Facts
X AG, Schaffhausen, as the majority shareholder of Y AG, Zug, sought to acquire Y AG in full and submitted a public purchase offer to the minority shareholders on August 31, 2006. After the completion of the offer, X AG held directly and indirectly a total of 92.8% of the share capital and voting rights of Y AG.
On December 15, 2006, Z AG, Schaffhausen, a wholly-owned subsidiary of X AG, concluded a merger agreement with Y AG. It was agreed that Z AG would acquire Y AG through an absorption merger, and the minority shareholders of Y AG would receive a compensation of CHF 150 per registered share with a nominal value of CHF 20, which would be paid by X AG.
On March 27, 2007, A (Plaintiff 1), Stuttgart, B (Plaintiff 2), Mainbernheim, and other individuals filed a lawsuit with the Cantonal Court of Schaffhausen against Z AG (Defendant 1) and X AG (Defendant 2), requesting an appropriate increase in the compensation for the former minority shareholders of Y AG, in accordance with Art. 105 para. 1 of the Federal Act on Merger, Demerger, Transformation and Transfer of Assets.
Considerations
The Merger Act is based on the principle of continuity of membership. Accordingly, in mergers, the shareholders of the transferring company are entitled to shareholding or membership rights in the acquiring company that correspond to their previous shareholding or membership rights. However, this principle is limited, as the companies involved in the merger may grant the shareholders a choice between shareholding or membership rights and compensation, or determine that only compensation will be paid.
If, in a merger, an excluded shareholder believes that the compensation is not appropriate, they can, within two months of the publication of the merger resolution, demand that the court review the shareholding and membership rights and determine an appropriate compensation payment. This review lawsuit serves to economically correct a violation of the principle of continuity of…