Study on the Application of the Cross-Border Mergers Directive. Ius Commune Workshop, European Company Law Thomas Biermeyer, Maastricht University

Transcription

1 Study on the Application of the Cross-Border Mergers Directive Ius Commune Workshop, European Company Law Thomas Biermeyer, Maastricht University

2 Objectives To provide a description of the transposition of the Cross-Border Mergers Directive into the law of the EU and EEA Member States; To describe the scope of the application of the national rules on cross-border mergers; To map, compile, analyze the cross-border mergers carried out under the scope of the Cross-Border Mergers Directive; To identify (i) the reasons for using the Cross-Border Mergers Directive, (ii) its practical benefits, (iii) its impact on the cross-border mobility of European companies, (iv) the main problems related to the application of the Cross-Border Mergers Directive, and (v) potential gaps or inconsistencies in the European or national legislation that may reduce the attractiveness of cross-border mergers; To provide a comparison of the rules on cross-border mergers and the application thereof across Member States and the EEA countries, based on the information gathered about the national legislation, the examination of cross-border mergers cases, information about national practices, and the input from stakeholders and the information mentioned in point 4. 2

3 Methodology Summary Legal Quantitative Qualitative Quality Assurance and Safeguards: Academic Feedback Expert Review MS Review Private Databases Academic Literature In-house QA 3

4 Benefits 1. The Directive Ushered in a New Era of Cross Border Mergers Feedback from stakeholders, merger activity and legal-regulatory findings show that the Directive has had a profound impact on the cross border merger activity between Member States. Stakeholders are highly supportive of the new procedure set out by the directive, applaud its simplified procedure and general framework, and report lower costs and shorter times. Merger activity has doubled since the transposition and today, indicating that the new procedure has opened a bottleneck and dramatically improved cross border economic activity. Member states have largely implemented properly the directive, have supporting national authorities and have expanded the scope of the directive via gold-plating. Stakeholders consider the framework for cross-border seat transfers for non SE companies as highly advantageous. 4

5 Benefits of the Directive Direct Cost Savings through the CBMD Market Integeration Procedural Simplifcation Avoiding Unncessary SE Formation Cost Savings Lowering Agency Costs 5

6 Drivers 5. Companies Merge to Cut Costs and Find Optimal Business Environments Group reorganizations Business oriented mergers Cutting organizational costs Cutting on regulatory reporting costs Tax planning Choosing more efficient regulatory regimes 6

7 Difficulties 2. The Directive Faces Several Challenges Impeding its Full Effectiveness National Authorities are yet to develop proper standards and implement them relating to communications with stakeholders and each other in an effective, timely and reliable manner. Rules on creditor protection and minority protection pose problems due to differences in Member States such as the date of protection, duration, consequences and procedure. Employee participation under Article 16 CBMD is regarded as complex, time intensive and costly and shows inconsistencies in its mechanism Different timelines and requirements imposed by the Member State for the merger procedure lead to additional costs Differences in valuation and accounting rules lead to undesirable complexities The absence of a procedure for cross-border divisions has been stressed by many stakeholders 7

8 Trends 3. The Scope of the Directive is Undergoing a Rapid Expansion into New Areas Expanding the scope of the CBM law to include non-limited liability companies, cover optional provisions (e.g., cooperative) and expanding the geographical coverage (with non-eu companies) In accordance with the case-law of the Court of Justice of the European Union (SEVIC, Cartesio, Vale) Other forms of Gold Plating are common (e.g., CDTM, Expert Review) Expansion of the transposition to include cross border divisions The expansion, as supported also by the evidence, is suggestive of a positive reaction to the Directive. 8

9 Trends Overall extension of scope 9

10 Quantitative Trends The number of transactions in Europe decreased from 2008 to 2012, while the number of CBMs increased Number of CBMs increased by 173% -- from 132 CBMs in 2008 to 361 in 2012 This implies c. 30% annual average increase 10

11 Quantitative Trends 11

12 Quantitative Trends Area of business The prominent areas of business are: 4% 3% 1% Banking, Insurance and Investment Retail Holding company High tech and IT Banking, Insurance and Investment (36%) Retail (11%) 4% Energy Industry Holding Company (7%) 4% 36% Industrial Automobiles High Tech and IT (6%) 4% Telecommunication 5% Pharmaceuticals and Healthcare Chemical Industry Real estate 5% Food industry 6% 6% 7% 11% Utilities Construction industry Transportation Aviation 12

13 Thanks for your attention 13