Consultation EU-Directive cross-border mergers, conversions and demergers

On 7 February 2022, a legislative proposal was published to implement the European Directive on cross-border mergers, conversions and demergers. In practice, CMS is frequently involved in many cross-border mergers, conversions and demergers and has therefore viewed the proposal with great interest to uniformly regulate these cross-border transactions. This proposal deals with the cross-border mergers, conversions and demergers of limited liability companies. Currently, the Netherlands only has statutory provisions for cross-border mergers, but not yet for cross-border conversions and demergers. There will be a new Section 6 of Title 7 introduced in Book 2 of the Dutch Civil Code containing special provisions for cross-border divisions. In addition, a new Title 7A will be introduced in which the cross-border conversion of limited liability companies will be regulated. Various current provisions of Book 2 of the Dutch Civil Code regarding the cross-border merger will also be amended. The aim is to create harmonised legislation for cross-border mergers, conversions and demergers.

Among other things, the Directive provides for a harmonised regime for the protection of shareholders, creditors and employees. In the case of cross-border mergers, the protection of shareholders and creditors that is currently in force will be expanded and the legal co-determination rights of employees will be better protected. For the demerger and conversion, these safeguards will be included in the new Section 6 and Title 7A. In addition, on the basis of the Directive, an authority must be designated to assess whether there is any malpractice or other fraudulent intent before the cross-border transaction can go through, the so-called 'fraud test'. In the proposal, this fraud test is placed in the hands of the civil-law notary because, according to the legislator, this is in line with the current role of the civil-law notary as gatekeeper as provided for in the Civil-Law Notaries Act (Wna). 

Bob van Zijl, Britt Straat and Martijn van der Bie responded on behalf of CMS to the consultation document on the proposal concerning cross-border mergers, conversions and divisions of limited liability companies. They have commented on a number of articles of the legislative proposal. Their reaction in Dutch may be found here.

The Netherlands must implement the Directive into national legislation before 31 January 2023.