Mobility Directive expected to facilitate reorganization of companies across borders within the EU

Mobility Directive expected to facilitate reorganization of companies across borders within the EU

Mobility Directive expected to facilitate reorganization of companies across borders within the EU

The EU”s so-called “Mobility Directive” creates a European legal framework for transnational reorganizations of companies, including those involving cross-border conversions, mergers, and divisions.

With the Mobility Directive having entered into force on January 1 of 2020 and the deadline for its transposition into national law set at January 31, 2023, we at the commercial law firm MTR Rechtsanw?lte can report that company law is becoming more European.

Germany”s Federal Ministry of Justice (BMJ) has now submitted a draft bill for implementing the provisions of the EU Directive. The legislation also includes provisions that will make it easier to convert companies within Germany.

The bill seeks to provide legal certainty by introducing a procedure that is compatible across Europe for cross-border mergers, divisions, and changes in legal form for stock corporations, commercial partnerships limited by shares, and private limited companies, with this facilitating digital communication between the respective commercial registers.

Additionally, the rights of majority shareholders in connection with both cross-border and domestic conversions are to be standardized, and the unequal treatment of minority shareholders of the companies involved is to be ended. Appraisal proceedings shall be made available to minority shareholders going forward.

Stock corporations shall also be able to compensate for the necessary adjustment of the value ratios of the companies involved by issuing additional shares. The aim of the regulation is to preserve liquidity and facilitate investments in the course of restructuring.

Furthermore, the creditors of a company are to be protected more efficiently in the context of conversion procedures. For instance, it will not be possible to register conversion measures if creditors claim that they have not been adequately protected. Employees of the companies involved are to be given their own specific rights to obtain comprehensive information at an early stage in connection with pending conversions so that they can exercise their rights effectively.

The EU Mobility Directive provides for the supplementation and optimization of the existing regulations on cross-border mergers. In addition, a legally secure framework is to be created for cross-border divisions and relocations of registered offices. The aim of the Directive is to promote the mobility of corporations within the European Union and to reinforce their freedom of establishment, which has to date been hampered by various national regulations of the member states.

Lawyers with experience in the field of company law can advise on conversions, mergers, and divisions.

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