Squeeze-out Committee Valuation report Squeeze-out Act Expert

Committee in top form – but unfortunately its time is running out

The committee originally established to review exchange ratios in the case of mergers is in practice primarily concerned with reviewing cash settlements offered to shareholders in the case of squeeze-outs.

In this blog, criticism has already been levelled at the legislator for taking powers away from the committee via the Stock Corporation Amendment Act 2019. In particular, the change in legislation deprived the committee of the right to prepare its own expert opinion on the appropriateness of a cash settlement. Now, the committee is limited to bringing about the settlement of a dispute by conducting corresponding settlement negotiations; furthermore, it still may obtain an expert opinion from an external expert.

Unfortunately, this reform of the review procedure introduced by the Stock Corporation Amendment Act 2019 has gone too far. This is effectively demonstrated by recent developments in committee proceedings already underway:

As the previous legislation continues to be applied in proceedings already underway, the committee has recently made repeated and meaningful use of its power to issue opinions itself. Based on the committee's expert opinion issued in relation to the squeeze-out of BEKO Holding AG, the Regional Court of Krems was able to render a detailed decision on 16 January 2020 setting out whether the cash compensation offered was appropriate. On 26 June 2020, the committee presented its own and highly regarded expert opinion on the squeeze-out of BWT AG. Moreover, the Supreme Court's decision on the squeeze-out of Miba (6 Ob 138/19s – CERHA HEMPEL represented one of the parties to the proceedings) is even based on an expert opinion drawn up by the committee entirely without the involvement of an external expert (and thus corresponds to the ideal role of the committee as originally envisaged by the law).

In light of this, there is a desire for the legislator to "reform the reform" and to restore the committee's power to issue its own opinions.