EU: Provisional Agreement on Cross-border Mergers, Demergers or Transfers

On 13 March 2019, the European Commission released a statement (19/1608) that the European Parliament and the Member States have reached a provisional agreement on new rules making it easier for companies to merge (fusion/fusie), demerge (scission/splitsing) or move within the Single Market (the "Agreement").

While the intention of the Agreement is to allow companies to be more competitive and easily expand across the European Union, it also provides strong safeguards for employees, minority shareholders and creditors, and aims to ensure that these cross-border operations are not misused for fraudulent or abusive purposes.

The Agreement is part of the Company Law Package of 25 April 2018 (Package), which proposes to revise and upgrade Directive 2017/1132 relating to certain aspects of company law (Directive), by introducing rules for digital tools and processes in company law and on cross-border conversions, mergers and divisions. This Package is currently being debated in the European Parliament and the Council.

The Directive codifies and consolidates a large part of EU company law, including:

• Sixth Council Directive 82/891/EEC of 17 December 1982 based on Article 54 (3) (g) of the Treaty, concerning the division of public limited liability companies;
• Eleventh Council Directive 89/666/EEC of 21 December 1989 concerning disclosure requirements in respect of branches opened in a Member State by certain types of company governed by the law of another State;
• Directive 2005/56/EC of the European Parliament and the Council of 26 October 2005 on cross-border mergers of limited liability companies;
• Directive 2009/101/EC of the European Parliament and the Council of 16 September 2009 on coordination of safeguards which, for the protection of the interests of members and third parties, are required by Member States of companies within the meaning of the second paragraph of Article 48 of the Treaty, with a view to making such safeguards equivalent;
• Directive 2011/35/EU of the European Parliament and the Council of 5 April 2011 concerning mergers of public limited liability companies; and
• Directive 2012/30/EU of the European Parliament and the Council of 25 October 2012 on coordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 54 of the Treaty on the Functioning of the European Union, with respect to the formation of public limited liability companies and the maintenance and alteration of their capital, with a view to making such safeguards equivalent.