[ParlTrack]

Proposal for a directive
Recital 1

(1) The Directive (EU) 2017/1132 of the European Parliament and of the Council41 regulates cross-border mergers of limited liability companies. These rules represent a significant milestone in improving the functioning of the Single Market for companies and firms and to exercise the freedom of establishment and, at the same time, offer appropriate and adequate protection to the parties concerned, such as workers, creditors and minority shareholders. However, evaluation of these rules shows that there is a need for modifications in cross-border merger rules. Furthermore, it is appropriate to provide for rules regulating cross-border conversions ~~and divisions~~. _________________ 41 Directive (EU) 2017/1132 of the European Parliament and of the Council of 14 June 2017 relating to certain aspects of company law (codification) (OJ L 169, 30.6.2017, p. 46).

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 6

(6) It is appropriate therefore to provide procedural and substantive rules on cross-border conversions which would ~~contribute to the abolition of restrictions on~~simplify freedom of establishment and ~~provide~~ at the same time ~~adequate and proportionate~~provide strong protection for stakeholders such as employees, creditors and minority shareholders.

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 7

(7) The right to convert an existing company formed in a Member State into a company governed by another Member State may in certain circumstances be used for abusive purposes such as for the circumvention of labour standards, social security payments, tax obligations, creditors', minority shareholders' rights or rules on employees participation. In order to combat such possible abuses, a general principle of Union law, Member States are required to ensure that companies do not use the cross-border conversion procedure in order to create purely artificial arrangements ~~aimed at obtaining undue tax advantages or at unduly prejudicing the legal or contractual rights of employees, creditors or members~~. Member States should be able to block the possibility of conversions and mergers leading to artificial arrangements resorted to by undertakings with the aim of evading future obligations arising from national rules on taxation and employee participation. In so far as it constitutes a derogation from a fundamental freedom, the fight against abuses must be interpreted strictly and be based on an individual assessment of all relevant circumstances. A procedural and substantive framework which describes the margin of discretion and allows for the diversity of approach by Member States whilst at the same time setting out the requirements to streamline the actions to be taken by national authorities to fight abuses in conformity with Union law should be laid down.

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 10

(10) To allow all stakeholders' legitimate interests to be taken into account in the procedure governing a cross-border conversion, the company should disclose the draft terms of the cross-border conversion containing the most important information about the proposed cross- border conversion, including the envisaged new company form, the instrument of constitution and the proposed timetable for the conversion. Members, creditors, trade unions and employees of the company carrying out the cross-border conversion should be notified in order that they can submit comments with regard to the proposed conversion.

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 13

(13) In order to assess the accuracy of the information contained in the draft terms of conversion and merger and in the reports addressed to the members and employees and to provide factual elements necessary to assess whether the proposed conversion constitutes an artificial arrangement, an independent expert report should be required to be prepared in order to assess the proposed cross-border conversion and merger. In order to ~~secur~~guarantee the independence of the expert, the expert should be appointed jointly by the competent authority, ~~following an application by the company~~at the request of the company and, if available, by the competent body of the organisation representing the company’s employees. In this context, the expert report should present all relevant information to enable the competent authority in the departure Member State to take an informed decision as to whether or not to issue the pre- conversion certificate. To this end, the expert should be able to obtain all the relevant company information and documents and carry out all necessary investigations in order to gather all the evidence required. He or she should also be required to receive and consider comments and opinions from financial authorities, social insurance bodies, the representatives of the employees of the company, or, where there are no such representatives, from the employees themselves and also from the creditors and members of the company. The expert should use information, in particular net turnover and profit or loss, number of employees and the composition of balance sheet collected by the company in view of the preparation of financial statements in accordance with Union law and the law of Member States. However, in order to protect any confidential information, including business secrets of the company, the critical parts of such information should ~~not form part of the expert’s final report which itself would b~~be redacted before being made publically available. as part of the final report.

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 14

(14) With a view to avoiding disproportionate costs and burdens for smaller companies carrying out the cross- border conversion, micro and small enterprises, as defined in the Commission Recommendation 2003/361/EC45, should be exempted from the requirement to produce an independent expert report. However, these companies can resort to an independent expert report to prevent litigation costs with creditors. _________________ 45Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises (OJ L 124, 20.5.2003, p. 36).deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 22

(22) The issue of the pre-conversion certificate by the departure Member State should be scrutinised to ensure the legality of the cross-border conversion of the company. The competent authority of the departure Member State should decide on the issue of the pre-conversion certificate within ~~one~~two months of the application by the company, unless it has serious concerns as to the existence of an artificial arrangement aimed at obtaining undue tax advantages or unduly prejudicing the legal or contractual rights of employees, creditors or members. In such a case, the competent authority should carry out an in- depth assessment. However, this in-depth assessment should not be carried out systematically, but it should be conducted on a case-by-case basis, where there are serious concerns as to the existence of an artificial arrangement. For their assessment, competent authorities should take into account at least a number of factors laid down in this Directive which however should be only considered as indicative factors in the overall assessment and not be considered in isolation. In order not to burden companies with an overly lengthy procedure, this in-depth assessment should in any event be concluded within ~~two~~four months of informing the company that the in-depth assessment will be carried out.

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 23

(23) After having received a pre- conversion certificate, and after verifying that the incorporation requirements in the destination Member State are fulfilled, the competent authorities of the destination Member State should register the company in the business register of that Member State. Only after this registration should the competent authority of the departure Member State strike the company off its own register. It should ~~not~~ be possible for the competent authority of the destination Member State to challenge the accuracy of the information provided by the pre- conversion certificate, particularly in order to avoid artificial arrangements. As a consequence of the cross-border conversion, the converted company should retain its legal personality, its assets and liabilities and all rights and obligations, including rights and obligations arising from contracts, acts or omissions.

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 26

(26) The evaluation of the implementation of the cross-border merger rules in Member States has shown that the number of cross-border mergers in the Union has significantly increased. However, this evaluation has also revealed certain shortcomings in relation specifically to creditor protection, protection of employees and shareholder protection as well as to the lack of simplified procedures which impede the full effectiveness and efficiency of those cross-border merger rules.

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 36

(36) The existing Union law does not provide for a legal framework for cross- border divisions of companies and firms, since Directive (EU) 2017/1132 only provides rules in Chapter III for domestic divisions of public limited companies.deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 37

(37) The European Parliament has called upon the Commission to adopt harmonised rules on cross-border divisions. This harmonised legal framework would further contribute to the removal of restrictions on the freedom of establishment whilst at the same time providing adequate protection for stakeholders such as employees, creditors and members.deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 38

(38) This directive lays down rules on cross-border divisions, both for partial and full divisions, but only through the formation of new companies. However, this directive does not provide a harmonised framework for cross-border divisions in which a company transfers assets and liabilities to more than one existing company as these instances had been viewed as being very complex, requiring the involvement of competent authorities from several Member States and entailing additional risks in terms of fraud and the circumvention of those rules.deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 38

(38) This directive lays down rules on cross-border divisions, both for partial and full divisions, but only through the formation of new companies. However, this directive does not provide a harmonised framework for cross-border divisions in which a company transfers assets and liabilities to more than one existing company as these instances had been viewed as being very complex, requiring the involvement of competent authorities from several Member States and entailing additional risks in terms of fraud and the circumvention of those rules.deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 39

(39) In case of a cross-border division involving newly formed recipient companies, those recipient companies, which are governed by the laws of Member States other than those of the Member State of the company being divided, should be required to comply with the incorporation requirements of those Member States. Such conditions include those related to the disqualification of directors.deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 40

(40) The right of companies to carry out a cross-border division may in certain circumstances be used for abusive purposes such as for the circumvention of labour standards, social security payments, tax obligations, creditors' or members' rights or rules on employees participation. In order to combat such abuses, as a general principle of Union law, Member States are required to ensure that companies do not use the cross- border division procedure in order to create artificial arrangements aimed at obtaining undue tax advantages or at unduly prejudicing the legal or contractual rights of employees, creditors or members. In so far as it constitutes a derogation from a fundamental freedom, the fight against abuses must be interpreted strictly and must be based on an individual assessment of all relevant circumstances. A procedural and substantive framework which describes the margin of discretion and allows for the diversity of approaches by Member States whilst at the same time setting out the requirements to streamline the actions to be taken by national authorities to fight abuses in conformity with Union law should be laid down.deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 41

(41) Given the complexity of cross- border divisions and the multitude of the interests concerned, it is appropriate to provide for an ex-ante control in order to create legal certainty. To that effect, a structured and multi-layered procedure should be set out whereby both the competent authorities of the Member State of the company being divided and of the Member State of the recipient companies ensure that a decision on the approval of a cross-border division is taken in a fair, objective and non- discriminatory manner on the basis of all relevant elements and by taking into account all legitimate public interests, in particular the protection of employees, shareholders and creditors.deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 42

(42) To allow all stakeholders' legitimate interests to be taken into account, the company being divided should disclose the draft terms of the division containing the most important information about the proposed cross- border division, including the envisaged the exchange ratio of securities or shares, the instruments of constitution of the recipient companies and the proposed timetable for the cross-border division. Members, creditors and employees of the company carrying out the cross-border division should be notified that they can submit comments with regard to the division.deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 43

(43) In order to provide information to its members, the company being divided should prepare a report. The report should explain and substantiate the legal and economic aspects of the proposed cross-border division, in particular explaining the implications of the cross- border division for members with regard to the future business of the company and the management organs’ strategic plan. It should also include explanations about the exchange ratio, where applicable, the criteria to determine the allocation of shares and potential remedies available to members, where they do not agree with the decision to carry out a cross-border division.deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 44

(44) In order to provide information its employees, the company being divided should prepare a report explaining the implications of the proposed cross-border division for employees. The report should explain in particular the implications of the proposed cross-border division on the safeguarding of the jobs of the employees, whether there would be any material change in the conditions of employment and the locations of the companies’ places of business, and how each of these factors would relate to any subsidiaries of the company. The provision of the report should be without prejudice to the applicable information and consultation proceedings instituted at national level following the implementation of Directives 2001/23/EC, 2002/14/EC or 2009/38/EC.deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 45

(45) In order to ensure the accuracy of the information contained in the draft terms of division and in the reports addressed to the members and employees and to provide factual elements necessary to assess whether the proposed division constitutes an artificial arrangement which could not be authorised, an independent expert report to assess the division plan should be required to be prepared. In order to secure the independence of the expert, the expert should be appointed by the competent authority, following an application by the company. In this context, the expert report should present all relevant information to enable the competent authority of the Member State of the company being divided to take an informed decision as to whether or not to issue the pre-division certificate To this end, the expert should be able to obtain all the relevant company information and documents and carry out all necessary investigations in order to gather all the evidence required. The expert should use information, in particular net turnover and profit or loss, number of employees and the composition of balance sheet collected by the company in view of the preparation of financial statements in accordance with Union law and the law of Member States. However, in order to protect any confidential information, including business secrets of the company, such information should not form part of the expert’s final report which itself would be publically available.deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 46

(46) With a view to avoiding disproportionate costs and burdens for smaller companies carrying out cross- border division, micro and small enterprises as defined in the Commission Recommendation 2003/361/EC of 6 May 2003 should be exempted from the requirement to have produce an independent expert.deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 47

(47) On the basis of the draft terms of the cross-border division and the reports, the general meeting of the members of the company being divided, should decide on whether or not to approve those draft terms. It is important that, the majority requirement for such a vote should be sufficiently high in order to ensure that the decision to divide is a collective one.deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 48

(48) It is appropriate that members who held voting rights and who did not vote to approve the draft terms of the cross- border division and those members without voting rights, who could not present their position, should be afforded the right to exit the company. Those members should be able to leave the company and receive cash compensation for their shares equivalent to the value of their shares. Furthermore, they should have a right to challenge the calculation and adequacy of that cash compensation offered and also the share exchange ratio where they wish to remain members of any of the recipient companies before a court. As part of those proceedings, the court should be able to order any company involved in the cross-border division either to pay additional cash compensation or to issue additional shares.deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 49

(49) The company being divided should propose in the draft terms adequate means to protect creditors in view of the cross-border division. In addition, in order to strengthen the protection of creditors in case of insolvency following the cross-border division, Member States should be allowed to require the company to make a declaration stating that it is not aware of any reason why the converted company should not be able to meet its liabilities. Member States should be able to make management organ personally liable for the accuracy of the statement. Since legal traditions vary among Member States with regard to solvency declarations and their possible consequences, it should be up to Member States to draw appropriate consequences of false or misleading declarations, including sanctions and liabilities in compliance with Union law.deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 50

(50) In order to guarantee the appropriate protection of creditors in cases where they are not satisfied with the protection offered by the company in the draft terms of the cross-border division, creditors who are prejudiced by the cross- border division may apply to the competent judicial or administrative authority of the Member State of the company being divided for the safeguards they consider adequate. In order to facilitate the assessment of prejudice, certain presumptions should be laid down whereby creditors would be deemed not to be prejudiced by a cross-border division where the risk of loss to a creditor is remote. A presumption should arise where an independent expert report concludes that there is no reasonable likelihood that the creditors would be prejudiced or where creditors are offered a right to payment against the company resulting from the division or against a third party guarantee of equivalent value to the creditor's original claim and which can be brought in the same jurisdiction jurisdiction as the original claim. The creditor protection provided for in this Directive should be without prejudice to national laws of the Member State of the company being divided concerning payment to public bodies, including taxation or social security contributions.deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 51

(51) To ensure the proper allocation of tasks among Member States and an efficient and effective ex-ante control of cross-border divisions, the competent authority of the Member State of the company being divided should have the power to issue a pre-division certificate without which the authorities of the Member States of the recipient companies should not be able to complete the cross- border-division procedure.deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 52

(52) The issue of the pre-division certificate by the Member State of the company being divided should be scrutinised to ensure the legality of the cross-border division. The competent authority should decide whether to issue a pre-division certificate within one month of the application by the company has been submitted, unless it has serious concerns as to the existence of an artificial arrangement aimed at obtaining undue tax advantages or at unduly prejudicing the legal or contractual rights of employees, creditors or members. In such a case, the competent authority should carry out an in-depth assessment. However, this in-depth assessment should not be carried out systematically but it should be conducted on a case-by-case basis where there are serious concerns as to the existence of an artificial arrangement. For their assessment, competent authorities should take into account at least a number of factors laid down in this Directive which however should be only considered as indicative factors in the overall assessment and not be considered in isolation. In order not to burden companies with an overly lengthy procedure, this in-depth assessment should in any event be concluded within two months informing the company that the in-depth assessment will be carried out.deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 53

(53) After having received a pre- division certificate, and after verifying that the incorporation requirements of the Member State of the recipient company or companies are fulfilled, the authorities of the Member States of the recipient companies should register the companies in the business registers of that Member State. Only after this registration should the competent authority of the Member State of the company being divided strike the company off its own register. The accuracy of the information provided by the pre-division certificate cannot be challenged by the competent authorities of the Member States of the recipient companies.deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 54

(54) As a consequence of the cross- border division, the assets and liabilities of the company being divided shall be transferred to the recipient companies in accordance with the allocation specified in the draft terms of division and the members of the company being divided shall become members of the recipient companies or remain members of the company being divided or shall become members of both.deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 55

(55) In order to ensure that employee participation is not unduly prejudiced as a result of the cross-border division where the company carrying out the cross- border division is operating under an employee participation system, the companies resulting from the division should be obliged to take a legal form allowing for the exercise of participation, including through the presence of representatives of the employees in the appropriate management or supervisory organs of the companies. Moreover, in such a case, a bona fide negotiation between the company and its employees should take place, along the lines of the procedure provided for in Directive 2001/86/EC, with a view to finding an amicable solution reconciling the right of the company to carry out a cross-border division with the employees'' rights of participation. As a result of those negotiations, either a bespoke and agreed solution or, in the absence of an agreement, the application of standard rules as set out in the Annex to Directive 2001/86/EC should apply mutatis mutandis. In order to protect either the agreed solution or the application of those standard rules, the company should not be able to remove the participation rights through carrying out subsequent domestic or cross-border conversions, mergers or divisions within 3 years.deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 56

(56) In order to prevent the circumvention of the employee participation rights by means of a cross- border division, the company carrying out a division which is registered in the Member State which provides for the employee participation rights, should not be able to perform a cross-border division without first entering into negotiations with its employees or their representatives when the average number of employees employed by that company is equivalent to four fifths of the national threshold for triggering such employee participation.deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 58

(58) The provisions of this Directive do not affect the legal or administrative provisions, including the enforcement of tax rules in cross-border conversions, and mergers ~~and divisions~~, of national law relating to the taxes of Member States, or ~~its~~their territorial ~~and~~or administrative subdivisions.

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Recital 60

(60) Since the objectives of this Directive, to facilitate and regulate cross- border conversions, and mergers ~~and divisions~~, cannot be sufficiently achieved by the Member States, but can be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary to achieve those objectives.

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 b – paragraph 1 – point 6 a (new)

(6a) ‘artificial arrangement’ means a company structure set up for abusive purposes, such as the circumvention of obligations arising from the legal and contractual rights of employees, creditors, or minority shareholders, the avoidance of rules on employee involvement, of social security payments, or of tax obligations due on profits generated, or a company structure which does not carry out a substantive or genuine economic activity supported by staff, equipment, assets and premises, such as, in particular, in the case of a ‘letterbox’ or ‘front’ subsidiary.

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 c – paragraph 2 – point e a (new)

(e a) there is a suspicion of welfare fraud or the infringement of workers’ rights;

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 c – paragraph 2 – point e b (new)

(eb) the company was involved in tax fraud, tax evasion or the setting up of harmful tax structures;

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 c – paragraph 3

3. Member States shall ensure that the competent authority of the departure Member State shall not authorise the cross- border conversion where it determines, after an examination of the specific case and having regard to all relevant facts and circumstances, that it constitutes an artificial arrangement ~~aimed at obtaining undue tax advantages or at unduly prejudicing the legal or contractual rights of employees, creditors or minority members~~. The company carrying out the cross-border conversion must demonstrate, on the basis of ascertainable objective factors, that it is actually established and pursues substantive and genuine economic activity in the destination Member State for an indefinite period.

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 d – paragraph 1 – point k a (new)

(ka) detailed information on the transfer of the central administration or principle place of business;

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 e – paragraph 4

~~4. However, that report shall not be required where all the members of the company carrying out the cross-border conversion have agreed to waive this requirement.~~deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 f – paragraph 3

3. The report referred to in paragraph 1 of this Article, shall be made available, at least electronically, to the trade unions and the representatives of the employees of the company carrying out the cross-border conversion or, where there are no such representatives, to the employees themselves not less than two months before the date of the general meeting referred to in Article 86i. That report shall also be made similarly available to the members of the company carrying out the cross-border conversion.

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 f – paragraph 5

5. However, where a company carrying out the cross-border conversion and its subsidiaries, if any, have no employees other than those who form part of the management or administrative organ, the report referred to in paragraph 1 shall not be required.deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 g – paragraph 1 – subparagraph 1

Member States shall ensure that the company carrying out the cross-border conversion and, where one exists, the competent organ of the company’s employee representation applies not less than ~~two~~four months before the date of the general meeting referred to in Article 86i to the competent authority designated in accordance with Article 86m(1), to appoint an expert to examine and assess the draft terms of the cross-border conversion and the reports referred to in Articles 86e and 86f for both form and content, subject to the proviso set out in paragraph 6 of this Article.

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 g – paragraph 3 – point a

(a) a detailed assessment of the ~~accuracy of the~~ reports and information submitted by the company carrying out the cross-border conversion in terms of both form and content;

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 g – paragraph 4

4. Member States shall ensure that the independent expert shall be entitled to obtain, from the company carrying out the cross-border conversion, all relevant information and documents and to carry out all necessary investigations to verify all elements of the draft terms or management reports. The expert shall also be ~~entitl~~obliged to receive and consider comments and opinions from ~~the~~financial authorities, social security programmes, trade unions, representatives of the employees of the company, or, where there are no such representatives, from the employees themselves and also from the creditors and members of the company. These shall be attached to the report as appendices.

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 g – paragraph 5

5. Member States shall ensure that information and opinions submitted to the independent expert can only be used for the purpose of drafting their report and that confidential information, including business secrets, shall not be disclosed. Where appropriate, the expert may submit a separate document containing any such confidential information to the competent authority, designated in accordance with Article 86m(1) and that separate document shall only be made available to the company carrying out the cross- border conversion and not be disclosed to any other paare treated as confidential. Business secrets in particular shall be redacted at key points in the reporty.

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 g – paragraph 6

~~6. Member States shall exempt micro and small enterprises as defined in Commission Recommendation 2003/361/EC (**) from the provisions of this Article.~~deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 g – paragraph 6 a (new)

6 a. For reasons of transparency, the report shall be made available to the public.

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 h – paragraph 4 – subparagraph 2

~~However, Member States may, in cases of genuine suspicion of fraud based on reasonable grounds, require a physical presence before a competent authority.~~(Does not affect the English version.)

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 l – paragraph 2

2. However, the rules in force concerning employee participation, if any, in the destination Member State shall not apply, where the company carrying out the conversion has, in the ~~six months~~year prior to the publication of the draft terms of the cross- border conversion as referred to in Article 86d of this Directive, an average number of employees equivalent to four fifths of the applicable threshold, laid down in the law of the departure Member State, which triggers the participation of employees within the meaning of point (k) of Article 2 of Directive 2001/86/EC, or where the same is true of the converted company within one year of the conversion, or where the national law of the destination Member State does not:

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 l – paragraph 2 – point b

(b) provide for employees of establishments and subsidiaries of the company resulting from the conversion that are situated in other Member States the same entitlement to exercise participation rights as is enjoyed by those employees employed in the destination Member State.

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 l – paragraph 3 – introductory part

3. In the cases referred to in paragraph 2 of this Article, the participation of employees in the converted company and their involvement in the definition of such rights shall be regulated by the Member States, mutatis mutandis and subject to paragraphs 4 to 7 of this Article, in accordance with the principles and procedures laid down in Article 12(1), (2), (3) and (4) of Regulation (EC) No 2157/2001 and the following provisions of Directive 2001/86/EC:

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 l – paragraph 4 – point a

(a) shall confer on the special negotiating body the right to decide, by a majority of two thirds of its members representing at least two thirds of the employees, not to open negotiations or to terminate negotiations already opened and to rely on the rules on participation in force in the destination Member State;deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 l – paragraph 4 – point b

(b) may, in the case where, following prior negotiations, standard rules for participation apply and notwithstanding such rules, decide to limit the proportion of employee representatives in the administrative organ of the converted company. However, if in the company carrying out the conversion employee representatives constituted at least one third of the administrative or supervisory board, the limitation may never result in a lower proportion of employee representatives in the administrative organ than one third;deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 l – paragraph 7

7. Where the converted company is operating under an employee participation system, that company shall be obliged to take measures to ensure that employees' participation rights are protected in the event of any subsequent cross-border or domestic merger, division or conversion for a period of ~~thre~~five years after the cross- border conversion has taken effect, by applying mutatis mutandis the rules laid down in paragraphs 1 to 6.

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 m – paragraph 3 – subparagraph 2

However, in cases of genuine suspicion of fraud based on reasonable grounds, Member States may require a physical presence before a competent authority where relevant information and documents are required to be submitted.(Does not affect the English version.)

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 m – paragraph 6

6. Member States shall ensure that competent authorities designated in accordance with paragraph 1 may consult other relevant authorities from both the departure Member State and the destination member state with competence in the different fields concerned by the cross-border conversion.

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 m – paragraph 7 – introductory part

7. Member States shall ensure that the assessment by the competent authority is carried out within ~~one~~two months of the date of receipt of the information concerning the approval of the conversion by the general meeting of the company. It shall have one of the following outcomes:

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 m – paragraph 7 – point c

(c) where the ~~competent authority has serious concerns~~re is reason to suspect that the cross-border conversion constitutes an artificial arrangement ~~referred to in Article 86c(3), it may~~, the authority should decide to carry out an in-depth assessment in accordance with Article 86n and shall inform the company about its decision to conduct such an assessment and of the subsequent outcome.

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3 Directive (EU) No 2017/1132

Member States shall ensure in order to assess whether the cross-border conversion constitutes an artificial arrangement ~~within the meaning of Article 86c(3)~~, that the competent authority of the departure Member State carries out an in-depth assessment of all relevant facts and circumstances and shall take into account at a minimum the following: the characteristics of the establishment in the destination Member State, including the intent, the sector, the investment, the net turnover and profit or loss, number of employees, the composition of the balance sheet, the tax residence, the assets and their location, the habitual place of work of the employees and of specific groups of employees, the place where social contributions are due and the commercial risks assumed by the converted company in the destination Member State and the departure Member State.

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 n – paragraph 2

2. Member States shall ensure that where the competent authority referred to in paragraph 1 decides to carry out an in- depth assessment, it is able to hear the company and all parties that have submitted observations pursuant Article 86h(1)(c) in accordance with national law. The competent authorities referred to in paragraph 1 may also hear any other interested third parties in accordance with national law. The competent authority shall take its final decision regarding the issue of the pre-conversion certificate within ~~two~~four months from the start of the in-depth assessment.

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 o – paragraph 2

2. Member States shall ensure that the decision to issue the pre-conversion certificate is sent to the authorities referred to in Article 86m(1) and to all parties that have submitted observations pursuant to Article 86h(1)(c) in accordance with national law and that the decisions to issue or refuse to issue a pre-conversion certificate are available through the system of interconnection of registers set up in accordance with Article 22.

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 3

Directive (EU) No 2017/1132
Article 86 p – paragraph 3 – subparagraph 2

However, in cases of genuine suspicion of fraud based on reasonable grounds, Member States may require a physical presence before a competent authority of a Member State where relevant information and documents are required to be submitted.(Does not affect the English version.)

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 4 – point b a (new)

Directive (EU) No 2017/1132
Article 119 – paragraph 1 – point 2 a (new)

(b a) in Article 119 the following definition is inserted: "(2a) ‘artificial arrangement’ means a company structure set up for abusive purposes, such as the circumvention of obligations arising from the legal and contractual rights of employees, creditors, or minority shareholders, the avoidance of rules on employee involvement, of social security payments, or of tax obligations due on profits generated, or a company structure which does not carry out a substantive or genuine economic activity supported by staff, equipment, assets and premises, such as, in particular, in the case of a ‘letterbox’ or ‘front’ subsidiary."

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 5

Directive (EU) No 2017/1132
Article 120 – paragraph 4 – point e a (new)

(e a) there is a suspicion of social fraud or infringements of workers’ rights;

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 9

Directive (EU) No 2017/1132
Article 123 – paragraph 4 – subparagraph 2

~~However, Member States may, in cases of genuine suspicion of fraud based on reasonable grounds, require a physical presence before a competent authority.~~(Does not affect the English version.)

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 9

Directive (EU) No 2017/1132
Article 124 – paragraph 3

3. The report shall be made available, at least electronically, to the members of each of the merging companies not less than one month before the date of the general meeting referred to in Article 126. The report shall also be made similarly available to the trade unions and the representatives of the employees of each of the merging companies, or where there are no such representatives, to the employees themselves. However, where the approval of the merger is not required by general meeting of the acquiring company in accordance with Article 126(3), the report shall be made available, at least one month before the date of the general meeting of the other merging company or companies.

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 9

Directive (EU) No 2017/1132
Article 124 – paragraph 4

~~4. However, the report referred to in paragraph 1, shall not be required where all the members of the merging companies have agreed to waive this requirement.~~deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 10

Directive (EU) No 2017/1132
Article 124 a – paragraph 4

4. Where the management or administrative organ of one or more of the merging companies receives~~, in good time,~~ an opinion from the representatives of their employees, or, where there are no such representatives, from the employees themselves, as provided for under national law, the members shall be informed thereof and that opinion shall be appended to the report.

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 11 – introductory part

(11) in Article 125~~(1), the following second subparagraph is added~~ is amended as follows:

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 11

Directive (EU) No 2017/1132
Article 125 – paragraph 1 – subparagraph 2

~~Member States shall take into account, in assessing the independence of the expert, the framework established in Articles 22 and 22b of Directive 2006/43/EC.~~deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 11 a (new)

Directive (EU) No 2017/1132
Article 125

Article 125 Independent expert report 1. An independent expert report intended for members and made available not less than one month before the date of the general meeting referred to in Article 126 shall be drawn up for each merging company. Depending on the law of each Member State, such experts may be natural persons or legal persons. 2. As an alternative to experts operating on behalf of each of the merging companies, one or more independent experts, appointed for that purpose at the joint request of the companies by a judicial or administrative authority in the Member State of one of the merging companies or of the company resulting from the cross-border merger or approved by such an authority, may examine the common draft terms of cross-border merger and draw up a single written report to all the members. 3. The expert report shall include at least the particulars provided for by Article 96(2). The experts shall be entitled to secure from each of the merging companies all information they consider necessary for the discharge of their duties. 4. Neither an examination of the common draft terms of cross-border merger by independent experts nor an expert report shall be required if all the members of each of the companies involved in the cross-border merger have so agreed. (https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32017L1132&from=EN)(11 a) Article 125 is replaced by the following: "Article 125 Independent expert report 1. Member States shall ensure that the company carrying out the merger and, where one exists, the competent organ of the company’s employee representation applies not less than four months before the date of the general meeting referred to in Article 126 to the competent authority designated in accordance with Article 127(1), to appoint an expert to examine and assess the draft terms of the cross- border merger and the reports referred to in Articles 124 and 124a for both form and content, subject to the proviso set out in paragraph 6 of this Article. The application for the appointment of an expert shall be accompanied by the following (a) the draft terms of the cross- border merger referred to in Article 122; the reports referred to in Articles 124 and 124a. 2. The competent authority shall appoint an independent expert within five working days of the application referred to in paragraph 1 and the receipt of the draft terms and reports. The expert shall be independent from the company carrying out the cross-border merger and may be a natural or a legal person depending upon the law of the departure Member State. Member States shall take into account, in assessing the independence of the expert, the framework established in Articles 22 and 22b of Directive 2006/43/EC. 3. The expert shall draw up a written report providing at least: (a) a detailed assessment of the correctness in form and content of the reports and information submitted by the company carrying out the cross-border merger; (b) a description of all factual elements necessary for the competent authority, designated in accordance with Article 127(1), to carry out an in-depth assessment to determine whether the intended cross-border conversion constitutes an artificial arrangement in accordance with Article 128, including at a minimum the following: the characteristics of the establishment in the destination Member State, including the intent, the sector, the investment, the net turnover and profit or loss, number of employees, the composition of the balance sheet, the tax residence, the assets and their location, the habitual place of work of the employees and of specific groups of employees, the place where social contributions are due and the commercial risks assumed by the converted company in the destination Member State and the departure Member State. 4. Member States shall ensure that the independent expert shall be entitled to obtain, from the company carrying out the cross-border merger, all relevant information and documents and to carry out all necessary investigations to verify all elements of the draft terms or management reports. The expert shall also be obliged to receive and consider comments and opinions from financial authorities, social security programmes, trade unions, representatives of the employees of the company, or, where there are no such representatives, from the employees themselves and also from the creditors and members of the company. These shall be attached to the report as appendices. 5. Member States shall ensure that information and opinions submitted to the independent expert are treated as confidential. Business secrets in particular shall be redacted at key points in the report. 6. For reasons of transparency, the report shall be made available to the public." Or. de

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 14 – point a

Directive (EU) No 2017/1132
Article 127 – paragraph 1 – subparagraph 3

However, in cases of genuine suspicion of fraud based on reasonable grounds, Member States may require a physical presence before a competent authority where relevant information and documents are required to be submitted.(Does not affect the English version.)

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 15 – point b

Directive (EU) No 2017/1132
Article 128 – paragraph 3 – subparagraph 2

However, Member States may take measures in cases of genuine suspicion of fraud based on reasonable grounds which could require a physical presence before a competent authority of a Member State in which the relevant information and documents are required to be submitted.(Does not affect the English version.)

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 18 – point -a (new)

Directive (EU) No 2017/1132
Article 133 – paragraph 2

2.(-a) paragraph 2 is replaced by the following: However, the rules in force concerning employee participation, if any, in the Member State where the company resulting from the cross-border merger has its registered office shall not apply, where at least one of the merging companies has, in the ~~six months~~year prior to the publication of the draft terms of the cross-border merger as referred to in Article 123, an average number of employees that exceeds ~~500 and is operating under an employe~~four fifths of the applicable threshold, laid down in the law of the departure Member State, which triggers the participation ~~system~~of employees within the meaning of point (k) of Article 2 of Directive 2001/86/EC, or where the same is true of the company resulting from the merger within one year, or where the national law applicable to the company resulting from the cross- border merger does not: (a) provide for at least the same level of employee participation as operated in the relevant merging companies, measured by reference to the proportion of employee representatives amongst the members of the administrative or supervisory organ or their committees or of the management group which covers the profit units of the company, subject to employee representation; or (b) provide for employees of establishments and subsidiaries of the company resulting from the cross-border merger that are situated in other Member States the same entitlement to exercise participation rights as is enjoyed by those employees employed in the Member State where the company resulting from the cross-border merger has its registered office. ~~(https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32017L1132&from=EN)~~Or. de

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 1 – paragraph 1 – point 20

Directive (EU) No 2017/1132
Title II – Chapter IV (new)

~~[...]~~deleted

2018/09/11
Committee: ECON

Martin SCHIRDEWAN

Proposal for a directive
Article 3 – paragraph 1

1. The Commission shall, no later than five years after [OP please insert the date of the end of the transposition period of this Directive] and subsequently every five years, carry out an evaluation of this Directive and present a Report on the findings to the European Parliament, the Council and the European Economic and Social Committee accompanied, where appropriate, by a legislative proposal. The evaluation shall in particular examine whether a positive impact has been achieved regarding eliminating artificial and/or harmful arrangements, and its impact on workers’ rights. The European Commission shall consult the European social partners. Member States shall provide the Commission with the information necessary for the preparation of that report, in particular by providing data on the number of cross-border conversions, mergers and divisions, their duration and related costs.

2018/09/11
Committee: ECON

76 Amendments of Martin SCHIRDEWAN related to 2018/0114(COD)

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