Facilitating cross-border mergers of limited liability companies in the European Union

Abstract

One of the aims of the Tenth Company Directive (2005/56/EC) established by the European parliament and the Council of the European Union, is the facilitation of cross-border mergers of limited liability companies. Although the Directive is one of the latest developments in the area of cross-border restructuring, there have been several previous developments which paved the way for the said Directive. This study will analyse the developments which took place in the field of cross-border mergers, starting from their inception until the present day. More significantly, it will assess what main obstacles to cross-border mergers were present in the first unregulated state and will analyse how the different developments helped in solving these issues. The dialectic which was always present in this area, and which gave rise to the suppression of the enactment of the European Company Statue for a number of years, was the compromise to be achieved between protecting the persons who were the most susceptible for prejudice and removing the obstacles for companies to merge. Therefore, areas like employee participation, creditor protection and the protection of minority shareholders gave rise to several debates and a balance needed to be struck between the interests of such groups and the interests of the company. Overall, the author is of the opinion that the developments which took place in the last thirty years are a welcome contribution to the facilitation of cross-border mergers. It is also significant to note that despite aiding the cross-border restructuring process, they do not hinder any protection afforded to the vulnerable groups, including the creditors, shareholders and employees of the companies. Finally, this study outlines that despite the above developments, there are still some nebulous areas which need to be cleared out for the cross-border merger procedure to be more effective. Although theoretically the legal infrastructure is there, on a practical point of view there is still ample space for development with the aim of further harmonising national legislations on a European level.