Adria legal group - Law office

Author: Jurij Logar, 
associate at Law firm
Završek & Šnajder, LLC

On the 28th of June 2023, the Slovenian National Assembly adopted Amendments to the Companies Act (ZGD-1L). This amendment came into effect on the 25th of July 2023 and incorporates significant changes and innovations related to online company formation, cross-border transformations, mergers, divisions of companies, and updates in the field of the Slovenian Business Register, all in pursuit of achieving a more digitalized and streamlined operation within the internal market of the European Union.

The new amendment is a response to two essential EU Directives. Directive (EU) 2019/1151 amending Directive (EU) 2017/1132 in regard to the use of digital tools and processes in company law (the Digitalization Directive) and Directive (EU) 2019/2121 amending Directive (EU) 2017/1132 in regard to cross-border conversions, mergers and divisions (the Mobility Directive). The adopted amendment to the Companies Act aims to enable the use of digital tools throughout the entire life cycle of a company. It further seeks to enhance the regulation of cross-border mergers and introduce new procedures for cross-border transformations and divisions of companies.

Some of the changes put forward by the said amendment were: the possibility of online establishment of companies; the possibility of holding virtual shareholders’ meetings without physical presence, if certain conditions are met; and certain changes to the Slovenian Business Register, with which the legislator is trying to increase the transparency of operations and access to information.

With the new amendment, there were some key changes made regarding cross-border transformation, mergers and divisions of companies. The amendment looks to simplify and streamline the processes for mergers and divisions with certain mechanisms, which are briefly introduced bellow.

Both the plan for a cross-border merger and the management report must contain a broader range of information than before, the content of which is prescribed by the new Companies Act. Additionally, the amendment sets new requirements for public disclosure of the cross-border transformation plan and other documents, as well as the offer of monetary compensation.

The plan must now include all details of any special benefits granted to management or members of the governing or supervisory bodies of companies involved in cross-border mergers. The management report, in addition to explaining the legal and economic consequences of the cross-border merger (especially its impact on the future operation of the merging company), must provide specific explanations tailored to the recipients of the report, whether shareholders or employees, unless all shareholders waive this requirement, or the company has no employees other than those in the management or supervisory bodies.

The adopted amendments require that the plan, audit report, and notice allowing objections to the plan be available electronically six weeks before the company's general meeting. Furthermore, it mandates that these documents, along with any omissions determined as business secrets, be sent to the registration authority five working days before the general meeting for public disclosure.

Additionally, the proposed law addresses the audit of mergers, divisions, and transformations. The audit report must contain the auditor's opinion on the appropriateness of the exchange ratio and whether any cash payments or proposed severance pay are suitable. In certain cases, an audit is not required. The amendments to the Act also include measures to protect creditors by granting them the right to request security for their claims that predate the publication of the cross-border merger plan.

However, please keep in mind that this short text does not take into consideration all the novelties and specificities of the introduced amendments to the Companies Act.

In need of further information or help in connection with the cross-border transformation, merger or divisions of companies in Slovenia or in case of any other questions regarding the Companies Act, do not hesitate to contact the ALG partner in Slovenia – Odvetniška družba Završek & Šnajder o.p., d.o.o.