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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Oki Europe Ltd v Oki Systems (Polska) SP ZOO [2017] EWHC 3634 (Ch) (21 December 2017) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2017/3634.html Cite as: [2017] EWHC 3634 (Ch)

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IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMPANIES COURT (ChD)

		Rolls Building Fetter Lane London EC4A 1NL
		21st December 2017

MR. JUSTICE MARCUS SMITH:

1. By a claim commenced under Part 8 of the Civil Procedure Rules on 9 August 2017, the companies before me seek an order approving the completion of a cross-border merger pursuant to the Companies Cross Border Mergers Regulations 2007.
2. In this case, the merging companies are Oki Europe Ltd, a company incorporated in England and Wales ("Oki Europe") and, Oki Systems (Polska) Sp. Z.o.o. a company registered in Poland ("Oki Poland").
3. Oki Poland is a wholly owned subsidiary of Oki Europe, Oki Europe in its turn is a wholly owned subsidiary of Oki Data, a Japanese corporation which is itself a wholly owned subsidiary of Oki Electric, another Japanese corporation.
4. The order sought is an order approving the proposed cross-border merger whereby Oki Poland will be absorbed into Oki Europe without entering liquidation. On its dissolution, all of its assets and liabilities will be transferred to Oki Europe, and it is thus appropriate to refer to Oki Poland as the "transferor" and Oki Europe as the "transferee".
5. The court has jurisdiction to make the orders sought if the requirements set out in Regulation 16.1 of the Regulations are met. In this case, I find that they are:

(1) For the purposes of Regulation 16.1(a), the transferee (Oki Europe) is a UK company not wound up, so this requirement is satisfied.

(2) For the purpose of Regulation 16.1(b), an order has been made certified proper completion of the pre-merger acts and formalities by the transferee (Oki Europe), and I refer in this regard to the certificate of Mr. Deputy Registrar Middleton dated 30 November 2017.

(3) For the purpose of Regulation 16.1(c) a pre-merger certificate has been issued by the competent authority in Poland, certifying proper completion of the pre-merger acts and formalities by the transferor (Oki Poland), and I refer to a certificate and a translation of that certificate from the original Polish into English dated 11 December 2017.

(4) For the purpose of Regulation 16.1(d) the application is within time, the claim form having been issued within the requisite period.

(5) For the purpose of Regulation 16.1(e) the draft terms of the merger I am being asked to approve are the same as those approved in the instruments that I referenced in the second and third points above, namely the certificates regarding the pre-merger formalities.

(6) Regulation 16.1(f) is not applicable and Part 4 of the Regulation is not engaged as neither the transferor (Oki Poland) nor the transferee (Oki Europe) has employee participation arrangements.

6. I therefore find that I have jurisdiction in relation to this proposed merger and I propose to move on to the law regarding the approval of mergers under Regulation 16.
7. This was considered by Sales J in Diamond Resorts (Europe) Ltd [2012] EWHC 3576 Ch and by Morgan J in Re Livanova Plc v Sorin S.P.A [2015] EWHC 2865 Ch The approach of Sales J was followed by Morgan J in that latter case, albeit that Morgan J suggested that the approach might benefit from further consideration in an appropriate case. Snowdon J made a similar point in Re M2 Property Invest Ltd [2017] EWHC 3218 Ch
8. This is not an appropriate case in which to consider the correct approach. Only the merging companies are represented before me and the facts of the case are relatively straightforward. I have, therefore, followed the approach of Sales J, that is to say applying the approach in Re Diamond to these relatively straightforward facts, which represents the more stringent approach.
9. I therefore must begin to ascertain whether any stakeholder is adversely affected by the proposed merger. I am satisfied that the proposed merger does not adversely affect any stakeholder in any of the merging companies in any material way. The merger is essentially proposed in the context of a group restructuring. Although it is not directly relevant, it is fair to say that this is one of a series of mergers between companies in the same group, some ten of which have already been approved by Mann J. This is the eleventh.
10. The transferor (Oki Poland) is a wholly-owned subsidiary of the transferee (Oki Europe). All that has happened by the merger is that the number of corporate entities is being reduced. Any interest in the transferee (Oki Europe) will in substance be unaffected by the merger.
11. I summarise the structure of the corporate group of which Oki Poland and Oki Europe are part earlier in this ruling. Oki Europe, as I have said, is wholly owned by Oki Data, which is itself a subsidiary of Oki Electric. All that has happened is that the corporate chain is being shortened by one link.
12. I have been shown various documents regarding the financial position of the companies. Although both the transferor and the transferee show in their balance sheets a negative balance, the financial position post-merger completion shows that Oki Europe is solvent to the tune of some €5.7 million and that is a distinct improvement on prior figures that I have been shown. What is more, as a result of the series of mergers that I have referenced, the financial position of Oki Europe is improved, a series of steps have additionally been taken to ensure that the position of the creditors of Oki Poland and Oki Europe have been improved.
13. Not only is Oki Europe solvent, it also has the benefit of a letter of support from Oki Electric in Japan and a guarantee from Oki Data in Japan. Both of these companies are, as I have been shown, solvent with substantial interests. What is more, the internal creditors of Oki Europe have, in a series of letters, postponed their interest in terms of debt recovery against Oki Europe in favour of outside creditors. That includes not merely general internal creditors but also any payment that will be due under the guarantee by Oki Europe to Oki Data. To that extent the position of creditors has substantially been improved.
14. The question of employees has been addressed in a directors' report, which simply notes that the 125 employees of Oki Poland will not be directly impacted by the proposed merger. In particular, the report of the director of Oki Europe states:

"All employees will continue to be employed in their current geographical location and they will simply become employees of Oki Europe but there will be no change to contractual employment terms, such as salary, grade, working hours, professional classification et cetera. Statutory rights will not be affected, and any conditions set out in collective bargaining agreements will continue to apply post-merger."

15. This document, that is to say the report to directors, has been shown to employees and I am told that there are no objections in relation to the merger from any employees of Oki Poland.
16. In these circumstances, I can see no adverse effects and some positive effects of the merger on the main stakeholders, that is to say shareholders, creditors and employees. I can see no other good reason not to make the order sought and, in these circumstances, I propose to make the order that I have just been handed up approving the merger.

Transcribed by Opus 2 International Ltd. (Incorporating Beverley F. Nunnery & Co.) Official Court Reporters and Audio Transcribers 5 New Street Square, London EC4A 3BF Tel: 020 7831 5627 Fax: 020 7831 7737 [email protected] This transcript has been approved by the Judge