Company restructuring: new directive to facilitate cross-border mergers and divisions of EU companies approved

By: Estela Martín

Company restructuring. The EU is removing unjustified obstacles to the freedom of establishment of companies in the single market.

Following an agreement with the European Parliament, the European Council today adopted a Directive facilitating cross-border transformations, mergers and divisions of EU companies.

Comprehensive procedures

The new rules introduce comprehensive procedures for cross-border conversions and divisions and provide for additional rules for cross-border mergers of limited liability companies based in an EU member state. They also provide for further simplifications that will apply to all three operations.

These include the possibility of accelerating the procedure by waiving the report to members and employees if the shareholders agree or if the company or any of its subsidiaries has no employees.

The directive establishes procedures to verify the legality of cross-border transactions under the relevant national law and introduces a mandatory monitoring procedure to combat abusive practices.

The procedure will allow national authorities to block a cross-border transaction if it is carried out for abusive or fraudulent purposes, such as to escape or circumvent national or Union law or criminal purposes.

The agreed text provides for similar rules concerning employee participation rights in cross-border transformations, mergers and divisions. It also ensures that employees are adequately informed and consulted on the expected impact of the operation.

The rights of minority shareholders and those without voting rights will be further protected. At the same time, creditors of the company concerned are given clearer and more reliable guarantees.

Finally, the directive encourages the use of digital tools throughout the cross-border transaction process. For example, it will be possible to complete formalities such as issuing the pre-trade certificate online. All relevant information will be exchanged through business registers, which are digitally interconnected.



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