RCM (UK) Ltd Acquiring Company Merger Report - Allianz Global ...

Report on the Merger by Absorption 

between 

Allianz Global Investors Europe GmbH 

a company with limited liability, 

having its registered office in Frankfurt am Main, 

registered in the commercial register of Frankfurt am Main Local Court (Amtsgericht Frankfurt am 

Main) under no. HRB 9340 

(the “Acquiring Entity”) 

and 

RCM (UK) Limited 

a company with limited liability, 

incorporated and registered under the laws of England under company number 02014586, 

having its registered office at 155 Bishopsgate, London, EC2M 3 AD, United Kingdom 

(the “Transferring Entity”) 

(the Transferring Entity and the Acquiring Entity 

also jointly referred to as the “Companies”) 


Report on the Merger by Absorption

Contents 

I. Introduction ................................................................................................................................ 3 

1. Overview of the merger and main steps .............................................................. 3 

2. Legal basis and applicable law ............................................................................ 4 

II. Description of the Companies ................................................................................................. 6 

1. Allianz Global Investors Europe GmbH ............................................................... 6 

1.1 Company object ....................................................................................................... 6 

1.2 Governing bodies ..................................................................................................... 8 

1.3 Employees and co-determination ............................................................................ 8 

1.4 Capital and shareholders ......................................................................................... 9 

2. RCM (UK) Limited .................................................................................................. 9 

2.1 Company object ....................................................................................................... 9 

2.2 Employees and co-determination .......................................................................... 10 

2.3 Capital and shareholders ....................................................................................... 10 

III. Economic grounds for the merger ....................................................................................... 11 

IV. Repercussions of the cross-border merger on creditors .................................................. 12 

1. General consequences ....................................................................................... 12 

2. Repercussions on the Transferring Entity’s creditors ..................................... 12 

3. Repercussions on the Acquiring Entity’s creditors ......................................... 12 

4. Investor protection .............................................................................................. 13 

V. Repercussions of the cross-border merger on employees and other personnel ............ 14 

1. Transferring Entity ............................................................................................... 14 

2. Acquiring entity ................................................................................................... 14 

3. Procedures for establishing co-determination ................................................. 15 

3.1 Applicability of the German Act on Co-Determination of Employees in crossborder 

Mergers (MgVG)......................................................................................... 15 

3.2 Organisation of the employee participation process .............................................. 16 

3.3 Application of the Fall-back Solution ...................................................................... 17 

VI. Explanation of the merger plan ............................................................................................ 19 

1. Effectiveness of the merger ................................................................................ 19 

2. Merger Date .......................................................................................................... 19 

3. Transfer of shares ............................................................................................... 20 

4. Articles of the Acquiring Entity .......................................................................... 20 

5. No merger audit and no special advantages .................................................... 21 

6. Miscellaneous ...................................................................................................... 21 

6.1 Costs ...................................................................................................................... 21 

6.2 No approval required ............................................................................................. 21 



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I. 

Introduction 

1. Overview of the merger and main steps 

It is anticipated that the representative bodies of the Companies involved will conclude the 

merger plan between the Transferring Entity and the Acquiring Entity drawn up by them on 

14 June 2013 on 09 September 2013. On the same day, the sole shareholder of the Transferring 

Company and the Acquiring Company will resolve and consent to the merger plan. 

The following merger report is given in order to inform the sole shareholder, the Acquiring 

Entity’s works council at the Frankfurt am Main site, the Acquiring Entity’s employees at the 

Munich and Stuttgart sites and, by way of precaution, the group works council constituted 

within the Allianz group pursuant to section 122e German Restructuring Act (Umwandlungsgesetz 

– UmwG) (the “Restructuring Act”). 

The present report was prepared by the management of the Acquiring Entity in order to describe 

the planned merger between the Companies and to outline the repercussions of the 

cross-border merger for the creditors and employees. 

This report will be made available to the shareholder of the Acquiring Entity, the works 

council of the Acquiring Entity at the Frankfurt am Main site and the employees of the Acquiring 

Entity at the Munich and Stuttgart sites and, by way of precaution, the group works 

council constituted within the Allianz group no later than one month before the date on 

which the shareholder resolves in favour of the present merger. 

The Transferring Entity will prepare a separate report governed by English law. 

Under English law the shareholder’s meeting of the Transferring Entity has to give its final 

consent to the merger. Under sections 122a, 13 and 50 Restructuring Act, the shareholder’s 

meeting of the Acquiring Entity is required to pass a resolution in favour of the merger 

plan. 

The merger only becomes effective once it is entered in the commercial register of the Acquiring 

Entity. The target date for this entry is currently 31 October 2013. Irrespective of 



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this, the economic effect of the merger will come into force with retrospective effect on 01 

January 2013, referred to as the “Merger Date”. 

2. Legal basis and applicable law 

The present merger plan is explicitly subject to English and German law in the light of Directive 

2005/56/EC of the European Parliament and of the Council of 26 October 2005 on 

cross-border mergers of limited liability companies (the “Directive”). This reason for this is 

that the Transferring Entity is a company governed by English law and the Acquiring Entity 

is a company governed by German law and a so-called “cross-border” merger under the 

terms of the Directive is therefore involved. 

The Directive was implemented in the United Kingdom by adoption of the Companies 

(Cross-Border Mergers) Regulations 2007 (the “English Regulations”). In Germany, the 

Directive was implemented by incorporating the relevant rules into the Restructuring Act. 

The cross-border merger by absorption in Germany is primarily based on the concrete 

terms of sections 2 ff., 46 ff. and 122a ff. Restructuring Act. 

In legal terms, the planned concentration is a merger by absorption of the Transferring Entity 

by the Acquiring Entity entailing the transfer of the entire assets of the Transferring Entity 

to the Acquiring Entity by way of universal succession (Gesamtrechtsnachfolge), without 

any liquidation, and absorption of the Transferring Entity into the Acquiring Entity. 

English law applies to the internal organisation, operational procedures and powers of attorney 

of the governing bodies of the Transferring Entity. German law applies to the internal 

organisation, operational procedures and powers of attorney of the Acquiring Entity. 

According to article 14 of the Directive and sections 122a ff. and 20 Restructuring Act, 

German law acknowledges that the Transferring Entity ceases to exist as a result of realisation 

of the merger and that its entire asset and liabilities including all rights and duties pass 

to the Acquiring Entity by way of universal succession. The Acquiring Entity will keep its 

current company form, firm name and registered office as stated in the preamble to this report. 

The Company’s object is regulated by the German Investment Act (Investmentgesetz – 

InvG) (the “Investment Act”) until 22 July 2013. From 22 July 2013 onwards, the Invest- 



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ment Act will be replaced by the German Capital Investment Code (Kapitalanlagesetzbuch 

– KAGB) (the “Capital Investment Code”) (see Act on the implementation of alternative investment 

fund managers (AIFM-Umsetzungsgesetz – AIFM-UmsG)). 

According to the transitional provisions of the Capital Investment Code, the Investment Act 

will still be applicable after 22 July 2013 until the Company has lodged an application as an 

AIF asset management company. Therefore, when referring to the Investment Act, respective 

provisions of the Capital Investment Code will also be mentioned. 

The Company’s activities will be regulated by the German Investment Act (Investmentgesetz 

– InvG) (the “Investment Act”) until 22 July 2013. From 22 July 2013 the Investment 

Act will be replaced by the Capital Investment Code (Kapitalanlagesetzbuch – KAGB) (the 

“Capital Investment Code”) (see the German Act implementing Directive 2011/61/EU on 

Alternative Investment Fund Managers (AIFM-Umsetzungsgesetz – AIFM-UmsG)). 

Under the transitional rules in the Capital Investment Code, the Investment Act also applies 

to the Company after 22 July 2013 until the Company has filed an application for authorisation 

as an AIF asset management company (Kapitalverwaltungsgesellschaft). Thus in references 

to the Investment Act, the corresponding provisions in the Capital Investment Code 

will also be referred to alternatively. 



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II. 

Description of the Companies 

1. Allianz Global Investors Europe GmbH 

1.1 Company object 

The object of the Acquiring Entity is: 

(1) The company is an investment company (Kapitalanlagegesellschaft) under the 

terms of the Investment Act (or alternatively a management company (Verwaltungsgesellschaft) 

under the terms of the Capital Investment Code). Its object is to manage: 

a) UCITS-compliant funds (richtlinienkonforme Sondervermögen) according to 

sections 46 to 65 Investment Act (or alternatively investment funds under the 

UCITS Directive according to sections 192 to 213 Capital Investment Code), 

b) mixed funds (gemischte Sondervermögen) according to sections 83 to 86 

Investment Act (or alternatively mixed investment funds according to sections 

218 to 219 Capital Investment Code), 

c) old-age pension funds (Altersvorsorge-Sondervermögen) according to sections 

87 to 90 Investment Act, 

d) other funds (sonstigen Sondervermögen) according to sections 90g to 90k 

Investment Act (or alternatively other investment funds according to sections 

220 to 224 Capital Investment Code), 

e) special funds (Spezial-Sondervermögen) according to sections 91 to 95 Investment 

Act (or alternatively open-ended domestic special AIFs (offene 

inländische Spezial-AIF) according to sections 278 to 284 Capital Investment 

Code) if assets as defined in section 2(4) no. 1, 2, 3, 4, 7 and 9 Investment 

Act are exclusively acquired on behalf of these funds (or alternatively 

if assets as defined in section 284(2) no. 2a, 2b, 2c, 2d, 2g and 2i Capital 

Investment Code are exclusively acquired on behalf of the open-ended 

domestic special AIFs with fixed investment terms) and provided that they 

are not special funds in the form of funds with additional risks (Sondervermögen 

mit zusätzlichen Risiken) or in the form of funds-of-funds with addi- 



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tional risks (Dachsondervermögen mit zusätzlichen Risiken) (or alternatively 

open-ended domestic special AIFs in the form of hedge funds under the 

terms of section 283 Capital Investment Code and fund-of-fund hedge funds 

(Dach-Hedgefonds) under the terms of section 225 Capital Investment 

Code), 

f) investment stock corporations with third-party managers (fremdverwaltete 

Investmentaktiengesellschaften) under the terms of section 96(4) Investment 

Act (or alternatively investment stock corporations with variable capital (Investmentaktiengesellschaft 

mit veränderlichem Kapital) under the terms of 

section 112(1) Capital Investment Code), where investment assets as defined 

in a), b), d) and e) involved. 

(2) Apart from the business referred to in (1) above, the company may also carry on the 

following businesses and activities which are necessary for the investment of its 

own assets: 

a) discretionary management of assets invested in financial instruments as defined 

in section 1(1)1 of the German Banking Act (Kreditwesengesetz – 

KWG) on behalf of others (individual asset management), 

b) investment advice, 

c) custody and management of shares issued under the provisions of the Investment 

Act (or alternatively Capital Investment Code) or by a foreign investment 

company (or alternatively management company) on behalf of 

others, 

d) distribution of shares that are issued under the provisions of the Investment 

Act (or alternatively Capital Investment Code) or that may be publicly distributed 

under sections 130 to 140 of the Investment Act (or alternatively sections 

293-335 of the Capital Investment Code), 

e) conclusion of pension agreements according to section 1(1) of the German 

Pension Provision Agreements Certification Act (Altersvorsorgeverträge- 

Zertifizierungsgesetz – AltZertG) and agreements for establishment of a 

funded retirement pension (kapitalgedeckte Altersversorgung) under the 

terms of section 10(1) no. 2b of the German Income Tax Act (Einkommensteuergesetz 

– EStG), 



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f) granting of undertakings to investors that upon redemption of shares, termination 

of management of shares under the terms of a) and termination of 

custody and management of shares under the terms of c) at least a specified 

or specifiable amount will be paid to the investors (minimum payment commitment), 

and 

g) other activities directly associated with the business and activities referred to 

above. 

1.2 Governing bodies 

The governing bodies of the Acquiring Entity are the management, co-determined supervisory 

board (Aufsichtsrat) and the shareholder’s meeting. The Acquiring Entity’s governing 

bodies will continue to exist following the merger. 

1.3 Employees and co-determination 

The Acquiring Entity has sites in Frankfurt am Main, Munich and Stuttgart and has 1121 

employees as at the effective date 14 June 2013. The employees’ interests at the Frankfurt 

am Main site are represented by the works council constituted at this site of the Acquiring 

Entity. The Acquiring Entity has an economic committee. The employees’ material rights 

are contained in their individual employment agreements (including any individually agreed 

inclusions/references to collective wage agreements under labour law) and for the employees 

at the Frankfurt am Main site in existing company agreements. 

The Transferring Entity is not a member of any employers’ associations and there is no obligation 

to pay wages according to a collective bargaining agreement pursuant to section 3 

German Collective Wage Agreement Act (Tarifvertragsgesetz – TVG). 

The Acquiring Entity has a supervisory board in accordance with the provisions of section 

6(2) Investment Act and section 1(1) no. 3 German One-Third Participation Act (Drittelbeteiligungsgesetz 

– DrittelbG); co-determination takes place according to the One-Third 

Participation Act. In concrete terms this means that two of the current six members of the 

supervisory board are chosen by the employees. 



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1.4 Capital and shareholders 

The company’s share capital currently amounts to EUR 49,900,500.00 and is divided up into 

the following shares: 

a) share with serial no. 1, with a nominal amount of EUR 37,000,000.00 and 

b) shares with serial no. 2 to 6, with a nominal amount of EUR 100.00 each, 

c) share with serial no. 7, with a nominal amount of EUR 12,900,000.00. 

All shares are held by Allianz Global Investors GmbH. 

All shares in the share capital of the Acquiring Entity are fully paid up, no repayments of 

capital contributions have been made, none of the shares referred to is encumbered with a 

right of lien or usufruct, and none of the shares referred to is subject to confiscation or attachment. 

The Acquiring Entity has not issued any corporate bonds (including convertible 

bonds). 

2. RCM (UK) Limited 

2.1 Company object 

The Transferring Entity is authorised to carry on the following activities: 

(1) [German translation] Advising on investments (except on Pension Transfers and 

Pension Opt Outs); 

(2) [German translation] Agreeing to carry on a regulated activity; 

(3) [German translation] Arranging (bringing about) deals in investments; 

(4) [German translation] Arranging safeguarding and administration of assets; 

(5) [German translation] Dealing in investments as agent; 

(6) [German translation] Making arrangements with a view to transactions in investments; 

(7) [German translation] Managing investments; 

(8) [German translation] Safeguarding and administration of assets (without arranging). 



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The company may perform any acts necessary to pursue the company object. 

2.2 Employees and co-determination 

The Transferring Entity has 46 employees at the effective date 14 June 2013. The employees’ 

rights and duties are contained in their individual employment agreements and, where 

relevant, any applicable collective labour law rules. There is no committee comparable to a 

German works council or any other body representing employees at the Transferring Entity. 

2.3 Capital and shareholders 

The Transferring Entity’s share capital amounts to GBP 20,000,000.00 and is divided into 

20,000,000 shares of GBP 1.00 per share. 

All shares are held by Allianz Global Investors GmbH. 

All shares in the Transferring Entity’s share capital are fully paid up, no repayments of capital 

contributions have been made, none of the shares referred to is encumbered with a right 

of lien or usufruct, and none of the shares referred to is subject to confiscation or attachment. 

The Transferring Entity has not issued any corporate bonds (including convertible 

bonds). 



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III. 

Economic grounds for the merger 

The proposed merger is intended to meet various objectives, such as to rationalise the Allianz 

Global Investors Group, achieve cost savings and synergies, improve the efficiency of 

services and product ranges for the Group’s client base, implement the “One Firm” business 

model, simplify management of the company and regulatory procedures, enable creation 

of a European business model comprising the European centre of excellence in the securities 

services segment, and generally to provide an improved range of services for customers. 

Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the 

coordination of laws, regulations and administrative provisions relating to undertakings for 

collective investment in transferable securities (UCITS) (“UCITS IV Directive”) allows the 

Allianz Global Investors Group to implement the creation of a European centre maintaining 

associated branch offices in various legal systems which is able to strengthen certain European 

centres of excellence so as to enhance the quality of its services (including in particular 

in relation to individual and collective asset management), which are also offered to customers 

on a cross-border basis. Provision of a company with a licence according to the Directive 

of the European Parliament and of the Council of 21 April 2004 on markets in financial 

instruments (MiFID Directive) is not necessary for the Acquiring Entity since all the activities 

performed by RCM UK Limited may be performed with the licence under the UCITS 

IV Directive which is passported to the United Kingdom. 

The following activities will be concentrated at the Acquiring Entity as a result of the proposed 

merger. The company will continue to operate through a branch office in London: 

a) Collective asset management within the scope of the UCITS IV Directive 

(this service is currently not provided by the Transferring Entity); 

b) Distribution of investment funds; 

c) Individual portfolio management; and 

d) Investment advice. 



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Due to the objectives referred to above, a merger of the Companies is regarded as the 

most suitable solution. 

IV. 

Repercussions of the cross-border merger on creditors 

1. General consequences 

All existing liabilities of the Transferring Entity will be transferred to the Acquiring Entity by 

way of universal succession (Gesamtrechtsnachfolge). The Acquiring Entity has sufficient 

funds to satisfy these liabilities. As explained above, the Acquiring Entity will also take over 

the entire debts of the Transferring Entity, including debts that originate from the period prior 

to 01 January 2013 and are not listed in the Transferring Entity’s accounts. 

The creditors’ rights will be protected by application of the creditor protection provisions in 

the country concerned. 

2. Repercussions on the Transferring Entity’s creditors 

The Transferring Entity will apply to the English Companies Court requesting that no creditors’ 

meeting is required and that the creditors of the Transferring Entity do not have to give 

their consent to the performance of the merger since the liabilities of the Transferring Entity 

will be transferred to the Acquiring Entity as a result of the merger. This would not lead to 

any disadvantages for the Transferring Entity’s creditors because the Acquiring Entity is 

obliged under regulatory rules to maintain a certain amount of equity capital. 

3. Repercussions on the Acquiring Entity’s creditors 

The Acquiring Entity’s creditors are entitled to demand provision of security from the Acquiring 

Entity for their existing claims as long as they provide evidence that satisfaction of their 

claims will be put at risk by the merger (sections 122a(2) and 22(1) s. 2 Restructuring Act). 

If a creditor wishes to demand security, they have to register their claim with the Acquiring 

Entity in writing within six months of announcement of the registration of the merger in the 

commercial register responsible for the Acquiring Entity stating the value and merits of their 

claim (sections 122a(2) and 22(1) s. 1 Restructuring Act). 



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4. Investor protection 

In the context of the merger both Companies will ensure that the legal position of the investors 

with mandates currently managed by the Transferring Entity by individual asset management 

does not change and that they are granted the highest possible level of protection 

in order to safeguard the continued existence of the contractual relationships. [This means 

in particular: 

a) There will be no changes to the contracts for the mandates currently managed 

by the Transferring Entity by individual asset management. This does 

not apply to changes that are essential for successful implementation of the 

merger. However, any material change to the contracts is excluded. 

b) The costs of the merger will not be charged to the mandates managed by 

individual asset management. 

c) Investors with mandates currently managed by the Transferring Entity by individual 

asset management will be guaranteed maximum information prior to 

the merger, if appropriate by individual communication. 

d) Upon conclusion of the merger the resources, services and processes currently 

provided by and implemented at the Transferring Entity will be continued 

by the branch of the Acquiring Entity in the United Kingdom to the same 

quality. 

e) The Acquiring Entity will take over all contractual relationships between the 

Transferring Entity and external service providers (e.g. outsourcing, management 

mandates and depositary bank) without interruption. 

g) It will also be ensured that investors with mandates currently managed by 

the Transferring Entity by individual asset management are still able to 

communicate with the merged company in English following the merger.] 



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V. 

Repercussions of the cross-border merger on employees and other personnel 

1. Transferring Entity 

Upon registration of the merger the Transferring Entity’s employees will be transferred to 

the Acquiring Entity. The economic and contractual relationships, including all rights and 

duties, will continue in full and without interruption as a result of the universal succession. 

The merger as such will not result in any changes to contractual terms and conditions taken 

over by the Acquiring Entity. The Transferring Entity’s employees are not affected by any 

provisions under collective wage agreements. All pension obligations of the Transferring 

Entity will be transferred to the Acquiring Entity. 

No works council exists at the Transferring Entity. 

2. Acquiring entity 

The employment contracts and jobs of the Acquiring Entity’s employees will not be affected 

by the planned merger. All obligations of the Acquiring Entity towards its employees will 

continue unchanged. No special measures are planned for the Transferring Entity’s employees 

in connection with the merger. In particular, there will be no personnel cuts in the 

course of the merger. 

The merger will not lead to changes in the operational structure and organisation of the Acquiring 

Entity’s business operations. The identity of the businesses will not be affected by 

the merger. Thus due to the absence of a change of business, no consultations with the 

works council of the Acquiring Entity under the terms of section 111 Works Constitution Act 

and no social plan under the terms of section 112 Works Constitution Act are necessary. 

The works council at the Acquiring Entity will continue to exist unchanged and will not represent 

the employees of the Acquiring Entity’s branch office following the merger. 

The merger does not have any effects on existing company agreements at the Acquiring 

Entity. 

All pension obligations of the Acquiring Entity will continue unchanged. 



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3. Procedures for establishing co-determination 

3.1 Applicability of the German Act on Co-Determination of Employees in cross-border Mergers 

(MgVG) 

The procedure governing participation of employees employed in the Member States of the 

EU and the other states of the EEA following cross-border mergers is based on art. 16 of 

the EU Merger Directive for companies emerging from cross-border mergers whose registered 

office is located in the country (Germany). This was transposed into national law by 

the German Act on Co-Determination of Employees in cross-border Mergers (Gesetz über 

die Mitbestimmung der Arbeitnehmer bei grenzüberschreitenden Verschmelzungen – 

MgVG) (the “Act on Co-Determination of Employees in cross-border Mergers”). Since 

the registered office of the Acquiring Entity will continued to be located within the country 

(Germany), the procedure for employee participation is based on the provisions of the Act 

on Co-Determination of Employees in cross-border Mergers, in part supplemented by the 

national legal instruments of the states where the Acquiring Entity will have employees implementing 

art. 16 of the Merger Directive. 

The aim of art. 16 of the Merger Directive is to prevent employee rights in a company from 

being “melted down” in connection with a cross-border merger by merging the company into 

a company in a state whose laws grant the employees fewer co-determination rights. 

Under section 5 Act on Co-Determination of Employees in cross-border Mergers, the provisions 

of this Act regarding co-determination by employees apply if, either 

(1) in the six months before publication of the merger plan at least one of the 

companies involved has more than 500 employees on average and a system 

of co-determination under the terms of section 2(7) Act on Co- 

Determination of Employees in cross-border Mergers exists at the company; 

or 

(2) the national laws authoritative for the company resulting from a cross-border 

merger do not provide for co-determination by employees to at least the 

same degree as that previously existing in the companies taking part in the 

merger; or 



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(3) the national laws authoritative for the company resulting from a cross-border 

merger do not provide for the same right to exercise co-determination for 

employees in operations of this company located in other Member States as 

are granted to employees in the Member State where the registered office of 

the company resulting from the cross-border is located. 

In the present case at least the first and last alternatives apply, since the Acquiring Entity 

had more than 500 employees for more than six months before publication of the merger 

plan and had a supervisory board with one-third participation. In addition, English law does 

not have any degree of corporate co-determination established at the level of the supervisory 

board or comparable to the German One-Third Participation Act. 

Thus the Act on Co-Determination of Employees in cross-border Mergers applies to the 

present cross-border merger. 

3.2 Organisation of the employee participation process 

The present merger is part of a larger European reorganisation in which the further implementation 

steps affect affiliated enterprises of the Acquiring Entity as defined in sections 15 

ff. Stock Corporation Act (Aktiengesetz – AktG) in other European countries, some of which 

have more employees than the number of personnel employed in the United Kingdom. 

These steps will be carried out without delay. Thus all requirements as to employee representation 

and co-determination will either be fulfilled or implemented in compliance with the 

relevant EU Directive and the national laws of the countries involved implementing this Directive. 

The relevant law in Germany is the Act on Co-Determination of Employees in 

cross-border Mergers. 

Under the Act on Co-Determination of Employees in cross-border Mergers there are basically 

three different possibilities for organising the employee participation process. 

Firstly, section 22 Act on Co-Determination of Employees in cross-border Mergers provides 

that the management of the companies involved in the merger enter into a written agreement 

with a special negotiating committee (“SNC”) regarding co-determination by the employees 

in the company resulting from the cross-border merger. 



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However, the SNC may alternatively decide not to begin any negotiations regarding the 

agreement on employee co-determination or to break off agreements that have already 

been commenced. In this case, the regulations regarding employee co-determination applying 

in the state where the company resulting from the cross-border merger will have its registered 

office will be directly applicable. However, the condition is that the degree of codetermination 

by the employees which applied in the country of the Transferring Entity may 

not be undermined or minimised. This requirement is met in the relationship between Germany 

and the United Kingdom. Thus in these circumstances the German law on employee 

participation applies since the registered office of the Acquiring Entity is in Germany. 

As a third possibility, the provisions in sections 23 to 27 Act on Co-Determination of Employees 

in cross-border Mergers regarding co-determination by employees in accordance 

with the rules of the above Act apply, among other things, if the management of the companies 

involved in the merger decide to apply sections 23 to 27 of the Act to the company 

resulting from the merger immediately from the time of its registration and if one or more 

forms of co-determination covering at least one third of the total number of employees of all 

companies involved and the affected subsidiaries existed in one or more of the companies 

before registration (alternative 1) or covered less than one third of the total number of employees 

of all the companies involved and the SNC passes a resolution to this effect (alternative 

2) (alternatives 1 and 2 being the “Fall-back Solution”). 

In the present case, employee co-determination in accordance with the One-Third Participation 

Act existed at the Acquiring Entity. Since the number of employees of the Acquiring 

Entity exceeds that of the Transferring Entity, this arrangement also applied for more than 

one third of the total number of all employees, meaning that it is also possible to apply the 

Fall-back Solution in the present merger. 

3.3 Application of the Fall-back Solution 

The management of the Acquiring Entity and the management board (Vorstand) of the 

Transferring Entity have decided not to enter into any negotiations on an agreement regarding 

co-determination by employees and to take recourse to the Fall-back Solution (alternative 

1). 

Application of the Fall-back Solution means: 



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The employees of the Acquiring Entity as well as its subsidiaries and operations or its representative 

bodies are entitled to appoint, recommend or reject a share of all the members 

of the Acquiring Entity’s supervisory board. The number of employee representatives on the 

Acquiring Entity’s supervisory board is based on the highest share of employee representatives 

existing in the governing bodies of the companies involved before registration of the 

company resulting from the merger, as set out in section 24 Act on Co-Determination of 

Employees in cross-border Mergers. In the present case, the highest share of employee 

representatives was in the supervisory board of the Acquiring Entity, which had one-third 

participation. Two of the six supervisory board members are employee representatives. It is 

the wish of the Acquiring Entity’s shareholder that the supervisory board should continue to 

consist of six members. Thus the number of employee representatives in the Acquiring Entity’s 

supervisory board will be determined in accordance with the applicability of section 

6(2) Investment Act (or alternatively from 22 July 2013 section 18(2) Capital Investment 

Code) and section 1(1) no. 3 One-Third Participation Act to the Acquiring Entity and will 

continue to be two. This means that the future number of employee representatives on the 

supervisory board will not differ from the present number. The employee seats on the supervisory 

board will be shared out among the states where the Acquiring Entity has employees 

and where members have to be voted in or appointed under the Act on Co- 

Determination of Employees in cross-border Mergers. Since most of the Acquiring Entity’s 

employees work in Germany, (provided this remains this way) one of the two employee representatives 

on the supervisory board will always come from Germany. 



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VI. 

Explanation of the merger plan 

The merger plan is explained below, unless already done so in the above sections. 

1. Effectiveness of the merger 

The Transferring Entity will transfer its entire assets to the Acquiring Entity, i.e. its entire assets 

and liabilities and all rights and asset items forming the assets of the Transferring Entity. 

The Transferring Entity will be dissolved automatically and by the legal effect of the merger 

alone. According to article 12 of the Directive, the laws of the Federal Republic of Germany 

by which the Acquiring Entity is governed determine the date on which the merger 

comes into force. The merger will become effective at the time it is entered into the commercial 

register located at the registered office of the Acquiring Entity. 

2. Merger Date 

The Acquiring Entity will become the owner of the assets being transferred from the date on 

which the merger becomes effective as a result of the conditions described above coming 

into effect. It has a right of use in relation to these assets with retrospective affect from 01 

January 2013. The assumption of the Transferring Entity’s assets by the Acquiring Entity 

will take place within the parties’ internal relationship with effect from the end of 31 December 

2012. As of 0:00 hours on 01 January 2013 (Merger Date) all acts and business of the 

Transferring Entity are deemed to have been undertaken for the account of the Acquiring 

Entity. 

It is determined by express agreement that all business transacted from 01 January 2013 

onwards on the basis of the assets transferred by the Transferring Entity will be regarded 

as retrospective both for the assets and the liabilities, and will be deemed to be for the account 

of and at the exclusive risk of the Acquiring Entity, who will include the said business 

transactions in its balance sheet. 

The Acquiring Entity will take over the entire debts of the Transferring Entity, including 

those dating from the period before 01 January 2013 and not stated in the Transferring Entity’s 

accounts. 



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If a higher or lower difference emerges between the liabilities taken over from the Acquiring 

Entity and the amounts actually claimed by third parties at a later date, then the Acquiring 

Entity must make good any surplus liability without any claim to repayment or surrender; if 

the opposite should be the case, it will profit from any credit surplus. 

3. Transfer of shares 

The annual financial statements of Transferring Entity and the Acquiring Entity from 31 December 

2012 will form the basis of the merger. The carrying amounts of the Transferring 

Entity’s assets will be adopted and carried forward by the Acquiring Entity. 

The existing shares in the Transferring Entity will cease to exist as a result of completion of 

the merger. The capital increase contemplated in connection with the merger and the resulting 

conversion ratio is not intended to reflect the relationship between the value of the 

Transferring Entity and the Acquiring Entity as going concerns. There will be no additional 

cash payment for the same reason. 

In the course of the merger, the shareholder will increase the Acquiring Entity’s share capital 

from a current level of EUR 49,900,500.00 by EUR 100.00.The capital increase will take 

place by transferring the Transferring Entity’s assets. There will be no capital increase in 

cash form. 

The Acquiring Entity will issue the shareholder with a new share with a nominal value of 

EUR 100.00. The new share will confer the same rights and duties as the existing shares in 

the Acquiring Entity. 

No special rights exist on the part of the shareholder and no such rights will arise as a result 

of the merger. 

The share to be granted by the company will be entitled to a share in profits as of 01 January 

2013. 

4. Articles of the Acquiring Entity 

The current articles of association (Satzung) of the Acquiring Entity will be changed only 

slightly. A change in the articles of association is necessary to the extent that the amount of 



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share capital of the Acquiring Entity is altered by the capital increase described above and 

if the articles would be incorrect without an adjustment. Notwithstanding this, amendments 

to the articles may arise by official order, although to date there are no indications of any 

such orders. 

5. No merger audit and no special advantages 

The shareholder will, to the extent legally permitted, waive the need for an audit of the merger 

and for a merger audit report; thus no experts will be examining the merger plan. No 

advantages will be conferred on members of the management or supervisory board or any 

other members of the management, supervisory or controlling organs of the Acquiring Entity 

or Transferring Entity. 

6. Miscellaneous 

6.1 Costs 

The costs of the merger mainly involve advisory costs. In particular, the Companies have 

consulted leading business, finance and legal advisors in the course of the preparations 

and for performance of the merger. In addition, costs will arise as a result of the implementation 

of the merger, in particular notarial costs and other similar fees. Finally, there will also 

be costs arising from disclosure obligations towards the investors in the harmonised funds 

which have to be fulfilled in relation to the merger. Although the costs will be incurred by 

each company separately, they will ultimately be borne by the Acquiring Entity as a result of 

the merger. 

6.2 No approval required 

It should be noted for the avoidance of doubt that an approval of the proposed merger by 

the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht) 

and/or the Financial Conduct Authority is not necessary. 

Frankfurt, dated this 14 June 2013 

_______________________________ 




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RCM (UK) Ltd Acquiring Company Merger Report - Allianz Global ...

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