The Romanian Presidency has reached a provisional agreement with the European Parliament on 13 March on the directive that facilitates EU companies’ cross-border conversions, mergers and divisions. On 27 March Member States’ ambassadors, sitting in Coreper, endorsed this important compromise reached by the Romanian Presidency, through the Ministry of Justice team.
This Directive is one of the two files of the Company Law package introduced as part of the Commission’s Single Market Strategy and proposed by the European Commission in April 2018. On the other file on Digitalization processes and digital tools throughout a company’s lifecycle, the co-legislators reached a provisional agreement on 4 February.
The Company Law Package represented a priority for the Romanian Ministry of Justice, which was responsible for coordinating the activity on both files, being convinced that the two instruments would achieve better results by working together. For the first time in European Union law, rules are provided for cross border conversions and divisions and the regime of cross border merger is improved, the legal framework being adapted to the economic and social realities.
The compromise text introduced a mandatory anti-abuse assessment in a way that the competent authority from the departure Member State, after examining the completion of procedures and formalities and all relevant information, shall not issue the pre-operation certificate if the cross border conversion, merger or division is unlawful and it was designed for fraudulent purposes.
“The business community and the European Court of Justice have increasingly highlighted the need for harmonized rules on the transfer of seat of the companies within the internal market – simple, unitary, modern rules offering adequate protection for the legitimate interests of shareholders, creditors and employees. Mobility is, therefore, a right of honest entrepreneurs and the new directive ensures its effectiveness while protecting against the risk of abuse in the exercise of this right”, declared the Minister of Justice, University Professor Dr. Tudorel Toader.
The proposed directive provides additional protection to employees, ensuring a more transparent approach and effective information to them about the planned cross-border conversion, merger or division and stronger safeguards for creditors and minority shareholders. Also, the directive encourages the use of digital tools throughout the cross border operation. All necessary formalities, such as the issuance of the pre-operation certificate, may be completed in their entirety online. The exchange of relevant information should be done via the system of interconnection of business registers (BRIS).