Brussels, 17/11/2003 (Agence Europe) - On Wednesday, the European Commission is expected to adopt, without discussion, a draft directive on cross-border mergers which proposes that rules for worker consultation as set out in the statute of the European Company should be applied to such mergers. According to the proposal, the rules that will apply during cross-border mergers will be those of the Member State where the new undertaking has its registered office. This principle is mainly valid for everything that concerns the protection of creditors and holders of loans and shareholders (except for those who own shares with special rights). On the other hand, the State of registration rule does not apply for some aspects linked to the cross-border nature of the operation, for example, for the name and office of registration of the company. The directive essentially aims at mergers between small and medium-sized companies which, not hoping to operate in all Member States, have no interest in adopting the statute of European Company. It covers all forms of firms, whether joint stock or limited liability. It should facilitate mergers between companies of Member States hitherto hampered by the many and varied national corporate laws. It should also prevent companies that merge to create a new undertaking to circumvent legislation of certain Member States that ban cross-border mergers (Germany, Netherlands, Austria, Ireland, Sweden, Denmark, Finland and Greece).
The Commission proposal will replace the draft 10th directive on corporate law which has been blocked since 1985 due to opposition between Parliament and Council on worker consultation. In order to unravel this knot, the draft text foresees applying the rules adopted in 2001 for the European Company. According to this proposal, in principle, the State of registration rules apply. Nonetheless, if companies that merge come both from Member States that do not provide for worker consultation rules and from Member States where this is compulsory, negotiation should be begun according to procedures set out in the European Company statute. Should negotiations fail, the legislation of the Member State with the most stringent provisions for consultation apply without fail.