European Union to facilitate cross-border mobility of companies

Romania’s EU Council Presidency has reached a provisional agreement with the European Parliament on 13 March on directive that facilitates EU companies’ cross-border conversions, mergers and divisions. On 27 March, Member States’ Ambassadors (COREPER) endorsed this important compromise reached by Romanian Presidency through Ministry of Justice team.

Directive is one of the two files of Company Law Package introduced as part of Commission’s Single Market Strategy and proposed by European Commission in April 2018. On the other file - Digitalization processes and digital tools throughout a company’s lifecycle - co-legislators reached a provisional agreement on 4 February.

Company Law Package has represented a priority for 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, legal framework being adapted to economic and social realities.

Compromise text introduced a mandatory anti-abuse assessment in a way that the competent authority from departure Member State, after examining completion of procedures and formalities and all relevant information, will not issue pre-operation certificate if the cross border conversion, merger or division is unlawful and was designed for fraudulent purposes.

Romanian Minister of Justice, University Professor Tudorel Toader: “Business community and European Court of Justice have increasingly highlighted the need for harmonized rules on transfer of seat of 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 new directive ensures its effectiveness while protecting against the risk of abuse in the exercise of this right”.

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, directive encourages use of digital tools throughout cross border operation. All necessary formalities, such as issuance of pre-operation certificate, may be completed online. Exchange of relevant information should be done via Business Registers Interconnection System (BRIS).

Source:Romania2019.eu