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   (Text with EEA relevance)
Date: 2006-09-06
Institutions: Council of the European Union, European Parliament
Subjects: capital market, company law, legal status, protection of shareholders, public limited company, share, share capital

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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

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EURO-
PEAN UNION,

(3)

Having regard to the Treaty establishing the European Commu-
nity, and in particular Article 44(1) thereof,

Having regard to the proposal from the Commission,

(4)

Having regard to the opinion of the European Economic and
Social Committee (1),

Acting in accordance with the procedure laid down in Article 251
of the Treaty (2),

(5)

Whereas:

(1)

(2)

The second Council Directive 77/91/EEC of 13 Decem-
ber 1976 on coordination of safeguards which, for the
protection of the interests of members and others, are
required by Member States of companies within the mean-
ing of the second paragraph of Article 58 of the Treaty,
in respect of the formation of public limited liability com-
panies and the maintenance and alteration of their capi-
tal, with a view to making such safeguards equivalent (3),
sets out the requirements for several capital-related mea-
sures taken by such companies.

(6)

(7)

to

In its Communication of 21 May 2003 to the Council and
the European Parliament entitled ‘Modernising Company
Law and Enhancing Corporate Governance in the Euro-
pean Union – A Plan to Move Forward’ the Commission
draws the conclusion that a simplification and moderni-
sation of Directive 77/91/EEC would significantly contrib-
ute
efficiency
and competitiveness without reducing the protection
offered to shareholders and creditors. Those objectives
have the first priority but do not affect the need to pro-
ceed without delay to a general examination of the feasi-
bility of alternatives to the capital maintenance regime
which would adequately protect the interests of creditors
and shareholders of a public limited liability company.

promotion

business

the

of

Member States should be able to permit public limited
liability companies to allot shares for consideration other
than in cash without requiring them to obtain a special
expert valuation in cases in which there is a clear point of
reference for the valuation of such consideration. None-
theless, the right of minority shareholders to require such
valuation should be guaranteed.

Public limited liability companies should be allowed to
acquire their own shares up to the limit of the company’s
distributable reserves and the period for which such an
acquisition may be authorised by the general meeting
should be increased so as to enhance flexibility and reduce
the administrative burden for companies which have to
react promptly to market developments affecting the price
of their shares.

Member States should be able to permit public limited
liability companies to grant financial assistance with a view
to the acquisition of their shares by a third party up to
the limit of the company’s distributable reserves so as
to increase flexibility with regard to changes in the own-
ership structure of the share capital of companies. This
possibility should be subject to safeguards, having regard
to this Directive’s objective of protecting both sharehold-
ers and third parties.

In order to enhance standardised creditor protection in all
Member States, creditors should be able to resort, under
certain conditions, to judicial or administrative proceed-
ings where their claims are at stake as a consequence of a
reduction in the capital of a public limited liability
company.

In order to ensure that market abuse is prevented, Mem-
ber States should take into account, for the purpose of
the provisions of
this Directive,
implementation of
Directive 2003/6/EC of the European Parliament and of
the Council of 28 January 2003 on insider dealing and
market manipulation (market abuse) (4), Commission
Regulation (EC) No 2273/2003 of 22 December 2003
implementing Directive 2003/6/EC of the European Par-
liament and of the Council as regards exemptions for buy-
back
financial
instruments (5) and Commission Directive 2004/72/EC of
29 April 2004 implementing Directive 2003/6/EC of the
European Parliament and of
the Council as regards
accepted market practices, the definition of inside infor-
mation in relation to derivatives on commodities, the
drawing up of lists of insiders, the notification of manag-
suspicious
ers’
transactions (6).

transactions and the notification of

programmes

stabilisation

and

of

(1) OJ C 294, 25.11.2005, p. 1.
(2) Opinion of the European Parliament of 14 March 2006 (not yet pub-
lished in the Official Journal) and Council Decision of 24 July 2006.
(3) OJ L 26, 31.1.1977, p. 1. Directive as last amended by the 2003 Act

of Accession.

(4) OJ L 96, 12.4.2003, p. 16.
(5) OJ L 336, 23.12.2003, p. 33.
(6) OJ L 162, 30.4.2004, p. 70.

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Directive 77/91/EEC should therefore be amended
accordingly.

recognised independent expert and where the following con-
ditions are fulfilled:

(8)

(9)

In accordance with point 34 of the Interinstitutional
Agreement on better law-making (1), Member States are
encouraged to draw up, for themselves and in the interest
of the Community, their own tables illustrating, as far as
possible, the correlation between this Directive and the
transposition measures, and to make them public,

HAVE ADOPTED THIS DIRECTIVE:

Article 1

Directive 77/91/EEC is hereby amended as follows:

1.

in Article 1(1), the 21st indent shall be replaced by the
following:

‘— in Hungary:

nyilvánosan működő részvénytársaság;’;

2.

the following Articles shall be inserted:

‘Article 10a

1. Member States may decide not to apply Article 10(1),
(2) and (3) where, upon a decision of the administrative or
management body, transferable securities as defined in
point 18 of Article 4(1) of Directive 2004/39/EC of the Euro-
pean Parliament and of the Council of 21 April 2004 on
markets in financial instruments (*) or money-market instru-
ments as defined in point 19 of Article 4(1) of that Direc-
tive are contributed as consideration other than in cash, and
those securities or money-market instruments are valued at
the weighted average price at which they have been traded
on one or more regulated market(s) as defined in point 14
of Article 4(1) of that Directive during a sufficient period, to
be determined by national law, preceding the effective date
of the contribution of the respective consideration other than
in cash.

However, where that price has been affected by exceptional
circumstances that would significantly change the value of
the asset at the effective date of its contribution, including
situations where the market for such transferable securities
or money-market instruments has become illiquid, a revalu-
ation shall be carried out on the initiative and under the
responsibility of the administrative or management body.
the aforementioned revaluation,
For
Article 10(1), (2) and (3) shall apply.

the purposes of

2. Member States may decide not to apply Article 10(1),
(2) and (3) where, upon a decision of the administrative or
management body, assets, other than the transferable secu-
rities and money-market instruments referred to in para-
graph 1, are contributed as consideration other than in cash
which have already been subject to a fair value opinion by a

(a)

the fair value is determined for a date not more than
the asset
six months before the effective date of
contribution;

(b)

the valuation has been performed in accordance with
generally accepted valuation standards and principles in
the Member State, which are applicable to the kind of
assets to be contributed.

In the case of new qualifying circumstances that would sig-
nificantly change the fair value of the asset at the effective
date of its contribution, a revaluation shall be carried out on
the initiative and under the responsibility of the administra-
tive or management body. For the purposes of the afore-
mentioned revaluation, Article 10(1), (2) and (3) shall apply.

In the absence of such a revaluation, one or more sharehold-
ers holding an aggregate percentage of at least 5 % of the
company’s subscribed capital on the day the decision on the
increase in the capital is taken may demand a valuation by
an independent expert,
in which case Article 10(1), (2)
and (3) shall apply. Such shareholder(s) may submit a
demand up until the effective date of the asset contribution,
provided that, at the date of the demand, the shareholder(s)
in question still hold(s) an aggregate percentage of at least
5 % of the company’s subscribed capital, as it was on the
day the decision on the increase in the capital was taken.

3. Member States may decide not to apply Article 10(1),
(2) and (3) where, upon a decision of the administrative or
management body, assets, other than the transferable secu-
rities and money-market instruments referred to in para-
graph 1, are contributed as consideration other than in cash
whose fair value is derived by individual asset from the statu-
tory accounts of the previous financial year provided that
the statutory accounts have been subject to an audit in accor-
dance with Directive 2006/43/EC of the European Parlia-
ment and of the Council of 17 May 2006 on statutory audits
of annual accounts and consolidated accounts (**).

The second and third subparagraphs of paragraph 2 shall
apply mutatis mutandis.

Article 10b

1. Where consideration other than in cash as referred
to in Article 10a occurs without an expert’s report as referred
to in Article 10(1), (2) and (3), in addition to the require-
ments set out in point (h) of Article 3 and within one month
after the effective date of the asset contribution, a declara-
tion containing the following shall be published:

(1) OJ C 321, 31.12.2003, p. 1.

issue;

(a) a description of the consideration other than in cash at

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(b)

its value, the source of this valuation and, where appro-
priate, the method of valuation;

Member States shall make such acquisitions subject to the
following conditions:

(c) a statement whether the value arrived at corresponds at
least to the number, to the nominal value or, where
there is no nominal value, the accountable par and,
where appropriate, to the premium on the shares to be
issued for such consideration;

(d) a statement that no new qualifying circumstances with

regard to the original valuation have occurred.

That publication shall be effected in the manner laid down
by the laws of each Member State in accordance with
Article 3 of Directive 68/151/EEC.

2. Where consideration other than in cash is proposed to
be made without an expert’s report as referred to in
Article 10(1), (2) and (3) in relation to an increase in the
capital proposed to be made under Article 25(2), an
announcement containing the date when the decision on the
increase was taken and the information listed in paragraph 1
shall be published, in the manner laid down by the laws of
each Member State in accordance with Article 3 of
Directive 68/151/EEC, before the contribution of the asset
as consideration other than in cash is to become effective.
In that event, the declaration pursuant to paragraph 1 shall
be limited to the statement that no new qualifying circum-
stances have occurred since the aforementioned announce-
ment was published.

3.
Each Member State shall provide for adequate safe-
guards ensuring compliance with the procedure set out in
Article 10a and in this Article where a contribution for a
consideration other than in cash is made without an expert’s
report as referred to in Article 10(1), (2) and (3).

(*) OJ L 145, 30.4.2004, p. 1. Directive as last amended by
Directive 2006/31/EC (OJ L 114, 27.4.2006, p. 60).

(**) OJ L 157, 9.6.2006, p. 87.’;

3.

in Article 11(1), the first subparagraph shall be amended as
follows:

(a)

‘Article 10’ shall be replaced by ‘Article 10(1),
and (3)’;

(2)

(b)

the following sentence shall be added:

‘Articles 10a and 10b shall apply mutatis mutandis.’;

4.

in Article 19, paragraph 1 shall be replaced by the following:

‘1. Without prejudice to the principle of equal treatment
of all shareholders who are in the same position, and to
Directive 2003/6/EC of the European Parliament and of the
Council of 28 January 2003 on insider dealing and market
manipulation (market abuse) (*), Member States may permit
a company to acquire its own shares, either itself or through
a person acting in his own name but on the company’s
behalf. To the extent that the acquisitions are permitted,

(a) authorisation shall be given by the general meeting,
which shall determine the terms and conditions of such
acquisitions, and, in particular, the maximum number
of shares to be acquired, the duration of the period for
which the authorisation is given, the maximum length
of which shall be determined by national law without,
however, exceeding five years, and, in the case of acqui-
sition for value, the maximum and minimum consider-
ation. Members of the administrative or management
body shall satisfy themselves that, at the time when each
authorised acquisition is effected, the conditions referred
to in points (b) and (c) are respected;

(b)

the acquisitions, including shares previously acquired by
the company and held by it, and shares acquired by a
person acting in his own name but on the company’s
behalf, may not have the effect of reducing the net assets
below the amount mentioned in points (a) and (b) of
Article 15(1);

(c) only fully paid-up shares may be included in the

transaction.

Furthermore, Member States may subject acquisitions within
the meaning of the first subparagraph to any of the follow-
ing conditions:

(i)

(ii)

that the nominal value or, in the absence thereof, the
accountable par of the acquired shares, including shares
previously acquired by the company and held by it, and
shares acquired by a person acting in his own name but
on the company’s behalf, may not exceed a limit to be
determined by Member States. This limit may not be
lower than 10 % of the subscribed capital;

that the power of the company to acquire its own shares
within the meaning of the first subparagraph, the maxi-
mum number of shares to be acquired, the duration of
the period for which the power is given and the maxi-
mum or minimum consideration are laid down in the
statutes or in the instrument of incorporation of the
company;

(iii) that the company complies with appropriate reporting

and notification requirements;

(iv) that certain companies, as determined by Member
States, may be required to cancel the acquired shares
provided that an amount equal to the nominal value of
the shares cancelled must be included in a reserve which
cannot be distributed to the shareholders, except in the
event of a reduction in the subscribed capital. This
reserve may be used only for the purposes of increas-
ing the subscribed capital by the capitalisation of
reserves;

(v)

that the acquisition shall not prejudice the satisfaction
of creditors’ claims.

(*) OJ L 96, 12.4.2003, p. 16.’;

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5.

in Article 20(3), the words ‘Article 15(1)(a)’ shall be replaced
by the words ‘points (a) and (b) of Article 15(1)’;

6. Article 23(1) shall be replaced by the following:

‘1. Where Member States permit a company to, either
directly or indirectly, advance funds or make loans or pro-
vide security, with a view to the acquisition of its shares by
a third party, they shall make such transactions subject to
the conditions set out in the second, third, fourth and
fifth subparagraphs.

The transactions shall take place under the responsibility of
the administrative or management body at fair market con-
ditions, especially with regard to interest received by the
company and with regard to security provided to the com-
pany for the loans and advances referred to in the first sub-
paragraph. The credit standing of the third party or, in the
case of multiparty transactions, of each counterparty thereto
shall have been duly investigated.

The transactions shall be submitted by the administrative or
management body to the general meeting for prior approval,
whereby the general meeting shall act in accordance with
the rules for a quorum and a majority laid down in
Article 40. The administrative or management body shall
present a written report to the general meeting, indicating
the reasons for the transaction, the interest of the company
in entering into such a transaction, the conditions on which
the transaction is entered into, the risks involved in the trans-
action for the liquidity and solvency of the company and the
price at which the third party is to acquire the shares. This
report shall be submitted to the register for publication in
accordance with Article 3 of Directive 68/151/EEC.

The aggregate financial assistance granted to third parties
shall at no time result in the reduction of the net assets below
the amount specified in points (a) and (b) of Article 15(1),
taking into account also any reduction of the net assets that
may have occurred through the acquisition, by the company
or on behalf of the company, of its own shares in accor-
dance with Article 19(1). The company shall include, among
the liabilities in the balance sheet, a reserve, unavailable for
distribution, of
the aggregate financial
assistance.

the amount of

Where a third party by means of financial assistance from a
company acquires that company’s own shares within the
meaning of Article 19(1) or subscribes for shares issued in
the course of an increase in the subscribed capital, such
acquisition or subscription shall be made at a fair price.’;

undertaking itself, or individuals acting in their own name,
but on behalf of the members of such bodies or on behalf
of such undertaking, are counterparties to such a transac-
tion, Member States shall ensure through adequate safe-
guards that such transaction does not conflict with the
company’s best interests.

(*) OJ L 193, 18.7.1983, p. 1. Directive as last amended by

Directive 2006/43/EC.’;

8.

in Article 27(2), the second subparagraph shall be replaced
by the following:

‘Article 10(2) and (3) and Articles 10a and 10b shall apply.’;

9. Article 32(1) shall be replaced by the following:

‘1.
In the event of a reduction in the subscribed capital,
at least the creditors whose claims antedate the publication
of the decision on the reduction shall at least have the right
to obtain security for claims which have not fallen due by
the date of that publication. Member States may not set aside
such a right unless the creditor has adequate safeguards, or
unless such safeguards are not necessary having regard to
the assets of the company.

Member States shall lay down the conditions for the exer-
cise of the right provided for in the first subparagraph. In
any event, Member States shall ensure that the creditors are
authorised to apply to the appropriate administrative or judi-
cial authority for adequate safeguards provided that they can
credibly demonstrate that due to the reduction in the sub-
scribed capital the satisfaction of their claims is at stake, and
that no adequate safeguards have been obtained from the
company.’;

10. Article 41(1) shall be replaced by the following:

‘1. Member States may derogate from Article 9(1), the
first sentence of point (a) of Article 19(1), and Articles 25,
26 and 29 to the extent that such derogations are necessary
for the adoption or application of provisions designed to
encourage the participation of employees, or other groups
of persons defined by national
in the capital of
undertakings.’.

law,

7.

the following Article shall be inserted:

Article 2

‘Article 23a

In cases where individual members of the administrative or
management body of the company being party to a transac-
tion referred to in Article 23(1), or of the administrative or
management body of a parent undertaking within the mean-
ing of Article 1 of Council Directive 83/349/EEC of
13 June 1983 on consolidated accounts (*) or such parent

1. Member States shall bring into force the laws, regulations
and administrative provisions necessary to comply with this
Directive by 15 April 2008.

When Member States adopt these measures, they shall contain a
reference to this Directive or shall be accompanied by such ref-
erence on the occasion of their official publication. The methods
of making such reference shall be laid down by Member States.

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2. Member States shall communicate to the Commission the
texts of the main provisions of national law which they adopt in
the field covered by this Directive.

Article 4

This Directive is addressed to the Member States.

Article 3

Done at Strasbourg, 6 September 2006.

This Directive shall enter into force on the 20th day following
that of its publication in the Official Journal of the European Union.

For the European Parliament
The President
J. BORRELL FONTELLES

For the Council
The President
P. LEHTOMÄKI