Corporate Law in Europe – new opportunities for cross border reorganisation projects

With the Directive (EU) 2019/2121 of the European Parliament and of the Council of 27 November 2019 (known as the Mobility Directive) amending Directive (EU) 2017/1132, the European legislator has created a uniform EU-wide legal framework for cross-border transformation projects for the first time. The regulations on cross-border mergers, which already existed in isolated cases in the past, are to be harmonized by this and cross-border changes of legal form as well as demergers (via new formation) are to be subject to a statutory regulation for the first time. Cross-border transformation measures will thus gain considerably in implementation efficiency and security.

 

According to Article 3 of the Mobility Directive, the implementation of the European legal requirements had to take place in the individual member states by January 31, 2023. While the German legislator was late in fulfilling this obligation by enacting the Act on the Implementation of the Reorganization Directive (UmRUG) with effect from March 1, 2023, the transposition of the Directive into the respective national law has not yet taken place in a large number of EU member states.

 

As long as and to the extent that the Directive has not (yet) been transposed into the respective national law in the respective Member States, cross-border transformation transactions, in particular change of legal form and demerger transactions, can in principle only be carried out on the part of the foreign company involved on the basis of and in compliance with the case law of the ECJ on the freedom of establishment that has been handed down to date.

 

Whoever wishes to achieve a legally secure result comparable to the cross-border demerger in economic and/or corporate law terms, is referred to the more cost-intensive alternative structuring measures which have already been used in practice in the past in case constellations involving countries which are in default with regard to the implementation of the Directive. Further developments currently remain to be seen.

 

The following presentation contains an overview of the status of the implementation of the Directive in the respective Member States as well as information on selected issues relating to conversion law.

Directive EU 2019/2121 on cross-border transactions in the European Union has not currently been implemented. A law dated 9 March 2023 (L. nº 2023-171) authorized the French government to implement the provisions of Directive EU 2019/2121 by regulation by June 9, 2023. In this context, France was warned by the European Commission on March 27, 2023, for non-transposition.

 

Initial date 31 January 2023, current status – amendments to the respective laws have been submitted to the Saeima (the Latvian legislature) for a third (final) reading, but no date has been set.

 

The Lithuanian Law on the cross-border merger of Limited Liability Companies has been adopted by the Lithuanian Parliament on 6 April 2023. It has now been forwarded to the President for further review, signature and announcement. The President will either provide comments or sign and announce the Law within coming weeks. The entry into force is scheduled for 31 August 2023.

 

The law is at the draft stage, which means it is being consulted on and has not yet reached parliament. When it comes to implementation, the deadlines have all passed, The draft states that the regulations should come into force on 31 January 2023. 

 

Portugal has not yet transposed Directive (UE) 2019/2121, and no proposal or deadline has been submitted.

 

The directive on cross-border conversions has not yet been transposed in Slovakia. It was submitted to the departments for comments on 13 January 2023. This should be completed on 13 February 2023, and it should enter into force on 1 June 2023.