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News from Members Cross-Border Merger Directive, under scrutiny from the European Commission

Cross-Border Merger Directive, under scrutiny from the European Commission

by Voicu & Filipescu April 11, 2014

Website www.vf.ro

Lecture of the researchers hosted by Voicu & Filipescu, on the conclusions of the study on the Directive, ordered by the European Commission

In 2013, the European Commission ordered a study on the application of the Cross-Border Merger Directive, aiming to identify the impact, benefits and potential gaps of this normative act, with the ultimate purpose of establishing the need for its revision. Thomas Biermeyer, on behalf of the researchers contracted for this study, came to Bucharest to give a lecture on the general conclusions and to review the results concerning Romania.

In Romania, 13 cross-border mergers were closed between 2008 and 2012: two in which the acquiring company was a Romanian company and 11 in which the acquired company was a Romanian company.

The study reported some difficulties arising from the lack of harmonization, inconsistencies in relation to aspects regarding the participation of employees, issues resulting from creditor and minority protection, the absence of a standardized procedure between national registers, as well as delays generated by the need to obtain different prior authorizations, especially in the case of regulated domains.

The event was hosted by Voicu & Filipescu, as partner Georgiana Badescu contributed to the study, along with other Romanian lawyers and representatives of relevant authorities from our country.

In 2005, the Cross-Border Merger Directive (Directive 2005/56/EC of the European Parliament and of the Council) was adopted, and by 2007 the EU and EEA Member States needed to transpose such in their national laws. In 2013, the European Commission commissioned the services of Bech-Bruun, a Scandinavian law firm, and of Lexidale, an international consultancy firm, to conduct a study on the transposition of the Directive and its effects in practice.

Over 700 stakeholders from 30 countries (EU Member States of 2012 and the EEA countries) were invited to contribute with information for the conduct of the study, while other sources were represented by legal framework research and the review of certain public sources (authorities, publications, etc.).

General conclusions reveal that the Directive had a significant impact on the cross-border merger activity between the Member States, because it introduced a simplified procedure and it allowed for the reduction of costs and time spans, so that, as of its transposition and until the study’s publication, the number of cross-border merger transactions doubled.
The identified weaknesses, identified in all targeted states, include sub-harmonization of rules, which allows Member States to implement different laws on various subjects, as well as the protection of the minority shareholder, the possibility of appointing judicial experts, or the publication requirements. Difficulties were also encountered in the process of communication between the agents, as well as between national registers; it has been determined that there is no precise procedure for this process, which leads to uncertainties in relation to and higher costs for cross-border mergers.

The European Commission is currently reviewing the conclusions of the study, in order to establish whether or not a revision of the Directive is necessary.

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