Volume 16, Issue 1-2

In April 2018, the EU Commission presented a Proposal of Directive -amending Directive 2017 / 1132- on cross-border conversions, mergers and divisions (“The Proposal”). The Proposal lays down common rules and procedures at the EU level on how a company can move from a Member State to another Member State, merge or divide into two or more new companies across borders. This paper addresses this Proposal focusing mainly on the rules on cross-border conversions. After a brief introduction, Section 2 describes the background of the Proposal and analyses some general questions. Sections 3 through 6 examine the different phases in which a cross-border conversion is structured, with particular attention to the safeguards laid down by the Proposal aimed at the protection of minority shareholders, creditors and employees. Finally, Sections 7 and 8 provide a general assessment of the text and a series of conclusions.

The Mobility Package currently under discussion in the Council will constitute a major breakthrough for cross-border transactions if finally adopted. Although its focus is on enabling companies to make use of the freedom of establishment, some of its core rules address the protection of creditors and minority shareholders. Both groups can be adversely affected by being transferred across borders; a coherent, harmonised regulation of both issues is crucial for ensuring a largely frictionless enforcement of the different legal regimes applicable to the company or companies affected by such a cross-border transaction. This article critically analyses the proposed regulation against this background. It takes into account the developments until the end of 2018.

In April 2018, the European Commission presented a proposal for a Directive amending Directive 2017 / 1132 as regards cross-border conversions, mergers and divisions. This article discusses the proposed provisions to protect the interests of employees in a cross-border operation. Their position would be strengthened since employee representatives are granted information and consultation rights. As to the protection of existing board level employee representation rights, the Proposal follows the EU legal framework on the involvement of employees, consisting of a negotiation process between representatives of the employees and the management. As Standard Rules apply if no agreement can be reached, negotiations take place with the law as a sentinel. Practice has shown that this complicated legal framework is effective in protecting existing employee participation rights. The Proposal shows that in 2019, this carefully vetted political compromise leaves EU legislators little room to manoeuvre by simplifying the framework or strengthening the position of employees.

Digitalization revolutionizes all legal areas, including corporate law. The article deals with different impacts of digitalization on communication schemes in corporations, such as virtual general assemblies or communication patterns in board of directors, also encompassing communication with third parties, namely investors. The legal framework for these communication patterns refer not only to corporate but also to media regulations, data protections, as well as capital market law. Digitalization also has an impact on liability of directors: As Big Data and new algorithms improve the information base for decision making of directors they are at the same time obliged to make use of it. On the other hand, IT-security has become one of the main tasks for directors as digitalization of all work flows in enterprises requires necessary IT-security standards in order to avoid existential risks in case of attacks. Furthermore, Blockchain as a new technology enables the secure identification of all kind of transactions, including automatized contracts (so-called smart contracts) which could enhance procedures in corporations. New problems arise concerning the use of Blockchain as an investment form such as DAO Ethereum. Finally, the phenomenon of close cooperation between different partners by using digital work flows and semi-intelligent agents (so-called industry 4.0) is discussed.

The Commission’s Proposal 2018 / 0113 aims to promote the use of digital tools and procedures in company law. To this effect it introduces a compulsory procedure for the online incorporation of companies. The key principle of the proposal is that the incorporation can be done without the physical presence or the presentation of original documents. Member states must admit electronic identification means but can establish additional requirements to ensure the identity and capacity of the applicants and the compliance with national law, including the involvement of notaries. This study examines how this might be done in practice and how it might contribute to the security of transactions. As the proposal also provides for online filing of other documents and for the registration and filing or branches, we interpret that the same procedure should be applied to these transactions. The proposal also provides for an extension of the information of companies that has to be freely accessible in Commercial Registers. This is extremely useful for the internal market, so the proposal should guarantee that this information is reliable and easily proved by the applicant.

Currently, the Council of the European Union is negotiating the European Commission’s recent proposal on cross-border mobility. This paper provides an overall assessment based on the proposal’s central pillars: freedom of establishment and protection of the interests of creditors, shareholders, and employees. The proposed directive meets a real necessity for regulation on a European level and pursues an ambitious agenda. While the general approach is excellent, there is room for improvement on some issues of importance.

On 25 April 2015, the European Commission, as a part of its Company Law Package, presented a proposal for amending the Company Law Directive (CLD) as regards cross-border conversions, mergers and divisions (Mobility Directive Draft – MobilD-D). This article critically analyses the accomplishments and deficits of this proposal.