Case Study: Pre-IPO restructuring in Europe

Pre-IPO restructuring is the process of reorganising a company';s legal, corporate and financial architecture before a public listing on a European stock exchange. Done correctly, it reduces regulatory friction, attracts institutional investors and shortens the time between filing and first trading day. Done poorly, it creates liability exposure, delays the listing by months and can cause underwriters to withdraw. This analysis examines the legal tools available in European jurisdictions, the procedural sequence, the most common mistakes made by international founders, and the practical economics of each restructuring path.

The core challenge for any cross-border business approaching an IPO in Europe is that capital markets regulators - primarily the national competent authorities operating under the EU Prospectus Regulation (Regulation (EU) 2017/1129) - require a clean, transparent and auditable corporate structure. A holding company with opaque ownership layers, multiple share classes carrying inconsistent economic rights, or unresolved intercompany loans will not pass the due diligence stage. Restructuring must therefore address legal form, governance, capital structure and contractual obligations simultaneously.

This article covers the legal framework governing pre-IPO restructuring in Europe, the principal corporate tools available, the procedural steps and timelines, the role of jurisdiction selection, and the most frequent errors made by companies that attempt to self-manage the process.

The European legal environment for pre-IPO restructuring is shaped by several overlapping regulatory layers. At the EU level, the EU Prospectus Regulation sets the disclosure standard for securities offerings and admissions to trading. It requires that the prospectus contain a complete description of the issuer';s corporate structure, including all subsidiaries, intercompany arrangements and material contracts. Any restructuring completed within a defined look-back period - typically three years - must be disclosed and explained.

The EU Cross-Border Conversions, Mergers and Divisions Directive (Directive (EU) 2019/2121), transposed into national law across member states by the end of 2023, introduced harmonised rules for cross-border mergers, divisions and conversions. This directive is directly relevant to pre-IPO restructuring because it allows a company incorporated in one EU member state to convert into a legal form governed by another member state';s law without dissolution and re-incorporation. For a founder who built an operating company in Poland or Romania and now wants a Dutch or Luxembourg holding structure for the IPO, this is the primary legal mechanism.

At the national level, the Netherlands Civil Code (Burgerlijk Wetboek), particularly Book 2 governing legal persons, and the Luxembourg Law of 10 August 1915 on Commercial Companies (Loi du 10 août 1915 concernant les sociétés commerciales) are the two most frequently used frameworks for establishing the IPO holding entity. Both jurisdictions offer the Naamloze Vennootschap (NV) in the Netherlands and the Société Anonyme (SA) in Luxembourg as the standard listed company form.

The UK Listing Rules, maintained by the Financial Conduct Authority (FCA), remain relevant for companies targeting the London Stock Exchange after Brexit, but the regulatory divergence from the EU framework has grown. Companies choosing between Amsterdam Euronext, the Luxembourg Stock Exchange, Frankfurt';s regulated market or the London Stock Exchange must factor in the applicable national transposition of EU rules and, for London, the standalone UK prospectus regime.

Germany';s Aktiengesetz (AktG, Stock Corporation Act), particularly sections governing share capital, supervisory board composition and pre-emption rights, is relevant for companies targeting the Frankfurt Stock Exchange. The AktG imposes minimum share capital requirements for an Aktiengesellschaft (AG) and prescribes a two-tier board structure that differs materially from the one-tier board model available in the Netherlands and Luxembourg.

The choice of listing venue and holding jurisdiction is the first and most consequential decision in pre-IPO restructuring. It determines the applicable corporate law, the governance model required by the exchange, the tax treatment of dividends and capital gains, and the investor base accessible at launch.

The Netherlands has become the preferred European IPO jurisdiction for technology and growth companies over the past decade. The Dutch NV offers a flexible governance framework under Book 2 of the Burgerlijk Wetboek, including the ability to create a one-tier board, issue multiple share classes with differentiated voting rights, and implement loyalty share structures under the Dutch Act on Long-Term Shareholder Engagement (implementing Directive (EU) 2017/828). Amsterdam Euronext is the largest European exchange by market capitalisation for technology listings.

Luxembourg is preferred for investment fund structures, real estate vehicles and companies with complex cross-border ownership. The Luxembourg SA under the 1915 Law allows authorised capital structures, giving the board flexibility to issue new shares without a general meeting, subject to a five-year authorisation limit. The Luxembourg Stock Exchange operates two markets: the regulated Bourse de Luxembourg and the Euro MTF, the latter being a multilateral trading facility with lighter disclosure requirements suited to smaller issuers.

A common mistake made by founders from outside the EU is assuming that the holding company can remain in a non-EU jurisdiction - such as the British Virgin Islands or Cayman Islands - while listing on a European exchange. In practice, most European exchanges and institutional investors require the issuer to be incorporated in an EU or EEA jurisdiction, or at minimum in a jurisdiction with equivalent corporate governance standards. Maintaining an offshore holding structure through the IPO creates prospectus disclosure complications and often triggers additional regulatory scrutiny from the national competent authority.

The practical sequence for jurisdiction selection involves:

• Assessing the target investor base and their governance expectations
• Reviewing the tax treaty network of the candidate jurisdiction
• Confirming the availability of the required share class structure under local corporate law
• Verifying the exchange';s minimum free float and market capitalisation requirements
• Confirming that the chosen legal form satisfies the exchange';s eligibility criteria

To receive a checklist for pre-IPO jurisdiction selection and holding structure assessment in Europe, send a request to info@vlolawfirm.com

Once the target jurisdiction and legal form are confirmed, the restructuring itself proceeds through a defined set of corporate law tools. Each tool has specific conditions of applicability, procedural timelines and cost implications.

Cross-border conversion under Directive (EU) 2019/2121 allows an existing company to change its legal form and governing law without dissolution. The procedure requires a conversion plan approved by the management body, an independent expert report on the adequacy of the conversion terms, a creditor protection period of at least one month after publication of the conversion plan, and approval by the shareholders'; meeting. The total procedural timeline from plan publication to completion of registration in the destination jurisdiction typically runs between three and six months, depending on the efficiency of the registries involved and whether creditors raise objections.

The cost of a cross-border conversion includes notarial fees in both the origin and destination jurisdictions, registry fees, the independent expert';s fee and legal advisory costs. Legal fees for a straightforward conversion of a mid-size operating company typically start from the low tens of thousands of EUR and can reach six figures for complex structures with multiple subsidiaries.

Cross-border merger by absorption is used when the founder wants to consolidate multiple operating entities into a single holding company. The absorbing company acquires all assets and liabilities of the absorbed company by universal succession, and the absorbed company is dissolved without liquidation. Under the Directive, the merger plan must be published at least one month before the shareholders'; meeting, creditors have the right to seek adequate safeguards, and employees must be informed and consulted. The procedural timeline is similar to conversion: three to six months in straightforward cases.

A non-obvious risk in cross-border mergers is the treatment of intercompany loans at the time of merger. If the absorbed entity has outstanding loans from the absorbing entity, these are extinguished by confusion (merger of creditor and debtor in the same legal person) upon completion of the merger. This can have unintended tax consequences in the jurisdiction of the absorbed entity, particularly where the loan carried interest that was being deducted for local tax purposes.

Share capital reorganisation is almost always required before an IPO, regardless of whether a cross-border element is involved. The typical steps include:

• Converting existing shares into a single class of ordinary shares with equal voting rights, or establishing a defined dual-class structure with clear sunset provisions acceptable to institutional investors
• Eliminating or converting preference shares held by early-stage investors, often through negotiated redemption or conversion at an agreed ratio
• Implementing a share split to bring the nominal value per share into the range expected by retail investors on the target exchange
• Resolving any pre-emption rights that would prevent the company from issuing new shares to IPO investors

Under Dutch law, a share capital reorganisation requires a notarial deed of amendment of the articles of association, approved by a shareholders'; resolution. The notary must verify that the procedure complies with Book 2 of the Burgerlijk Wetboek. Under Luxembourg law, the equivalent procedure requires a notarial deed before a Luxembourg notary, with the amended articles published in the Recueil électronique des sociétés et associations (RESA).

Spin-off and division tools are used when the company needs to separate a non-core business line before the IPO. A partial division under Directive (EU) 2019/2121 allows a portion of the company';s assets and liabilities to be transferred to a newly formed entity, with shares in the new entity distributed to the existing shareholders. This is relevant when the IPO story needs to focus on a single business segment and the presence of unrelated activities would confuse investors or complicate the prospectus narrative.

Capital markets regulators and institutional investors apply governance standards that go beyond the minimum requirements of corporate law. Pre-IPO governance restructuring is therefore not merely a legal formality - it is a substantive redesign of decision-making authority.

The EU Shareholder Rights Directive II (Directive (EU) 2017/828), implemented across member states, requires listed companies to adopt policies on related-party transactions, remuneration and long-term shareholder engagement. Companies restructuring for an IPO must build these policies into their articles of association and internal regulations before the prospectus is filed, not after listing.

A one-tier board structure, available under Dutch law through the Wet bestuur en toezicht rechtspersonen (Act on Management and Supervision of Legal Persons), combines executive and non-executive directors in a single board. This model is familiar to US and UK institutional investors and is increasingly preferred for European technology IPOs. The German two-tier model, with a separate Vorstand (management board) and Aufsichtsrat (supervisory board) under the AktG, is mandatory for German AGs above certain size thresholds and is less flexible for founder-led companies.

Shareholder agreements entered into before the IPO must be reviewed and, in most cases, terminated or substantially amended. Lock-up provisions, drag-along and tag-along rights, and anti-dilution protections that are appropriate for a private company become problematic in a listed context. The prospectus must disclose all material shareholder agreements, and provisions that restrict the free transferability of shares or give certain shareholders disproportionate influence over the company';s management will attract scrutiny from the national competent authority.

A common mistake is leaving venture capital investor rights agreements in place without amendment until the prospectus drafting stage. At that point, renegotiating these agreements under time pressure - with underwriters and regulators already engaged - significantly increases legal costs and can delay the filing. The correct approach is to begin shareholder agreement review at least 12 to 18 months before the target listing date.

In practice, it is important to consider that founders seeking to retain control through dual-class share structures face different constraints depending on the listing venue. Amsterdam Euronext permits dual-class structures with loyalty shares under the Dutch loyalty dividend and loyalty voting frameworks. The Frankfurt Stock Exchange';s Prime Standard, by contrast, requires a single class of ordinary shares for inclusion in the DAX indices, which affects post-IPO liquidity and index eligibility.

To receive a checklist for pre-IPO governance restructuring and shareholder agreement review in Europe, send a request to info@vlolawfirm.com

The following scenarios illustrate how the legal tools described above apply in practice across different company profiles, dispute values and restructuring stages.

Scenario one: Eastern European technology company targeting Amsterdam Euronext

A software company incorporated as a Polish Spółka z ograniczoną odpowiedzialnością (Sp. z o.o., limited liability company) with subsidiaries in Romania and the Czech Republic seeks to list on Amsterdam Euronext. The company has three founders, two venture capital investors holding preference shares, and a complex intercompany loan structure used to fund subsidiary operations.

The restructuring path begins with incorporating a Dutch NV as the new holding company. The founders and investors then contribute their shares in the Polish operating company to the Dutch NV in exchange for NV shares, using a share-for-share exchange structured to qualify for rollover relief under the applicable tax treaties. The preference shares held by the venture capital investors are converted into ordinary NV shares at a negotiated ratio, with the investors receiving enhanced voting rights for a defined period under a loyalty share structure.

The intercompany loans between the Polish operating company and its Romanian and Czech subsidiaries are reviewed for transfer pricing compliance under the OECD Transfer Pricing Guidelines as implemented in each jurisdiction. Loans that do not carry arm';s length interest rates are amended before the restructuring is completed, to avoid adverse tax adjustments being flagged in the prospectus due diligence.

The total restructuring timeline for this scenario, from initial legal advice to completion of the Dutch NV structure, runs approximately 9 to 12 months. Legal fees across all jurisdictions involved typically start from the mid-five-figure EUR range and can reach six figures depending on the complexity of the intercompany arrangements and the number of jurisdictions requiring local counsel.

Scenario two: Luxembourg holding company seeking to list on the Frankfurt Stock Exchange

A private equity-backed industrial group with a Luxembourg SA holding company and operating subsidiaries in Germany and Austria seeks to list on the Frankfurt Stock Exchange';s regulated market. The PE sponsor holds a majority stake and intends to reduce its holding through the IPO.

The restructuring challenge here is primarily governance-related. The Frankfurt Stock Exchange';s Prime Standard requires compliance with the German Corporate Governance Code (Deutscher Corporate Governance Kodex), including recommendations on supervisory board independence and remuneration transparency. The Luxembourg SA';s one-tier board must be restructured to include independent non-executive directors meeting the Code';s independence criteria.

The PE sponsor';s shareholder agreement contains a drag-along provision and a right of first refusal that must be terminated before the prospectus is filed. The sponsor negotiates a lock-up agreement with the underwriters instead, committing to retain a defined percentage of shares for 180 days post-listing.

The Luxembourg SA does not need to be converted into a German AG for a Frankfurt listing - the Frankfurt Stock Exchange accepts foreign issuers incorporated in EU member states. However, the prospectus must include a comparative analysis of Luxembourg and German corporate law, explaining how the Luxembourg SA';s governance framework achieves equivalent investor protections to those required under the AktG.

Scenario three: UK-incorporated company restructuring for a dual listing in Amsterdam and London

A fintech company incorporated as a UK private limited company (Ltd) seeks a dual listing on Amsterdam Euronext and the London Stock Exchange. Post-Brexit, this requires compliance with both the EU Prospectus Regulation (for the Amsterdam listing) and the UK Prospectus Regulation (for the London listing).

The company uses a cross-border conversion under the UK Companies Act 2006 and the Dutch implementation of Directive (EU) 2019/2121 to re-domicile as a Dutch NV. The UK entity is converted into the Dutch NV, which then applies for admission to trading on both exchanges simultaneously. The dual prospectus is prepared in coordination with both the Autoriteit Financiële Markten (AFM, the Dutch financial markets authority) and the FCA, with the AFM acting as home member state regulator for the EU prospectus.

A non-obvious risk in dual listings is the divergence between EU and UK disclosure requirements for related-party transactions. The EU Market Abuse Regulation (Regulation (EU) 596/2014) and the UK MAR impose similar but not identical obligations, and the company must establish compliance procedures that satisfy both regimes simultaneously from the first day of trading.

Many founders underestimate the consequences of beginning the restructuring process too late. A company that approaches underwriters with an unresolved corporate structure faces a predictable sequence of problems.

First, the underwriters'; legal due diligence will identify structural issues that must be resolved before the prospectus can be filed. Each issue identified at this stage adds time and cost to the process, because the restructuring must now be completed under time pressure with multiple advisers already engaged and billing.

Second, the national competent authority reviewing the prospectus draft will raise comments on any restructuring completed within the look-back period. If the restructuring was completed hastily and without proper documentation, responding to these comments requires reconstructing the decision-making process and producing evidence of compliance with applicable corporate law requirements. This is significantly more expensive than doing the restructuring correctly in the first place.

Third, institutional investors conducting their own due diligence during the roadshow will ask detailed questions about the corporate history. A restructuring completed six months before the IPO, without a clear business rationale documented in board minutes and shareholder resolutions, raises governance concerns that can reduce demand for the offering.

The risk of inaction has a concrete time dimension. A company that delays restructuring by 12 months - for example, because the founders are focused on revenue growth and regard legal structuring as a secondary priority - will typically need to compress a 12-month restructuring process into six months when the market window opens. This compression increases legal costs by a factor of two to three, increases the risk of procedural errors, and reduces the quality of the governance documentation that will be scrutinised by regulators and investors.

A common mistake made by international founders is relying on the legal team that handled the company';s private funding rounds to manage the pre-IPO restructuring. Private equity and venture capital transaction lawyers are expert in their field, but pre-IPO restructuring requires specific expertise in capital markets regulation, cross-border corporate law and exchange listing rules. The cost of using a generalist team that learns on the job is typically measured in months of delay and six-figure legal fee overruns.

We can help build a strategy for pre-IPO restructuring that is sequenced correctly, documented to the standard required by European regulators, and completed within a timeline that preserves the market window. Contact info@vlolawfirm.com to discuss your specific situation.

What is the most significant legal risk in pre-IPO restructuring for a company with subsidiaries in multiple EU member states?

The most significant risk is the unintended triggering of tax liabilities during the restructuring itself. Cross-border mergers, conversions and share-for-share exchanges are generally structured to be tax-neutral under the EU Merger Directive (Council Directive 2009/133/EC), but this neutrality is conditional on meeting specific requirements in each member state involved. A step that qualifies for rollover relief in the Netherlands may not automatically qualify in Poland or Romania, and the failure to obtain advance tax rulings in each relevant jurisdiction before completing the restructuring can result in unexpected tax assessments that must then be disclosed in the prospectus. Engaging local tax counsel in each jurisdiction at the outset - not as an afterthought - is the only reliable way to manage this risk.

How long does pre-IPO restructuring typically take, and what does it cost?

For a company with a single operating entity and a straightforward ownership structure, the minimum realistic timeline from initial legal advice to a completed holding structure ready for prospectus drafting is six to nine months. For a company with multiple subsidiaries, complex intercompany arrangements and existing investor rights agreements requiring renegotiation, 12 to 18 months is a more realistic estimate. Legal fees vary significantly depending on the number of jurisdictions involved and the complexity of the structure, but founders should budget for costs starting from the low six-figure EUR range for a multi-jurisdictional restructuring. Attempting to compress the timeline by reducing the scope of legal advice is a false economy - errors identified during prospectus due diligence cost more to fix than they would have cost to prevent.

When should a company choose a cross-border conversion rather than establishing a new holding company through a share-for-share exchange?

A cross-border conversion is preferable when the operating company itself will be the listed entity - that is, when the company wants to change its legal form and governing law without creating a new holding layer. This avoids the complexity of a two-tier structure and simplifies the prospectus corporate structure section. A share-for-share exchange into a new holding company is preferable when the company wants to consolidate multiple entities under a single listed parent, or when the founders and investors need to reorganise their personal shareholdings as part of the restructuring. The choice also depends on the tax treatment in the relevant jurisdictions: in some cases, a conversion triggers stamp duties or transfer taxes that a share-for-share exchange does not, and vice versa. The decision should be made after a comparative tax and corporate law analysis covering all jurisdictions involved.

Pre-IPO restructuring in Europe is a multi-layered legal process that must be planned and executed well in advance of the target listing date. The choice of holding jurisdiction, the corporate tools used to reorganise the structure, the governance changes required by the listing venue, and the sequencing of each step all have direct consequences for the cost, timeline and success of the IPO. Companies that treat restructuring as a box-ticking exercise rather than a substantive legal project consistently encounter avoidable delays and costs at the prospectus stage.

Our law firm VLO Law Firms has experience supporting clients in Europe on pre-IPO restructuring and capital markets preparation matters. We can assist with holding company establishment, cross-border mergers and conversions, shareholder agreement review, governance restructuring and coordination with national competent authorities across EU jurisdictions. To receive a checklist for pre-IPO restructuring readiness in Europe, or to discuss your specific situation, contact: info@vlolawfirm.com