ARCHIVESHISTORIQUES
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DOCUMENTS "COM"
COM(75)671
Vol.1975/0246

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COMMISSION OFTHEEUROPEAN COMMUNITIES *
COM(75)671final.
Brussels,22December1975
SECOla)AMENDEDPROPOSE ,FORATHIRD .COUNCE,.DIRECTIVE
oncoordination ofsafeguardswhich,fortheprotectionofmembersandother:
arerequiredbyMemberStatesofcompanieswithinthemeaningofthesecond
paragraphofArticle58of"theTreaty,inconnectionwithmergers "between
sociétésanonymes
(submittedtotheCouncilbytheCommissionpursuanttothesecondparagraph
ofArticle149oftheEECTreaty)
COU(75)671fin"!.

EXPLANATORY MEMORANDUM
I.IETROUJCTION
On16June197C,theCommissionsubmittedtotheCouncilthe
ProposalforaThird.Directiveoncompanylaw(l)dealingwithmergers
ofpubliccompaniesincorporated underthelawofasingleMemberState.
°1TIay1971,theEconomicandSocialCommittee(2),andon16November
I,theEuropeanParliament (3)gavetheirOpinionsonsheproposal.
InordertotakeaccountoftheseOpinions,aswellastheentry
oftheUnitedKingdom,IrelandandDenmark,intotheCommunityon
4January1973,theCommission amendeditsproposed ,directive,pursuant
toArticle149,paragraph2oftheTreaty(4).
On8April1975,theEuropeanFarliamentgaveitsOpiniononthe
amendedProposal(5)»OnthebasisofthisOpinion,theCommissionar.ended
itsFroposalonceagain.
II.NOTESONAUCLES
Article5,para^raph 5
FollowingtheEuropeanParliament'sOpinion,itisexpressly
statedthatthedocumentsreferredtoinparagraphs 2to4mays
beissuedinpartratherthaninfull,onlyiftheshareholder so
requires.
!rticle6,paragraph 3andArticle5,paragraph 5
TheEuropeanParliamentconsidersthatthegeneralmeeting
calledtoconsiderthemergershouldbeinformedastothewhole
textoftheopiniongivenbytheemployees'representatives .
(1)O.J.No.C89,14July1970
(2)O.J.No.C88,6September1971
(3)O.J.No.C129,11December1972
(4)C0M(72)1668final
(5)O.J.No.c95,23April1975
•••J••■

Toensureavailability ofthisinformation,everyshareholder
willhavetherighttohaveaccesstothisopinion.
/rtiele6,paragraph4
Regardingtheprotectionofemployees,thefirstamendedversion
providedforanobligationtobeimposedonthemanagementorgansto
enterintonegotiations withtheemployees'representatives withaview
toreachinganagreementonthemeasurestobetakenontheemployees'
behalf.-If,attheendofsuch•negotiations ,agreementwasnotreached
betweentheparties,eachofthemcouldaskforjuedifctiq ..!>;•/c-*r'"j
authority.TheEuropeanParliamentdidnotagreewiththissolution.
Anotherprocedurehadtobedeveloped,sincemediation,bydefinition,
didnotresolvethesocialconflictdefinitively .FollowingParliawent's
Opiniongivenon8April1975# "thesecondamendedversionhasprovided
that,inviewoftheaimsofsocialprotection,thisprooedurecanonly
besetinmotionbytheemployees.Attherequestoftheirrepresentatives ,
theemployerisboundtotakepartinnegotiations onthemeasurestobe
talcenforthebenefitoftheemployees.Intheeventofadeadlockin
suchnegotiations ,eachofthepartiesmayappealtoanarbitration
authoritysummonedtotakeadefinitivedecisiononthemeasuresin
issue,withoutthisdecisionconstituting apre-condition ofthe
consideration bythegeneralmeetingoftheproposalforamerger.
Thenewproposedprocedurecanonlybeunderstoodinconjunction
withthepreviousproceduresetoutin.paragraphs 1to3.Accordingto
thislastprocedure,thereportpreparedbythemanagementorgr-nexplains
theeffectsofthemergerwithregardtotheemployees,andinparticular,
indicatesthemeasurestobetakenontheirbehalf.Thesemattersform
themainsubjectforthediscussions betweentheemployerandthe
employees *representatives .Thelattermayequallyaskfortheopening
ofnegotiations onmeasuresofasocialnature.Thustheemployees'
representatives maydiscoverwhethertheyhavemorechanceofobtaining
asatisfactorysocialplanbyusingtheprocedureset,outonparagraph4»
or,ontheotherhand,whetheritisdesirableforthemtouseother
*
meansprovidedbynationallaw. t .
Article6,paragraph 5
Theamendmentofthetext,madeinaccordancewiththeOpinionof
theEuropeanParliament,correspondstothatofArticle5»para^vaph .5»

*FIRSTiuWDEDPRCPOSAL
PROPOSAI.FORA
THIRDCOU1TCILDIRECTIVE !
oncoordination ofsafeguardswhich,forthe
protectionoftheinterestsofmembersand
others,arerequiredbyMemberStatesof
companieswithinthemeaningofthesecond
paragraphofArticle58oftheTreaty,in
connectionwithmergersbetweensocietes
anonymes
(PresentedbytheCommissiontotheCouncil
ionJr:vV-y19II)
TIKCOUNCILOi"1TKiDEUROPEANCOMIUNITLSS ,
HavingregardtotheTreatyestablishing
theEuropeanEconomicCommunity,andin
particularArticle54(3)(g)thereof;
Havingregardtotheproposalfromthe
Commission ;
HavingregardtotheOpinionofthe
EuropeanParliament ;
HavingregardtotheOpinionofthe
EconomicandSocialCommittee ;
Whereasthecoordination providedforin
Article54(3)(g)andintheGeneralProgramme
fortheabolitionofrestrictions onfreedom
ofestablishment wasbegunbyDirective
No63/151/2ECof9March1968^;
Whereasthecoordination wascontinued
(2)byDirectiveFo of v'
whichharmonizedtheprovisionsadopted
bythevariousMemberStatesinrelation
totheformationofsocietesanonymesand
themaintenance andalteration oftheir
capital;
(1)OJNoL65,14March1968,p.8
(2)OJNoC48,24April1970,p.8

vr.ar'ast\eprotectionoftheinterests
ofiaerajcrsandothersrequiresthatthe
lawsoftheMemberStatesrelatingto
mergers "betweensocietesanonymesbecoor­
dinatedandthatthoseMemberStatesin
v'.icnthepossibilityofmergerdoesnot
existshouldmakeprovisionintheirlaws
formergerstobeeffected;
Whereasinthecontextofcoordinationit
isparticularly importantthattheshare­
holdersofmergingcompaniesbekeptadequa­
telyinformedinasobjectiveamanneras
possibleandthattheirrightsbesuitably
protected *
Whereasitislikewiseessentialthatthe
employeesofmergingcompaniesbekeptin­
formedthattheybeconsultedregardingthe
effectsofmergersuponthem.
Whereascreditors,includingdebenture
holdersendpersonshavingotherrights,
mustbeprotectedsothatmergerisnot
detrimentaltothem;
Whereasthedisclosurerequirements of
DirectiveT5o68/15I/EECof9March1968
shouldbeextendedtoincludemerger
operationssothatthirdpartiesarekept
adequatelyinformed:Whereasitislikewiseessentialthat
theemployeesofmergingcompaniesbe
informedoftheeffectsofthemerger
uponthem,thattherepresentatives
oftheemployeesbeconsulted,andthat
attherequest .oftheserepresentatives
negotiations mustbebegun,which,in
theeventofdisagreement ,canleadto
anarbitration tosettlethemeasures
tobetakeninfavouroftheemployees.

-5-
Whereasitisrequisitethatthesafeguards-Hochange
affordedtomembersendothersinconnection
withthecarryingoutofmergeroperations
"beextendedtocovercertainlegalpractices
whichinimportantrespectsaresimilarto
merger,sothatprotectionisnoteliminated ;
Whereassoastoensurecertaintyastothe
lewintherelationships betweenthecompanies
c.: ;.;j!:-,voenthencudthirdparties,
andbetweenthemembers,itisnecessary
tolimitthecasesofnullityofmergerby
introducing ,ontheonehcnd,theprinciple
thatdefectsbecuredwhereverthisispossible
and,ontheother,ashortperiodwithin
wliiehproceedingsfornullitymustbecom­
menced;
ïLis;J>OPJ?::TDTHISDIIMÏÏIVE -:
Article1-4unchanged

X.xtearnagoncntorgansofeachof
■themergingcompaniesshalldrawupa
detailedreportexplainingthedraftterms
ofmerger,endinparticulartheshare
exchanger^tio,endsettingoutthelegal
andeconomicgroundstherefore.
2.Inaddition,foreachofthenerging
companiesoneormoreindependantexperts
designatedorapprovedbyalegaloradmin­
istrativeauthorityshallexaminethe
draftterrasofmorgeranddrawupareport
fortheshareholders .Theseexpertsmaybe
thepersonsresponsibleforauditingthe
company 1saccounts.
Eachexpertshallbeentitledtoobtain
frommergingcoiapeniesallrelevant
information snddocumentsandtocarryout
allnecessaryinvestigations .
Intheirreporttheexpertsmuststatewhether
intheiropiniontheshareexchangeratio
isjustifiedornot.Insupportoftheir
statementtheyshallgiveatleastthe
followingparticulars :
(a)Therelationship betweenthecompanies *
netassetsonthebasisofactual
values;----...
(b)Therelationship betweentheearnings
yieldsofthecompanies,takingfuture
prospectsintoaccovmt *
(c)Thecriteriausedinevaluatingthe
netassetsandearningsyields.

Inaddition,thereportshallindicate
whatspecialdifficulties ofevaluation
havearisen,ifany.
3.Everyshareholdershall "beentitled
tohaveaccesstothefollowingdocuments
attheregisteredofficeatleasttwomonths
beforedateofmeetingoftheGeneralMeeting
whichistodecideontheproposedmerger:
(e.;;dirftterrasofuerger;
(b)Thebalance-sheets ,profitandloss
accountsandannualreportsofthe.
mergingcompaniesforthelastthree
financialyears;
(c)afinancialstatementdrawnupasat
thefirstdayofthesecondmonth
precedingthedateofthedraftterns
of.merger,ifthelastbalance-sheet
relatestoafinancialyearwhichended
morethansixmonthsbeforethatdate;
(d)Thereportsofthemcnagementorgans
oftiiemergingcompaniesprovidedforin
paragraph 1ofthisArticleandin'
Article6(l);
(e)Theexperts1reportsprovidedforin
paragraph2ofthisArticle.
4.Thefinrncialstatementprovidedfor
inparagraph3(c)shallbedrawnupin
accordance withthesa&emethodsandinthe
saneformasthelastannualbalance-sheet .

-8-
ÎJV/VJR:
(a)Nofreshphysicalinventoryshall
betaken;
(b)Thefiguresinthelastbalance-
sheetshallbealteredonlyto
reflectchangesintheaccounts;
thefollowingshallnevertheless
betalcenintoaccount:
-interimdepreciation nnd
provisions ;
-naterialchangesinactual
valuenotshownintheaccounts.
5*'Everyshareholdershallbe
entitledtoobtainfreeofchargeon
requestcopies,infullorinpart,
ofthedocunentsreferredtoin
paragraph3,15*Everyshareholdershallbe.
entitledtoobtain.freeofchargeon
requestcopies,infullor,if
required,inpart,ofthedocuments
referredtoinArticle5tparagraph3
andinArticle6,paragraphs#

Article 6 Article 5
1.Themanagement organs ofeach ofthe –Nochange
merging companies shall draw upadetailed • -
report explaining thelegal ,economic and
social effects ofthemerger onthe
employées over aperiod ofatleast two
years andindicating themeasures tote
taken regarding them .
2,Lrcz-jemployee ^-6remployees *repre - -Nochange
•uCatiiLivcc shall beentitled tohave access
tothereport provided forinparagraph 1
and the other documents referred toin
Article 5(3)atthecompany 'sregistered
office atleast two months before the
meeting oftheGeneral Heeting which is
todecide onthemerger .
3.Before theGeneral Heeting discusses 3.Before theGeneral Meeting considers
themerger themanagement organs ofthe themerger ,themanagement organs ofthe
merging companies shall discuns the merging companies shall discuss thereports
reports provided forinparagraph 1with theprovided forinparagraph 1with the
employees' 1representatives .Thelatter employees' representatives .Thelatter
maydeliver awritten opinion .TheGeneral maydeliver awritten opinion .
Heeting which istodecide onthemerger
shall beinformed ofthat opinion .representatives ,themeasures tobetaken
onbehalf oftheemployees will bemstdo
thesubject ofnegotiations between the
parties .Onrequest oftheemployées'
TheGeneral Meeting which isto
decide onthemerger must beinformed
ofthat opinion a*ioftheresult of
thenegotiations ,iithere isany.
Every shareholder shall have theright
tohave access tothedocuments ,before
theconsideration bytheGeneral Meeting
oftheproposed merger .

-ία-
4.If+liemergerispre-judL-iQ-i-altothe
employees 1intereststhemanagementorgans
shallinitiatenegotiations withthe
employees *representatives ,beforethe
GeneralMeetingdiscussesthemerger,with
aviewtoreachingagreementonthemeasures
tobetakenregardingtheemployees#Ifno
agreementisreachedinthesenegotiations ,
eachofthepartiesmayaskthepublic
authoritytoactasintermediary.
5.Everyemployeeoremployees'
representative shallbeentitledtoobtain
freeofchargeonrequestcopies,infull
orin]5art,ofthedocumentsreferredtoin
paragraph2to4« ■
6,Thi3Articleiswithoutprejudiceto
thelawsoftfroseMemberStateswhichare
morefavourabletoemployeesincasesof
merger.' *4*Ifnoagreementisachievedasa
resultofthenegotiations providedfor
in-paragraph3andthegeneralmeetings
ofthemergingcompanieshaveapproved
thedrafttermsofmerger,themanagement
organoftheacquiringcompanyisobliged,
onademandoftheemployees *representatives ,
toengagein/negotiations withtheemployees'
representatives withtheviewtoreachingan
agreementonthemeasurestobe'iJh
regardtotheemployees.If,attheenr'of
thesenegotiations ,orofaperiodoftvro
monthsatthelatestfromthedatewhen
theybegan,anagreementhasnotbeen
reachedbeti*eentheparties,eitherofthem
canreferthemattertoaharbitration body
whichshalldecidedefinitively ,withinone
month,onthemeasurestobetakenontheir
behalf.Thisarbitration bodyshellconsist
ofarbitrators appointedinequalnumbersby
eachoftheparties,andofapresident
appointedbycommonconsentofthetwoparties
Ifoneofthepartiesfailstoappointits
arbitrators,orifagreernent ,isnotreached
onthechoiceofthepresident,thecompetent
courtshallmaketheseappointments ,
5»Everyemployeeoremployees *representati\
shallbeentitledtoobtainfreeofchargeon
requestcopies,infullor,ifrequired,inpar
ofthedocumentsreferred *toinparagraphs P.
to4,
-Nochange.
Articles7-24»nochange