The European Commission has launched a consultation on cross-border mergers and divisions to establish (i) the appropriateness of introducing amendments to improve the existing Directive 2005/56/EC on cross-border mergers (the Directive) and (ii) a possible initiative to provide a framework for cross-border divisions of companies.
The consultation follows the 2012 Action Plan on European company law and corporate governance, which included consultations and research in these areas. The Action Plan identified a number of problems/difficulties related to the implementation and functioning in practice of the Directive. For instance, the study identified procedural rules as being a source of uncertainty and complexity, in particular, rules on creditors’ protection, minority shareholders’ protection and the valuation of assets.
As the Commissions' press release explains, the relevant rules regarding divisions have been harmonised at national level for a number of years by Directive 82/891/EEC. However, to date, there is no EU level framework for cross-border divisions and companies wishing to undertake a cross-border division have to perform several operations, such as a national division and a cross-border merger or the creation of a subsidiary and a subsequent transfer of assets. It was felt that an initiative to provide a framework for cross-border divisions was required, possibly through an amendment of the cross-border mergers Directive, which would be well known to stakeholders and would provide a tested framework for cross-border restructurings. According to the Commission, the outcome of the 2012 consultation on the future of European company law showed that the majority of stakeholders would be interested in further harmonisation in the field of cross-border mergers and divisions.
In Ireland, the European Communities (Cross-Border Mergers) Regulations 2008 (S.I. No. 157 of 2008), which implemented the Cross Border Mergers Directive into domestic law, were signed on 27 May 2008. The Regulations apply to all public and private companies (other than companies limited by guarantee).
The Consultation runs until Monday 1 December 2014.