CROSS-BORDER MERGER DIRECTIVE ADOPTED BY THE EU COUNCIL
The directive deals with mergers in the European Community only
On 20 September 2005, the Council of the European Union has adopted a directive on cross-border mergers of companies aiming at facilitating the carrying-out of cross-border mergers between various types of limited liability companies governed by the laws of different EU Member States. This directive will facilitate the cooperation and consolidation between companies from different Member States by reducing the difficulties encountered, at the legislative and administrative levels, by cross-border mergers of companies in the Community.
According to a press release some of the key features of the agreed text are:
– The directive will apply to mergers of limited liability companies, formed in accordance with the law of a Member State and having their registered office, central administration or principal place of business within the EU Community
– Member States will have the possibility to adopt specific provisions regarding the protection of minority shareholders of a merging company, who have opposed the cross-border merger
– Cross-border mergers must be approved by the general meeting of each of the companies involved
– The monitoring of the completion and legality of the decision-making process in each merging company must be carried out by the national authority having jurisdiction over each of those companies, whereas monitoring of the completion and legality of the cross-border merger should be carried out by the national authority having jurisdiction over the company resulting from the cross-border merger.
– On the key issue of employee participation rights, the general principle is that the national law governing the company resulting from the cross-border merger will apply.
The EU Member States shall adapt national laws to comply with the provisions of the new directive within a period of two years.
The Netherlands Antilles are not part of the EU. This directive is therefore of no relevance to it. Under Netherlands Antilles law, a cross-border legal merger is only possible if the acquiring entity is a Netherlands Antilles legal entity and the law governing the foreign legal entity does not prohibit the merger. Hopefully, the directive is only the first step towards cross-border mergers between two countries whether in or outside the European Community.
Karel Frielink
Attorney (Lawyer) / Partner
