EN    EN EN 
 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 24.9.2008 
SEC(2008) 2487 
  
COMMISSION STAFF WORKING DOCUMENT 
Accompanying document to the 
Proposals for a directive of the Eu ropean Parliament and the Council 
simplifying the rules of the Third and the Sixth Company law Directives 
 
Impact assessment 
 
EXECUTIVE SUMMARY 
 
{COM(2008) 576} 
{SEC(2008) 2486}  
 
EN 2   EN Executive summary  
1. I NTRODUCTION  
In 2007, the Commission launched an initiative for a broad simplifi cation exercise in the areas 
of company law, accounting and auditing. This in itiative is a key contribution to the wider 
Better Regulation/Simplification agenda, in particular the initiative to reduce administrative burdens weighing on European companies.  
A first proposal for a directive simplifying the Third and the Sixth Company law Directives 
on domestic mergers and divisions was included in the first package of  "fast track" proposals 
adopted by the Commission in March 2007. This pr oposal aimed at repealing the requirement 
for an expert report in the context of a merger  or a division of public limited companies where 
all shareholders of the companies concerne d renounce to this report. The directive was 
adopted by the European Parliament and the Council on 13 November 2007.
1 
On 10 July 2007, the Commission adopted a communication ("the Communication") setting 
out its further ideas for simplification of the company law acquis, including additional proposals for a simplification of the Third and the Sixth Company law Directives.
2  
The Communication was welcom ed by Competitiveness Council on 22 November 2007 and 
by the European Parliament on 21 May 2008. The Eu ropean Parliament how ever recalls that 
the interests of all stakeholders , including investors, owners, creditors and employees, as well 
as the principles of subsidiarity and propor tionality, must be duly taken into account.3 
In addition, at the Commission's invitation to stakeholders to submit comments in writing by 
October 2007, contributions from eighteen Memb er State governments, one EEA country and 
110 stakeholders (including Europ ean bodies and associa tions) were submitted that originated 
from 23 countries in total, of which 22 Member  States. A report on th e reactions received is 
available on the website of the Directorate- General for Internal Market and Services 
(DG MARKT) at http://ec.europa.eu/internal_marke t/company/simplification/index_en.htm . 
The administrative costs related to the informa tion obligations contained in the Third and the 
Sixth Company law Directives were measured in the context of a large-scale measurement 
that is a key part of the Co mmission's Action Programme for m easuring administrative costs 
and reducing administrative burdens4. The report on this measurem ent which is based on the 
‘EU Standard Cost Model’ was delivered at the end of June 2008.5 The High Level Group of 
Independent Stakeholders6 was consulted alongside the work of the consortium 
                                                 
1 Directive 2007/63/EC of the European Parliament and of the Council of 13 November 2007 amending 
Council Directives 78/855/EEC and 82/891/EEC as regards the requirement of an independent expert’s 
report on the occasion of merger or division of pub lic limited liability companie s, OJ L300, 17.11.2007, 
p. 47. 
2 Communication from the Commission on a simplified business environment for companies in the areas 
of company law accounting and auditing (COM(2007)394); 
http://ec.europa.eu/internal_market/company/simplification/index_en.htm 
3 Report A6-0101/2008 
4 See COM(2006)689 final, OJ C 78, 11.4.2007, p. 9. 
5 Although the report has been delivered as final version, minor adjustments in the version that will 
ultimately be published, at this stage, cannot be excluded. 
6 See http://ec.europa.eu/enterprise/regulation/better_regulation/high_level_group_is_en_version.htm 
 
EN 3   EN Deloitte/Rambøll/Capgemini that carries out the measurement. The Group, in its opinion of 
10 July 2008, supports the Commission's inte ntion to propose measures to reduce the 
administrative burdens created by th e Third and the Sixth Directive. 
The report on the measurement forms the main basis of the Impact Assessment. Other sources 
of information are replies from the Member  States to questions submitted by DG MARKT 
and the summary report on the reacti ons to the July 2007 Communication. 
2. S UBSIDIARITY  
Action at EU level is necessary to the extent that the obligations that impose administrative 
burdens derive from EU directives. Under t hose conditions, the reduction of administrative 
burden requires the modification of the EU rule s. Action at EU level is therefore justified. 
3. O BJECTIVES  
The objective of this initiative, which is foreseen in the Simplification Rolling Programme for 
adoption by the Commission in 20087, is to enhance the competi tiveness of EU companies by 
reducing administrative burdens that are caused by the rules of the Third and the Sixth 
Directives, where this can be done without jeopardising the inte rests of other stakeholders. 
In particular, this initiative aims at: 
• Reducing reporting requirements at EU level in  the context of mergers and divisions, in 
order to provide Member States and companie s with more flexibility to decide which 
reports are really needed in each specific case; 
• Removing rules that lead to double reporting a nd, therefore, cause unnecessary costs to 
companies; 
• Adapting rules on publication and information duties to the technological developments, 
also with a view to general e nvironmental cons iderations; and 
• Ensuring coherence between the rules of the Third and the Sixth Directives on the one 
hand and recent changes to the re st of the Company law acquis on the other, in particular 
as concerns the creditor protec tion rules in the Third, the Sixth and the Second Directive. 
4. PROBLEM DEFINITION , OPTIONS & IMPACTS  
The Third and the Sixth Directives curren tly contain a number of detailed reporting 
requirements that companies involved in a merg er/division have to co mply with and which 
impose considerable costs on them. When the requirements of these two directives are 
considered in conjunction with the Second Co mpany law Directive on the capital of public 
limited-liability companies, in certain situations, this can lead to a further increase in costs. 
Furthermore, the means provided for in the direct ives to inform shareholders about the details 
                                                 
7 "Second progress report on the strategy for simplifying the regulatory environment", Annex 1, Revision 
of the company law, accounting and auditing acqui s (COM(2008)33, not published in the Official 
Journal, p. 23) 
 
EN 4   EN of the transactions were designed 30 years ago and therefore do not take  into account today's 
technological possibilities. Finally, changes in other directives during the last years and in 
particular to the Second Company law Directive in the area of cr editor protection have lead to 
certain inconsistencies between the different directives. 
In the light of the problem definition above, th ere are three areas that  could be addressed by 
simplification measures: 
(1) Reporting requirements in the context of the planned merger/division; 
(2) Publication and documentation duties vis-à-vi s the shareholders in particular; and 
(3) Rules on creditor protection. 
The impact of possible policy options was measured against the following criteria: reduction 
of companies' administrative burdens, impact  on the rights of resident and non-resident 
shareholders, impact on creditors and other stakeholders (e.g. employees), environmental 
impact and consistency with other directives.  
The conclusion of the impact assessment is that the potential overall savings of the 
recommended options in terms of administrativ e burdens can roughly be  estimated at about 
172 mio €/year. This would imply a reduction in administrative burdens by about 9.15 % as 
far as the area of company law is concerned and by about 1.23 % if th e total administrative 
burdens in the areas of company law, account ing and auditing are taken as a basis.  
4.1. Reporting requirements 
The reporting requirements in the Third and the Sixth Directives consist of the obligation to 
produce a written report by the management  on the legal and economic grounds of the 
merger/division, an independent ex pert's report that examines in  particular the proposed share 
exchange ratio, and an accounting statement wh ere the annual accounts are older than six 
months. These documents have to be submitted to  the general meeting of shareholders that 
has to decide on the merger or the division. 
In relation to the written report from the management,  the measurement report indicates 
that for mergers , the total administrative costs in the EU 27 amount to around 
7.79 mio €/year. 25 % are estimated to be so-ca lled "business as usual costs", so that the 
administrative burden is estimat ed to around 5.84 mio €/year.  
With a view to divisions , the corresponding total costs are about 7.98 mio €/year, but this 
figure only covers 23 Member States.8 Assuming the costs of divisions, in the missing four 
Member States, are about the same as for merger s the total costs with a view to divisions can 
be estimated to 8.89 mio €/year, and th e administrative burden 6.67 mio €/year. 
As far as the independent expert report  on the draft terms of merg er/division is concerned, 
the yearly administrative bur den are estimated at about 248.15 mio € with a view to mergers , 
and about 81.17 mio € with a view to divisions . The consortium estimates these burdens will 
be reduced by about 170.09 mio €/year on ce Directive 2007/63 has been transposed9. 
                                                 
8 The missing MS are DK, HU, IE and NL. 
9 Transposition deadline is 31/12/2008. 
 
EN 5   EN The impact assessment estimates the administrative burden of producing the accounting 
statement  to be at least 1.28 mio €/year.  
These figures show that these reporting requir ements create considerable administrative 
burdens for companies. 
The first question to be addressed is theref ore, whether these reporting requirements are 
indispensable in their current fo rm. Furthermore, account needs to  be taken of the fact that 
these costs are increased further where one of  the companies has to finance the operation 
through a capital increase or where a new company is  set up as a part of the operation as this 
leads to additional reporting requirements under the Second Company law Directive. Finally, the current use of Member State options to re duce reporting requirements in certain situations 
needs to be looked at. Where a merger/divisio n involves a parent company and its 100 or at 
least 90% subsidiary, th e directives, under certai n conditions, already give Member States the 
possibility to reduce the re porting requirements deriving fr om the Third and the Sixth 
Directives. However, not all Member States  currently make use of this possibility. 
The impact assessment identified possible simplification measures for this problem strand in 
three areas: 
(4) measures targeting all public limited-liability companies; 
(5) measures with a view to companies that are set up or increase their capital in the 
context of a merger or division; and 
(6) measures concerning simplified mergers and divisions between parent companies and 
subsidiaries. 
4.1.1. Measures targeting all public  limited-liabil ity companies 
Four options are presented with a view to the fi rst strand of actions that addresses the current 
extent of the reporting requirements in general: 
– Option 1: No policy change; 
– Option 2: Introduce the possibility, for sharehol ders, to renounce the written report of the 
management and the accounting statement, either by unanimity or by majority decision; 
– Option 3: Restrict the reporting re quirements in the directives to medium sized and large or 
to listed companies; and 
– Option 4: Repeal the reporting requirements in the directives. 
The impact assessment concludes that option 2 should be preferred as it avoids any negative 
impact on the interests of the shareholders while achieving some burden savings for the 
companies involved. Option 1 would not lead to  any additional savings for companies once 
directive 2007/63 has been transposed whereas  options 3 and 4 are likely to have a too 
harmful effect on the rights of shareholders. Furthermore, under the two latter options there 
 
EN 6   EN would be a risk of diverging national rules with  a view to domestic mergers on one hand and 
cross-border mergers on the ot her which are regulated by th e so-called Tenth Directive10. 
In addition to the measures under option 2, it is  proposed to abolish the requirement for an 
accounting statement where the company has set up a half-year ly financial statement under 
the Transparency Directive. 
The total savings of these pr oposed measures are estimated at about 7.12 mio €/year. 
4.1.2. Measures with a view to companies that set up new companies or increase their 
capital in the context of  a merger or division 
This strand of action looks at th e duplication of requirements for e xperts' reports that currently 
derives in particular from the rules of the Sixth Directives on the one hand and the Second 
Directive on the capital of public limited-liability  companies on the other, in cases where the 
operation is linked to setting up a new company or an increase in  the capital of the receiving 
company. In the case of mergers and public offe rs, the Second Directive contains a Member 
State option to exempt companies from the repor t on contributions in kind required by that 
directive. 
Three options are presented: – Option 1: No policy change; 
– Option 2: Introduce a Member State option to grant an ex emption from the reporting 
requirement under the Second Directive where an e xpert report is establ ished in the course 
of a division; and 
– Option 3: Introduce a mandatory exemption from the reporting requirement under the 
Second Directive in the case of a me rger, a public offer and a division. 
The conclusion in the Impact Assessment is that option 2 should be preferred. Whereas 
option 1 implies that double reporting would ha ve to continue, optio n 3 would not leave 
Member States any flexibility to adapt proce dures under national law to  the precise need of 
companies and shareholders. This flexibility, howe ver, seems useful given that the contents of 
the reports under the Third and the Sixth Dir ectives on one hand and the Second Directive on 
the other are not entirely identical. 
The burden savings of option 2 are estimat ed to lie between 3.26 – 9.43 mio €/year, 
depending on how many Member States will make use of the option to be granted. 
4.1.3. Measures concerning simplified merge rs and divisions between  parent companies 
and subsidiaries 
The third strand of action looks  at the current possibility for Member States to grant 
exemptions from the need to hold a gene ral meeting and from certain reporting and 
information requirements where the merger or division take place between parent companies 
                                                
 
10 Directive 2005/56/EC of the European Parliament and of the Council of 26 October 2005 on cross-
border mergers of limited liability comp anies, OJ L310, 25.11.2005, p. 1 
 
EN 7   EN and their subsidiaries. Currently, only about one th ird of the Member States make full use of 
this option. 
The impact assessment sets out three options: – Option 1: No policy change; 
– Option 2: Removing the Member State opti ons as regards simplified mergers and 
divisions; and 
– Option 3: Ensuring that Member  States have to grant the possibility of simplified 
mergers/divisions to their companies. 
The conclusion is that option 3 s hould be preferred as none of the two other options is likely 
to lead to a change at Memb er State level. The potential savings, under this option, are 
estimated to be around 153.49 mio €/year.  
4.2. Publication and documentation duties 
Under the rules of the Third and the Sixth Directiv es, companies have to file the draft terms of 
merger/division with the companies register and publish these draft terms in the national 
gazette or a central electronic platform, in line with the provisions of the First Company law 
Directive on disclosure obligations of limited- liability companies. The necessity of filing 
these draft terms with the register can be qu estioned, in particular where they are today 
available online. 
Furthermore, the directives provide that shareh olders must be given th e possibility to access 
certain documents at the place of the company's re gistered office and to receive free copies of 
these documents. Also this obligation does not seem to be in line any more with the possibilities offered by modern information t echnology which allow for an easier and cheaper 
access to the information and have therefore alre ady been used in more recent directives. 
In the impact assessment, three optio ns for action are therefore examined: 
– Option 1: No policy change; 
– Option 2: Use a central digital solution at national level for publishing the information; and 
– Option 3: Use the company's or another Inte rnet site for publishing the information. 
Option 3 is identified as the option to be pref erred as it combines the advantage of adapting 
the information mechanisms under the Third and th e Sixth Directives to those used in more 
recent directives with a low risk that sharehol ders will incur additional costs for the access to 
the information. Option 3 also offers the highest burden savings potential which is estimated at over 3.5 mio €/year. 
 
EN 8   EN 4.3. Protection of creditors 
Recent changes to the Second Company law Directive11 have, inter alia, led to clarifying the 
creditor protection rules under that  directive in the sense that cr editors have to show credibly 
that an operation concerning the company's capital jeopardises their claims if they want to 
obtain securities. This clarification is lacking in  the parallel rules contained in the Third and 
the Sixth Directives which leads to a certa in inconsistency between these directives. 
On this issue, three options are discussed: 
– Option 1: No policy change; 
– Option 2: Adapt creditor protection rules to  the provision in the modernised Second 
Directive; and 
– Option 3: Repeal the creditor prot ection rules in the directives. 
Option 2 is recommended as it en sures coherence between the diffe rent EU directives without 
jeopardising creditors' rights. No material imp act on companies' costs is expected from this 
option. 
5. M ONITORING AND EVALUATION  
Five years after the transposit ion of the amendments, the effect of the measures should be 
evaluated.  
This evaluation should look, in part icular at the following questions: 
• Whether and to what extent the overall cost s of companies have been reduced in the 
context of mergers and divisions; this should be based, inter alia, on the feedback from a sample of companies; 
• Whether the information provided to shareholders  and other stakeholders in the course of 
the process is considered sufficient; and 
• Whether the recommended Member States' option with a view to the reporting requirement 
under the Second Company law Directive in th e case of mergers and divisions provides 
useful results on whether a mandatory exemption should be considered. 
A permanent monitoring of the developments  of companies' costs would imply putting 
additional administrative burdens on companies in order to obtain the information required. 
Such a system is therefore not  envisaged at this stage. 
                                                
 
11 Directive 2006/68/EC of the European Parliament and of the Council of 6 September 2006 amending 
Council Directive 77/91/EEC as regards the formation of public limited liability companies and the 
maintenance and alteration of their capital, OJ L 264, 25.9.2006, p. 32.