Cross-Border Mergers Between Companies: Remaining Practical Problems After the 10th Council Directive of the European Union

Abstract

Although the arguments about the benefits of the adoption of a rule on cross-border mergers in general and of the provisions of the Cross-Border Mergers Directive in particular have been numerous, on the other side there is criticism with regard to the way the provisions of the Cross-Border Mergers Directive regulates several areas of the related merger transaction. Inconsistency and ambiguity arise in relation to several aspects of the provisions of the directive for reasons that may be related to the references made to the national legislation of the Member States and the absence of a satisfactory degree of harmonization between them.Unclear provisions relate to the scope of the Cross-Border Mergers Directive and to the categories of legal entities it applies to. The inclusion in the applicability of the directive of the limited liability companies and their definition related to both the limited liability status and the presence of a share capital is not clear as to the applicability of this directive to the limited liability entities without share capital. Furthermore, the inclusion of the securities together with the shares in the exchange ratio and in the consideration value with regard to the transfer of assets and liabilities from the dissolving company to the resulting one, rises uncertainty as to the classification of securities that may be involved in such exchange and consideration value. Moreover the conflict of laws between Member State represent a clear obstacle as to the cross-border merger transaction as a tool for company mobility. The incompatibility of the theories the Member States have embraced in order to apply their lex societatis and to allow the incorporation of the commercial legal entities, represents a problem for the company mobility and freedom of establishment achieved by means of the cross-border mergers.