Change of Control
The change of control (abbreviation: CoC; German change of ownership structure ) is in the business a clause in loan agreements or bond conditions that the lenders or creditors an authorization requirement or a right of termination grants in the event that the borrower or obligor a complete or partial change of the partner occurs.
General
With borrowers or bond debtors, credit events can occur that have a negative impact on their creditworthiness without any change in their business indicators . This includes the change of the partner or the entry of another partner. Since the creditors have based their loans or bonds on the existing shareholder relationships, a planned change in shareholders usually changes the basis of the business and thus the credit risk . The new shareholder structure can have an impact on corporate policy or the economic situation of the borrower or bond debtor and thus jeopardize the repayment of the loan or bond. From the point of view of the lender, changes in the ownership structure can therefore have considerable legal and economic consequences.
The term "change of control" ( German change of control ) is intended to express that through the change of ownership and influence and control on or about the society changed. During the inspection can group law , takeover law or antitrust issues be considered.
Legal issues
The change of control clause is one of the covenants and concerns the change of shareholder at the borrower or bond debtor, which is primarily triggered by company acquisitions or company takeovers by third parties . The clause is not intended to cover every change in shareholders, but rather only those changes in shareholders that shift the majority of the voting rights in favor of a new shareholder. Therefore, the change of control clause usually contains a threshold of> 30% or> 50% majority stake in the borrower or bond debtor (change of control). From the latter threshold, there is a new group affiliation , so that the economic circumstances of the loan or bond debtor can be influenced by the new shareholder and the financial sovereignty of the loan or bond debtor could be restricted or eliminated. In the change of control clause, it makes sense to refer to allocation provisions such as section 2 (5) WpÜG , section 30 (2) WpÜG or section 33 WpHG .
A perfect ban even the smallest changes in ownership speaks the "bearer whereabouts clause '( English owner maintenance-ship ) that will perpetuate a rigid ownership structure.
A significant deterioration in the financial situation can follow the change of control, because the new shareholder only has access to the borrower's assets after the company has been acquired . The credit event of the change of shareholder can also be taken into account in the negative declaration. The content of the change of control clause is not covered by other contractual clauses such as the default clause , cross default clause or pari passu clause .
purpose
Change of control clauses are primarily intended to protect creditors from hostile takeovers ( English unfriendly takeover ) and thus serve to protect creditors or investors , because a significant change of shareholder can be likely to impair the debtor's creditworthiness . Change of control clauses in employment contracts of board members or managing directors that contain a severance payment commitment receive special attention . They assume that if there is a change of shareholders there is even a likelihood that top management will be replaced.
Individual evidence
- ↑ Peter Thilo Hasler / Markus A. Launer / Martin K. Wilhelm (eds.), Praxishandbuch Debt Relations , 2013, p. 129
- ↑ Werner Mielke / Than-Mai Nguyen-Viet, Changes in the control relationships at the contractual partner: Admissibility of change of control clauses in German law , in: DB Heft 47, 2004, p. 2515 f.
- ↑ Carsten Cramer, Change of Control Clauses in German Corporate Law , 2009, p. 125 ff.
- ↑ Peter Thilo Hasler, Markus A. Launer, Martin K. Wilhelm (Eds.): Praxishandbuch Debt Relations . 2013, p. 133 .
- ↑ Martina Kästle: Legal issues regarding the use of covenants . 2003, p. 61 .
- ↑ Carsten Cramer, Change of Control Clauses in German Corporate Law , 2009, p. 112 ff.
