Tag Archives: Public limited company

Companies: protecting the interests of members and third parties

Companies: protecting the interests of members and third parties

Outline of the Community (European Union) legislation about Companies: protecting the interests of members and third parties

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Businesses in the internal market > Company law

Companies: protecting the interests of members and third parties

Document or Iniciative

Directive 2009/101/EC of the European Parliament and of the Council of 16 September 2009 on coordination of safeguards which, for the protection of the interests of members and third parties, are required by Member States of companies within the meaning of the second paragraph of Article 48 of the Treaty, with a view to making such safeguards equivalent (Text with EEA relevance) [See amending act(s)].

Summary

This Directive aims to frame the guarantees required of companies in order to protect the interests of members and third parties.

Types of companies concerned

This Directive applies to:

  • companies incorporated with limited liability.

Disclosure as regards companies

Companies must disclose certain documents and information relating in particular to:

  • the instrument of constitution and the statutes, and their amendments;
  • the appointment, termination of office and particulars of the persons who have the power to represent the company in legal proceedings and who take part in the administration, supervision or control of the company;
  • the amount of the capital subscribed;
  • any change of the registered office;
  • the winding-up of the company;
  • the liquidation of the company.

All of these disclosed items shall be recorded in a file opened in a central register, commercial register or companies register. The file may be available in electronic format or on paper.

Any change must be recorded in the central register and made public within 21 days after the complete transmission of information.

Companies must have a unique identifier for communication between registers. This unique identifier includes the elements which shall enable the following to be identified:

  • the Member State of the register;
  • the domestic register of origin;
  • the company number in that register.

Member States shall be responsible for the publication of the above information in the national gazette or other means. They shall take the necessary measures to avoid any discrepancy between the pieces of information provided and shall ensure that this information is kept up-to-date. This information must also be made available on the European e-Justice portal in all the official languages of the EU, and also in electronic format using the system of interconnection of central registers (available from 2014).

The system of interconnection of registers shall provide access free-of-charge to the following information:

  • the name and legal form of the company;
  • the registered office of the company and the Member State where it is registered;
  • the registration number of the company.

The Commission shall provide a search service on companies registered in the Member States. In addition it shall introduce a central European portal which aims to ensure the inter-operability of the registers.

The processing of personal data is subject to the provisions of the Directive on the protection of personal data.

Validity of obligations entered into by the company

If action has been carried out on behalf of a company being formed before it has acquired legal personality, the persons who acted shall be liable therefor and not the company itself.

Once a company has acquired legal personality, acts performed by the organs of the company shall be binding upon it in respect of third parties, including such acts that go beyond the limitations of the objects of the company, except where these acts exceed the powers conferred upon those organs.

Even if the formalities of disclosure concerning the persons who are authorised to represent the company have been completed, any irregularity in their appointment shall not be relied upon against third parties. The company may only rely on such disclosure if it provides proof that the third parties had knowledge of the irregularities.

Nullity of the company

The Member States shall provide for the nullity of companies by decision of a court of law. The nullity of a company may only be ordered in the following cases:

  • no instrument of constitution has been executed;
  • the objects of the company are of an unlawful nature or contrary to public policy;
  • there is no statement of the name of the company, subscriptions, the total amount of capital subscribed or the objects of the company;
  • failure to comply with the provisions of national law concerning the minimum amount of capital to be paid up;
  • the incapacity of all the founder members;
  • the number of founder members is less than two.

Once nullity has been official recognised, the company is liquidated. However, shareholders must pay up the capital agreed to be subscribed by them but which has not been paid up with respect to creditors.

This Directive repeals Directive 68/151/EC.

References

Act Entry into force Deadline for transposition in the Member States Official Journal

Directive 2009/101/EC

21.10.2009

OJ L 258, 1.10.2009

Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal

Directive 2012/17/EU

6.7.2012

7.7.2014

OJ L 156, 16.6.2012

Successive amendments and corrections to Directive 89/666/EC have been incorporated in the basic text. This consolidated version is for reference purpose only.

Mergers of public limited liability companies

Mergers of public limited liability companies

Outline of the Community (European Union) legislation about Mergers of public limited liability companies

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Businesses in the internal market > Company law

Mergers of public limited liability companies

Document or Iniciative

Directive 2011/35/EU of the European Parliament and of the Council of 5 April 2011 concerning mergers of public limited liability companies (Text with EEA relevance).

Summary

This Directive aims at coordinating the legislation of Member States on mergers of public limited liability companies to protect the interests of members and third parties.

Member States need not apply this Directive:

  • to cooperatives;
  • to companies which are being acquired or will cease to exist and are the subject of bankruptcy proceedings, proceedings relating to the winding-up of insolvent companies, judicial arrangements, compositions and analogous proceedings.

Mergers by acquisition and merger by the formation of a new company

Mergers by acquisition * or mergers by the formation of a new company *may be effected where one or more of the companies which are ceasing to exist is in liquidation, provided that the companies have not yet begun to distribute their assets to their shareholders.

Where the administrative or management bodies of companies decide to carry out a merger, they must draw up draft terms of merger in writing which include, in particular:

  • the type, name and registered office of the companies;
  • the share exchange ratio;
  • terms relating to the allotment of shares;
  • the rights conferred by the acquiring company.

The administrative or management bodies of the companies must make the draft terms of merger public at least one month before the date fixed for the general meeting, pursuant to the conditions laid down in the Directive on protecting the interests of members and third parties. They shall be exempt from this requirement if the draft terms are made available on the company website for that period. In order to be valid, the merger must be approved by the general meeting of each of the merging companies.

All mergers require the approval of the general meeting of each of the merging companies. However, Member States need not make the merger subject to approval by the general meeting if:

  • publication of the merger takes place at least one month before the date fixed for the general meeting;
  • all shareholders of the acquiring company are entitled to inspect certain documents (draft terms of merger, annual accounts, for example) at least one month before the date fixed for the general meeting;
  • one or more shareholders of the acquiring company holding a minimum percentage of the subscribed capital (no more than 5 %) is/are entitled to require that a general meeting be called to decide whether to approve the merger.

One month before the date fixed for the general meeting, shareholders may inspect documents (unless they have already been published on the website) such as:

  • the draft terms of merger;
  • the annual accounts;
  • the reports of the administrative bodies.

The merging companies shall protect employees’ rights pursuant to the provisions of the Directive on safeguarding employees’ rights in the event of transfers of undertakings. They must also provide creditors with safeguards as regards their financial situation.

After a merger, the following situations may occur:

  • all assets and liabilities have been transferred;
  • the shareholders of the company being acquired become shareholders of the acquiring company;
  • the company being acquired ceases to exist.

The laws of the Member States may lay down nullity rules for mergers, in particular if:

  • nullity is to be ordered in a court judgment;
  • a defect liable to render a merger void can be remedied;
  • the judgment declaring a merger void does not affect the validity of obligations.

Acquisition of one company by another which holds 90 % or more of its shares

One or more companies may be wound up without going into liquidation and transfer all of their assets and liabilities to another company which is the holder of all their shares, in accordance with the provisions described earlier. Nevertheless, Member States may choose not to impose certain requirements.

This Directive repeals Directive 78/855/EEC.

Key terms of the Act
  • Merger by acquisition: the operation whereby one or more companies are wound up without going into liquidation and transfer to another all their assets and liabilities in exchange for the issue to the shareholders of the company or companies being acquired of shares in the acquiring company and a cash payment, if any, not exceeding 10 % of the nominal value of the shares so issued or, where they have no nominal value, of their accounting par value.
  • Merger by formation of a new company: the operation whereby several companies are wound up without going into liquidation and transfer all their assets and liabilities to a company that they form, in exchange for the issue to their shareholders of shares in the new company and a cash payment, if any, not exceeding 10 % of the nominal value of the shares so issued or, where they have no nominal value, of their accounting par value.

Reference

Act Entry into force Deadline for transposition in the Member States Official Journal

Directive 2011/35/EU

1.7.2011

OJ L 110, 29.4.2011