On 28 June 2023, the National Assembly of the Republic of Slovenia adopted the Act on Amendments and Additions to the Companies Act (ZGD-1L). The amendment, which entered into force on 25 July 2023, implements a number of important changes and novelties in online company formation, cross-border transformations, mergers and divisions of companies and new features in the domain of court registers.

The amendment ZGD-1L implements two European Union Directives into Slovenian national law: the Directive 2019/1151 amending Directive (EU) 2017/1132 as regards the use of digital tools and processes in company law (the "Digitalisation Directive"), and the Directive (EU) 2019/2121 amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions (the "Mobility Directive").

Key changes of the Companies Act

1. Online formation of limited liability companies

The amendment to the ZGD-1L, implementing the Digitalisation Directive, introduces the legal basis for the online formation of corporations (including dual companies). It has enabled corporations to be established online eliminating the requirement for the physical presence of the founders at a public notary’s office or at a registration body.

Articles of Association (AoA) may be concluded by video-electronic means as a notarial deed in electronic form in the manner regulated under the Notarial Act (ZN).

In the case of the formation of a one-person limited liability company, the adoption of the Memorandum of Association remains possible directly through the Slovenian Business Point (SPOT) portal using a qualified digital certificate. The deed of incorporation may also be issued in a special form, either electronically or in physical form, the latter of which is also subject to the notarial certification of the shareholder’s signature.

In places requiring a notary for the incorporation process of a company, the amendment refers to the Notarial Act, which now allows for a AoA in the form of a notarial deed to be drawn up remotely. It also enables the remote registration of subsidiaries respectively without the need for the founders to be physically present.

2. Cross-border conversions, mergers and divisions

The Mobility Directive and, on its basis, the amendment to the Companies Act dictates a structured multi-phase procedure for all three types of cross-border operations (i.e. conversions, mergers and divisions) and introduces certain common rules. For each of the cross-border operations, it sets out the permissible forms of these operations, with the key issue being the regulation of the respective legal standing of all relevant stakeholders, in particular the rights of shareholders, creditors and employees. For mergers and divisions, the amendment provides for a simplified procedural regime.

Both the cross-border operation plan as well as the management report shall include a broader range of required information than before. Moreover, the amendment redefines anew the content and scope of the required public disclosure of the cross-border conversion plan and other documents, and the offer of a cash compensation.

For example, the plan must also include full details of any special benefits accorded to the management or members of the management or supervisory bodies of the cross-border merging companies. In addition to providing an explanation of the legal and economic consequences of the cross-border merger (in particular the implications for the future business of the company being merged cross-border), the management report should also contain an additional list of explanatory notes, the content of which differs depending on the addressee of the report, the shareholders or the employees.

In the new Section 4, the amendment provides for special rules for cross-border divisions of corporations and other dual companies, while a new Section 6a governs special rules for cross-border conversions of corporations and other dual companies.

3. Virtual or Digital General Shareholders' Assembly Without the Physical Presence of Shareholders

The new regulation envisages, if stipulated by the company's Articles of Association, for the holding of a virtual general assembly without the physical presence of shareholders and their proxies and other persons, provided that certain conditions are met.

We find the wording of the amendment particularly problematic, where the resolution of the general meeting cannot be contested on the basis of an alleged violation of shareholders' rights resulting from technical interference in the use of technical means at the virtual general shareholders’ meeting, unless there is intent or gross negligence.

A shareholder must give notice of an appeal to a virtual general meeting on the grounds of technical interference no later than 24 hours after the start of the meeting.

4. Business Register Interconnection System

The objective of the amendment in the domain of business registers is to ensure greater transparency and improved accessibility to information, as it provides for a system of interconnection of business registers in accordance with the Digitalisation Directive, which enables companies to submit information only once, as the information submitted in this system is exchanged between the registry bodies.

The amended regime determines which data shall be exchanged through the Business Register Interconnection System. Certain changes also apply to the contents of the application for registration of a subsidiary in the register, the registration of amendments to documents and other particulars of a foreign company based in a Member State and the annual report notification of a foreign company based in a Member State.

5. Other relevant changes

The amendment further introduces the right to a specific legal remedy whereby creditors can seek security for their claims older than the date of disclosure of the draft terms of the cross-border merger.

In the case of a cash compensation offered to minority shareholders, the amendment requires adequate security for this compensation, without which the registry authority is not authorised to issue a confirmation that all the conditions of the cross-border conversion have been fulfilled.