COMPANY RESTRUCTURINGS IN THE EU

A new amendment to the directive on cross-border conversions, mergers and divisions will adopt safeguards and provide harmonised procedures, especially for small and medium sized limited liability companies, in case of cross border restructurings in the European Union. The amended rules will empower minority shareholders, who, in case of disapproving a cross-border transformation or merger, will have the right to dispose their shares and receive adequate cash compensation. Such compensation will be examined by an independent expert, unless shareholders waive their right to receive such external assessment. Concerned creditors of the company have also been granted clearer and more reliable securities during cross-border transformations.

The new rules also ensure further simplifications, including the possibility of speeding up the procedure by waiving reports for members and employees in the event that shareholders agree, or if the company or any of its subsidiaries do not have any employees.

For safeguarding and authorisation purposes, Member States should appoint a competent authority to scrutinize the lawfulness of the cross-border transformation. Such authority must in particular ensure that the transformed company complies with the provisions of national law on the incorporation and registration of companies. Thus, the procedure will allow national authorities to block a cross-border operation when it is carried out in an abusive or fraudulent way.

An overall EU-wide regulatory framework is a must to ensure the competitiveness of European companies in today’s business environment, and the Directive’s amendment was unavoidable. If the new rules work in practice, both transparency and creditor securities will have a higher protection system in the European Union. Member States will have 36 months to adopt the measures necessary for the implementation.