11 EU Members Taken To Task Over Failure To Implement Cross-Border Merger Legislation

by Ulrika Lomas, for LawAndTax-News.com, Brussels

09 June 2008

The European Commission announced on Thursday that it has decided to pursue infringement procedures against 11 Member States over their failure to implement the Cross-Border Mergers Directive into national law.

The Commission stated that it would be sending formal requests to Belgium, Greece, Spain, France, Italy, Lithuania, Latvia, the Netherlands, Portugal, Sweden and Slovenia.

These formal requests take the form of reasoned opinions, the second stage of the infringement procedure laid down in Article 226 of the EC Treaty.

If there is no satisfactory reply within two months, the Commission may refer the matter to the European Court of Justice. The Directive should have been implemented before the end of 2007.

The Cross-Border Mergers Directive, adopted in 2005, aims at facilitating mergers of limited-liability companies on a cross-border basis. It sets up a simple framework drawing largely on national rules applicable to domestic mergers and avoids the winding up of the acquired company.

According to the EC, the Directive fills an important gap in company law, and is a key measure in the context of the Commission's Action Plan on Company Law and Corporate Governance in the EU.

The Directive covers all limited-liability companies, with the exception of undertakings for collective investment in transferable securities (UCITS). Additionally, there are special provisions for cooperative societies.

Under the adopted Directive, employee participation schemes apply to cross-border mergers where at least one of the merging companies already operates under such a scheme.

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