Mergers of public limited liability companies: Union legislation

Directive 2011/35/EU of the European Parliament and of the Council of 5 April 2011 (OJ L
of 29 April 2011) concerning mergers of public limited liability companies coordinates the
safeguards required in mergers for the protection of the interests of members and others.
The Directive incorporates most of the provisions of Council Directive 2001/23/EC of 12
March 2001 on the approximation of the laws of the Member States relating to the safeguarding
of employees’ rights in the event of transfers of undertakings, businesses or
parts of undertakings or businesses, as well as the provisions on reporting and documentation
set out in Directive 2009/109/EC of the European Parliament and of the Council of
16 September 200922 amending Council Directives 77/91/EEC, 78/855/EEC and 82/891/
EEC, and Directive 2005/56/EC as regards reporting and documentation requirements in
the case of mergers and divisions. It thus regulates these transactions with a view to ensuring
that third parties are sufficiently informed.
The Member States shall, in accordance with this Directive, make provision for rules governing
merger by the acquisition of one or more companies by another company23 and
merger by the formation of a new company.
In the case of merger by acquisition, the administrative or management bodies of the
merging companies shall draw up draft terms of merger in writing, the content of which is
set out in detail in the Directive. Draft terms of merger must be published for each of the
merging companies, at least one month before their approval, or made available on its
website free of charge for the public or via the central electronic platform referred to in
Directive 2009/101/EC.
One or more experts, acting on behalf of each of the merging companies but independent
of them, appointed or approved by a judicial or administrative authority, shall examine the
draft terms of merger and draw up a written report to the shareholders. However, the laws
of a Member State may provide for the appointment of one or more independent experts
for all the merging companies, if such appointment is made by a judicial or administrative
authority at the joint request of those companies.
In addition to the draft terms of merger, shareholders shall be entitled to receive certain
documentation, specified in the Directive, at least one month before the date fixed for the
general meeting approving the merger. This documentation includes the annual accounts
and annual reports of the merging companies for the preceding three financial years. A
company shall be exempt from this requirement if it make such documentation available
to the public on its website during that period of time.
A merger shall require at least the approval of the general meeting with a majority of not
less than two thirds of the votes attached to the shares, equity units or subscribed capital
represented. The laws of a Member State may, however, provide that a simple majority of
the votes shall be sufficient when at least half of the subscribed capital is represented.
Protection of the rights of the employees of each of the merging companies shall be regulated
in accordance with Directive 2001/23/EC.
The laws of the Member States must provide for an adequate system of protection of the
interests of creditors of the merging companies whose claims antedate the publication of
the draft terms of merger and have not fallen due at the time of such publication. To that
end, such creditors shall be entitled to obtain adequate safeguards where the financial
situation of the merging companies makes such protection necessary.
In any event, Member States shall ensure that the creditors are authorised to apply to the
appropriate administrative or judicial authority for adequate safeguards provided that they
can credibly demonstrate that due to the merger the satisfaction of their claims is at stake
and that no adequate safeguards have been obtained from the company.
The Directive sets out the legal consequences of a merger and the civil liability of the administrative
or management bodies of the acquiring or acquired company, and limits the
cases of nullity of a merger in order to preserve legal certainty in dealings between interested
companies, between interested companies and third parties and between shareholders.
Also set forth is the regime governing merger by formation of a new company, which includes
most of the provisions laid down for the other type of merger.

Finally, where a merger by acquisition is carried out by a company which holds 90% or
more, but not all, of the shares and other securities conferring the right to vote at general
BANCO DE ESPAÑA 16 ECONOMIC BULLETIN, JULY 2011 FINANCIAL REGULATION: 2011 Q2 meetings of the company or companies being acquired, Member States shall not require
approval of the merger by the general meeting of the acquiring company if certain conditions
are fulfilled.
The Directive came into force on 1 July 2011.