Cross-Border Transactions Within The EU: Towards Harmonized Procedures And Enhanced Protection Of Stakeholders

Author:Mr Chems Idrissi
Profession:Soulier Avocats

Published on April 25, 2018, Proposal for a Directive of the European Parliament and of the Council amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions has the objective to "provide specific and comprehensive procedures for cross-border conversions, divisions and mergers to foster cross-border mobility in the EU while, at the same time, offering company stakeholders [i.e. employees, creditors and shareholders] adequate protection in order to safeguard the fairness of the Single Market."

This Article provides an overview of the contemplated procedures.

Cross-border conversions (transfers of registered office) In line with the so-called Polbud judgment1, the Proposal aims at opening up cross-border conversions to Small- and Mid-sized Businesses (SMBs), while retaining their legal personality and introducing a harmonized procedure that protects the rights of the employees, creditors and shareholders of the relevant companies:

First step: Preparation of the draft terms of the cross-border conversion and drawing-up of two reports addressed to shareholders and employees. In medium-size and large companies these documents would be submitted for verification to an independent expert. The draft terms of the cross-border conversion and the two reports would be made publicly available. Second step: General meeting of the company in order to launch the cross-border conversion process. The decision of the general meeting would then be submitted to the competent national authority of the Member State of departure which, after a first legality check2, would decide whether to issue a pre-conversion certificate or not. Third step: Transmission of the issued pre-conversion certificate to the competent authority of the Member State of destination for a second legality check. Following the aforementioned checks, the cross-border conversion would then become legally effective from the date of registration of the converted company in the Member State of destination.

Cross-border mergers The Proposal aims at remedying the shortcomings of the current rules derived from the 2005 Directive on cross-border mergers3 through (i) the harmonization of the rules governing the protection of employees, creditors and shareholders, and (ii) the introduction of simplified procedures:

For employees: Provision of enhanced information on the impact of the contemplated merger. For creditors: Right to apply to the competent...

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