Commission staff working document - Accompanying document to the Proposal for a Directive of the European Parliament and the Council simplifying the rules of the Third and the Sixth Company law Directives - Impact assessment {COM(2008) 576} {SEC(2008) 2487}
Date: 2008-09-24
Institutions: European Commission
Subjects: EC Directive, company law, demerger, impact study, merger, simplification of legislation

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 24.9.2008 
SEC(2008) 2486 

COMMISSION STAFF WORKING DOCUMENT 

Accompanying document to the 

Proposal for a directive of the European Parliament and the Council 
simplifying the rules of the Third and the Sixth Company law Directives 

Impact assessment 

{COM(2008) 576} 
{SEC(2008) 2487} 

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COMMISSION STAFF WORKING DOCUMENT 

Accompanying document to the 

Proposal for a directive of the European Parliament and the Council 
simplifying the rules of the Third and the Sixth Company law Directives 

Impact assessment 

TABLE OF CONTENTS 

1. 

1.1. 

1.2. 

1.3. 

2. 

3. 

4. 

4.1. 

Introduction .................................................................................................................. 5 

The EU acquis in company law.................................................................................... 5 

Commission initiative to simplify company law.......................................................... 5 

Context - Reduction of administrative burdens............................................................ 6 

Procedural issues and consultation of interested parties .............................................. 7 

Main sources of information used................................................................................ 9 

Problem definition...................................................................................................... 11 

The directives on domestic mergers and divisions in today's business 
environment................................................................................................................ 11 

4.2. 

Reporting requirements in the context of a planned merger or division.................... 13 

4.2.1.  Detailed written report on the draft terms of merger/division by the management ... 13 

4.2.2. 

Independent expert report........................................................................................... 14 

4.2.3.  Accounting statement ................................................................................................. 16 

4.2.4.  Double reporting in the case of an increase in capital or setting up of a new 

company linked to division of companies.................................................................. 18 

4.2.5.  Simplified mergers and divisions between parent companies and subsidiaries......... 20 

4.3. 

Publication and documentation duties........................................................................ 21 

4.3.1.  Publication of the draft terms of merger/division and of the merger/division 

itself............................................................................................................................ 21 

4.3.2.  Documentation to be made available to shareholders ahead of the general 

meeting ....................................................................................................................... 22 

4.4. 

Protection of creditors ................................................................................................ 24 

5. 

Subsidiarity................................................................................................................. 24 

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6. 

7. 

7.1. 

Objectives................................................................................................................... 24 

Policy options and Analysis ....................................................................................... 25 

Reporting requirements – measures targeting all public limited-liability 
companies................................................................................................................... 26 

7.1.1.  Option 1: No policy change ....................................................................................... 26 

7.1.2.  Option 2: Introduce the possibility, for shareholders, to renounce the written 

report of the management and the accounting statement ........................................... 26 

7.1.3.  Option 3: Restrict reporting requirements to larger or to listed companies ............... 27 

7.1.4.  Option 4: Repeal the reporting requirements in the directives................................... 28 

7.1.5.  Comparing the options ............................................................................................... 28 

7.2. 

Reporting requirements – measures with a view to companies that are set up or 
increase their capital in the context of a merger or division ...................................... 31 

7.2.1.  Option 1: No policy change ....................................................................................... 31 

7.2.2.  Option 2: Introduce a Member State option to grant an exemption from the 

reporting requirement under the Second Directive in the case of a division ............. 31 

7.2.3.  Option 3: Introduce a mandatory exemption from the reporting requirement 

under the Second Directive in the case of a merger, a public offer and a division.... 31 

7.2.4.  Comparing the options ............................................................................................... 31 

7.3. 

Reporting requirements – measures concerning simplified mergers and divisions 
between parent companies and subsidiaries............................................................... 32 

7.3.1.  Option 1: No policy change ....................................................................................... 32 

7.3.2.  Option 2: Removing the Member State options as regards simplified mergers 

and divisions............................................................................................................... 32 

7.3.3.  Option 3: Ensuring that Member States have to grant the possibility of 

simplified mergers/divisions ...................................................................................... 33 

7.3.4.  Comparing the options ............................................................................................... 36 

7.4. 

Publication and documentation duties........................................................................ 36 

7.4.1.  Option 1: No policy change ....................................................................................... 36 

7.4.2.  Option 2: Use a central Internet site for publishing the information ......................... 37 

7.4.3.  Option 3: Use the company's or another Internet site for publishing the 

information ................................................................................................................. 38 

7.4.4.  Comparing the options ............................................................................................... 39 

7.5. 

Protection of creditors ................................................................................................ 40 

7.5.1.  Option 1: No policy change ....................................................................................... 40 

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7.5.2.  Option 2: Adapt creditor protection rules to the provision in the modernised 

Second Directive ........................................................................................................ 40 

7.5.3.  Option 3: Repeal the creditor protection rules in the directives................................. 40 

7.5.4.  Comparing the options ............................................................................................... 40 

7.6. 

Conclusion.................................................................................................................. 41 

8. 

Monitoring and Evaluation......................................................................................... 42 

ANNEXES ............................................................................................................................... 43 

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1. 

INTRODUCTION 

1.1. 

The EU acquis in company law 

The  EU  company  law  directives  establish  disclosure  requirements  for  limited-liability 
companies  and  for  the  branches  of  these  companies  that  are  established  in  another 
Member State (First and Eleventh Directive), set minimum requirements concerning the 
capital  of  public  limited-liability  companies  (Second  Directive)  and  concerning  the 
procedures  for  domestic  mergers  and  divisions  (Third  and  Sixth  Directives)  and  for 
cross-border  mergers  (Tenth  Directive).  Furthermore,  the  Twelfth  Company  law 
Directive  introduced  the  possibility  to  found  limited-liability  companies  with  a  single 
member  and  more  recent  directives  dealt  with  the  procedure  to  follow  in  the  case  of  a 
takeover bid (Takeover bid Directive) and with shareholder voting (Shareholders' rights 
Directive). 

Those directives that were adopted between the 1960s and the 1980s have been updated 
several  times  in  order  to  adapt  them  to  new  developments.1  However,  none  of  these 
amendments touched on the scope or the basic content of the directives concerned. They 
have remained fundamentally unchanged since their adoption. 

1.2. 

Commission initiative to simplify company law 

In July 2007, the Commission launched an initiative for a broad simplification exercise in 
the  areas  of  company  law,  accounting  and  auditing.  On  10 July 2007,  it  adopted  a 
communication ("the Communication") setting out its ideas.2 

The  Communication  outlined  two  options  for  the  simplification  of  the  company  law 
acquis:  

Option  1  considered  keeping  only  the  directives  that  cover  cross-border  issues.  It 
proposed, therefore, the repeal of the directives on companies' capital (Second Directive), 
domestic  mergers  and  divisions  (Third  and  Sixth  Directive),  and  single  member 
companies (Twelfth Directive). 

Option  2  limited  the  exercise  to  some  key  simplification  measures  related  to  specific 
provisions of the directives. This limited approach would also give possibility to review 
e.g. the rules on the documentation of a merger or a division (management reports, expert 
reports, etc.) or the creditor protection rules of the directives. 

The  simplification  initiative  in  company  law  is  a  key  contribution  to  the  wider  Better 
Regulation/Simplification  agenda,  in  particular  the  initiative  to  reduce  administrative 

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2 

In the context of the fourth phase of the Simplification of the Legislation on the Internal Market 
Process (SLIM), the First and Second Company law Directives were modernised; furthermore, the 
Tenth Company law Directive on cross border mergers and the Directive on the exercise of certain 
rights of shareholders were adopted. 
Communication from the Commission on a simplified business environment for companies in the 
areas  of  company  law  accounting  and  auditing  (COM(2007)394,  not  published  in  the  Official 
Journal); available on DG MARKT's website at 
http://ec.europa.eu/internal_market/company/simplification/index_en.htm 

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burdens weighing on European companies. The proposals deriving from this initiative are 
foreseen  in  the  Simplification  Rolling  Programme  for  adoption  by  the  Commission  in 
2008.3 

1.3. 

Context - Reduction of administrative burdens 

Unnecessary  and  disproportionate  administrative  costs  severely  hamper  economic 
activity.  In  2005,  the  Commission  therefore  launched  an  Action  Programme  for 
measuring administrative costs and reducing administrative burdens in order to improve 
the business environment for EU companies and to make the EU economies fit to meet 
the challenges of a more competitive global business environment in which they have to 
operate.4 

The Action Programme was endorsed by the Spring European Council in March 20075. 
The European Council underlined that reducing administrative burdens is important with 
a  view  to  boosting  Europe's  economy,  especially  given  the  potential  benefits  this  can 
bring for small and medium-sized enterprises (SMEs). It stressed that a strong joint effort 
of  the  European  Union  and  the  Member  States  is  necessary  to  reduce  administrative 
burdens within the EU.  

is  carried  out  by 

A  key  part  of  the  Action  Programme  consisted  of  a  large-scale  measurement  of 
administrative  costs  incurred  by  businesses  in  meeting  legal  obligations  to  provide 
information.  This  baseline  measurement 
the  consortium 
Deloitte/Capgemini/Ramboll  on  behalf  of  the  Commission  and  covers  obligations 
stemming  from  EU  legislation  and  from  national  measures  transposing  that  legislation. 
The methodology used is based on the ‘EU Standard Cost Model’, inspired by different 
variants of the Standard Cost Model (SCM) currently used for measurements at national 
level by a number of Member States.6 The EU measurement focuses on the thirteen areas 
with  the  most  burdensome  information  obligations  ("priority  areas"),  which  included, 
among others, the area of company law, accounting and auditing. The results of the entire 
measurement  exercise  will  be  delivered  by  the  end  of  2008.  However,  company 
law/accounting/auditing  was  designated  as  a  pilot  in  that  exercise,  given  that  national 
measurements  carried  out  in  the  years  until  2006  and  the  results  of  the  stakeholder 
consultation  had  identified  that  area  as  one  of  the  most  burdensome  areas  of  the  EU 
acquis.  Therefore,  the  final  measurement  results  in  these  areas  were  made  available 
already at the end of June 2008. 

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"Second  progress  report  on  the  strategy  for  simplifying  the  regulatory  environment",  Annex  1, 
Revision  of  the  company  law,  accounting  and  auditing  acquis  (COM(2008)33,  not  published  in 
the Official Journal, p. 23) 
See Communication from the Commission to the Council, the European Parliament, the European 
Economic and Social Committee and the Committee of the Regions - "A strategic review of Better 
Regulation  in the  European Union" (COM(2006)689  final,  OJ  C 78,  11.4.2007, p.  9).  For  more 
detailed 
of  DG  ENTR: 
the 
http://ec.europa.eu/enterprise/admin-burdens-reduction/home_en.htm 
Presidency Conclusions of the Brussels European Council - doc. 7224/07 Concl 1 
The measurement has been conducted in the Czech Republic, Finland, France, Ireland, Poland and 
Spain. Furthermore, existing data from Member States that which have already conducted baseline 
measurements  where  used  (Netherlands,  Denmark,  UK  and  Germany).  The  data  for  the  other 
Member States were obtained by way of extrapolation. 

the  website 

information 

programme 

see 

on 

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For  the  same  reason,  a  first  proposal  for  a  directive  modifying  the  Third  and  the  Sixth 
Company  law  Directives  was  included  in  the  first  package  of  "fast  track"  proposals 
adopted  by  the  Commission  in  March  2007.  This  proposal  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 concerned renounce to the need for 
such a report. The directive was adopted by the European Parliament and the Council on 
13 November 2007.7 

2. 

PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES 

The  content  of  the  July  Communication  was  submitted  to  the  debate  by  the  European 
Parliament, the Council and stakeholders. 

On 22 November 2007, the Competitiveness Council adopted conclusions welcoming the 
simplification  initiative  in  broad  terms  and  stressed  the  importance  of  reducing 
administrative  burdens  in  order  to  improve  the  competitiveness  of  companies.  The 
Council  called  on  the  Commission  to  expedite  consideration  of  responses  to  its 
Communication  and,  where  appropriate  and  preferably  before  the  end  of 2008,  bring 
forward proposals, accompanied by impact assessments.8 

On  21  May  2008,  a  report  was  adopted  by  the  European  Parliament  which  expresses 
general support for the simplification exercise but rejects the idea of a (partial) repeal of 
the  EU  company  law  acquis  and  indicates  preference  in  principle,  on  the  side  of  the 
Parliament,  for  limited  simplification  measures  (option  2  of  the  Communication).  The 
European  Parliament  further  recalls  that  the  interests  of  all  stakeholders,  including 
investors, owners, creditors and employees, as well as the principles of subsidiarity and 
proportionality, must be duly taken into account.9 

In addition, the Communication invited Member State and EEA governments along with 
stakeholders  to  submit  comments  on  the  proposals  in  writing  by  mid-October  2007. 
Contributions  from  eighteen  Member  State  governments,  one  EEA  country  and 
110 stakeholders, 
including  European  bodies  and  associations,  originated  from 
23 countries  in  total,  of  which  22  Member  States,  were  submitted.  A  report  on  the 
reactions  received  is  available  on  the  website  of  the  Directorate-General  for  Internal 
Market 
at 
http://ec.europa.eu/internal_market/company/simplification/index_en.htm.10 

(DG MARKT) 

Services 

and 

Among those who reacted to the Communication, option 2 (limited  simplification) was 
clearly preferred to option 1 (repeal/partial repeal). The main argument put forward was 
that  these  directives  provide  legal  certainty  and  that  their  repeal  would  rather  cause 
additional  costs  than  lead  to  savings  for  companies.  However,  about  three  quarters  of 

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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  public  limited  liability 
companies, OJ L300, 17.11.2007, p. 47. 
Council document 15222/07 DRS 48 
Report A6-0101/2008 
See also Annex 1 to this Impact Assessment. 

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those  who  took  a  position  on  the  question  whether  individual  simplification  measures 
should  be  proposed  supported  the  idea.  They  considered  that  the  Company  Law 
Directives  are  in  some  parts  overly  descriptive  and  restrict  the  flexibility  of  Member 
States and companies beyond what is really necessary.  

Furthermore,  the  High  Level  Group  of  Independent  Stakeholders11  was  consulted 
alongside  the  work  of  the  consortium  that  carries  out  the  large-scale  measurement  of 
administrative costs. In February 2008, it gave a positive opinion on a second package of 
fast track proposals in company law that included proposals for modifications of the First 
and the Eleventh Company law Directives12. In two further meetings, it discussed further 
reduction  possibilities  in  company  law,  accounting  and  auditing  and  adopted  its  final 
opinion  on  10 July 2008.  In  this  opinion,  the  group  welcomes  the  efforts  by  the 
Commission to review the reporting requirements in these two directives and calls upon 
the  Commission  to  present  ambitious  legislative  proposals  which  realize  as  much  as 
possible the reduction potential identified for these two directives whilst protecting both 
shareholders’ and creditors’ interest. 

The  proposals  that  should  follow-up  the  results  of  the  communication  and  of  the 
measurement were entered into the agenda planning of DG Internal Market and Services 
under reference no. 2006/MARKT/044. 

In  April  2008,  a  Steering  Group  was  formed  to  monitor  the  progress  of  the  impact 
assessment of the present proposal. The Steering Group was made up of representatives 
of  the  several  Directorates-General  who  responded  to  the  invitation  of  DG  Internal 
Market  and  Services 
(the  Legal  Service, 
DG Employment,  Social  Affairs  and  Equal  Opportunities  and  DG for  Enterprise  and 
Industry) and included a representative of the Secretariat-General. 

the  Steering  Committee 

join 

to 

The  Group  met  twice  to  evaluate  the  advance  of  the  impact  assessment,  to  provide 
guidance and drafting contributions and to approve the final document. 

The  Impact  Assessment  report  was  examined by  the  Impact  Assessment  Quality  Board 
on 2 July 2008. Following the Board's opinion, several changes were made to this Impact 
Assessment, in particular, the following: The assessment of burden reductions has been 
complemented  using  figures  from  the  consortium  that  were  only  made  available  in  the 
course of the month of July. Some estimations in the Impact Assessment report have also 
been amended following further scrutiny of the assumptions and estimations presented by 
the consortium. Section 3 has been extended with an explanation of how the data from 
the measurement is calculated in general. This is supplemented throughout the document 
with  further  explanations  of  how  some  of  the  individual  estimations  have  been 
calculated.  The  comments  of  the  High  Level  Group  of  Independent  Stakeholders  have 
been  inserted  in  section  2.  Section  3  includes  now  an  explanation  of  which  reduction 

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See  Commission  working  document  "Reducing  administrative  burdens  in  the  European  Union 
2007 progress report and 2008 outlook", COM(2008)35; 
For details on the High Level Group of Independent Stakeholders see the website of DG ENTR at 
http://ec.europa.eu/enterprise/regulation/better_regulation/high_level_group_is_en_version.htm 
Proposal  for  a  Directive  of  the  European  Parliament  and  of  the  Council  amending  Council 
Directives  68/151/EEC  and  89/666/EEC  as  regards  publication  and  translation  obligations  of 
certain types of companies, COM(2008)194, not yet published in the Official Journal 

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suggestions in the measurement report are not covered in the Impact Assessment report. 
Comments  on  the  support  from  stakeholders,  including  national  differences  in  this 
regard, have also been inserted in section 3 and throughout the document. Section 4.1 has 
been  extended  with  an  explanation  of  why  an  initiative  is  particularly  important  for 
SME's.  Further  clarity  as  to  the  baseline  scenario  in  section  7.1  has  been  provided. 
Moreover, sub-option (2) has been inserted in section 7.1.2 and sub-option (1) has been 
inserted  in  section  7.1.3.  In  section  7.6,  an  estimate  of  to  what  extent  the  envisaged 
reductions contribute to the global 25% reduction target has been inserted. 

3. 

MAIN SOURCES OF INFORMATION USED 

The  main  source  of  information  on  which  this  impact  assessment  is  based  is  the  large 
scale measurement of administrative costs, carried out by the consortium which delivered 
its  report  on  30  June  2008.  Furthermore,  the  consortium  provided  some  additional 
information  about  the  reduction  potential  of  possible  simplification  measures  in  an 
additional report of 31 July 2008.13 

In the measurement report, the total administrative costs deriving from the EU rules on 
company  law  (including  accounting  and  auditing)  are  estimated  at  a  total  of  22.74  bn 
€/year.  84.9%  of  these  costs  derive  from  the  obligations  of  the  Fourth  Company  law 
Directive14 and another 4% from the Seventh Company law Directive15. About 11% (2.5 
bn  €)  are  linked  to  the  company  law  directives  that  do  not  deal  with  accounting  and 
auditing matters. According to the report by the consortium, about 25% of these are so 
called "business as usual costs" that would arise even in the absence of legislation. For 
the accounting directives, these "business as usual costs" are estimated to lie at 40%. This 
means that the overall administrative burdens in the area of company law can roughly be 
estimated  at  about  1.88  bn  €/year,  and  in  the  area  of  accounting  at  roughly  12.13  bn 
€/year. 

The  estimates  in  the  report  by  the  consortium  are  made  using  the  EU  Standard  Cost 
Model. The basic principle in the model is to calculate, on the basis of interviews with 
companies,  the  costs  per  occurrence  (one  type  of  occurrence  could  for  instance  be 
preparing  draft  terms  of  merger)  and  multiplying  with  the  total  (average)  number  of 
occurrences  in  that  Member  State  per  year.  Then  the  total  costs  per  Member  State  per 
year  are  summoned.  The  consortium  has  applied  this  method  in  6 Member  States16, 

13 

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15 

16 

Although these two reports have been delivered as final versions, minor adjustments in the version 
that will ultimately be published, at this stage, cannot be excluded. 
Fourth Council Directive 78/660/EEC of 25 July 1978 based on Article 54 (3) (g) of the Treaty on 
the annual accounts of certain types of companies, OJ L 222, 14.8.1978, p. 11, last amended by 
Directive 2006/46/EC of the European Parliament and of the Council of 14 June 2006 amending 
Council  Directives  78/660/EEC  on  the  annual  accounts  of  certain  types  of  companies, 
83/349/EEC  on  consolidated  accounts,  86/635/EEC  on  the  annual  accounts  and  consolidated 
accounts  of  banks  and  other  financial  institutions  and  91/674/EEC  on  the  annual  accounts  and 
consolidated accounts of insurance undertakings, OJ L 224, 16.8.2006, p. 1) ( . 
Seventh  Council  Directive  83/349/EEC  of  13  June  1983  based  on  the  Article  54  (3)  (g)  of  the 
Treaty  on  consolidated  accounts,  OJ  L  193,  18.7.1983,  p.  1,  last  amended  by  Directive 
2004/46/EC). 
These Member States are the Czech Republic, Finland, France, Ireland, Poland and Spain. 

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reused  data  in  another  five  Member  States17  where  national  measurements  had  already 
been carried out, and extrapolated figures from the remaining 16 Member States using a 
method of categorising the Member States in groups depending on criteria related to e.g. 
average wage rates, average size of companies and total number of companies. 

The sometimes considerable differences, in the report, in administrative costs of different 
countries can, at least partially, be explained by the differences in these criteria. To this 
end, the measurement report groups the Member States in three groups:  

–  Large  and  established  economies  with  high  populations,  high  GDP,  mainly 

limited liability companies and relatively high wages (e.g. FR, DE, UK) 

–  Smaller (mostly western European) economies with high wages, a generally 

highly educated labour force and a fairly high GDP (e.g. FI); and 

–  Emerging (mostly Eastern European) economies with above average growth 
in  GDP,  below  average  wages  and  relatively  low  administrative  costs  (e.g. 
CZ, PL, BG)  

Another explanation is that in the four countries where the national data were taken over 
for the purpose of the present measurement, the information obligations are not always 
defined in the same way as in the measurement by the consortium. Where this is the case 
with  a  view  to  a  certain  information  obligation,  this  is  indicated  in  the  following,  and 
where appropriate, these figures are not taken into account with a view to calculating the 
total costs or potential savings. 

The figures and other information provided by the consortium have been complemented 
by information on national procedures directly requested from the Member States. 

Furthermore, also the summary report on the reactions to the July 2007 Communication 
gives indications on where, in particular, the companies themselves see possibilities for 
facilitating their lives. Therefore, this information serves as a further basis for this impact 
assessment. In this context it should be noted that the reactions received and reflected in 
the impact assessment seem to be influenced to a significant extent by the geographical 
origin  of  the  respondents.  As  set  out  in  the  summary  report  on  the  reactions  to  the 
Communication, around 20% of the reactions derived from UK stakeholders and another 
20% from German stakeholders. French stakeholders represented about 12% of the total 
respondents.  Whereas  a  clear  majority  of  UK  respondents  and  respondents  from  the 
Nordic  countries  strongly  supported  wide  reaching  simplification  measures,  French 
stakeholders  and,  at  least  in  the  area  of  company  law,  also  a  number  of  German 
stakeholders  were  more  hesitant.  The  same  is  true  for  the  (fewer)  respondents  from 
countries  like  Belgium  and  Austria.  A  possible  explanation  for  these  trends  is  that 
stakeholders in Member States that have been part of the negotiations on these directives 
are  closer  to  their  system  and  therefore,  see  less  a  need  for  a  change  than  stakeholders 
from  Member  States  that  joined  the  EU  later  and  were  confronted  with  the  directives 
only  at  the  moment  of  their  accession.  From  this  point  of  view  it  would  have  been 
interesting  to  have  more  reactions  from  the  new  Member  States,  which,  unfortunately, 

17 

These  Member  States  are  Denmark,  Germany,  the  Netherlands,  the  United  Kingdom  and,  to  a 
limited extent, Austria. 

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however  was  not  the  case.  Another  factor  seems  to  be  that  the  current  high  level  of 
harmonisation  is  useful  for  international  groups  of  companies  that  are  obviously  more 
present in France and Germany than in smaller Member States. 

As to the number of public limited-liability companies concerned, the 2006 survey of the 
European  Companies'  Registers  Forum18  provides  figures  that  are  used  in  order  to 
complement the information provided by the measurement. 

The impact assessment covers all reduction proposals that the consortium puts forward in 
its  report,  with  the  exception  of  the  proposal  to  abolish  the  requirement  for  holding  a 
general  meeting  in  the  acquiring  company.  This  proposal  was  put  forward  by  the 
Commission  in  its  July 2007  Communication  and  rejected  by  two  third  of  the 
respondents who reacted to this proposal. 

4. 

PROBLEM DEFINITION 

The Third and the Sixth Company law Directives belong to those company law directives 
that were adopted about 30 years ago. A number of rules contained in these directives no 
longer  seem  to  match  with  the  technological  developments  and  with  today's  business 
environment. In addition, some requirements in these Directives seem to imply costs for 
at least certain companies that are clearly disproportionate to the purpose pursued by the 
rules,  leaving  too  little  flexibility  to  Member  States  and  companies  to  adapt  the 
requirements to their situation. Also some rules seem to be incoherent with more recent 
rules in other company law directives. Therefore, simplification measures concerning the 
Third  and  the  Sixth  Company  law  Directives  going  beyond  the  2007  fast  track 
modification  were  proposed  in  the  July  2007  Commission  Communication.  When  the 
second  fast  track  package  was  prepared  in  March  2008,  these  proposals  were  not 
included  in  the  list  as  they  were  not  considered  as  suitable  for  a  fast  track  procedure. 
They do not aim at minor legislative changes but at a general update and review of the 
requirements of these directives.  

4.1. 

The  directives  on  domestic  mergers  and  divisions  in  today's  business 
environment 

The Third and the Sixth Company law Directives apply to mergers and divisions of those 
public  limited-liability  companies  notified  by  the  Member  State  in  accordance  with 
Article 1 of the Third Directive. 

In  order  to  ensure  an  appropriate  protection  of  shareholders  of  these  public  limited-
liability companies in the case of a (domestic) merger or division, the directives establish 
certain  information  and  publication  duties  that  the  companies  involved  have  to  comply 
with.  In  addition,  the  directives  contain  rules  for  the  protection  of  the  companies' 

18 

EN 

European 
http://www.ecrforum.org/section/8/index.html.  The  Forum  is  an  organism 
established in order to enhance cooperation between companies' registers in Europe. 

Commerce 

Registers 

Survey 

Forum 

2006, 
that  has  been 

11 

   EN 

 
                                                 
creditors.  The  rights  of  the  employees  of  the  companies  involved  in  the  operation  are 
dealt with by separate EU rules19. 

Despite  the  restriction  of  the  directives'  scope  to  public  limited-liability  companies, 
almost all 21 Member States that replied to questions asked by DG MARKT applied the 
same or similar rules to mergers and divisions of private limited-liability companies, in 
particular  with  a  view  to  the  reporting  requirements  established  in  the  directives  (see 
Annex  2).  However,  in  about  half  of  these  Member  States  members  of  private  limited-
liability companies have the possibility to renounce (by unanimity) these reports. 

Reporting requirements are particularly burdensome for small enterprises. As stressed in 
the  Commission's  Small  Business  Act  of  25 June  200820,  rules  should  therefore  be 
designed according to the "Think Small First" principle and ensure that exemptions for 
small enterprises are in place, in order to make their lives easier. 

In their current form, the Third and the Sixth Directives do not seem to match with this 
objective. They regulate the information obligations towards the companies' shareholders 
in  a  very  detailed  way  and  leave  little  flexibility  to  Member  States  and  companies  to 
adapt these requirements e.g. to the size of the companies concerned and the number of 
their  shareholders.  The  result  is  that  in  some  cases  the  costs  of  complying  with  the 
requirements  seem  disproportionate  to  the  purpose  pursued.  Furthermore,  the  ways  in 
which information is to be provided (e.g. making documents available at the companies' 
registered offices, possibility of requesting paper copies) seem rather old fashioned from 
today's  point  of  view  and  are  not  in  line  with  the  methods  applied  by  more  recent 
directives, such as e.g. the Shareholders' Rights Directive21. Finally, the directives do not 
take account of modifications that have been made, in the recent past, to other EU acts 
which contain similar or related provisions, such as the Second Company law Directive 
on the capital of public limited-liability companies that was modified in 200622 and the 
Transparency Directive that was adopted in 200423.  

From  the  reactions  received  to  the  Communication  and  the  preliminary  results  of  the 
measurement  of  administrative  burdens,  it  can  be  concluded  that  a  review  of  these 
Directives should look in particular at the following issues: 

–  Reporting  requirements  in  the  context  of  a  planned  merger  or  division:  the  current 
rules  in  the  directives  seem  very  detailed  and  leave  Member  States  and  companies 

19 

20 

21 

22 

23 

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, OJ L 82, 22.3.2001, p. 16 
Communication from the Commission: "Implementing the Community Lisbon programme: Think 
Small First - A Small Business Act for Europe, COM(2008) 394, pages 7/8 
Directive  2007/36/EC  of  the  European  Parliament  and  of  the  Council  of  11  July  2007  on  the 
exercise of certain rights of shareholders in listed companies, OJ L 184, 14.7.2007, p. 17 
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 
Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on 
the  harmonisation  of  transparency  requirements  in  relation  to  information  about  issuers  whose 
securities  are  admitted  to  trading  on  a  regulated  market  and  amending  Directive 2001/34/EC, 
OJ L 390, 31.12.2004, p. 38 

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little  flexibility  as  to  the  appropriateness  and  the  contents  of  the  different  reports. 
Furthermore, the fact that also the Second Company law Directive plays a role in the 
process leads to cases of double reporting in particular in the context of divisions; 

–  Publication  and  documentation  duties:  the  ways  by  which  documents  have  to  be 
published  and/or  made  available  to  shareholders  is  rather  old  fashioned  and  creates 
unnecessary costs; and 

–  The protection of creditors in the context of the directives: Here, a recent modification 
of  a  parallel  rule  in  the  Second  Company  law  Directive  has  led  to  certain 
inconsistencies within EU law. 

4.2. 

Reporting requirements in the context of a planned merger or division 

Under  the  Third  and  the  Sixth  Company  Law  Directives,  companies  that  prepare  a 
merger or a division are subject to a number of reporting requirements. These reports are 
meant to inform shareholders about the legal modalities of the operation, the economic 
background and the underlying facts and data that led the management of the companies 
involved to propose a certain share exchange ratio. 

The rules in the Third and Sixth Directives determine in a relatively detailed way what 
reports  are  required  and  from  whom.  Thus,  a  detailed  written  report  explaining  the 
draft terms of the operation and setting out the legal and economic grounds24 is required 
from the management or administrative bodies of the companies involved, a report of an 
independent expert is needed in order to assess in particular whether the proposed share 
exchange ratio is fair and reasonable25 and an accounting statement has to be drawn up 
if  the  latest  annual  accounts  relate  to  a  financial  year  that  ended  more  than  6  months 
before the date of the draft terms of merger or division26. Furthermore, in the case of a 
division  where  both  an  expert  report  under  the  Second  Company  law  Directive  and  an 
expert report on the draft terms of division are required, the Sixth Directive only allows 
Member States to provide that both reports can be established by the same expert27; there 
is no exemption from either of these reporting requirements granted under any of the two 
directives. 

4.2.1.  Detailed written report on the draft terms of merger/division by the management  

The  draft  terms  of  merger/division  form  the  legal  basis  of  the  merger/division  and  are 
normally drawn up by the administrative or management bodies of each of the companies 
involved  in  the  merger/division  with  the  help  of  external  experts  (lawyers,  M&A 
specialists), and are to be published in the manner prescribed by the national law.28 

In order to explain the content of this legal document to the shareholders, the company's 
management has to draw up a detailed written report to the general meeting where it also 
has to set out the legal and economic grounds  for the merger/division, in particular the 

24 
25 
26 
27 
28 

Article 9 Third Directive, Article 7 Sixth Directive 
Article 10 Third Directive, Article 8 Sixth Directive 
Article 11(1)(c) Third Directive, Article 9(1)(c) Sixth Directive 
Article 8(3) Sixth Directive 
Art. 5(1), Art. 6 Third Directive; Art. 3(1), Art. 4 Sixth Directive 

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13 

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basis for the exchange ratio and the criterion for the allocation of shares.29 This report, in 
most cases, is produced in-house so the costs for the company are relatively limited.  

According to the measurement report the average cost of the detailed written report in the 
EU is 3,304 € for mergers and 10,079 € for divisions. However, these figures include big 
differences  between  the  Member  States.  Disregarding  some  extreme  figures  from 
Germany and United Kingdom would make the average cost in the EU 689 € for mergers 
and  7,799  €  for  divisions.30  The  latter  differences  in  costs  seem  mainly  related  to  the 
question whether the help of external experts is used or not.  

The  measurement  report  indicates  that  for  mergers,  the  total  administrative  costs 
(including external and internal costs) of requiring the detailed written report in the EU 
amount to around 7.79 mio €/year. 25% are estimated to be so-called "business as usual 
costs", so that the administrative burden is estimated to lie 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.31 Assuming the costs of divisions, in the missing 
four Member States, are about the same as for mergers the total costs for divisions can be 
estimated to 8.89 mio €/year, and the administrative burden 6.67 mio €/year.  

As  further  discussed  below  in  sections  4.2.2.  and  7.1.,  the  question  is  whether  the 
requirement of the management report is really necessary in all cases, or if more flexible 
requirements would make better regulation. 

4.2.2. 

Independent expert report 

An  additional  document  that  the  administrative  or  management  bodies  of  each  of  the 
companies  involved  have  to  submit  to  their  shareholders  is  a  report  by  an  independent 
expert on the draft terms of merger/division. 

While  the  report  by  the  management  fulfils  mainly  an  explanatory  function,  the  expert 
report must look at the substance of the economic decisions that have been taken in the 
draft terms of merger/division having a direct impact on the situation of the shareholders. 
The requirement that the report has to be established by an independent expert (normally 
an auditor) serves to ensure that the shareholders are provided with an objective basis for 
the decision on the merger/division that they have to take in the general meeting. 

Given  the  need  to  employ  an  independent  expert,  the  costs  linked  to  this  report  are 
considerably  higher  than  that  of  the  report  by  the  management.  These  costs  consist 
mainly  of  the  external  costs  (fees  to  be  paid  to  the  expert)  but  also  internal  costs  are 

29 
30 

31 

Art. 9(1) Third Directive; Art. 7(1) Sixth Directive 
The  UK  figure  for  divisions  is  21  €  (UK)  and  the  DE  figure  for  both  mergers  and  divisions  is 
68,005  €  per  incident.  It  is  unknown  to  what  extent  these  extreme  figures  are  the  result  of 
differences in the method of measurement in the UK and DE national measurements compared to 
the  measurement  made  by  the  Consortium.  In  general  the  average  total  costs  per  management 
report are between 250 and 1,750 € for mergers and between 3,000 and 19,000 € for divisions.  
The missing MS are DK, HU, IE and NL. 

EN 

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created  by  the  need  to  appoint  the  expert  and  to  provide  him  with  the  necessary 
information.32 

According to the consortium the average cost of the expert report in the EU is 41,774 € 
for  mergers  and  42,829 €  for  divisions.  Again,  these  figures  include  big  differences 
between  the  Member  States.  Disregarding  some  extreme  figures  from  Netherlands  and 
United Kingdom would reduce the average cost to 19,432 € for divisions.33  

The  measurement  report  estimates  that  for  mergers  the  total  costs  in  the  EU  are 
estimated to be 330.86 mio €/year and the administrative burden 248.15 mio €/year. 

For  divisions, 
108.23 mio €/year and the administrative burden 81.17 mio €/year.34 

the  corresponding 

total  costs 

in 

the  EU  are  estimated 

to  be 

Despite of the different functions of the management report on one hand and the expert 
report  on  the  other,  there  are  obviously  overlaps  between  the  two  reports.  Both  reports 
are  required  to  elaborate  on  the  draft  terms  of  merger/division,  especially  the  share 
exchange ratio and any special valuation difficulties which have arisen.  

For instance in the case of mergers between smaller public limited-liability companies 
with a limited number of shareholders and limited assets, an expert report might not be 
necessary.  The  situation  might  be  sufficiently  transparent  on  the  basis  of  the  written 
report  of  the  management  alone.  The  same  goes  for  divisions  of  small  public  limited-
liability companies.  

In  other  situations,  an  expert  report  might  be  necessary  but  not  an  additional  written 
report by the management, as, in order to evaluate the draft terms of merger or division, 
the expert report normally will need to describe also the content of the draft terms more 
precisely. 

There even might be situations where neither of the two reports is necessary, for instance 
if all shareholders are also managing directors in the company and therefore already have 
all relevant knowledge. 

Despite  these  possible  overlaps  between  the  two  reports,  and  possible  cases  of 
redundancy,  the  Third  and  the  Sixth  Directives  do  not  provide  any  possibility  for 
exemption  from  any  of  the  requirements.  The  only  flexibility  in  this  respect  was 
introduced  by  Directive  2007/63/EC35  that  provided  that  no  expert  report  needs  to  be 
established where all shareholders renounce it. This rule was copied from the more recent 

32 

33 

34 

35 

Based  on  figures  from  the  six  Member  States  where  the  consortium  has  made  a  measurement 
themselves the external costs account for around 97% of the total costs of an expert report. 
The figures from NL and UK are 22.50 € and 623,749 € respectively (both taken from the national 
measurements).  
The  total  figure  from  the  consortium  is  105,600,583  €,  but  this  figure  does  not  include  DK. 
Assuming the costs from DK are the same as for mergers the total costs in EU are 108,227,116 €. 
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  public  limited  liability 
companies was published in the Official, OJ L 300 of 17 November 2007, p. 47. 

EN 

15 

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Directive on cross-border  mergers36 and has to be transposed by the Member States by 
31 December 2008. 

The  rules  of  the  Third  and  the  Sixth  Company  law  Directives  also  do  not  take  into 
account  the  flexibility  introduced  in  2006  into  the  Second  Company  law  Directive  as 
regards the expert valuation of a contribution in kind37. This modification allows Member 
States  to  grant  an  exemption  from  the  requirement  for  an  expert  report  in  three  cases: 
(1) where the contribution in kind consists of transferable securities traded on a regulated 
market, (2) where it consist of other assets that have already been subject to a fair value 
evaluation  by  an  independent  expert  less  than  six  months  before  the  relevant  date,  and 
(3) where the fair value of the contribution is derived by individual asset from the audited 
statutory accounts of the previous financial year. 

The modification of the Second Directive had to be transposed by the Member States by 
15 April  2008.  However,  by  15  August,  only  20 Member  States  had  notified  the 
transposition to the Commission, and it seems as if only very few of them have made use 
of this option concerning the expert report. 

4.2.3.  Accounting statement 

Where the last annual accounts are older than six months at the moment where the draft 
terms of merger/division are drawn up, the management of each of the companies –listed 
and unlisted- involved also has to prepare an accounting statement. For this statement the 
management has to use the same method and layout as for the annual balance sheet. The 
statement, however, does not need to be audited.  

The accounting statement is one of the documents which currently need to be provided to 
the  shareholders  at  the  company's  registered  office  one  month  ahead  of  the  general 
meeting deciding on the merger/division and sent to every shareholder, who requests it, 
free  of  charge.38  This  applies  in  principle  both  to  mergers/divisions  by  way  of  normal 
procedure and to the different cases of simplified mergers/divisions.39 

The consortium seems to have measured only three of the information obligations in the 
Third and Sixth Directive where the preparation and disclosure to the shareholders of an 
accounting  statement  is  relevant,  namely  the  two  main  provisions  and  one  of  the 
simplified procedures for divisions.40 

As  regards  mergers  the  consortium  estimates  that  the  costs  of  making  available  to  the 
shareholders the different documents concerned amount to 3.49 mio €/year in the EU41, 

36 

37 
38 

39 
40 

41 

Directive  2005/56/EC  of  the  European  Parliament  and  of  the  Council  of  26  October  2005  on 
cross-border mergers of limited liability companies, OJ L310, 25.11.2005, p. 1. 
See Art. 10a of Directive 77/91/EC, introduced by Art. 1(2) of Directive 2006/68/EC 
Art. 11(1) and (3) Third Directive and Art. 9(1) and (3) Sixth Directive. The other documents that 
need to be made available to the shareholders are the draft terms of merger/division, the annual 
accounts  and  reports  of  the  merging/dividing  companies  for  the  preceding  three  financial  years, 
the detailed written report by management and the independent expert's report. 
See Art. 8(b), 24, 25(b) and 27(b) Third Directive and Art. 6(b) and Art. 20(b) Sixth Directive. 
Only Art. 11(1) and (3) Third Directive and Art. 6(b) and 9(1) and (3) have been measured, but 
not Art. 8(b), 24, 25(b) and 27(b) Third Directive and Art. 20(b) Sixth Directive. 
Data missing from DK. 

EN 

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apparently only counting the number of occurrences of normal procedure mergers. There 
are no "business as usual costs" in this case. 

The  consortium  assumes  that  30%  of  the  measured  costs  relate  to  producing  the 
accounting statement and making it available to the shareholders afterwards. Given that 
the accounting statement can be extracted from the accounting system, does not require 
an  audit  and  requires  less  pages  to  be  copied  etc.  than  the  three  financial  reports,  the 
assumption of 30 % of the measured costs seems to be acceptable.  

If one applies this 30 % assumption to the measurement made by the consortium the cost 
savings that could be made in the EU if the accounting statement was not required at all 
can be estimated at about 1.05 mio €/year for normal procedure mergers. On top of this 
come the cost savings related to the simplified mergers regulated by Art. 8(b), 24, 25(b) 
or 27(b) Third Directive.  

As regards divisions the consortium estimates that the  costs of making available to the 
shareholders  the  different  documents  concerned  amount  to  0.24  mio  €/year,  only 
counting,  however,  the  number  of  occurrences  of  divisions  carried  out  in  the  normal 
procedure. On top of this come, total costs of about 0.51 mio €/year regarding simplified 
divisions according to Art. 6(b) Sixth Directive. These costs are based on data from the 
14 Member States42 where a general meeting, under certain conditions, only is required 
in the dividing company.  

If  one  applies  the  30  %  assumption  referred  to  above  the  total  cost  savings  in  the  EU 
would be around 0.23 mio €/year for these two types of division. No figures are available 
regarding simplified divisions where the recipient companies together hold all the shares 
of  the  company  being  divided  and  therefore  only  general  meetings  in  the  recipient 
companies are required.43  

The  objective  of  the  requirement  for  an  accounting  statement  is  to  provide  the 
shareholders of listed and unlisted companies with an update on the assets and liabilities 
of  the  companies  involved.  However,  the  six  months'  deadline  seems  a  bit  arbitrary  as 
events influencing the financial situation of the company can arise any time and are not 
necessarily more likely five months after the annual accounts have been issued than two 
months  after  that  date.  Furthermore,  as  indicated  above,  in  cases  e.g.  where  all 
shareholders  are  involved  in  the  management  of  the  company  the  statement  may  not 
bring much added value for them. 

Finally, the rule in the Third and the Sixth Directives on the accounting statement does 
not take account of the half yearly financial statements that have to be prepared by listed 
companies  under  the  rules  of  the  Transparency  Directive44.  Where  such  half-yearly 
statements have to be prepared, the necessary financial information is already updated in 
a six months' rhythm so that the establishment of an additional accounting statement on 
the  occasion  of  a  planned  merger  or  division  does  not  seem  necessary.  At  least  in  this 
respect,  the  current  rules  of  the  Third  and  the  Sixth  Directives  therefore  create 
unnecessary administrative burden. 

42 
43 
44 

These are: AT, CZ, FI, FR, EL, IE, IT, LT, LU, NL, SI, ES, SE and UK. 
Art. 20(b) Sixth Directive 
Art. 5 Directive 2004/109/EC  

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4.2.4.  Double  reporting  in  the  case  of  an  increase  in  capital  or  setting  up  of  a  new 

company linked to division of companies 

An independent expert report has to be drawn up, under the rules of the Second Company 
law  Directive,  when  shares  are  issued  for  consideration  other  than  in  cash  both  in  the 
context of setting up a company and in the context of a capital increase in a company.45 

On  the  basis  of  that  report,  shareholders  can  verify  whether  the  value  of  the  non-cash 
consideration corresponds to that of the shares issued in exchange. The purpose of these 
rules is, therefore, to avoid the danger of overvaluation (either of property or claims) to 
the detriment of the company and to protect the interests of shareholders and creditors.46 

Member  States  have  the  possibility  to  provide  for  an  exemption  from  the  reporting 
requirement  both  where  a  new  company  is  set  up  by  merger  and  where  the  capital  is 
increased in the course of a merger or a public offer for the purchase or exchange of 
shares.47 The reason for these possibilities is that, both in the case of a merger and of an 
exchange  offer,  the  respective  directives  (the  Third  Company  Law  Directive  and  the 
Takeover bids Directive) provide for a report which, although its scope is larger, has to 
include the information normally contained in the expert report.48  

However, the EU rules do not offer a similar exemption possibility in the case of setting 
up a new company or an increase of capital linked to a division of a company, although 
the Sixth Directive contains the same rules on the expert report to be established as the 
Third Directive. Instead, under the rules of the Sixth Company Law Directive, Member 
States only have the possibility to provide that the report on the division and the report on 
the consideration in kind may be drawn up by the same expert.49 This situation seems to 
be  inconsistent  and  unnecessary  burdensome  at  least  in  those  cases  where  the  report 
under the Sixth Directive is indeed established.50 

It should be noted that the consortium ranks the obligation to establish an expert report in 
the comparable case of a merger and the duty to have an expert report under the Second 
Directive  fifth  and  eighth  in  the  top  10  of  most  burdensome  information  obligations  in 
company law.  

The  consortium  estimates  the  costs  and  also  the  burdens  of  requiring  an  expert  report 
under  the  Second  Directive  in  the  context  of  divisions  at  about  66 mio €.  This  figure, 
however, is based on the erroneous assumption that one expert report drawn up under the 
Sixth  Directive  will  always  be  accompanied  by  one  expert  report  under  the  Second 

45 
46 

47 
48 

49 
50 

Art. 27(2), (3), Art. 10 Second Directive, Art. 10 Third Directive 
Cf.  AG  Tesauro,  Case  C-83/91  (Wienand  Meilicke),  European  Court  reports  1992,  I-4871, 
para 14, 19. 
Art. 27(3) Second Directive 
cf. Articles. 5, 9, 10 Third Directive; in the case of a takeover the report is the offer document, 
Art. 6(3) Takeover bids Directive (Directive 2004/25/EC of the European Parliament and of the 
Council of 21 April 2004 on takeover bids, OJ L 142, 30.4.2004, p. 12) 
Articles 8(3) and 22(4) Sixth Directive 
Any measure in this area should therefore be seen in the context of possible measures concerning 
the reporting requirements in the Third and Sixth Directives. 

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Directive.51 Moreover, the cost estimate from the consortium does not take into account 
the  expert  report  for  considerations  other  than  in  cash  where  the  subscribed  capital  is 
increased in the course of a division.52 

It seems, therefore, more appropriate  to calculate  the total  costs/burdens  in this  context 
on  the  basis  of  an  estimated  average  cost  per  expert  report  under  the  Second  Directive 
and to multiply this average with an estimate of the number of occurrences. 

According to the figures provided by the consortium , the average cost per occurrence in 
the  EU  when  requiring  an  expert  report  for  contributions  in  kind  is  16,700 €  in  the 
context  of  setting  up  new  companies  and  11,180 €  in  the  context  of  capital  increases. 
Since, in the context of divisions, it is far more common to set up new companies than to 
increase  the  capital  of  existing  companies,  a  rough  estimate  of  the  average  cost  per 
occurrence in the EU can be set to around 15,000 €. 

The  measurement  report  estimates  that  around  4,331  draft  terms  of  divisions  of  public 
limited liability companies are produced in the EU per year.53 However, for Denmark the 
consortium  comes  to  very  high  figures  as  some  of  them  are  counted  multiple  times. 
Based  on  an  estimate  by  the  Danish  Commerce  and  Companies  Agency  (DCCA)  the 
Danish figure is rather 327 than 2,806 making the total number of draft terms of divisions 
1,852 in the EU per  year.  Since  most,  but  not all, occasions of  draft terms of divisions 
lead to the division taking place, the number of divisions of public limited companies in 
the EU can be estimated to be around 1,800/year. 

According  to  an  estimate  provided  by  the  DCCA,  about  half  of  all  divisions  of  public 
limited liability companies in Denmark are carried out either by way of setting up new 
public limited liability companies or increasing the capital of existing companies that act 
as recipients for the assets and liabilities of the company dividing. Taking into account 
that, in Denmark, divisions often involve private companies as recipient companies that 
do  not  fall  under  the  requirements  of  the  Second Directive,  it  can  be  assumed  that  this 
50% assumption marks the lower end of the possible range for the whole EU. 

It would lead to assuming about 900 occurrence in the EU per year and thus to costs of 
around 13.5 mio €/year. In an alternative scenario where it is assumed that 1,300 cases of 
double  reporting  of  this  kind  occur  per  year  in  the  EU  the  estimated  costs  would  lie 
around 19.5 mio €, so that the total range of costs/burdens can be set around a level of 
between 13.5 mio € and 19.5 mio €/year. 

51 

52 
53 

On the one hand the two expert reports need not have anything to do with each other (for instance 
if  the  recipient  companies  of  a  division  of  a  public  limited  liability  company  are  private 
companies,  or  if  the  recipient  companies  are  existing  public  limited  companies  and  they  do  not 
increase their capital as a consequence of the division; in that case an expert report under the Sixth 
Directive  is  required  but  no  expert  report  is  required  under  the  Second  Directive).  On  the  other 
hand one expert report drawn up under the rules of the Sixth Directive might necessitate several 
expert reports under the Second Directive (for instance if several new public limited companies 
are set up as a consequence of the division). 
Art. 27 (2) of the Second Directive.  
The consortium's figure is 4,327 but data is missing from IE and LT. Looking at the figures from 
other information obligations e.g. "Disclosure of division" suggests that the figures from these two 
Member States should be 0 and 4.  

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19 

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No  matter  whether  the  latter  estimate  is  used  or  the  consortiums  estimate  is  used  as  a 
basis,  these  figures  show  that,  apart  from  the  argument  of  consistency,  the  current 
situation  also  can  create  considerable  costs  that  appear  to  be  a  typical  example  of  an 
administrative  burden.  In  a  modern  business  environment,  double  reporting  should  be 
avoided  to  the  extent  possible  as  it  creates  additional  costs  for  companies  without 
providing real added value to shareholders and creditors. 

4.2.5. 

Simplified mergers and divisions between parent companies and subsidiaries 

The current rules of the Third and the Sixth Directives already give Member States the 
possibility  to  facilitate  mergers  and  divisions  between  parent  companies  and  their 
subsidiaries and, therefore, to reduce the administrative costs linked to these operations. 
These possibilities are, firstly, the possibility to grant an exemption from the requirement 
to  hold  a  general  meeting  in  certain  cases.  Secondly,  in  certain  cases,  also  the 
requirements concerning the documentation to be provided to the shareholders of some 
or all of the companies involved can be reduced. 

The  problem  for  the  companies  is  that  both  according  to  the  information  in  the  report 
from the consortium and that provided by the Member States (see Annex 3) only a few of 
the  27  Member  States  make  full  use  of  the  possibilities  described  above  (called  in  the 
following "simplified mergers and divisions").54  

Average  costs  on  mergers  and  divisions  could  in  most  Member  States  be  substantially 
reduced  if  companies  were  given  the  right  to  make  use  of  the  exemption  possibilities 
concerning simplified mergers and divisions.  

Based on the information from the consortium, the following example shows some of the 
differences in requirements and costs due to the implementation or non-implementation 
of the simplified procedures: 

Contrary  to  Spain,  France  has  not  implemented  the  simplified  merger  procedure  in 
Art. 28  Third  Directive  according  to  which  amongst  others  the  obligations  “Detailed 
written report on merger” and “Experts' report on merger” are, under certain conditions, 
not required. Partly as a result of this, in Spain, for every 100 draft terms of merger there 
are only five detailed written reports being drawn up and five expert reports, whereas in 
France  96  and  71  reports  respectively  are  established.  As  shown  in  sections  4.2.1.  and 
4.2.2., the average cost, in the EU, of a detailed written report is 3,304 €, and 41,774 € in 
the case of an expert report (in relation to mergers). 

There  can  be  different  reasons  for  the  choice  of  Member  States  not  to  grant  the 
exemptions:  one  can  be  a  concern  that  minority  shareholders  are  not  adequately 
protected, another one can lie in the ownership structure of companies in that country (if 
mainly dispersed ownership some of the exemption possibilities will not be relevant).  

The concern that minority shareholders may not be adequately protected, however, seems 
exaggerated, since the exemption possibilities also provide for minority protection rules 
(see the conditions set out in Annex 3, point 1). 

54 

It  seems  as  if  only  SK  and  UK  make  full  use  of  all  exemption  possibilities  (Art.  24-29  Third 
Directive and Art. 20 Sixth Directive).  

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4.3. 

Publication and documentation duties 

4.3.1.  Publication  of  the  draft  terms  of  merger/division  and  of  the  merger/division 

itself 

The text of the draft terms of merger/division has to be disclosed in accordance with the 
mechanisms  provided  for  under  the  First  Company  law  Directive:  the  draft  terms 
therefore  have  to  be  filed  with  the  companies  register  and  published  in  the  Member 
State's  national  gazette  or  on  a  central  electronic  platform.55  The  same  applies  to  a 
merger or a division that have taken place.56 

On  17  April  2008,  the  Commission  adopted  a  proposal  that  aims  at  reducing  the 
administrative costs linked to the disclosure regime of the First Company law Directive. 
If this proposal is adopted by the European Parliament and the Council, also the costs of 
a merger and a division will be reduced. The measurement report provides figures on the 
future savings with a view to the obligation to publish the fact that a merger/division has 
taken place. These are estimated at about 1.7 mio €/year.57 Concerning the publication of 
the  draft  terms  of  merger/division,  only  figures  that  also  include  the  drawing  up  of  the 
draft  terms  are  provided.  The  total  costs  of  drawing  up  the  draft  terms  and  publishing 
them  are  estimated  at  about  1.9  mio  €/year58.  The  total  future  savings  from  the 
Commission proposal of April 2008, in the area of mergers and divisions can therefore 
roughly be estimated at between 2 and 3 mio €/year. 

However, not only the way in which the publication has to take place but also the use of 
the  obligation,  for  the  companies,  to  file  the  draft  terms  of  merger/division  with  the 
companies'  register can be questioned. The  nature of  the information contained in the 
draft terms  is different from the other  information that has to be kept in the company's 
file (like name, address and names of persons entitled to represent the company): Once 
the  decision  on  the  merger/division  has  been  taken  and  the  deadline  for  contesting  the 
operation  has  expired,  the  public  interest  in  that  document  seems  to  be  limited.  This 
temporary information need could also be satisfied by a publication of the draft terms of 
merger/division on a generally accessible website. 

The  situation  is  somewhat  different  with  a  view  to  the  filing  of  the  merger/division 
itself:  The  two  directives  explicitly  link  a  number  of  legal  consequences  to  the  merger 
and  the  division  (transfer  of  assets  and  liabilities,  end  of  the  existence  of  the  acquired 
company/company  to  be  divided).  These  are  significant,  long  term  effects,  so  that  it 
seems appropriate to maintain the existing disclosure regime in this respect.  

Whereas the filing costs for this latter information, therefore, seem unavoidable, the costs 
caused  by  the  obligation  to  file  also  the  draft  terms  of  merger/division  do  not  appear 
justified.  Even  once  the  additional  costs  currently  caused  by  the  publication  obligation 

55 

56 
57 
58 

Art.  6  Third  Directive,  Art.  4  Sixth  Directive  and  Art.  6(1)  of  Directive  2005/56/EC  of  the 
European Parliament and of the Council of 26 October 2005 on cross-border mergers of limited 
liability companies, OJ L310, 25.11.205, p. 1 
Art. 18 Third Directive, Art. 16 Sixth Directive 
About 1.57 mio € for mergers and 137,000 € for divisions. 
About 1.74 mio € for mergers and about 170,000 € for divisions. The difference in costs can be 
explained by the different number of occurrences of the two types of events. 

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21 

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under  the  First  Directive  have  been  removed,  the  filing  of  the  draft  terms  of 
merger/division  with  the  register  will  still  cause  costs  to  companies  in  most  Member 
States. Annex 4 shows that in ten out of the sixteen Member States that have answered 
the  question,  companies  are  charged  a  fee  for  the  publication  of  draft  terms  of 
merger/division.  In  six  of  the  sixteen  Member  States  no  fee  is  charged.  For  those 
Member  States  that  charge  a  fee  the  fee  varies  from  1  €  (in  Germany)  to  289  €  (in 
Greece).  In  average  the  fee  is  around  105  €.  For  the  nine  Member  States  with  specific 
information  on  the  size  of  the  fee  the  total  costs  are  0.44 mio €/year  for  mergers  and 
0.04 mio €/year for divisions. On this basis it can be estimated that the total costs in the 
EU of filing draft terms are about 1.39 mio €/year for mergers and 0.09 mio €/year for 
divisions, or 1.48 mio €/year for mergers and divisions taken together.59  

4.3.2.  Documentation  to  be  made  available  to  shareholders  ahead  of  the  general 

meeting 

As mentioned above under section 4.2.3., at least one month before the general meeting 
which  is  to  decide  about  the  merger/division,  shareholders  have  to  be  given  the 
possibility  to  inspect  certain  documents  at  the  place  of  the  registered  office  (the  draft 
terms  of  merger/division,  the  reports  and  the  statement  referred  to  under  points  4.2.1, 
4.2.2  and  4.2.3,  and  the  annual  accounts  and  annual  reports  of  the  merging  companies 
(respectively:  the  companies  involved  in  the  division)  for  the  preceding  three  financial 
years) and to receive free copies of these documents at their request. 

This information requirement does not take into account the technological developments 
and today's business environment. Nowadays, share ownership in public limited-liability 
companies  is  increasingly  dispersed,  in  particular  where  companies  are  listed  on  a 
regulated  market.  The  Impact  Assessment  that  was  drawn  up,  in  2006,  for  the 
Commission  proposal  for  a  Directive  on  certain  rights  of  shareholders  in  listed 
companies60  showed  that  in  2004,  on  average,  about  one  third  of  shares  in  companies 
listed in the EU were held by non resident shareholders and that the tendency during the 
last  years  has  been  towards  a  fast  increase  of  cross-border  ownership  for  EU  listed 
companies.61  It  seems  obvious  that  for  foreign  investors  the  possibility  to  consult 
documents at the place of the company's registered office is almost worthless. But also 
for non-listed companies that are likely to have a more homogeneous ownership structure 
such on the spot consultation possibilities no longer seem appropriate. 

This conclusion is supported by anecdotal evidence that copies of the annual reports, for 
example,  are  requested  only  by  a  minority  of  shareholders.  However,  despite  the  low 
demand  from  the  side  of  their  shareholders,  companies  have  to  produce  a  considerable 

59 

60 

61 

The Member States on which no information is available are: BG, FI, HU, LU, LV, NL, PL, PT, 
RO, SI and ES. It is assumed that in 62.5 % (=10/16) of these Member States the average EU fee 
applies and that in the other Member States no fee applies. For FR, there is information that there 
is a fee of 3-4 € per line but no information on the average number of lines. Therefore, the average 
EU fee of 105 € is also used as an estimate in FR.  
Directive 2007/36/EC, see footnote 21. 
The  impact  assessment  on  this  proposal  can  be  found  on  DG MARKT's  website  at 
http://ec.europa.eu/internal_market/company/shareholders/indexa_en.htm 
SEC(2006)181, pages 8 and 48, 
http://ec.europa.eu/internal_market/company/docs/shareholders/comm_native_sec_2006_0181_en
.pdf 

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number  of  paper  copies  of  the  three  reports  in  advance  in  order  to  be  able  to  meet 
possible  requests  without  delaying  the  process.  In  the  case  of  cross-border  mergers62 
copies may even have to be provided in different languages. 

In  order  to  illustrate  the  problem,  the  example  set  out  in  Annex  5  shows  the 
documentation  that  was  made  available  in  the  context  of  a  recent  merger  between  two 
large insurance groups, on the basis of the current rules of the Third Directive. The total 
costs for the printing of about 22,000 copies of the last three annual reports and 14,800 
copies  of  the  last  quarterly  financial  statements,  the  storing,  mailing  and,  finally,  the 
destruction of redundant copies amounted, in that case, to about 800,000 €. Although this 
example is obviously not representative for the average merger in the EU, it shows what 
consequences the current rules can have. 

The  production  of  high  numbers  of  copies  that  are,  in  the  end,  not  requested  by 
shareholders  does  not  seem  acceptable  from  an  environmental  point  of  view  either. 
However, if a company does not want to risk delaying the process it is almost impossible 
not to produce the copies before requests from shareholders are actually received. 

As mentioned above under section 4.2.3, the consortium has measured only three of the 
information obligations in the Third and Sixth Directive where the inspection and making 
available of documents ahead of the general meeting is relevant.  

to 

the  shareholders 

As  regards  mergers,  the  consortium  estimates  that  the  costs  and  burdens  of  making 
to 
available 
3.49 mio €/year  in  the  EU63,  only  counting  the  number  of  occurrences  of  normal 
procedure  mergers.  On  top  of  this  come,  therefore,  the  costs  related  to  simplified 
mergers64 for which however, no figures are available. The amount referred to above can 
therefore be considered as a minimum average amount. 

the  different  documents  concerned  amount 

to 

the  shareholders 

As  regards  divisions,  the  consortium  estimates  that  the  costs  and  burdens  of  making 
available 
to 
0.24 mio €/year, only counting the number of occurrences of normal procedure divisions. 
On  top  of  this  come,  therefore,  total  costs  of  0.51 mio  €/year  regarding  simplified 
divisions  in  those  14  Member  States65  where  a  general  meeting  only  is  required  in  the 
dividing company.66 This leads to a total of 0.75 mio €/year for divisions.  

the  different  documents  concerned  amount 

One  has  to  add  to  this,  finally,  the  costs  related  to  divisions  where  the  recipient 
companies together hold all the shares of the company being divided and therefore only 
general meetings in the recipient companies are required.67 On these costs no figures are 
available so that, again, the total amount referred to above can be regarded as a minimum 
average amount.  

62 

63 
64 
65 
66 
67 

Through  the  reference,  in  Article  6(2)  of  Directive  2005/56/EC,  to  "additional  requirements 
imposed by the Member State to which the company concerned is subject", the national rules on 
documentation requirements deriving from the provisions of the Third and the Sixth Directive for 
domestic mergers and divisions will normally apply also in the context of cross-border mergers. 
Data missing from DK. 
Those under Art. 8(b), 24, 25(b) and 27(b) Third Directive. 
These are: AT, CZ, FI, FR, EL, IE, IT, LT, LU, NL, SI, ES, SE and UK. 
Art. 6(b) Sixth Directive 
Art. 20(b) Sixth Directive 

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This  means  that  the  total  administrative  burdens  for  mergers/divisions  in  this  context 
amount at least to 4.24 mio €/year. 

4.4. 

Protection of creditors 

Creditor protection rules in the Third and the Sixth Directives were created on the basis 
of the concept that had already been used, a few years earlier, for the Second Directive 
on the capital of public limited-liability companies. 

Directive 2006/68/EC modifying the Second Directive modernised the creditor protection 
rule applicable in case of a reduction in capital68. The procedure for protecting creditors 
whose claim antedate the publication of the decision on the reduction was specified more 
in detail. It was also clarified that these creditors have to show credibly that their claims 
are being jeopardised by the capital reduction if they want to obtain security. 

This change so far has not been reflected in the parallel provisions in the Third and the 
Sixth Directives which does, at this stage, not seem to lead to problems in practice but 
creates an unnecessary incoherence in the rules of these three directives. 

5. 

SUBSIDIARITY 

Action  at  EU  level  is  necessary  to  the  extent  that  the  obligations  that  impose 
administrative burdens derive from EU directives. Under those conditions, the reduction 
of administrative burden requires the modification of the EU rules. Action at EU level is 
therefore justified. 

6. 

OBJECTIVES 

The  objective  of  the  initiative  is  to  enhance  the  competitiveness  of  EU  companies  by 
reducing administrative burdens caused by the rules of the Third and the Sixth Directives 
where this can be done without jeopardising the interests 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  companies  with  more  flexibility  to  decide 
which reports are really needed in each specific case; 

•  Removing rules that lead to double reporting and, therefore cause unnecessary costs to 

companies; 

•  Adapting  rules  on  publication  and 

information  duties 

to 

the 

technological 

developments, also with a view to general environmental considerations; and 

•  Ensuring  coherence  between  the  rules  of  the  Third  and  the  Sixth  Directives  on  one 
hand and recent changes to the rest of the Company law acquis on the other hand, in 

68 

Article 32 Second Directive, as modified by Art. 1(9) of Directive 2006/68/EC 

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24 

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particular  as  concerns  the  creditor  protection  rules  in  the  Third,  the  Sixth  and  the 
Second Directive. 

7. 

POLICY OPTIONS AND ANALYSIS 

This  section  examines  different  policy  options  that  could  be  chosen  in  order  to  reduce 
administrative  burdens,  i.e.,  the  respective  merits  of  doing  nothing,  reducing  the 
requirements  in  the  directives  and,  possibly,  preventing  Member  States  from  imposing 
certain requirements on companies (full harmonisation). These options are discussed and 
measured against the following pre-defined criteria: 

(a) 

(b) 

(c) 

(d) 

(e) 

Reduction  of  companies'  administrative  burdens:  Information  obligations 
create  internal  and  external  costs  to  the  company  (e.g.  fees  and 
remunerations  for  external  experts  etc).  Where  the  companies  would  not 
incur  the  same  costs  without  the  information  obligation  these  costs  are 
administrative burdens. These burdens prevent companies from using their 
capital  for  purposes  that  are  directly  related  to  their  business  and, 
therefore, reduce the competitiveness of these companies. 

Impact  on  the  rights  of  resident  and  non-resident  shareholders:  The 
majority  of  rules  in  the  Third  and  the  Sixth  Directives  are  designed  to 
protect  shareholders,  and  in  particular  minority  shareholders.  Any 
reduction  in  obligations  for  companies  therefore  needs  to  be  weighed 
against  the  interest  of  the  shareholders  in  obtaining  this  information. 
Where the question is at stake how to provide information (e.g. in paper or 
electronically,  through  the  company  or  through  central  bodies)  in 
particular the accessibility for shareholders and possible access costs have 
to be taken into account. 

Impact on creditors and other stakeholders (e.g. employees): Mergers and 
divisions  have  an  impact  also  on  stakeholders  like  creditors  and 
employees. Any proposal for measures therefore has to take into account 
the possible impact on these parties. 

Environmental  impact:  Reporting  and  information  requirements  that  rely 
on paper based solutions have a negative environmental impact and should 
therefore  be  replaced  by  electronic  solutions  where  this  is  possible  and 
the  Sustainable 
appropriate.  This  approach 
Development Strategy of the EU, by reducing the use of resources at the 
production and by reducing waste.69 

line  with 

is  also 

in 

Consistency  with  other  directives:  For  the  sake  of  clarity  and  legal 
certainty,  the  rules  on  domestic  mergers  and  divisions  should  be  in  line 
with related rules, such as those on cross-border mergers, and take account 
of changes that have been made to these rules in the last years. 

69 

See  e.g.  Communication  from  the  Commission  to  the  Council  and  the  European  Parliament  - 
Towards  a  Thematic  Strategy  on  the  Sustainable  Use  of  Natural  Resources  (COM(2003)572 
final), available at: http://ec.europa.eu/environment/natres/index.htm  

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7.1. 

Reporting  requirements  –  measures  targeting  all  public  limited-liability 
companies 

7.1.1.  Option 1: No policy change 

Based  on  the  estimations  above,  the  average  administrative  burdens  of  the  current 
situation  where  all  three  reports  have  to  be  provided  to  shareholders  lie  at  around 
255.04 mio €/year for mergers and 88.06 mio €/year for divisions.70 These estimations do 
not take account yet of the modification introduced by Directive 2007/63/EC with a view 
to  the  independent  expert  report  as  this  directive  has  to  be  transposed  only  by 
31 December 2008. With a view to this modification, the consortium assumes that 66 % 
of all micro and small companies and 25 % of all larger companies will make use of the 
waiver  introduced  by  Directive  2007/63/EC.  On  the  basis  of  this  assumption,  the 
transposition of that modification would lead to burden reductions of 128.17 mio €/year 
for mergers and 41.92 mio €/year for divisions, or 170.09 mio €/year in total.71 The total 
yearly administrative burdens of the reporting requirements should therefore be reduced 
to  about  126.87 mio €/year  in the  context  of  mergers  and  46.14 mio € in  the context of 
divisions. 

Apart  from  situations  covered  by  this  new  exemption,  the  production  of  the  reports 
remains mandatory. Given that there are also no indications for developments that would 
render this production less costly than is the case today, option 1 would mean that, after 
31 December 2008, these costs would remain unchanged. 

7.1.2.  Option  2:  Introduce  the  possibility,  for  shareholders,  to  renounce  the  written 

report of the management and the accounting statement 

(1)  Waiver by unanimity 

As just indicated, Directive 2007/63/EC modified the Third and the Sixth Directives by 
aligning them with the rule in Directive 2005/56/EC on cross-border mergers which says 
that no expert report has to be  established  where  all shareholders renounce it. Option 2 
would  imply  extending  this  rule  to  the  written  report  of  the  management  and  the 
accounting statement. 

The  modification,  by  Directive  2007/63/EC,  reflects  the  Roman  law  principle  "Volenti 
non fit iniuria" which  means  that  there is no  need  to  force  protection  on  someone  who 
does  not  consider  this  protection  necessary.  Extending  this  rule  to  the  requirements  for 
the written report by the management and the accounting statement seems only logical. It 
should  also  be  noted  that  about  half  of  the  Member  States  that  provided  DG MARKT 
with  information  already  apply  this  possibility  of  a  waiver  in  the  case  of  mergers  and 
divisions of private limited-liability companies. 

Creditors  and  other  stakeholders  would  not  be  affected  by  this  change.  The  rules 
establishing  the  reporting  requirements  are  designed  for  the  protection  of  the 

70 
71 

Total costs minus 25% "business as usual costs". 
According  to  the  consortium  65%  of  all  companies  are  micro  or  small  companies  and  35%  are 
larger companies. The calculation is then e.g. for mergers: 330,860,951*(65%*66%+35%*25%) = 
cost saving of 170,889,681. Subtracting 25% for business as usual costs gives burden reduction. 

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26 

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shareholders,  not  of  the  creditors  (see  point 4.4)  or  the  employees  (the  protection  of 
employees  is  dealt  with  by  separate  EU  acts72)  who  enjoy  protection  under  different 
rules.  Consequently,  whereas  the  draft  terms  of  merger/division  are  publicly  available, 
the  directives  provide  that  the  report  of  the  management  and  the  accounting  statement 
only have to be accessible to the shareholders. 

With  a  view  to  the  written  report  by  the  management,  the  administrative  burden 
reduction  of  such  a  modification  can  be  estimated to lie at 3.02 mio €/year  for mergers 
and another 3.45 mio €/year for divisions, under the same assumption as above. 

With  a  view  to  the  accounting  statement,  the  administrative  burden  reduction  is 
currently estimated at 0.54 mio €/year for mergers and 0.12 mio €/year for divisions, on 
the basis of the same assumption (but might be higher, cf. section 4.2.3). 

The total administrative burden savings under option 2 can therefore be estimated to be 
7.12 mio €/year, that come on top of the 170.09 mio €/year arrived at under option 1. 

(2)  Waiver by majority 

In its report, the consortium proposes to introduce a waiver by majority decision of the 
shareholders  represented  at  the  general  meeting.  Despite  the  need  to  call  a  separate 
general  meeting  to  decide  on  the  waiver,  the  consortium  estimates  that  this  scenario 
could imply additional savings of 1.01 mio €/year compared to a decision by unanimity. 
However,  the  calculation  does  not  seem  to  take  account  of  the  costs  that  are  caused 
where the general meeting is called but the majority is not reached.  

7.1.3.  Option 3: Restrict reporting requirements to larger or to listed companies 

(1) 

Restricting the reporting requirements to medium-sized and large companies 

This option would imply an exemption, from the reporting requirement, for micro entities 
and small companies. Micro and small entities are defined as follows: 

Micro 

Small 

Medium 

Large 

Net turnover (€) 

≤ 1 000 000 

≤ 8 800 000  ≤ 35 000 000   > 35 000 000

Balance sheet total (€) 

≤ 500 000 

≤ 4 400 000  ≤ 17 500 000   > 17 500 000

Number of employees 

≤ 10

≤ 50

≤ 250 

> 250

The consortium estimates the total potential of this proposal for reducing administrative 
burdens  at  about  166.56 mio €/year  for  mergers  and  another  55.65 mio €/year  with  a 
view to divisions or 222.21 mio €/year in total for mergers and divisions, i.e. 52.12 mio € 
above the 170.09 mio € arrived at under option 1. 

(2) 

Restricting the reporting requirements to listed companies 

72 

See footnote 19. 

EN 

27 

   EN 

 
 
                                                 
One  possibility  for  reducing  the  current  requirements  would  be  to  limit  the  reporting 
obligations to listed companies. Such a limitation can be found in a number of EU rules 
dealing  with  transparency  and  information  and  reporting  duties  (e.g.  Transparency 
Directive, Shareholders' rights Directive, Prospectus Directive). Such a restriction could 
be  justified  with  the  fact  that  a  company  that  uses  the  stock  exchange  in  order  to  raise 
funds from a broad public can also be made subject to stricter requirements than a non-
listed public limited liability company. 

According to information from the Federation of European Stock Exchanges (FESE), the 
number  of  companies  based  in  the  EU  that  had  shares  listed  at  EU  FESE  members,  in 
May  2008,  was  8,488.  These  are  1.3%  of  the  total  number  of  public  limited-liability 
companies  in  the  EU  which,  on  the  basis  of  the  figures  provided  by  the  European 
Registries Forum73, can be estimated at about 650,000. 

The potential cost reduction under this option, however, can be estimated to lie below the 
99% that the above figures suggest. In the case of listed companies, the reporting can be 
expected to be more complicated and therefore, on average, more expensive than in the 
case  of  unlisted  ones.  However,  even  if  a  reduction  potential  of  only  80%  of  the  total 
costs  was  assumed,  this  option  could  reduce  the  total  administrative  burden  of  these 
requirements  by,  on  average,  a  further  101.5 mio €/year  with  a  view  to  mergers  and 
36.9 mio €/year with a view to divisions, compared to option 1.74  

7.1.4.  Option 4: Repeal the reporting requirements in the directives 

Option 4 implies deleting the reporting requirements from the directives. This means that 
it would be left to Member States whether and which reporting obligations they impose 
on their companies. This option takes account of the fact that, even where Member States 
decide  to  require  certain  reports,  it  is  easier  for  them  to  define  cases  in  which  these 
reports are not needed (limited size of the companies involved, and in particular of the 
company  to  be  acquired,  limited  number  of  shareholders  etc.),  on  the  basis  of  the 
specifics  of  the  country  concerned,  taking  into  account  that  the  Third  and  the  Sixth 
Directives deal with purely domestic mergers/divisions. 

This option could reduce the burdens linked to EU requirements in that area to zero and 
therefore lead to further burden reductions of about 126.87 mio €/year in the context of 
mergers  and  46.14 mio €/year  in  the  context  of  divisions,  compared  to  option  175. 
However, due to the need to protect shareholders at least under certain circumstances it 
seems  likely  that  at  least  some  Member  States  would  maintain  certain  reporting 
requirements at national level. 

7.1.5.  Comparing the options 

Option  1  would  not  lead  to  any  further  reduction  in  administrative  burden  and  would 
therefore not meet the objective set out under point 6. 

73 
74 

75 

See Annex 5. No figures were available for BE, BG, DE, GR, HU and SE. 
These figures are calculated on the basis of the figures calculated above under Option 1: No policy 
change. Merger: 126.87 mio*80%. Division: 46.14 mio*80%. 
The figures calculated refer to the calculation made under Option 1 above. 

EN 

28 

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Under all other options, firstly the requirement to set up an accounting statement should 
be  abolished  where  the  company  has  set  up  a  half-yearly  financial  statement  under  the 
Transparency  Directive.  This  is  a  change  that  merely  adapts  the  requirements  of  the 
Third and the Sixth Directives to take account of the Transparency Directive. 

For  the  rest,  option  4  is  likely  to  achieve  the  most  substantial  savings.  However,  as 
demonstrated  under  point  4.2,  the  reports  fulfil  a  useful  function  in  providing 
shareholders  with  the  necessary  information.  Repealing  them  entirely  could  have  as  a 
consequence that shareholders in future will not dispose any more of the information they 
need in order to take an informed decision about the merger or the division. Furthermore, 
given  the  need  for  some  information  this  measure  is  likely  to  create  27  regimes  of 
information obligations with still another regime – that of the Tenth Directive – applying 
to  cross-border  mergers.  This  can  be  problematic  in  particular  for  non  resident 
shareholders.  This  is  the  reason  why  out  of  the  slight  majority  of  stakeholders  who 
supported a modification of the provisions of the Third and the Sixth Directives in their 
reaction to the July 2007 Communication, one third made their support conditional upon 
the shareholders agreeing to waiving the report76.  

The same argument applies, in principle, in the case of the second scenario of option 3. 
However,  under  this  option  there  would  be  a  harmonised  system  at  least  for  listed 
companies,  which  are  more  likely  to  have  an  international  shareholder  base  than  non 
listed ones. The argument that one can nevertheless put forward against this option is that 
in  the  case  of  listed  companies  the  shareholders  have  at  least  one  indication  as  to  the 
value  of  that  company  (even  if  the  share  price  obviously  does  not  exactly  mirror  the 
company's value but can, in certain cases, be influenced by other factors). Shareholders 
of  unlisted  companies  do  normally  not  have  a  comparable  indication  of  the  company's 
value  which  would  help  them  to  judge  the  appropriateness  of  the  share  exchange  ratio 
themselves. One can therefore argue that they need, in this respect, even more protection 
than holders of listed shares. 

The  first  scenario  of  option  3  takes  this,  at  least  partially,  into  account.  Furthermore, 
micro  and  small  companies  that  are  targeted  in  that  scenario  typically  do  not  have  a 
significant cross-border activity so that the impact on non-resident shareholders and the 
coherence  with  the  rules  for  cross-border  mergers  play  a  minor  role.  However,  the 
definition of these categories is based on criteria that are not related to the number and 
the situation of the shareholders. Whereas the accounting directives, from which the idea 
of  such  segmentation  is  taken,  target  all  stakeholders,  the  reports  in  the  Third  and  the 
Sixth Directive are specifically meant for the shareholders. Not taking their situation into 
account when defining an exemption in this context, therefore, seems questionable. 

Option  2,  in  its  first  alternative,  avoids  any  negative  impact  on  the  interests  of  the 
shareholders  while  achieving  some  savings  for  the  companies  involved.  The  second 
alternative  would  reduce  the  protection  in  particular  for  those  shareholders  that  are 

76 

See DG MARKT's summary report (footnote 10). Only 40% out of the 129 total reactions to the 
communication took a position on the question with a view to the report by the management, and 
only one third of all respondents took a position with a view to the accounting statement. 

EN 

29 

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prevented  from  voting  in  the  general  meeting.  Furthermore,  as  set  out  above  the 
likelihood that substantial additional savings will be made seems doubtful. 

The differences between the options are summarised in the table below:77 

Figure 1: Comparison of options 

Reduction  of 
companies' 
admin burdens 

on 

Impact 
resident 
shareholders 

Impact 
on 
non  resident 
shareholders 

Environ
mental 
impact 

Consistency 
with  other 
directives* 

on 

Impact 
other 
stakeholders 
(creditors, 
employees) 

Option 1: No policy change 

+  (170.09  mio 
€/year)(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

Waiver 
unanimity 

by 

+  (177.21  mio 
€/year) 

Waiver 
majority 
decision 

by 

+  (up  to  178.22 
mio €/year) 

2: 

Option 
Possibility 
for 
shareholders 
renounce 
to 
to 
the 
management 
and 
report 
the 
accounting 
statement 

Option 3:  

(222.2  mio 

+ 
€/year) 

- 

Exemption  of 
micros 
and 
small 
companies 

Only 
companies 

listed 

++  (308.49  mio 
€/year) 

- - 

Option  4:  Repeal  the  reporting 
requirements in the directives 

++  (up  to  343.1 
mio €/year) 

- - 

* in particular with Cross-border mergers Directive 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

- 

- - 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

- 

- - 

"(cid:123)": No change 

"+": Positive impact 

"-": Negative impact  

Option 2 is therefore the preferred option. 

77 

Note that the "no policy change" option forms a dynamic baseline as through the transposition of 
Directive  2007/63/EC  the  170.09  mio  €/year  savings  indicated  will  be  made  in  future  even 
without further action. The cost reductions for the other options are calculated by adding to these 
170.09 mio €/year the additional expected savings. 

EN 

30 

   EN 

 
 
                                                 
7.2. 

Reporting  requirements  –  measures  with a view to companies that  are set 
up or increase their capital in the context of a merger or division 

7.2.1.  Option 1: No policy change 

This option implies that Member States, in the case of mergers or  public  offers, would 
continue  to  have  the  possibility  to  exempt  companies  from  the  requirement  to  have  an 
independent  expert  report  established  pursuant  to  the  Second  Directive,  but  that  they 
would not have such possibility in the context of divisions. 

The current costs of that obligation would therefore remain unchanged. 

7.2.2.  Option  2:  Introduce  a  Member  State  option  to  grant  an  exemption  from  the 
reporting requirement under the Second Directive in the case of a division 

Under this option, an exemption would be introduced, with a view to divisions, for those 
cases  where  there  otherwise  would  be  double reporting,  i.e.  where  the  report  under  the 
Sixth  Directive  is  effectively  drawn  up  (and  not  waived  as  proposed  above).  The  total 
costs  and  burdens  of  the  report  under  the  Second  Directive  when  linked  to  a  division 
have been estimated above under section 4.2.4, to lie at between 13.5 and 19.5 mio €. 

This  leads  to  a  potential  burden  reduction  of  an  exemption  from  this  requirement  of 
between 6.75 and 19.5 mio €/year, depending on whether only half the Member States or 
all of them make use of this option. 

On the basis of the assumption used above, that 66% of all small companies and 25% of 
larger companies would waive the report under the Sixth Directive, the burden reduction 
potential of this measure can be estimated roughly to lie between 3.26 and 9.43 mio €. 

7.2.3.  Option  3:  Introduce  a  mandatory  exemption  from  the  reporting  requirement 
under the Second Directive in the case of a merger, a public offer and a division 

This  option  implies  replacing  the  current  Member  States'  option  to  exempt  companies 
from the reporting requirement by a mandatory exemption in the case of a merger or a 
public offer, and to extend this mandatory exemption to the case of a division. 

This  means  that  in  all  cases  where  an  expert  report  is  established  in  the  course  of  the 
setting  up  of  new  companies  or  of  capital  increases  that  are  linked  to  a  merger,  public 
offer or division, in future no expert report under the Second Directive would have to be 
established.  According  to  the  estimations  set  out  above,  this  could  lead  to  savings  of 
more than 9.43 mio €/year. 

7.2.4.  Comparing the options 

Option  1  would  maintain  the  current  inconsistency  of  the  different  rules  and  therefore 
does not seem appropriate. 

Option 2 risks leading to less burden reduction as compared to option 3, in case not all 
Member States make use of the possibilities offered by the EU rules. However, in their 
reactions  to  the  2007  Communication  many  of  those  stakeholders  that  opposed  a  full 
exemption  argued  that  the  two  reports  do  not  serve  the  same  purposes  and  that  their 

EN 

31 

   EN 

 
content  could  therefore  differ,  depending  on the way a Member State has implemented 
the  different  directives.  Also  many  of  those  that  supported  the  proposal  in  principle 
expressed  themselves  in  favour  of  leaving  it  to  the  Member  States  to  decide  what 
reporting requirements to impose in this context.78 

With  a  view  to  this  possibility  to  "fine  tune"  the  different  reports  it  seems  more 
appropriate to choose option 2. 

Figure 2: Comparison of options 

of 

Reduction 
companies' 
admin burdens 

Impact 
on 
shareholders 

Impact  on  other 
stakeholders 
(creditors, 
employees) 

Environmental 
impact 

Consistency 
with 
directives* 

other 

Option 1: No policy change 

(cid:123) 

2: 

Introduce 

Option 
a 
Member  State  option  in  the 
case of a division 

+  (between  3.26 
and  9.43  mio 
€/year) 

(cid:123) 

(cid:123) 

3: 

Introduce 

Option 
a 
mandatory  exemption  in  the 
case  of  a  merger,  a  public 
offer and a division 

++ 
than 
(more 
9.43 mio €/year) 

(cid:123) / - ** 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

+ 

+ 

* 

** 

in particular with the rules on domestic mergers and on takeovers 

depending on the way of transposition of the different reporting requirements by the Member States 

"(cid:123)": No change 

"+": Positive impact 

"-": Negative impact  

Option 2 is therefore the preferred option. 

7.3. 

Reporting  requirements  –  measures  concerning  simplified  mergers  and 
divisions between parent companies and subsidiaries 

7.3.1.  Option 1: No policy change 

The rules in the Third and the Sixth Directives on simplified mergers and divisions have 
been  in  place  since  these  directives  were  first  adopted.  It  is  therefore  not  likely  that 
Member States will change their current systems without action at EU level. This means 
that,  under  this  option,  the  current  costs  that  are  linked  to  the  fact  that  a  number  of 
Member  States  have  not  made  use  of  the  possibilities  offered  by  the  directives  will 
probably remain unchanged. 

7.3.2.  Option  2:  Removing  the  Member  State  options  as  regards  simplified  mergers 

and divisions 

This change would make it clearer that the EU supports simplified procedures for these 
kind of mergers, under the conditions provided for in the directives. The directives would 

78 

One third of the total respondents took a position on this question, and 55% of them supported an 
exemption at least as a Member State option. 

EN 

32 

   EN 

 
 
                                                 
no  longer  empower  Member  States  not  to  allow  for  the  use  of  simplified  procedures. 
However, given that the directives, in general, only provide for minimum harmonisation, 
Member  States  would  nonetheless  still  be  free  to  set  stricter  requirements  at  national 
level and therefore, to maintain the current information obligations. For the same reason 
as in the case of option 1, it is not very likely that such a change of the directives would 
have a major impact at the level of the Member States.  

The same considerations apply where this option would be combined with a non-binding 
recommendation  to  Member  States  to  allow  for  simplified  mergers:  Member  States 
would not be obliged to review the system they  have  been  used  to  for  a  long  time  and 
would therefore not be very likely to do so.  

7.3.3.  Option  3:  Ensuring  that  Member  States  have  to  grant  the  possibility  of 

simplified mergers/divisions 

Option 3 implies granting the exemptions that are currently provided for in the directives 
in the form of Member States options (see point 4.2.5) to the companies covered by the 
directives and thus, preventing Member States from requiring a general meeting and/or 
certain reports where the conditions for a simplified merger/division are fulfilled. 

Data from the consortium shows that in five of the Member States that made full use of 
the  exemption  possibilities  for  mergers  (Italy,  Lithuania,  Luxembourg,  Poland  and 
Slovakia) these measures have led to total savings of about 24 mio €/year.79 Of these, the 
data indicates that about 90% are due to the exemption from the reporting requirements 
that  in  the  whole  EU  currently,  in  total,  lead  to  costs  of  about  457.04  mio  €/year  (see 
above, point 7.1.1).  

According to the measurement report the number of Member States that have not made 
use  of  the  exemption  possibilities  concerning  the  reporting  requirements  in  case  of 
merger is fourteen as regards the possibility of exemption where the acquiring company 
owns more than 90 % of the acquired company and eleven as regards the possibility of 
exemption when the acquiring company owns the acquired company by 100 %80. For the 
other exemption possibilities the number of Member States that have not made use hereof 
varies between eleven and fourteen.81  

Italy, Lithuania, Luxembourg, Poland and Slovakia account for 1,308 of the 11,432 draft 
terms of merger that are estimated to occur per year in the EU.82 Member States that have 

79 
80 
81 

82 

The exemption possibilities are the ones set out in Art. 24-29 Third Directive. 
Art. 28 and 24 Third Directive 
11 Member States have not made use of the possibility offered by Art. 25 not to require a general 
meeting  in  the  acquiring  company  when  there  is 100  % ownership. 12 Member  States  have  not 
made  use  of  the  possibility  offered  by Art.  27  not  to  require  a  general  meeting  in  the  acquiring 
company when there is more than 90 % ownership. Respectively 11 and 14 Member States have 
not  made  use  of  the  possibilities  offered  by  Art.  26  and  29  to  include  in  the  calculation  of  the 
"more than 90 %" or 100 % ownership persons holding shares in their own names but on behalf of 
the company, thereby extending the scope of the exemption possibilities in Art. 24, 25, 27 and 28. 
The  measurement  report's  total  figure  of  20,887  is  corrected  with  a  view  to  Denmark  and 
Slovenia.  The  DK  figure  is  corrected  from  10,209  to  752  based  on  an  estimate  by  the  Danish 

EN 

33 

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not transposed the exemption possibility concerning the reporting requirements where the 
acquiring company owns the acquired company by more than 90 % account for 7,989 of 
the  draft  terms  of  merger,  whereas  Member  States  that  have  not  transposed  the 
exemption  possibility  concerning  the  reporting  requirements  where  the  acquiring 
company owns the acquired company by 100 % account for 3,917 of the draft terms of 
merger. Assuming that companies would make use of these two types of exemptions to 
the same extent the figures correspond roughly to a situation where 5,953 of the 11,432 
draft terms of merger in the EU occur in Member States that have not transposed any of 
the exemption possibilities concerning the reporting requirements.  

Assuming  that  the  (potential)  cost  savings  per  merger  of  using  the  exemptions  are  on 
average the same in the two groups of Member States compared, and that the percentage 
of mergers potentially qualifying as simplified mergers are on average also the same, a 
rough  estimate  of  the  potential  cost  savings  of  this  option  that  would  imply  that  all 
Member  States  provide  for 
the  merger  exemptions  could  be  set  at  around 
109.23 mio €/year.83  However,  the  data  from  the  consortium  indicates  that,  in  the 
Member  States  that  currently  do  not  make  use  of  the  simplified  merger  procedures 
involving exemptions from the reporting requirements, the costs of establishing an expert 
report  are  85.3%  higher  than  the  average  costs  of  such  reports  in  Italy,  Lithuania, 
Luxembourg,  Poland  and  Slovakia.  Therefore  the  total  cost  savings  of  making  the 
exemptions  mandatory  is  more  likely  to  be  around  188.43  mio €/year  than  109.23 
mio €/year.84 Since cost savings from not having to draw up the management report and 
the expert report are estimated to include 25% business as usual costs, the administrative 
burden reduction of this option can roughly be estimated to around 147.21 mio €/year.85 
On top of this come potential savings related to the simplified division procedure.86 As 
this exemption possibility only regards the general meeting in the company being divided 
in cases where the recipient companies hold all the shares in the company being divided, 
the potential burden savings can be expected to be much lower than for mergers. At this 
stage,  there  is  incomplete  information  on  the  use  of  the  exemption  possibility  for 
divisions. Assuming that the proportion of Member States that do not currently use the 
exemption possibility account for about the same proportion of divisions as was the case 
for  mergers,  and  taking  into  account  that  divisions  do  not  seem  to  occur  as  often  as 
mergers and that the saving potential of not holding a general meeting is only around 10 
% compared to a situation where also reporting is not required, a rough estimate of the 
potential savings for the simplified division procedure would lie around 6.28 mio €/year. 
87 

83 
84 
85 

86 
87 

Commerce and Companies Agency. Data from SI is missing but based on the data on "Disclosure 
of merger" the number of draft terms of merger have been set to 2 for SI. 
24 mio*(5,953/1,308) = 109.23 mio €.  
(85%*109.23)*1.853+(15%*109.23) = 188.43 
Data from the consortium indicates that 87.5% of the costs from exempting from the simplified 
merger  procedures  originate  from  the  two  reports.  Business  as  usual  costs  can  therefore  be 
estimated to lie around 41.22 mio €/year (188.43*87.5%*25%), and the total burden reduction can 
be estimated to lie around 147.21 mio €/year (188.43-41.22). 
Art. 20 Sixth Directive 
According  to  the  information  from  the  Member  States  presented  in  Annex  3  only  4  out  of  the 
14 Member States that have answered this question have made use of the exemption possibility. 
But since these 14 Member States only account for about 1/3 of the total number of draft terms of 

EN 

34 

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This  leads  to  a  rough  estimate  of  the  total  burden  savings  potential  of  around 
153.49 mio €/year for this option. The precise savings will depend on to what extent the 
ownership  structure  of  companies  in  the  Member  States  currently  not  using  the 
exemptions allows for using the procedures. 

For  the  shareholders,  no  negative  impact  is  to  be  expected  with  a  view  to  those 
exemptions that are granted under the condition that the "acquiring" company (in the case 
of a merger) or the recipient companies (in the case of a division) already own all of the 
shares of the company to be merged/divided before the operation. Through the ownership 
in  that  latter  company  the  "acquiring"/recipient  companies  were  already  before  the 
merger/division economically carrying the risk of their subsidiary. Consequently, it is not 
likely that there will be a real impact of the merger on the value of the shares of these 
companies. 

In the case of a merger where the acquiring company holds 90% (or more) of the shares 
of  the  company  to  be  acquired,  option  3  formally  leads  to  a  reduction  of  some  of  the 
current  measures  protecting  also  the  minority  shareholders  (no  need  to  hold  a  general 
meeting,  reduced  reporting  requirements).  However,  the  safeguards  built  in  by  the 
exemption  rules  of  the  directives  (right  of  a  minority  that  holds  a  5%  share  in  the 
company  to  request  a  general  meeting,  exemption  from  the  requirement  to  provide  the 
necessary  reports  to  the  shareholders  of  the  company  to  be  acquired  only  where  these 
shareholders  are  granted  a  sell  out  right)  protect  the  rights  of  the  minority  in  an 
appropriate way, considering in particular that this minority can never be large enough to 
block  the  merger  in  a  general  meeting.  Therefore,  also  in  this  scenario  a  significant 
negative impact on the (minority) shareholders is not likely. 

Also for the creditors, option 3 would not imply a significant negative impact. As already 
set  out  under  point  7.1.2.,  the  rules  targeted  by  the  exemptions  are  designed  for  the 
protection  of the shareholders, not of the creditors that enjoy protection under different 
rules of the directives.  

Among  the  reactions  to  the  2007  communication,  only  37  out  of  a  total  of  128  took  a 
position  on  the  proposal  to  repeal  the  requirement  for  a  general  meeting  in  these 

divisions  it  is  uncertain  how  many  of  the  total  number  of  draft  terms  of  division  the  Member 
States that have not used the exemption account for. According to the measurement report 20,887 
draft terms of merger and 4,327 draft terms of division occur in the EU per year. However, after 
correcting misleading figures from Denmark the figures are rather 11,432 and 1,852 respectively. 
Since  there  are  always  at  least  two  existing  companies  participating  in  a  merger  whereas  for 
divisions  in  most  cases  only  one  existing  company  participate  the  ratio  between  mergers  and 
divisions  in  the  EU  can  roughly  be  set  to  around  3/1.  This  leads  to  a  rough  estimate  of  the 
potential savings of around 188.43/(10*3) = 6.28 mio €/year for the simplified division procedure. 
There  are  no  "business  as  usual  costs",  so  the  figure  is  both  the  cost  reduction  and  the 
administrative burden reduction.  

EN 

35 

   EN 

 
                                                                                                                                                 
situations.  Out  of  these,  about  58%  supported  this  proposal  with  a  view  to 
100% subsidiaries and about 55% with a view to 90% subsidiaries.88 

7.3.4.  Comparing the options 

Option 1 is not likely to lead to any change in the costs for companies, compared to the 
current situation. Also under option 2, Member States would, in principle, be free to keep 
their current rules. Only option 3, therefore, is likely to achieve a real reduction in costs 
and burdens compared to the current situation.  

Figure 3: Comparison of options 

Reduction  of 
companies' 
admin burdens 

on 
Impact 
shareholders' 
rights 

Impact  on  other 
stakeholders  (e.g. 
creditors, 
employees) 

Environmen-
tal impact 

Consistency 
with 
directives 

other 

Option 1: No policy change 

Option 2: exclude these cases 
from the directives 

Option  3:  Ensuring 
that 
Member  States  have  to  grant 
the  possibility  of  simplified 
mergers/divisions 

(cid:123) 

(cid:123) 

+  (153.49  mio 
€/year) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

"(cid:123)": No change 

"+": Positive impact 

"-": Negative impact  

Option 3 is therefore the preferred option. 

7.4. 

Publication and documentation duties 

This  problem  was  not  raised  in  the  2007  Communication  but  brought  to  the 
Commission's attention by respondents as an additional point that should be addressed. 

7.4.1.  Option 1: No policy change 

As  set  out  above  under  section  4.3.1.,  the  costs  for  publishing  the  draft  terms  of 
merger/division would be reduced by about 1 mio €/year if the modification to the First 
Directive  that  was  proposed  on  17  April  200789  is  adopted  by  the  Council  and  the 
Parliament. 

Apart  from  these  savings,  the  costs  that  companies  currently  incur  in  order  to  make 
available the documentation to their shareholders at the registered office of the company 
and to provide them with copies would remain unchanged under this option. 

88 

89 

The supportive comments came in particular from many companies and companies' associations 
whereas in particular certain chambers of commerce were critical about the proposal and would 
prefer to keep the current flexibility for Member States on this issue. 
COM(2008)194 

EN 

36 

   EN 

 
 
                                                 
7.4.2.  Option 2: Use a central Internet site for publishing the information 

This option consists in providing that a central website should be used in order to publish 
the  draft  terms  of  mergers/division  and  the  other  documents  to  be  made  available  to 
shareholders for a certain period. 

One possibility within this option is to use the central electronic website that has already 
been established in the context of the Transparency Directive90. However, this directive 
only  applies  to  listed  companies  and,  consequently,  in  a  number  of  Member  States  the 
central storage  mechanism  is  run  by  the stock exchange. Therefore, for this option that 
would apply to all public limited-liability companies a separate website would have to be 
established which probably should be run by the companies' register. 

With a view to the draft terms of merger/division this option would not imply a major 
change compared to the current situation where these documents have to be entered into 
the company's file. In times of electronic company files the question where the document 
is stored electronically should have no major impact on the costs created by the process 
(and charged to the company). 

With  a  view  to  the  other  documents  to  be  made  available  to  the  shareholders,  the 
company's internal costs for compiling the information would remain the same as under 
option 1 whereas the costs for giving shareholders access to them at the registered office 
would  be  replaced  by  those  for  putting  them  on  the  central  website  which  is  likely  to 
charge companies a fee for this service. It is difficult to estimate the difference between 
these two processes but in any case the difference can be expected to be minor, especially 
as the publication on the website might necessitate the creation of a protected zone where 
companies do not want to make these documents accessible to the wider public but only 
to their shareholders. 

Therefore, such  a  publication  on a central website would in first place  help to save  the 
costs linked to the provision of paper copies to shareholders. The total costs and burdens 
of the documentation requirement have been estimated to be at least 4.24 mio €/year (see 
point 4.3.2.). Looking at the example that has been given it seems appropriate to assume 
that the larger part of these costs is due to the production etc of paper copies. These latter 
costs  and  therefore  the  burden  savings  potential  under  this  option  can,  therefore,  be 
estimated to be at least around 3.5 mio €/year.  

From the users' point of view, an electronic availability of these other documents would 
even  facilitate  the  access  to  the  information  compared  to  the  current  situation,  in 
particular  for  those  shareholders  who  are  not  resident  in  the  vicinity  of  the  company's 
registered office91. Now, those shareholders normally need to ask the company to provide 
them with copies of the documents and have to wait for these copies to be sent to them.  

90 
91 

Central Storage Mechanism, Art. 21(2) Transparency Directive. 
The Commission Communication "Preparing Europe's digital future – i2010 Mid-Term Review" 
of 17 April 2008 (COM(2008) 199 final) find that more than half of EU citizens nowadays use the 
Internet  regularly  (i.e.  at  least  once  a  week),  with  80%  of  the  households  that  use  the  Internet 
regularly having migrated already to a broad band connection. 

EN 

37 

   EN 

 
                                                 
However,  there  is  a  risk  that  under  this  option  certain  costs  could  be  caused  to 
shareholders.  Firstly,  the  body  running  the  central  electronic  platform  might  charge 
access  costs  to  users  as  it  is  the  case,  with  some  registers,  with  a  view  to  information 
contained in the company's file. Furthermore, those shareholders who prefer to work on 
paper documents  would have to print the  documents that sometimes can reach sizeable 
volumes  (in  particular  annual  reports  of  some  public  limited-liability  companies). 
Nevertheless,  it  will  normally  neither  be  necessary  to  print  all  documents  nor  to  print 
them  in  their  entirety.  Instead,  printing  can  be  restricted  to  those  documents  and  those 
parts of them that the shareholder is really interested in. This would limit printing costs 
and have, at the same time, a favourable effect on the environment. 

7.4.3.  Option  3:  Use  the  company's  or  another  Internet  site  for  publishing  the 

information 

Option  3  implies  giving  companies  the  possibility  to  replace  the  current  obligations  by 
making the draft terms of merger/division available to the shareholders on the company's 
own  website  (or  on  any  other  website),  provided  that  the  central  electronic  platform 
which is used to notify the changes made to the register contains a link to that website. 
As for the other documents to be made available to the shareholders the option implies 
granting  companies  the  right  to  make  available  the  documents  on  their  Internet  site 
instead of complying with the current obligations. 

A general obligation to maintain a website does not exist in EU company  law  so  far.92 
According  to  ESTAT,  in  2007,  18%  of  all  businesses  in  the  EU  ran  an  extranet.  This 
figure, however, includes also the smallest unlimited liability companies that do not fall 
within the scope of the directives.93 Imposing the use of a website in the context of the 
Third  and  the  Sixth  Directives  would  create  new  administrative  burdens  on  those 
companies that so far do not have an Internet site. This does not seem appropriate.  

Instead, companies, under this option, with a view to the draft terms of merger/division 
should  be  given  the  choice  between  the  existing  publication  in  the  registers  and 
publication on their own Internet site or any other site. 

Where  companies  do  not  run  a  website  but  would  need  to  publish  information  on  the 
registers' internet site, potential savings would be the same as under option 2. However, 
where the company has a website, additional savings would be possible since the costs 
arising  at  the  register  should  be  reduced  as  the  register  in  future  only  would  have  to 
publish  the  fact  that  draft  terms  of  merger/division  of  the  companies  concerned  are 
available, and establish the link with the website where these draft terms are published. 

With  a  view  to  the  other  documents  to  be  made  available  to  shareholders,  additional 
savings, compared to option 2, are possible under this option as no fees would have to be 

92 

93 

The  Shareholders'  rights  Directive  that  is  to  be  transposed  by  summer  2009  introduced  such  an 
obligation only with a view to companies whose shares are listed on a regulated market. 
As an example, in Germany 87% of all companies between 50 and 249 employees had a website 
in  2007  (source:  Statistisches  Bundesamt,  Wirtschaft  und  Statistik  12/2007,  p.  1203).  Also  this 
number includes both private and unlimited and limited-liability companies. 

EN 

38 

   EN 

 
                                                 
paid to the body running the central website. As in option 2, these potential savings can 
be estimated to be at least around 3.5 mio €/year. 

The burden savings potential under this option can therefore be estimated to lie above the 
3.5 mio €/year assumed in the case of option 2.  

From  the  users'  point  of  view,  as  under  option  2,  the  electronic  availability  of  the 
information should rather facilitate the access to the information compared to the current 
situation. However, in the case where the company's own Internet site can be used there 
would be a guarantee that access is for free whereas the register (or a central electronic 
platform) might charge a fee in case the information has to be accessed via its website. 

7.4.4.  Comparing the options 

In  terms  of  coherence  of  Community  legislation,  both,  options  2  and  3,  compared  to 
option  1,  have  the  advantage  of  adapting  the  information  mechanisms  under  the  Third 
and the Sixth Directives to those used in more recent directives. Both these options also 
offer advantages in terms of accessibility to the users, as shown above. However, in the 
case of option 3 the risk that shareholders will incur additional costs for the access to the 
information is reduced, compared to option 2. 

In terms of administrative burdens, option 1 will leave the current burdens for companies 
untouched  (apart  from  the  savings  that  should  be  achieved  via  the  modification  of  the 
First Directive that is under way, see above). Option 2 requires the setting up of a new 
infrastructure, the costs of which are likely to be passed on to the companies. Option 3 
offers a higher degree of flexibility and, therefore,  seems  preferable  with  a  view  to  the 
objective of reducing administrative burdens.  

Figure 4: Comparison of options 

Reduction 
of 
companies'  admin 
burdens 

Accessibility 
to 
shareholders/users 

Access  costs  for 
shareholders/users 

Environmen-
tal impact 

Consistency 
with 
directives 

other 

Option  1:  No  policy 
change 

(cid:123) 

Option 
electronic platform 

2: 

Central 

+ (3.5 mio €) 

Option  3:  Internet  site 
with link 

+ (> 3.5 mio €) 

(cid:123) 

+ 

+ 

(cid:123) 

- - 

- 

(cid:123) 

+ 

+ 

(cid:123) 

+ 

+ 

"(cid:123)": No change 

"+": Positive impact 

"-": Negative impact  

Option 3 is therefore the preferred option. 

EN 

39 

   EN 

 
 
7.5. 

Protection of creditors 

7.5.1.  Option 1: No policy change 

Since  the  recent  modification  of  the  Second  Directive  that  had  to  be  transposed  by 
15 April 2008, the creditor protection rules under that directive have been clarified in the 
sense  that  Member  States  need  to  provide  for  the  possibility  for  creditors  to  obtain 
securities for their claims only if they can credibly show that an operation concerning the 
capital of the company jeopardises their rights. The Third and the Sixth Directives that 
contain similar rules are less clear concerning the burden of proof in this context. 

Under  option  1,  these  rules  would  remain  unchanged.  This  means  that  there  would 
continue to be a difference between the wording regarding the creditor protection regime 
under  the  Second  Directive  on  one  hand  and  the  Third  and  the  Sixth  Directives  on  the 
other, with the risk that transposition of these different rules into national law will differ.  

7.5.2.  Option  2:  Adapt  creditor  protection  rules  to  the  provision  in  the  modernised 

Second Directive 

This option entails adapting the rules in the Third and the Sixth Directives in the revised 
provision on creditor protection in the Second Directive, and in particular to clarify that 
securities have to be provided only where the creditor can show credibly that his claims 
are jeopardised. 

This solution was proposed in the 2007 Communication. 36 out of 128 respondents took 
a position on this proposal, and 70% of these respondents supported it. 

7.5.3.  Option 3: Repeal the creditor protection rules in the directives 

This option would entail deleting the current provisions on creditor protection from the 
directives. 

However,  as  shown  above  the  reporting  requirements  of  the  directives  are  exclusively 
directed at the protection of the shareholders. Repealing the provisions dealing with the 
companies'  creditors  would  therefore  imply  leaving  it  entirely  to  the  Member  States  to 
decide whether and how they want to provide for the protection of creditors. 

7.5.4.  Comparing the options 

Option 3 would remove creditor protection rules entirely from the directives. This would 
constitute  a  profound  change  to  the  objectives  of  the  two  directives.  Furthermore,  it  is 
difficult to justify why the EU should protect the shareholders of merging and dividing 
companies but not take account of the interests of the creditors of these companies.  

The  change  proposed  in  option  2  does  not  entail  a  material  change  to  the  current 
provision but only a clarification of its content. As option 1, also option 2 is therefore not 
likely to have a major impact on company’s costs and burdens. However, potential legal 
uncertainty as to the burden of proof would be removed. Furthermore, this option ensures 
coherence between the different legal acts in the area of EU company law. 

EN 

40 

   EN 

 
Figure 5: Comparison of options 

Reduction 
companies' 
burdens 

of 
admin 

Impact 
creditors 

on 

Impact 
on 
stakeholders 
employees) 

other 
(e.g.. 

Consistency  with  other 
directives 

Option 1: No policy change 

Option 2: Adapt to the provision in 
the modernised Second Directive 

(cid:123) 

(cid:123) 

Option  3:  Repeal 
protection rules 

the  creditor 

(cid:123) 

(cid:123) 

(cid:123) 

- 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

+ 

- 

"(cid:123)": No change 

"+": Positive impact 

"-": Negative impact  

Option 2 is therefore the preferred option. 

7.6. 

Conclusion 

On  the  basis  of  the  predefined  criteria  and  the  considerations  set  out  in  the  previous 
sections, the recommended options can be summarised as follows: 

Figure 6: Summary 

Reduction 
of 
companies'  admin 
burdens 

Impact 
on 
shareholders 

Impact  on  other 
(e.g. 
stakeholders 
creditors, 
employees) 

Environmen-
tal impact 

Consistency 
with 
directives 

other 

Possibility for shareholders to renounce 
to the written report of the management 
and the accounting statement 

+ (7.12 mio €/year)*  (cid:123) 

Introduce  a  Member  State  option 
regarding the expert report under the 2nd 
Directive in case of a division 

+  (3.26  –  9.43  mio. 
€/year) 

(cid:123) 

Ensuring 
possibility 
merger/division 

that  companies  have 
a 

the 
simplified 

of 

+  
(153.49 mio €/year) 

(cid:123) 

Allow  for  publication  via  Internet  site, 
accessible  via  a  link  on  a  central 
electronic platform 

+ (> 3.5 mio €/year) 

+/-** 

Adapt  creditor  protection 
modernised provisions in 2nd Directive 

rules 

to 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

(cid:123) 

+ 

(cid:123) 

(cid:123) 

+ 

(cid:123) 

+ 

+ 

* Savings measured against the dynamic baseline "No policy change" 

** While accessibility is improved, shareholders may incur some (limited) costs under this option. 

"(cid:123)": No change 

"+": Positive impact 

"-": Negative impact  

The overall savings of the recommended options in terms of administrative burdens can 
be  estimated,  on  the  basis  of  the  information  available  at  this  stage,  at  about 
172 mio €/year. On the basis of the figures set out in Section 3 above, this means that the 
implementation of these measures would lead to a reduction in administrative burdens by 

EN 

41 

   EN 

 
 
 
about 9.15% as far as the area of company law is concerned and by about 1.23% if the 
total  administrative  burdens  in  the  areas  of  company  law,  accounting  and  auditing  are 
taken as a basis.  

However, taking into account the methodology of the measurement, and in particular the 
fact that the figures for 16 Member States have been arrived at by way of extrapolation, 
these estimates obviously can only give a rough indication as to the size of the savings 
that  will  ultimately  be  made.  Furthermore,  as  indicated  in  Section  4.1,  a  considerable 
number of Member States apply the same or similar rules to mergers and divisions where 
private  limited-liability  companies  are  involved.  Although  these  operations  do  not  fall 
within  the  scope  of  the  directives  and  therefore,  of  this  impact  assessment,  additional 
savings should arise in that area at Member State level once the simplification measures 
proposed in this impact assessment are implemented. 

8. 

MONITORING AND EVALUATION 

Five years after the transposition of the amendments, the effect of the measures should be 
evaluated.  

This evaluation should look, in particular at the following questions: 

•  Whether and to what extent the overall costs of companies have been reduced in the 

context of mergers and divisions; 

•  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  the  case  of  mergers  and 
divisions  provides  useful  results  or  whether  a  mandatory  exemption  should  be 
considered. 

EN 

42 

   EN 

 
EUROPEAN COMMISSION 
Internal Market and Services DG 

ANNEX 1 

FREE MOVEMENT OF CAPITAL, COMPANY LAW AND CORPORATE GOVERNANCE 

SYNTHESIS OF THE REACTIONS RECEIVED TO THE 

COMMISSION COMMUNICATION ON A SIMPLIFIED BUSINESS 
ENVIRONMENT FOR COMPANIES IN THE AREAS OF 
COMPANY LAW, ACCOUNTING AND AUDITING (COM(2007)394) 

THE INTERNAL MARKET AND SERVICES  
DIRECTORATE-GENERAL  

DECEMBER 2007 

EN 

43 

   EN 

 
 
 
On  10  July  2007,  the  Commission  adopted  its  communication  on  a  simplified  business 
environment  for  companies  in  the  areas  of  company  law,  accounting  and  auditing.  In  this 
communication, the Commission set out its proposals for reducing administrative burdens and 
adapting the acquis in these areas to the needs of today's businesses. 

On 22 November, the Competitiveness Council adopted Council conclusions94 welcoming the 
Commission initiative and calling on the Commission to expedite consideration of responses 
to  its  communication  and,  where  appropriate  and  preferably  before  the  end  of 2008,  bring 
forward  proposals,  based  on  impact  assessments.  The  Legal  Affairs  Committee  of  the 
European  Parliament  is  currently  working  on  a  report  on  the  communication  to  be  adopted 
early in 2008. 

In  addition,  18  Member  States'  governments,  the  government  of  one  EEA  country  and  110 
stakeholders  reacted  to  the  invitation,  in  the  communication,  to  submit  comments  on  the 
proposals in writing, by mid-October 2007. 

Number of responses by field

trade unions
2%

business registers
1%

others
9%

securities regulators
2%

notaries
2%

lawyers
2%

cooperatives
2%

financial 
intermediaries
3%

consultancies 
(commercial 
information)
4%

institutional investors
9%

public authorities
18%

accountants and 
auditors
27%

companies
19%

These contributions from governments and stakeholders originated from 23 countries in total, 
including  22  Member  States.  A  number  of  contributions  were  also  submitted  by  European 
bodies and associations. 

94 

Council document 15222/07 DRS 48 

EN 

44 

   EN 

 
 
                                                 
Simplification: Responses per country

Number of responses

30

25

20

15

10

5

0

Austria

Belgium

Bulgaria
Denmark
Czech Rep.

Estonia

Finland

Germany
France

Greece

Ireland

Italy

Latvia
Norway
Netherlands
Lithuania

Portugal
Poland

Romania

Slovakia

United Kingdom
Spain
Sweden
EU associations

DG MARKT would like to thank the interested parties who sent in written opinions for their 
contributions. 

This report summarises the reactions that DG MARKT received to the communication and the 
main comments made. It does not provide detailed statistical data, but rather seeks to present a 
qualitative assessment of the contributions received. It also does not represent any indication 
as to what follow-up could be given, by the Commission, to the July communication. 

1. 

EXECUTIVE SUMMARY 

A clear majority of those that reacted to the proposal to repeal certain company law 
directives  did  not  support  it.  The  main  argument  put  forward  was  that  these 
directives provide legal certainty and that their repeal would rather cause additional 
costs than lead to savings for companies. 

However, about three quarters of those who took a position on the question whether 
individual  simplification  measures  should  be  proposed  supported  the  idea.  They 
considered  that  the  Company  Law  Directives  are  in  some  parts  overly  descriptive 
and  restrict  the  flexibility  of  Member  States  and  companies  beyond  what  is  really 
necessarily.  There  was,  in  particular,  overwhelming  support  for  the  proposals  to 
abolish  the  requirement  to  publish  details  contained  in  the  register  in  the  national 
gazette  (First  Company  law  Directive)  and  to  oblige  Member  States  authorities  to 
accept  certified  translations  prepared  and  accepted  in  another  Member  State 
(Eleventh  Company  law  Directive).  On  the  proposal  to  reduce,  at  EU  level,  the 
reporting  requirements  in  the  case  of  domestic  mergers  and  divisions,  there  was  a 
slight  majority  supporting  this  idea,  with  the  exception  of  the  proposal  concerning 
the  independent  expert  report  which  is  opposed  by  a  majority  of  respondents.  The 
majority of respondents supported, however, also the idea to streamline the creditor 
protection rules in these cases with the recent modification of the Second Company 
law Directive and to reduce the requirements for mergers with 90% or wholly owned 
subsidiaries. 

EN 

45 

   EN 

 
 
Concerning  the  proposals  put  forward  in  the  communication  in  the  areas  of 
accounting and auditing there was clear support from respondents for the proposal to 
introduce  a  Member  State  option  to  exempt  micro-entities  from  the  scope  of  the 
accounting  directives.  The  proposal  to  extend  the  transition  period  to  the  status  of 
SME  to  five  years  met  some  scepticism.  However,  a  period  of  three  years  was 
considered acceptable. A slight majority of respondents disagreed with the potential 
relief  from  publication  requirement  for  small  entities.  Also  the  idea  to  allow 
unlimited liability medium-sized companies to follow the rules for small companies 
met  support  whereas  respondents  were  split  over  the  proposal  to  take  the  same 
measure  with  a  view  to  management-owned  companies.  Finally,  the  proposals  for 
more minor simplification measures for all companies were supported in respect of 
audit exemptions under specific circumstances, a clarification of the IAS Regulation 
as well as the deletion of certain disclosure requirements. 

2. 

GENERAL REMARKS 

Respondents in general welcomed the initiative to address the issue of administrative burdens 
for  companies,  and  in  particular  small  and  medium-sized  ones.  A  number  of  respondents, 
however,  stressed  that  any  simplification  should  take  full  account  of  the  advantages  of 
harmonisation and that thorough impact assessments should be established in order to support 
individual simplification proposals. 

In  the  area  of  company  law,  reactions  to  the  proposals  seemed  to  be  influenced  mainly  by 
geographical origin and less by the sector the respondents belonged to. However, this was not 
the  case  for  the  proposals  concerning  accounting  and  auditing  where  support  came  in 
particular  from  companies  and,  in  many  instances,  from  investors  and  public  authorities 
whereas  the  reactions  from  the  side  of  the  accounting  and  auditing  profession  and  from 
consultancies to these proposals were often critical. 

3. 

OPTION  1:  PLACING  THE  FOCUS  ON  CROSS-BORDER  PROBLEMS  (SECTION  3.1.1  OF 
THE COMMUNICATION) 

In the communication, reducing the acquis in EU company law to those legal acts that aim at 
solving  specific  cross-border  problems  was  proposed  as  one  possible  way  forward  in 
company  law.  Under  this  option,  it  was  therefore  suggested  to  repeal  directives  such  as  the 
Third, the Sixth, the Twelfth and – subject to the outcome of the ongoing outside study on the 
current capital maintenance system – the Second Company law Directive. 

About  half  of  the  respondents took  a  position  on  this  option  1.  Of  those  respondents,  about 
one third expressed themselves in favour of the proposal whereas two thirds opposed it. 

Those  who  supported  the  proposal  pointed  out  in  particular  that  EU  company  law  in  its 
current  form  is  too  inflexible  and  hinders  regulatory  competition.  A  number  of  these 
respondents, however, preferred taking a by case-by-case approach: the directives should be 
judged  one  by  one  and  article  by  article  in  order  to  establish  whether  the  provisions  are 
relevant to the effective functioning of the single market.  

This approach was reflected in the views expressed on the different directives mentioned in 
the Commission communication: about a quarter of those respondents who took a position on 

EN 

46 

   EN 

 
the  Third  and  the  Sixth  Directive  were  in  favour  of  repealing  these  directives  whereas  only 
one fifth considered that the Second Directive should be repealed. However, about two fifths 
of  the  respondents  either  asked  for  a  repeal  of  the  Twelfth  Directive  or  indicated  that  they 
could accept such repeal. 

Those  respondents  that  expressed  themselves  against  option  1  stressed  in  particular  the 
positive effects of harmonisation. In their view, there are instances when it is valid to impose 
minimum  standards  which  apply  only  at  the  domestic  level,  thus  ensuring  at  least  a  partial 
level playing field throughout the EU. In particular, the repeal of enabling legislation is seen 
as counterproductive. Furthermore, they consider that the reduction in legal certainty caused 
by  the  repeal  of  the  directives  will  cause  new  costs  to  companies  that  will  outweigh  the 
savings. Additional costs will, in their view, also be created for the other stakeholders if they 
have  to  deal  again  with  27 different  legal  systems  in  the  future.  This  is  likely  to  have  a 
harmful  effect  on  the  confidence,  in  particular,  of  non-resident  shareholders  and  creditors. 
Some respondents who opposed option 1 also took the view that the practical effect of such 
measures  would  be  limited  as  Member  States  will  not  necessarily  make  use  of  the  new 
flexibility.  

With a view to the Third and the Sixth Company law Directives, opponents to the proposal 
of repealing the directives believe that the directives' transparency requirements create cross-
border benefits and stressed that these directives form the basis for the Tenth Company law 
Directive on cross-border mergers. One respondent also recalled that the harmonisation of the 
transmission  of  rights  and  obligations  in  the  directives  has  advantages  for  companies  (e.g. 
patents  of  the  merging  companies  in  all  Member  States  are  automatically  transferred  to  the 
acquiring  or  recipient  company).  Those  that  supported  a  repeal  of  these  directives  often 
considered  these  directives  as  outdated,  in  particular  after  the  adoption  of  the  Directive  on 
cross-border  mergers,  or  found the rules much too detailed and considered that they unduly 
restrict the flexibility of Member States and companies. 

On the Second Company law Directive, most respondents took the view that the outcome of 
the outside study commissioned by the Commission in 2006 should be awaited before taking 
further action. On the substance, a number of respondents, however, considered that the rules 
of  the  directive  are  overly  restrictive,  impose  excessive  burdens  on  companies  and  do  not 
achieve  its  objective  to  protect,  in  particular,  the  creditors  of  the  company.  Today  financial 
mechanisms are much more sophisticated than at the time of the adoption of the directive. In 
order  to  increase  the  flexibility,  one  respondent  proposed  to  introduce  a  Member  States' 
option  to  allow  for  real  non-par  value  shares.  The  large  majority  of  those  respondents  who 
expressed  a  view  on  the  Second  Directive  opposed  the  proposal  of  repealing  the  directive, 
mainly for the reason that the provisions provide for the necessary protection to investors and 
creditors,  that  the  provisions  on  distributions  to  shareholders  are  important  in  order  to 
preserve company and shareholder value and because pre-emption rights are considered as an 
important mechanism to protect shareholder rights. The latter right was considered important 
even by many of those respondents who, in general, favoured repealing the directive. 

Most respondents considered the possibility to establish single-member companies important. 
Those  respondents  that  nevertheless  supported  a  repeal  of  the  Twelfth  Company  law 
Directive  mainly  took  this  view  because  they  considered  that  today  this  principle  is 
established  in  all  Member  States  so  that  EU  intervention  is  not  necessary  any  more.  At  the 
same  time,  some  of  them  regarded  the  formal  requirements  contained  in  the  directive 
(registration  requirement,  obligation  to  take  decisions  in  writing  and  to  conclude  written 
contracts  between  the  company  and  the  member)  as  unnecessarily  burdensome.  Those 

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respondents  that  expressed  themselves  in  favour  of  maintaining  the  directive  stressed  the 
enabling  character  of  the  directive  and  the  risk  that  the  national  legal  systems  will  diverge 
after  its  repeal  which  would  be  particularly  harmful  for  companies  that  have  100% 
subsidiaries in other Member States. 

4. 

OPTION 2: MORE  PRINCIPLE-BASED,  LESS  DETAILED  REGULATION (SECTION 3.1.2. 
AND ANNEX 2 TO THE COMMUNICATION) 

The second option offered in the communication consisted in the proposal to simplify at least 
parts of the Third, the Sixth and probably also the Second Company law Directives as these 
directives, in their current form, leave Member States little flexibility to adapt their respective 
national systems to the evolving needs of businesses and stakeholders in general. 

Just over half of the total replies took a position on this option. Almost three quarters of those 
who  expressed  a  view  were  generally  in  favour  of  or,  at  least,  could  accept  adopting 
individual  simplification  measures  as  a  second  best  option  after  repealing  some  of  the 
directives. Those who chose this option believe that there are provisions in the company law 
directives that are truly obsolete and have no real effect and should be repealed or amended. 
Simplification measures however should be examined and justified on a case by case basis.  

Some respondents objected to the proposals under option 2 not because they did not see the 
need  to  simplify  EU  company  law  but  because  they  expressed  the  concern  that  individual 
simplification  measures  might  render  the  legal  texts  and  the  procedures  more  complex  and 
costly than this is currently the case. They commented that it is very hard to set up a common 
technical  method  for  simplification.  Therefore  if  the  repeal  of  the  directives  does  not  gain 
sufficient support, they would prefer not to amend the directives at all. 

4.1. 

Reporting requirements under the Third and the Sixth Company law Directives 

Not  all  respondents  who  generally  support  option  2  commented  on  the  individual 
simplification measures set out in the annexes of the communication. Among those who did 
comment there is a slight majority in favour of the detailed proposals to amend or repeal the 
reporting  requirements  in  the  Directives,  with  the  exception  of  the  proposal  concerning  the 
independent expert report which is opposed by a majority of respondents. 

Those respondents who are in favour of changing the rules on the reporting requirements (the 
written report of the management on the draft terms of a merger or a division, the independent 
expert report and the accounting statement) consider that it would be better to leave it to the 
Member  States  to  fit  the  respective  information  obligations  in  their  legal  system.  At 
Community  level  it  would  be  sufficient  and  more  appropriate  to  set  out  an  obligation  to 
provide for adequate, transparent and objective information to shareholders covering not only 
the  economic  and  legal  justification  for  the  operation  but  also  its  financial  terms  and  the 
valuation  of  the  share  exchange.  However,  the  way  by  which  such  information  is  to  be 
provided, in the view of these respondents, can be left to the Member States to decide. 

Half of those respondents who expressed themselves in favour of amending the rules on the 
reporting  requirements  are  in  favour  of  abolishing  the  requirement  of  drawing  up  the 
respective  reports  or  statements  only  where  shareholders  renounce  to  them.  Most  of  these 
respondents suggest that this decision would have to be taken by unanimity. 

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According to some respondents, the possibility of differentiating between listed and unlisted 
companies regarding the reporting requirements could also be considered. While it is essential 
to  keep  the  requirements  to  protect  the  shareholders  of  listed  companies,  the  by-laws  of 
unlisted companies in their view may set out different requirements. 

A  number  of  respondents  who  oppose  changing  the  legislation  stress  the  importance  of  the 
written report of the management on the draft terms of a merger or a division, the independent 
expert report and the accounting statement in ensuring the transparency of the operation and 
in  the  protection  of  shareholders'  interests.  In  their  view,  these  reports  provide  important 
information  for  the  shareholders  and  facilitate  understanding  of  the  motivations  and  the 
financial arrangements of the merger or the division.  

Regarding  more  substantial  changes,  a  significant  number  of  respondents  mention  that 
shifting from ex-ante information to ex-post liability may be costly and lessens the efficiency 
of shareholder protection. In particular, the cross-border enforcement of claims for damages is 
difficult.  Some  point  out  that  such  a  change  would  reduce  the  positive  impacts  of  the 
provisions  of  the  Transparency  Directive  and  the  Shareholders'  rights  Directive  facilitating 
cross-border voting. 

Some respondents indicated that mergers or divisions are rare events in companies' lives and 
that  therefore  the  related  reports  do  not  constitute  a  relevant  cost  factor.  Accordingly  the 
proposed modifications would not result in significant cost-savings for the company.  

4.1.1.  Written report by the management in case of a merger or a division 

Slightly more than half of those who expressed a view on this question support the proposal to 
amend the requirement on the written report or to leave it to the Member States to decide if 
they  require  a  report  by  the  management  explaining  the  draft  terms  of  the  merger  or  the 
division and setting out their legal and economic grounds. 

Most respondents who are in favour of amending the provision believe that the requirement of 
the  written  report  of  the  management  should  remain as it stands but shareholders  should be 
given the right to renounce to it. Most respondents suggest that this decision would have to be 
taken by unanimity. 

Some suggest that shareholders should also be given the right to waive the management report 
in the case of a cross-border merger (Directive 2005/56/EC). 

4.1.2. 

Independent expert report 

Almost  three  fifths  of  the  respondents  who  addressed  this  question  took  a  position  against 
abolishing  or  substantially  amending  the  requirement  for  an  independent  expert  report  in  a 
case  of  a  merger  or  a  division.  Most  of  them  referred  to  the  recently  adopted 
Directive 2007/63/EC amending the Third Company law Directive on mergers and the Sixth 
Company  law  Directive  on  divisions.  This  amendment  grants  an  exemption  under  the 
requirement of the independent expert report if all shareholders renounce to it.  

Most respondents argue that shareholders have a legitimate interest to be informed about the 
reasons  and  effects  of  the  merger  or  the  division,  including  the  valuation  of  the  share 
exchange ratio. The report ensures transparency and is indispensable to enable shareholders to 
take a well-informed decision at the general meeting.  

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A few of those respondents who are in favour of amending the requirement of an independent 
expert report consider that the report may be abolished if a clear point of reference exists for 
fixing the exchange ratio, as e.g. the stock price of listed shares, similarly as this is provided 
for in Directive 2006/68/EC amending the Second Company law Directive. 

4.1.3.  Financial statement 

Slightly more than half of the respondents also expressed themselves in favour of the proposal 
to amend the provisions on the accounting statement that has to be drawn up in the case of a 
merger or a division. These respondents who supported the abolition of the statement consider 
the requirement for an accounting statement in all cases where annual reports are older than 
6 months  excessive.  They  believe  it  could  be  left  to  market  forces  to  decide  if  such  a 
statement  is  necessary.  Some  suggest  that  directors  should  be  allowed  to  certify,  in  their 
written report, the amount of net assets and the net result for the relevant period and possibly 
other items on and off the balance sheet that were decisive in the setting of the share exchange 
ratio.  

Several respondents consider keeping the requirement for a financial statement but allowing 
shareholders  to  renounce  to  it.  The  decision,  in  their  view,  would  have  to  be  taken 
unanimously. 

The  respondents  who  oppose  the  proposal  underline  the  statement's  role  in  shareholder 
protection.  They  claim  that  it  is  an  important  means  for  the  shareholders  to  judge  if  the 
proposed exchange ratio is appropriate.  

4.1.4.  Double reporting requirement in the case of a division 

Relatively few respondents – less than one third - expressed a view on the proposal to abolish 
a  double  reporting  requirement  in  the  Sixth  Company  law  Directive.  The  Directive  allows 
Member States only to provide that the report on consideration in kind (Second Directive) and 
the  expert  report  on  the  draft  terms  of  division  may  be  drawn  up  by  the  same  expert.  They 
cannot grant an exemption from the double reporting requirement. 

A minority of respondents opposed the modification of the provisions for the reason that the 
expert report under the Second Directive and a report on the draft terms of the division under 
the  Sixth  Directive  have  different  objectives.  In  their  view  the  former  requires  objective 
measurement  while  the  assessment  of  the  share  exchange  ratio  aims  at  ensuring  that  the 
exchange ratio is appropriate.  

The  majority  of  respondents,  however,  supported  the  proposal  of  granting  an  exemption  to 
companies from one of the reporting requirements and underlined that even if the two reports 
do  not  serve  the  same  purpose,  measuring  the  value  of  the  contribution  in  kind  is  a 
precondition for the assessment of the share exchange ratio. Therefore the report on the draft 
terms  of  the  division  may  be  sufficient.  Producing  only  one  report  could  bring  about  cost 
savings to the company. 

4.2. 

Protection of creditors under the Third and the Sixth Directives 

Two thirds of the respondents who expressed a view on this question agree that the creditor 
protection rules in the Third and the Sixth Directives should be aligned with the provisions of 
the Second Directive as amended by Directive 2006/68/EC. 

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Those  who  support  the  proposal  to  require  creditors  to  credibly  demonstrate  to  the 
administrative or judicial authority that, in the event of a merger or a division, their interest is 
at stake, emphasise the importance of increased coherence of EU company law provisions. 

Some respondents in the minority suggest waiting to see how the amendment of the Second 
Directive  is  applied  in  practice.  One  respondent  considers  that  the  provisions  in  the  Second 
Directive are stricter and give less leeway to Member States than the rules of the Third and 
the Sixth Directives.  

4.3. 

Protection of shareholders of the acquiring/recipient company in the Third and 
the Sixth Directives 

Less than one third of the respondents commented on the proposal to give Member States the 
right to determine the conditions that have to be fulfilled if the acquiring/recipient company 
does not wish to hold a general meeting to decide upon the merger or the division. 

Two  thirds  of  those  who  responded  to  the  question  believe  that  the  respective  rules  should 
remain subject to EU law. Many argue that holding a general meeting is essential to ensure 
shareholders'  rights  and  to  reasonably  limit  directors'  liability  since  the  resulting  company 
does not only take over assets but also liabilities. 

The minority in favour of the proposal consider that the general meeting should be discharged 
of  duties  that  are  parts  of  the  day-to-day  management  of  the  company.  It  would  reduce 
transaction costs for companies. 

However,  a  slight  majority  of  the  respondents  who  gave  a  reply  to  the  question  agreed  that 
some  flexibility  should  exist  at  least  in  the  cases  of  the  transfer  of  the  assets  of  a  wholly 
owned subsidiary and of the acquisition of a subsidiary whose parent company already holds 
90 % of the shares. 

5. 

ADDITIONAL  SIMPLIFICATION  MEASURES  IN  COMPANY  LAW  (SECTION  3.2  AND 
ANNEX 3 TO THE COMMUNICATION) 

Alongside with both options presented in the paper for company law, a number of individual 
simplification  measures  were  proposed,  in  order  to  reduce  administrative  burdens  that  are 
linked  to  certain  directives  whose  usefulness  as  such  was  not  put  into  question  by  the 
communication.  

5.1. 

National gazette 

In particular, it was proposed with a view to the First Company law Directive to abolish the 
requirement to publish information in the national gazettes that also has to be entered into the 
Member States' commercial registers, to the extent that the publication in the national gazette 
entails additional costs for the companies. 

This proposal was supported by an overwhelming majority of respondents. A number of them 
stressed, however, that in this case the electronic register should  provide a daily transaction 
lists. Some respondents furthermore, took the view that the requirement for publication in the 
national gazette should only be deleted from the directive. It should then be left to Member 
States  to  decide  whether  they  want  to  impose  such  an  obligation  at  national  level.  The 
minority of respondents that opposed the proposal mainly put forward the arguments that the 

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current system functions well, that the electronic registers are not sufficiently developed yet to 
provide  an  equivalent  service,  that  costs  caused  to  companies  by  this  requirement  are 
relatively minor or that they oppose individual simplification measures in general (see above 
under point 4). 

5.2. 

Certified Translations 

The  second  proposal  contained  in  this  section  of  the  communication  referred  to  the 
possibility, for Member States, to request translations in the context of the establishment of a 
branch under the Eleventh Company Law Directive. 

A  very  broad  majority  of  respondents  agreed  with  the  proposal  to  oblige  Member  States  to 
accept  certified  translations  to  the  extent  that  they  are  accepted  by  the  judicial  or 
administrative  authorities  of  the  Member  State  where  they  were  established.  Those 
respondents  stressed  that  Member  States'  laws  sometimes  impose  excessive  requirements, 
such  as  for  notarisation.  However,  many  respondents  emphasised  the  importance  of 
guaranteeing that the translation is reliable which would be the case if it is certified in a way 
accepted  by  the  other  Member  States'  authorities.  The  few  respondents  that  objected  to  the 
proposal  referred  for  example  to  the  differences  in  certification  procedures  in  the  Member 
States or opposed individual simplification measures in general (see above under point 4). 

5.3. 

Registered office of a European Company 

A clear majority of respondents also supported the proposal to adapt Article 7 of the Statute 
for  a  European  Company  (SE)  concerning  the  company's  registered  office  to  the 
"Überseering" jurisprudence of the European Court of Justice. These respondents considered 
that  the  change  would  give  European  Companies  more  flexibility  in  structuring  their 
operations.  Some  respondents  drew  the  attention  to  the  fact  that  a  practical  interest  of  the 
company in having its registered office in another Member State than the administration can 
in  particular  exist  where  the  administrations  of  different  companies  of  one  group  are 
concentrated in one place in order to reduce the administrative expenses. Those respondents 
that  opposed  the  proposal  put  forward  in  particular  that  the  current  rule  provides  more 
transparency  and  that  the  "Überseering"  judgment  only  applies  directly  to  companies  under 
national law, or considered the proposal not to be a priority, in view of the limited number of 
SEs up to date. 

6. 

ACCOUNTING AND AUDITING (SECTION 4 AND ANNEX 4 TO THE COMMUNICATION) 

In  the  areas  of  accounting  and  auditing,  five  different  measures  had  been  identified  in  the 
communication  that  aim  at  reducing  the  administrative  burdens,  notably  for  small  and 
medium-sized  entities,  while  maintaining  the  goal  to  keep  and  improve  accounting  and 
auditing quality in the EU. 

Each  single  measure  is  summarised  in  identical  order  as  it  appeared  in  the  Commission 
Communication with no prejudgement whether or not and how to pursue these in the future. 

6.1. 

Introduction of "Micro entities" 

The  Commission  proposed  to  introduce  a  new  category  of  so  called  micro  entities  in  the 
Fourth Directive, which could be optionally exempted by Member States from the accounting 
directives. Micro entities are tentatively defined as entities with: 

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–  less than ten employees,  

–  balance sheet total below 500,000 EUR, and 

–  turnover below 1,000,000 EUR.  

The  proposal  to  introduce  the  micro  entities  definition  into  the  Fourth  Directive  was 
welcomed by a majority of those respondents that commented on the issue (about 80% of the 
total  number  of  respondents).  Nine  respondents  stated that the tentative  figures  defining  the 
thresholds for micro-entities should be higher, seven wished them to be lower. 

Those  respondents  that  welcomed  the  proposal  considered  it  a  major  reduction  of 
administrative burden for those entities, which will encourage new start-ups through removal 
of  disincentives  to  incorporation.  Support  was  the  strongest  amongst  public  authorities  and 
companies where more than four fifths expressed themselves in favour of the proposal. There 
were also comments suggesting that the thresholds for the micro entities should be as high as 
currently  defined  by  Article 11  of  the  Fourth  Directive  for  small  companies.  Those  that 
opposed  the  proposal,  primarily  accountants  and  auditors,  took  the  view  that,  despite  the 
possibility of Member States to maintain equivalent requirements at their level, it would lead 
to an abolition of bookkeeping and preparation of accounting data in general for those entities. 

6.2. 

Trespassing the thresholds for SMEs 

Under this topic three issues were discussed: 

–  to prolong the two-year period in Article 12 of the Fourth Directive to five years; 

–  to implement a one year period for those entities ceasing to exceed the thresholds instead 

of the existing two years period (Article 12); and 

–  to change the general procedure on how to amend and update the thresholds. 

Around 60% of respondents commented on the first issue and about 40% on the second one. 
Amongst  these  respondents,  a  slight  majority  were  against  the  proposed  changes;  however, 
replies coming from companies were almost unanimously in favour. A major concern of the 
opponents  was  that  an  exceptionally  bad  year  in  terms  of  financial  thresholds  of  Article  11 
could result in a 5 year switch to the small companies' accounting regime (as a consequence 
of combining the two proposed changes). In their view, this effect was likely to lead to abuse. 
However, more than one fifth of these opponents would agree if the prolongation was limited 
to a period of 3 years. Some also suggested that it should be made a Member States' option. 

Only  30%  of  the  responses  took  a  view  on  the  last  question  concerning  the  change  of 
procedure  to  amend  and  update  the  thresholds.  However,  almost  four  fifths  of  these  were 
rather positive, expressing a broad agreement that the current process needs to be streamlined. 
Supporters were in favour of periodic updates with some kind of reference or indexation, e.g. 
according to the percentage of inflation rate.  

Opponents argued that the threshold criteria are politically important and therefore should not 
be decided purely on technical grounds.  

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6.3. 

Relief from publication requirement for small entities 

Around three quarters of all respondents commented on the issue with a majority expressing 
themselves against the proposed change. The strongest support for the proposal was expressed 
by companies with three quarters of them pleading in favour. The most vocal opponents were 
information  providers  (consultancies)  who  use  the  financial  data  in  order  to  feed  their 
databases. 

Supporters  of  the  proposal  stressed  that  in  the  present  situation  mainly  the  competitors  of 
small  businesses  benefit  from  the  availability  of  information.  Opponents  took  the  view  that 
publication  is  not  expensive,  especially  taking  into  account  electronic  possibilities  such  as 
XBRL. They also highlighted that the proposal would lead to a decrease in transparency and 
reliability with potential counterproductive results like the increase in credit costs. It was also 
stressed  that  the  publication  requirement  is  seen  as  a  consequence  of  the  limited  liability 
status which requires that some information is provided to the stakeholders of the companies.  

6.4. 

Extension of exemption for companies without particular external user 

6.4.1.  Management owned companies 

Little  more  than  half  of  respondents  provided  comments  on  the  proposal  to  allow  medium-
size companies whose managers are at the same time their owners to follow the same regime 
as the one applying to small companies. Their views were split evenly. However, among the 
companies, a majority of four fifths supported the proposal. 

Opponents  to  the  issue  stressed  the  interests  of  stakeholders  and  the  overall  importance  to 
maintain medium-sized enterprises transparent. The risk based approach was also criticised as 
being vague and creating a new, unnecessary category of companies. Technical problems of 
enforcement were raised as well, pointing out for example to the lack of ownership databases.  

6.4.2.  Unlimited liability medium companies 

Almost  half  of  respondents  commented  on  the  proposal  to  render  the  regime  for  small 
companies  also  applicable  to  unlimited  liability  medium-sized  companies,  and  about  two 
thirds of these expressed themselves in favour. The strongest support came from companies 
that were almost unanimous in their positive assessment of the proposal. 

Some of the supporters even suggested extending the scope of the exemption to all unlimited 
liability companies instead of restricting it to medium-sized companies.  

Opponents stressed the information needs of stakeholders. 

6.5. 

Simplification for all companies 

6.5.1.  Full use of Article 57 – audit exemptions under specific circumstances 

Almost half of the respondents took a position on this proposal. A large majority of two thirds 
were  fully  or  rather  supportive.  Respondents  from  Member  States  which  have  made  use  of 
Article 57  generally  provided  a  positive  feed  back.  Respondents  mainly  supported  the  sole 
exemption of statutory audit, even though concerns were put forward concerning the risk of 
further concentration of the audit market into the hands of big players. Some put forward that 
given existing consolidation audit techniques, the benefits of the proposed measures might not 

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live  up  to  the  expectations.  Some  supported  consistency  of  auditing  practice  with 
consolidation  requirements  (IFRS).  A  number  of  respondents  urged  the  Commission  to 
investigate  why  only  a  few  Member  States  have  so  far  implemented  the  options  in  extant 
Article 57 in their jurisdiction, and call for further impact assessment. 

6.5.2.  Clarification  of  the  relationship  between  the  IAS  regulation  and  the  Seventh 

Directive 

About 40% of respondents commented on the proposal to clarify the relationship between the 
IAS  regulation  and  the  Seventh  Directive,  and  in  particular  that  parent  companies  with 
immaterial subsidiaries do not need to prepare IFRS consolidated financial statements. These 
respondents were strongly in favour with companies being unanimously positive. 

Supporters  encouraged  also  further  clarifications  of  the  IAS  Regulation,  e.g.  whether  listed 
companies  that  do  not  form  a  group  should  follow  IFRS,  and  addressed  more  detailed 
questions on the interlinkage between the IAS regulation and national accounting regimes. 

6.5.3.  Consolidation requirement for personal holdings 

Less than one fifth of respondents elaborate on this issue, with a majority of these being in 
favour. 

6.5.4.  Abolition of deferred tax accounting 

This  issue  attracted  the  attention  of  about  40%  of  the  respondents,  with  a  clear  majority  of 
them being in favour; all companies supported the proposal.  

Some commented that it is unclear whether the proposal is referring just to SMEs (as stated in 
the  last  sentence  of  the  respective  paragraph  of  the  Communication)  or  to  all  companies  as 
referred to in the title. Therefore those, who read it as restricted to SMEs, advocated for relief 
to  be  granted  to  all  companies  for  their  separate  and  consolidated  accounts.  Others  would 
prefer this becoming a Member State option.  

Opponents claimed that deferred taxes contain useful information and stressed that in any case 
there is already an option for Member States to allow for abridged notes without deferred tax 
disclosures for small companies. Others suggested differentiating this measure in the way that 
there  should  be  a  mandatory  abolition  for  small  companies,  but  a  requirement  for  full 
consideration (accounts and disclosures) for medium-sized and large companies.  

6.5.5.  Formation expenses 

The proposal to repeal the requirement for disclosure of an explanation of formation expenses 
attracted attention of about 40% of the respondents, out of whom an overwhelming majority 
showed  to  be  in  favour.  The  strongest  support  comes  from  companies  and  from  public 
authorities. 

Proponents  favoured  an  even  stronger  reduction  of  disclosure  duties,  such  as  the  repeal  of 
statements  about  auditors'  fees,  statements  about  derivative  financial  instruments  (both  for 
medium-sized companies) and statements regarding financial instruments stated at fair value 
(for small companies only). 

EN 

55 

   EN 

 
Opponents  argue  that  information  about  formation  expenses  is  valuable.  Some  pointed  out 
that exemption possibilities exist already for small companies (at Member State level). 

6.5.6.  Breakdown of net turnover into categories of activity and geographical markets 

This issue was addressed by more than 40% of the respondents. Around three quarters were in 
favour, including almost all companies. 

The  arguments  put  forward  corresponded  to  those  set  out  with  a  view  to  the  formation 
expenses  (see  point  6.5.5),  with  the  reservation  that  large  companies  should  continue  to 
disclose. 

7. 

ADDITIONAL SUGGESTIONS 

7.1. 

Company law 

In  the  Commission  communication,  it  was  emphasised  that  the  list  of  measures  proposed 
therein  was  not  considered  to  be  exhaustive,  and  the  Commission  invited  stakeholders  to 
submit additional suggestions for possible simplification measures. This invitation was seized 
by some of the respondents. 

One respondent proposed to distinguish, in company law, better between listed and non listed 
companies, as this is the case already for the EU securities markets legislation: for non-listed 
company  the  rules  could  be  much  less  detailed  and  more  principle  based  and  a  bottom-up 
approach  (”think  small  first”)  should  apply.  For  listed  companies,  more  complex 
circumstances would have to be addressed so that for these companies the rules could have a 
grater level of detail. 

With  a  view  to  the  Third  and  the  Sixth  Directive,  two  respondents  proposed  to  remove  the 
current requirement to make available the last three annual reports at the registered office of 
the companies involved. At least for the two reports on the previous financial years it should 
be sufficient to make them available online, via the company’s website. 

Concerning the Eleventh Directive, some respondents took the view that the current situation 
where it is only ensured that the information is available at the moment of the registration of 
the  branch  is  not  satisfactory.  Although  the  directive  contains  rules  to  have  changes 
concerning  the  mother  company  filed  at  the  branch's  register  this  is  not  enforceable  in 
practice.  Also,  the  register  of  the  parent  company  should  be  informed  about  changes  in  the 
branch register. In this context and also from a number of other respondents there was a call 
on the Commission to increase its support for the BRITE project, in order to make sure that 
information can be exchanged via the European Business Register (EBR). 

Another proposal that was made was to look not only at the Company law Directives but also 
at  the  Capital  markets  Directives.95  Finally,  one  respondent  suggested  proposing  a  single 
simplification directive in case option 1 would not obtain sufficient support. 

95 

Here,  it  should  be  noted  that  the  ongoing  exercise  to  measure  administrative  burdens  also  extends  to 
certain Financial Services and Capital Markets Directives. Results of this measurement will be available 
in the course of 2008. 

EN 

56 

   EN 

 
                                                 
7.2. 

Accounting  

In  addition  to  responding  on  questions,  commentators  presented  the  following  additional 
suggestions on the accounting side of the Commission Communication: 

Many respondents perceived the need to prepare different statements for different users (tax, 
statistics,  etc.)  as  a  major  burden,  and  therefore  encourage  general  work  on  'all  purpose' 
financial statements accompanied by single filing. 

In  terms  of  disclosure  it  was  suggested  that  Commission  should  exert  pressure  on  Member 
Sates to utilise already existing exemption options in accounting directives. 

Some respondents commented on the current IASB draft "IFRS for SMEs" by stating that it is 
too complex and not focussing enough on the particular user needs and thus not suitable for 
SMEs. 

A  call  to  reduce  the  number  of  options  available  in  the  directives  was  also  issued.  Other 
respondents, however, highlighted the need to keep options available to Member States so as 
to  accommodate  accounting  requirements  to  national  setting  (especially  where  threshold 
values are concerned). 

* 

* 

* 

EN 

57 

   EN 

 
 
ANNEX 2 

National rules applying to mergers/division of private limited-liability 
companies 

EN 

58 

   EN 

 
Mergers / divisions involving private limited-liability companies

Need for general 
meeting

Need for written report by 
management

Need for independent expert's 
report

COUNTRY

Application of the 
same rules for 
private and public 
companies

Need for 
merger/division 
plan

Austria

Basically yes, with some 
specific provisions

yes

yes

no, the shareholders 
may also cast their 
vote by circular 
resolution

Belgium

yes

Bulgaria

Cyprus

very simplified

yes

yes

yes

Czech Rep

yes (references), but 
simplified

yes

no, but signature of 
associates or partners

yes

Need for separate 
accounting 
statement

yes, if last regular 
statement is older than 
six months

no

yes

yes

no

yes

Denmark

yes

Estonia

Basically yes, with 
specific provisions

yes, no waiver

Merger Yes, unless 
90% of share capital 
hold by acquiring 
company and not 
demanded by 5%
Division Yes, no 
waiver

Merger Yes, unless all shares hold by 
acquiring company or agreed by all 
shareholders - applicable only if net 
turnover does not exceed certain 
thresholds
Division Yes, unless exchange of shares 
with divided company or approval of all 
shareholders

Yes (by auditor), unless all shares held by 
acquiring company (merger) / exchange 
of shares with divided company (division) 
or agreed by all shareholders

yes

Finland

basically yes

yes

yes

yes

yes, unless subsidiary merger or waived 
unanimously by shareholders

no

EN 

59 

EN 

 
  
 
France

Germany

Basically yes, with 
specific provisions

yes

yes

Yes, unless all shares held by acquiring 
company or waived by all shareholders

Yes, unless all shares hold by acquiring 
company or waived by all shareholders

no

Yes

no

no

statement of assets and 
liabilities

(yes)

yes, but contents 
differ from 3rd/6th 
CLD, merely basic 
information

(yes)

Greece

Hungary

no

Ireland

no, no possibility for 
private companies to 
merge so far
but provided for in 
Reform Bill

Italy

Latvia

yes

Lithuania

basically yes

yes

yes

no, unless requested by the shareholders 
who hold at lest 10% of all voting 
shares exept in case of merger by 
acquisition, when the acquiring 
company holds at least 90% of the 
shares of the acquired company

yes (firm of auditors), except in case of 
merger by acquisition, when the acquiring 
company holds at least 90% of the shares 
of the acquired company

like public limited

Luxembourg

Malta

yes

yes

yes

N.A.

yes

yes

yes

could be waived 
under conditions in 
Companies Act, 
Articles 345(6), 
358(3), 359(1) 
(merger), Article 
362(6) (division)

yes, but not for acquiring company 
holding at least 90% but not all of the 
shares, Article 359(2) Companies Act

yes, but not for acquiring company 
holding at least 90% but not all of the 
shares, Article 359(2) Companies Act; 
and not for divisions in the cases 
described by Articles 374(5), 374A(4) 
Companies Act

yes

N.A.

EN 

60 

EN 

 
  
 
Netherlands

yes

Norway

Basically yes

Poland

Portugal

Romania

Slovakia

yes

Yes, unless other 
stipulation
[less detailed rules for 
cooperatives, 
partnerships]

N.A.

yes

yes

Yes

Slovenia

yes

Spain

Sweden

UK

Basically yes

yes

yes

yes

No - rules apply (part 28 
of Companies Act 2006) 
in the case of private 
companies 

N.A.

yes

yes

yes

yes

yes

N.A.

yes

yes

N.A.

reports explaining share exchange ratio, 
not necessarily expert's report, 
acquiring company's report must be 
confirmed by auditor, though

yes

Not, if all members renounce, § 152a(5) 
CC

No, auditor examination only if some of 
the members apply for it, § 152a(6) CC

N.A.

no

no

no

yes

yes

yes

no

yes unless all shareholders agree that one 
is not necessary.

yes

EN 

61 

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Mergers / divisions involving private limited-liability companies

COUNTRY

Possibility to renounce to 
documents referred to above

Austria

not for separate accounting 
statement;
management report and examination 
of share exchange ratio if declared 
by all shareholders in writing or in 
the general meeting

Belgium

no

Provision of 
documents in 
electronic form
law requires reports in 
writing, but, however, 
provision via 
electronic is not 
prohibited

no,
but in preparation

Bulgaria
Cyprus

yes. The merger cannot proceed if so 
decided by majority

no

Czech Rep yes, unanimity

no specification, 
therefore allowed

Different procedures for mergers/divisions

procedures identical

Commercial Code
Sec 92a Mergers of Partnerships
Sec 92b Merger of Partnership with Ltd. Partnership
Sec 104a Mergers of Ltd Partnerships
Sec 104b Mergers of Ltd. Partnerships with Partnership

Denmark

Like public limited

yes, e-mail is allowed procedures identical

Estonia

(cf. C-G)

Finland

only export report, (cf. F)

yes

Procedures identical, only differences in information 
contained in merger/division plan

Statistics on number of 
mergers/division

in 2006:
appr. 1,000 mergers (only 
privates)
appr. 100 divisions (both publics 
and privates)

not available

not available

not available

appr. 800 mergers / 500-600 
divisions (companies in general)

mergers /divisions:
2005: 101 / 10
2006: 176 / 40
2007: 186 / 79
2007: 1288 mergers,
200-300 registered divisions
(public and private companies)

France

EN 

62 

EN 

 
  
 
Germany

Greece
Hungary

Ireland

yes in regard of written reports, 
unanimity

No (not required)

procedures identical

2004/05: 1093

no

allowed, not required

-

yes, approval of shareholders

Allowed

Secs 201-204 Companies Act 1963
binding arrangements between company and 
members/creditors for the purpose of 
reconstruction/amalgamation of companies,
provision by a court to facilitate transfer of property in this 
regard,
possibility of squeeze-out (beneficial ownerships) of 
dissenting shareholders

not available

no recourse to 3rd CLD in case of 
merger of public companies so far

Italy
Latvia

Yes, unanimity

Lithuania

no

Allowed, electronic 
document without 
legal power
No provisions

Procedures identical (Art. 61 sqq. Law on Companies)

2007:
mergers: 195 privates, 11 publics,
divisions: 7 privates, 1 public

Luxembour
g
Malta

not provided for

no provision

identical procedure

not available

(cf. D-F);
in addition, for divisions director's 
and expert's report and accounting 
statement can be waived 
unanimously, Article 366 
Companies Act

allowed, not required

procedures are very similar
for mergers: Part VIII of the Companies Act (Articles 336-
359),
for divisions: Part IX of the Companies Act (Articles 360-
375)

2006
42 companies involved in merger,
2 companies divides

Netherlands N.A.

allowed, not required N.A.

Norway

Allowed if accepted by 
shareholders

2007: 4200 mergers (60 public), 
1765 divisions (15 public)

EN 

63 

EN 

 
  
 
Poland
Portugal

Romania
Slovakia

yes, unanimity

no provision

procedures identical

in 2007: 21 mergers / 24 divisions

Like public limited

Slovenia

yes, unanimity

not required

procedures identical

Spain
Sweden

no
no

allowed, not required
allowed

procedures identical
procedures identical

UK

yes for the independent experts 
report if all shareholders agree on 
that it is not necessary

not specified

Takeover Provisions in Part 28 of Companies Act 2006 
supported by the Takeover Panel/code - is the normal 
route for domestic mergers and divisions in the UK

in 2005: 20 mergers
in 2006: 21 mergers

2000 mergers/year,
9 mergers between listed 
companies;
divisions rare

s. 427a of Companies Act 1985 
(public companies)
Part 27 of the Companies Act 
2006

EN 

64 

EN 

 
  
 
ANNEX 3 

Simplified mergers and divisions 

EN 

65 

   EN 

 
1. 

POSSIBILITIES  FOR  SIMPLIFIED  MERGERS  AND  DIVISIONS  UNDER  THE  THIRD  AND 
THE SIXTH COMPANY LAW DIRECTIVES 

1.1. 

Simplified mergers 

The Third Directive allows for different forms of simplified mergers: 

–  Member  States  can  provide  that,  under  certain  conditions,  the  acquiring  company  does 

not need to hold a general meeting96.  

–  Member  States  can,  furthermore,  provide  that,  under  certain  conditions,  none  of  the 
companies has to hold a general meeting to approve the draft terms of merger where the 
acquiring  company  already  holds  all  (voting)  shares  of  the  acquired  company.97  In  this 
case, also no written report by the management of the companies and no independent 
expert reports have to be established.98  

–  Where  the  acquiring  company  does  not  hold  all  shares  but  holds  at  least  90%  and  the 
minority shareholders of the company to be acquired are granted a sell out right for their 
shares, Member States can not only relieve the merging companies from the requirement of 
the written report by the management and the independent expert reports but also from the 
obligation  to  give  shareholders  the  right  to  inspect  certain  documents,  including  an 
accounting statement, one month before the general meeting deciding on the merger.99 

1.2. 

Simplified divisions 

Also the Sixth Directive allows for three forms of simplified divisions: 

–  Member States can provide that, under certain conditions, the recipient companies do not 

need to hold a general meeting100;  

–  Where  all  (voting)  shares  in  the  company  to  be  divided  are  owned  by  the  recipient 
companies, Member States can also provide that there is no need to hold a general meeting 
for the company to be divided, subject to certain conditions;101 and 

–  Where the recipients companies are newly established ones and their shares are attributed 
to  the  shareholders  of  the  company  to  be  divided  in  proportion  to  their  rights  in  the 
company to be divided, no independent expert's report under the Sixth Directive has to be 
established102. 

96 
97 
98 
99 
100 
101 
102 

Art. 8 Third Directive 
Art. 25 Third Directive 
Art. 24 Third Directive 
Art. 28 Third Directive 
Art. 6 Sixth Directive 
Art. 20 Sixth Directive 
Art. 22(5) Sixth Directive 

EN 

66 

   EN 

 
                                                 
Simplified mergers - use of the options provided by the Third Directive - Approval of the general meeting

Article 8 Third Directive

Article 24 Third Directive 

Article 25 Third Directive

Article 26 Third Directive 

2. 

USE OF THE OPTIONS BY THE MEMBER STATES 

COUNTRY

Austria

Belgium

Bulgaria

Cyprus

Czech Republic

Yes

No

Not applicable

(Act No. 125/2008 Coll., on transformation of business companies and cooperatives (as of 1 July 2008) 
§129: where the shares of the acquiring company's existing shareholders are not exchanged, the decision 
on a merger by acquisition may be taken by the acquiring company's board instead of its GM provided 
that: 
a) SH shall be informed about their rights at least one month before the resolution on the draft terms of 
merger;
b) at least 1 month before the decision on the draft terms of merger all SH of the participating company 
must have access to the documents listed in Art. 11 Third Directive and must be entitled to receive, 
without any undue delay, copies or abstracts (§ 119); 
c) one or more SH of the acquiring company holding at least 5% of shares can demand a GM within 1 
month after publication. If the company has issued shares with no voting rights attached, such shares are 
not taken into account for the calculation (§131(1));
d) the acquiring company owns at least 90% of the merging company's shares or interim certificates (in 
case of capital increase, calculated after such increase).

Denmark
Estonia
Finland

Yes
no

No. Pursuant to Article L.236-9 of the Code of Commerce, the approval of the general meetings in 
respect of the merging companies is compulsory. 

not transposed *

Article transposed

not transposed

Article transposed

not transposed

Article transposed
not transposed
not transposed
Article transposed

No

No

not transposed

Not applicable

(According to the Act No. 125/2008 Coll., on transformation of business 
companies and cooperatives, which shall enter into force 1 July 2008) § 132 
stipulates that if the acquiring company is the only shareholder of a merging 
company, the merger shall be approved by the boards of all participating 
companies;  § 132 stipulates that if the acquiring comapny is owner of all 
shares with voting rights of the merging company, the merger shall be 
approved by the boards of all participating companies.   

Article transposed

Article transposed

not transposed

not transposed

not transposed

Yes
no
not transposed
Article L.236-11 of the Code of Commerce stipulates that the approval of 
the draft terms of merger by the general meeting of respect of the acquired 
company is not necessary if all the shares representing the total capital of 
the acquired company are held in their entirety by the acquiring company. 
The approval by the general meeting in respect of the acquiring comapny is 
however needed. 

not transposed
not transposed
not transposed
not transposed

France

Germany

Greece

Hungary

Ireland

EN 

yes

not transposed

no (under German law a general meeting has to take place for passing 
resolutions on all fundamental issues in a controlled company)

Article transposed

no such exemption in our national law. Approval of the general meeting is in force

not transposed

No Approval of the general meeting is needed

not transposed

Article transposed

not transposed

Article transposed

Article transposed

not transposed

Article transposed

67 

EN 

 
  
 
The merger is decided upon according to the provisions concerning the amendment of the memorandum 
and articles of association (Article 2502 Codice Civile)

Article transposed

The memorandum or the articles of association may stipulate that the 
merger by acquisition is decided by the administrative bodies, if the 
requirements in respect of the draft terms of merger and the depositing of 
the shares are respected

Article transposed

Italy

Latvia

Lithuania

Luxembourg

Malta

Netherlands

Norway

Poland

Portugal

Romania

Slovakia

Slovenia

Spain

Sweden
United Kingdom Yes Co Act 2006 S.916

yes

no, due to protection of minority shareholders

yes

Yes. Article 345(6) of the Companies Act (Cap. 386)

No. In the year 2001 when the 3rd Directive was transposed, the option was not included. Nowadays, the 
more profound changes of our Commercial Code, including the simplification measures, await the re-
codification of the whole Civil law (which is under way).

not transposed

Article transposed

Article transposed

not transposed

Article transposed

Article transposed

Article transposed

Article transposed

Article transposed

no, due to protection of minority shareholders

yes

Article transposed

Yes. Article 358(3) of the Companies Act (Cap. 386)

not transposed

Article transposed

Article transposed

Article transposed

Article transposed

Yes, Companies Act Art. 599

Article transposed

Article transposed

Article transposed

not transposed

Article transposed

Article transposed

yes

Yes Co Act 2006 S.916

* Information in italics is taken from report on measurement of administrative costs by Deloitte/Ramboll/Capgemini

not transposed

Article transposed

Article transposed

not transposed

Article transposed

Article transposed

Article transposed

Article transposed

Article transposed

Article transposed

Article transposed

not transposed

Article transposed

EN 

68 

EN 

 
  
 
COUNTRY

Austria

Belgium

Bulgaria

Cyprus

Czech Republic

Simplified mergers - use of the options provided by the Third Directive - Approval of the general meeting

Article 27 Third Directive

Yes

No

not transposed 

Not applicable

(Act No. 125/2008 Coll., on transformation of business companies and cooperatives (as of 1 July 2008) 
§129: where the shares of the acquiring company's existing shareholders are not exchanged, the decision on a merger by 
acquisition may be taken by the acquiring company's board instead of its GM provided that: 
a) SH shall be informed about their rights at least one month before the resolution on the draft terms of merger;
b) at least 1 month before the decision on the draft terms of merger all SH of the participating company must have access to the 
documents listed in Art. 11 Third Directive and must be entitled to receive, without any undue delay, copies or abstracts (§ 119); 
c) one or more SH of the acquiring company holding at least 5% of shares can demand a GM within 1 month after publication. If 
the company has issued shares with no voting rights attached, such shares are not taken into account for the calculation (§131(1));
d) the acquiring company owns at least 90% of the merging company's shares or interim certificates (in case of capital increase, 
calculated after such increase).

Article 28 Third Directive
not transposed *

not transposed

not transposed

not transposed

Article transposed

Article 29 Third Directive 

not transposed

not transposed

not transposed

not transposed

not transposed

Denmark

Yes

Estonia

Finland

France

Germany

Greece

Hungary

Ireland

Italy

Latvia

Lithuania

yes, Article 421(4) Commercial Code

not transposed

No, since shareholders must have the possibility to take part in all important decisions, including mergers. 

yes

no such exemption in our national law. Approval of the general meeting is in force

not transposed

Article transposed

There are simplifying measures in terms of documentation on the decision for a merger (e.g. regarding the experts report), but the 
requirement of an approval of the decision is the same as illustrated in the preceding point.

no, due to protection of minority shareholders

yes

not transposed

not transposed

not transposed

not transposed

not transposed

not transposed

Article transposed

not transposed

not transposed

not transposed

not transposed

Article transposed

Article transposed

not transposed

Article transposed

Article transposed

Article transposed

Article transposed

not transposed

not transposed

Article transposed

Article transposed

EN 

69 

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Luxembourg

Malta

Article transposed

Yes. Article 359(1) of the Companies Act (Cap. 386)

Netherlands

not transposed

Norway

Poland

Portugal

Romania

Slovakia

Slovenia

Spain

Sweden

Article transposed

Article transposed

Article transposed

yes

yes, Companies Act Art. 599.1

not transposed

yes (cf. 1(a))

United Kingdom

Yes Co Act 2006 S.917

Article transposed

Article transposed

Article transposed

not transposed

not transposed

not transposed

Article transposed

Article transposed

not transposed

Article transposed

Article transposed

Article transposed

Article transposed

Article transposed

Article transposed

Article transposed

Article transposed

Article transposed

not transposed

not transposed

Article transposed

Article transposed

* Information in italics is taken from report on measurement of administrative costs by Deloitte/Ramboll/Capgemini

EN 

70 

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Article 6 Sixth Directive

Article 20 Sixth Directive

Article 23 Sixth Directive 

Simplified divisions - use of the options provided by the Sixth Directive - Approval of the general meeting

Yes

No

No

No

Not applicable

Not applicable

Yes

no

Yes

No. The general meeting remains compulsory since shareholders must have the 
possibility to take part in all important decisions, including divisions.  

No. The general meeting remains compulsory since shareholders must have the 
possibility to take part in all important decisions, including divisions.  

Germany

yes

No such exemption in our national law. Approval of the general meeting is in 
force.

no (cf. 1(b))

No. Approval of the general meeting is needed

The administrative bodies of the companies participating in the division draw up 
the balance sheet and the report accompanying the balance sheet, including the 
experts report. The experts report is not necessary if the division is effected by the 
formation of one or more new companies and if there are no criteria for the 
allocation of shares other than the pro-quota distribution. For the other procedural 
requirements for the division the respective provisions in terms of mergers apply.

The administrative bodies of the companies participating in the division draw up the 
balance sheet and the report accompanying the balance sheet, including the experts 
report. The experts report is not necessary if the division is effected by the formation of 
one or more new companies and if there are no criteria for the allocation of shares other 
than the pro-quota distribution. For the other procedural requirements for the division the 
respective provisions in terms of mergers apply.

no, due to protection of minority shareholders

no, due to protection of minority shareholders

no

Yes. Article 362(6) of the Companies Act (Cap. 386)

no

No. 

not transposed *

not transposed

not transposed

not transposed

not transposed

not transposed

not transposed

Article transposed

not transposed

not transposed

not transposed

not transposed

partially transposed

not transposed

not transposed

not transposed

not transposed

not transposed

COUNTRY

Austria

Belgium

Bulgaria

Cyprus

Czech Republic

Denmark

Estonia

Finland

France

Greece

Hungary

Ireland

Italy

Latvia

Lithuania

Luxembourg

Malta

EN 

71 

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Netherlands

Norway

Poland

Portugal

Romania

Slovakia

Slovenia

Spain

Sweden

yes

yes, Companies Act Art. 629, 296

yes

yes

NO, option not used

not specifically, but there applies the general rule that shareholders may unanimously set 
aside rules that protect them

United Kingdom

Yes -  Co Act 2006 S.931/932

Yes -  Co Act 2006 S.933

* Information in italics is taken from report on measurement of administrative costs by Deloitte/Ramboll/Capgemini

not transposed

not transposed

not transposed

not transposed

Article transposed

not transposed

not transposed

not transposed

Article transposed

EN 

72 

EN 

 
  
 
ANNEX 4 

Costs of filing draft terms of merger/division with the register 

EN 

73 

   EN 

 
Costs of registration in the central register, commercial register or companies register

COUNTRY

(Initial) registration of companies

Amendments to the register in general

publication of draft terms of merger/division

Austria

Costs depend on the content to be registered:
* basic fee (€ 34,-- for most companies, € 131,-- for public limited companies) 
* registration fees, e.g.: name of the company: € 8,--; address: € 8,--; capital: € 
131,--; articles of association: € 87,--; directors: € 25,--/each; 
members/shareholders: € 17,--/each; members of the supervisory board € 43,--
/each

Fees for amendments generally equal the fees for initial 
registrations (except for amendments to the articles of 
association: € 43,-- instead of € 87,--).

For a filing of the draft terms of merger/divison with the 
Commercial Court, only the applicable basic fee has to be paid. In 
addition, the companies have to bear the costs of publication of 
this filing in the official gazette (€ 100,--).

Belgium

* civil companies: none; 
* commercial company: 71 EUR (plus 71 EUR for each accessory branch). This 
cost is linked to the 'entreprise counters'

* civil companies: none; 
* commercial company: amendments : none                              
close-up of the company :71€ 

Publication by mention in the national journal by each concerned 
company : 134,07€ 

Bulgaria

Cyprus

Czech 
Republic

* Checking availability of company name and obtaining certificate for the 
registered name: BGN 100 (EUR 51) or 102 BGN (EUR 52) (by phone);
* Court fee at the to the bank account of Sofia City Court: state fee for court 
registration and certified copy of the court decision is BGN 121.50 (EUR  62) 
(it may be BGN 122.50 (EUR 62.3) if the court decision is longer than 1 
standard typing page)

£CY60 (EUR 102) plus 0.6% on the nominal capital

£CY60 (EUR 102) plus 0.6% on the nominal capital

£CY60 (EUR 102) plus 0.6% on the nominal capital

Registration in the Commercial Register: 5000 CZK (EUR 190);
(according to the Act No. 549 of 1991 Coll., on court fees)                                   
ONLY FOR REGISTRATION IN THE COMMERCIAL REGISTER 
(CHANGES IN REGISTERED INFO AND DELETION OF THE COMPANY), 
NOT FOR FILING OF THE DOCUMENTS IN THE COLLECTION OF 
DOCUMENTS

Changes: 1000 CZK (EUR 38);
Deletion: 3000 CZK (EUR 114);
(according to the Act No. 549 of 1991 Coll., on court fees)

The draft terms of merger is  filed in the Collection of Documents 
(which is an integral part of the Commercial Register where all 
documents are filed), filing of the draft terms of merger is free of 
charge and always in electronic form; then the draft terms of 
merger has to be published in the National Gazette  (sent in 
electronic form from the Commercial Register), fees: 2500 
CZK/1Word page (100 EUR); 4900 CZK/2 and more Word pages 
(196 EUR)                               

Denmark

Register the company with the Danish Commercial and Companies Agency 
over Webreg system: no charge

no charge

no charge

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Estonia

Finland

France

Germany

Dependent on type of legal person:
- sole trader: 200 EEK (13€), via internet: 200 EEK (13€);
- general partnership, limited partnership: 200 EEK (13€), via internet: 200 
EEK (13€);
- commercial association: 2200 EEK (141€), via internet: not possible;
- branch of foreign company: 2200 EEK (141€), via internet: not possible;
- private limited company: 2200 EEK (141€), via internet: 2900 EEK (185€);
- public limied company: 2200EEK (141€), via internet: not possible
* registration of new limited company or branch 330 €, partnership 155 €, sole 
trader 60 € 

* sole trader, general partnership, limited partnership: 60 EEK 
(4 €), 
* commercial association, branch of foreign company, private 
limited company, public limied company: 280 EEK (18 €)

* general partnership, limited partnership: 60 EEK (4 €), 
* commercial association, private limited company, public limied 
company: 280 EEK (18 €) 

* registration of changes 57 €, change of articles of 
association 330 €

* check company name availability with the Institut National de la Propriété 
Industrielle: no charge (unless deeper research is made, for example, by field of 
activity);
* request for a company’s registration with the Centre de Formalités des 
Entreprises (CFE): €40 paid to the CFE and €76.19 paid to the trade register in 
the Commercial court 

* fees are fixed in the Code of Commerce (decree). They are 
calculated on the basis of a baseline rate, which is currently 
fixed at 1.30€/unit; 
* the first amendment to the register amounts to 42 units, that 
is 42*1.30€ (54.60€); 
* any further amendment amounts to 15 units (19.50€).  

Fees for publication are fixed in the Code of Commerce (decree). 
The draft terms of merger/division are published in:  
* regional newspapers entitled to publish legal announcements: 
fees are fixed by each "préfets" and go from 3€ to 4€ per line;
* in the relevant part of the national gazette ("BALO") - if the 
company makes direct offers to the public: the fee is 64.60€.

* First registration
- private limited company: 100€ (no 2100 of the Gebührenverzeichnis der 
HRegGebV)
- public limited company or KGaA: 240€ (no 2102 of the Gebührenverzeichnis 
der HRegGebV), in the case of a formation against contributions in kind: 290€ 
(no 2103 of the Gebührenverzeichnis der HRegGebV)
* Registration of a branch: 90€ (no 2200 of the Gebührenverzeichnis der 
HRegGebV) 
* if the parent company has its seat in another MS: as new registration (100€ or 
240 €)

* registration of changes  30 € - 170 € (depending on the 
information to be registered)

 * (until the end of 2008 publication in   a newspaper in addition 
to)   20 €
*  electronical publication    1 €

Greece

* Costs for incorporation are dependent on the capital of a company. 
Example: S.A. with a capital of 60000 Euro the costs are: 60000*1/100 (tax of 
capital concentration) + 60000*1/1000 (tax of competition) + 60000*3/1000 
(approximately for notary's fee), + 544 Euro (publication fee); 
* publication fee for a branch of a S.A. is 544 Euro.

publication fee 289 euro (s.a. companies)

publication fee 289 euro (s.a. companies)

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The duty on company registration is:
• 600,000 HUF (EUR 2,340) for public limited companies and European public 
limited-liability companies,
• 100,000 HUF (EUR 390) for private limited companies and limited liability 
companies,
• 50,000 HUF(EUR 195) for unincorporated business associations
• 30,000 HUF (EUR 117) for sole proprietorships
• 250,000 HUF (EUR 975) for the Hungarian branch offices of foreign-
registered companies
• 150,000 HUF (EUR 590) for direct commercial representations of foreign 
companies.
The duty payable for the registration of companies under simplified proceedings 
is 15,000 HUF (EUR 59). 

* The standard fee for registering a company is €100.
* The 'CRODisk' scheme incurrs costs of €50 but this scheme is generally 
limited to frequent presenters of documents. 
* The standard fee for registering a business name is €40, or €20 if filed 
electronically.

Register with the Register of Enterprises (Registro delle Imprese) at the local 
Chamber of Commerce: € 156,00 (registration tax) + € 90,00 (registration with 
Chamber of Commerce) + € 200.00 (membership fees)

Register at the Ministry of Justice, Register of Enterprises: LVL 125 (176 
(EUR)) (+/- fee for verifying  the signature in case of a sole founder on the 
company's registration application and the sample signatures of the members of 
the Management Boardthis service: LVL 5.5 (EUR 8)

The costs depend on the type of company to be registered: 
- Private limited liability company: 198 Litas (57,42 €);
- Public limited liability company: 198 Litas (57,42 €),
- European company: 198 Litas (57,42 €);
- Branch of company: 99 Litas (28,71 €)
- Branch of foreign company: 200 Litas (58 €)

Hungary

Ireland

Italy

Latvia

Lithuania

€15 per form - resolution, Memo & Arts. Change in company 
details - address, Director info can be filed online for free. 
€100 to change company name.

€15 for form CBM1. No fees order introduced to date.

costs do not change in case of modification

costs do not change in case of merger or division 

Registration of amended document of incorporation costs 92 
Litas (26,56 €), Registration of amendments to the particulars 
or information (one record) cost 10 Litas (2,89 €).

There is no fee for the filing of the draft terms of merger/ division 
in the register

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Luxembourg

* Fee dependent on form of company (21 different forms). 
* Costs for Registration of a new company range from 13,70 € to 132,39 €;
Examples: SE 132,39 €, limited liability company (société responsabilité 
limitée) 132,39 €.

* Changes to the register are devided between 
- statutory changes (13,70 € to 68,48 €) and 
- other changes (9,13 € to 13,70 €).
* Deletion: from 13,70 € to 132,39 € 

From 350 € to 1,725 €, according to the share capital

No fee imposed

No fee imposed

Malta

Netherlands

Norway

Poland

Portugal

Romania

dependent on the size of company:
- small companies (capital less than 2.5 million € and less than 50 employees): 
54,05 €;
- medium sized companies (capital in between 2.5 million - 10 million € and 50 
- 250 employees): 108,10€;
- big companies (capital more than 10 million €, more than 250 employees): 
313,49€

The fee is NOK 6000 (which is approximately EUR 750) for registration of 
private limited companies public limited companies, limited partnerships and 
cooperatives.
For other companies and branches the registration fee is NOK 2500 (EUR 310). 
The registration fee basically covers the lifetime cost for registration in The 
Register of Business Enterprises.

* The registration of an incorporation of a company as well as a branch costs in 
total 1000 Zloty (EUR 277). Exception: a partnership costs 750 Zloty (EUR 
208). 

* Changes in the companies register cost 400 Zloty (EUR 
111).

€360 or €300 (depending on whether the company’s object is IT or IT related or 
not), including mandatory publications but excluding a 0.4% Stamp Tax rate, 
levied on the amount of the company's share capital subscriptions

Approximately:  350 RON (EUR 94)
RON 50 (EUR 13) (verification and registration of company's name/emblem) + 
RON 10 (EUR 3) (verification uniqueness of headquarters) + RON 30  (EUR 9) 
(Certificate issued by the trade register office) +  20% of the registration tax: 24 
RON (EUR 6) (Dissolution Fund) + 10,00 RON (EUR 3) (Obtaining Unique 
Registration Code) + 5% of the registration tax: EUR 6 (EUR 1) (Fund for the 
Bulletin of judicial reorganization and insolvency procedures) + RON 39 (EUR 
10) (stamp duty) + RON 120 (EUR 32) (registration fee) + publication taxes
Subsequent ammendments: RON 30 (EUR 9) for each mandatory element of 
the basic information of the company to be registered.

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free of charge

• change of legal form 
SKK 10 000 (EUR 333 (e-registration = 5000 (EUR 167)) 
• change (deletion of an old entry and insertion of a new 
entry) of any number of particulars regarding the same entity 
within the same application – SKK 2000 (EUR 67) (SKK 
1000 or EUR 33 for e-registration)
• change of the name of the street/village/town/city, change of 
ZIP code, etc. if the registered office remain the same - free of 
charge

Item No 17 of the Act No 71/1992 stipulates the actual fees for the registration 
in the matters of the Commercial Register as follows:
1. Joint Stock Company
SKK 25 000 (EUR 833) (e-registration = 12500 (EUR 417)) 
2. Other legal entities
SKK 10 000 (EUR 333) (e-registration = 5000 (EUR 167)) 
3. Individual entrepreneur
SKK 5 000 (EUR 167) (e-registration = 2500 (EUR 83)) 
4. Branch of a legal entity
SKK 10 000 (EUR 333) (e-registration = 5000 (EUR 167) 
5. Branch of individual entrepreneur
SKK 1 000 (EUR 33) (e-registration = 500 (EUR 17))
(If a whole application is submitted via electronic means, the fee is only 50% 
of the sum stipulated)

* no court taxes for any entry into court register 

* Certification of uniqueness of proposed company name: EUR 7 to 14 
* Public deed of incorporation of the company for its registration with the 
Mercantile Registry: EUR 159

2000 SEK (EUR 212) for registration of a new company or a new branch

800 SEK (EUR 85)

800 SEK (EUR 85)

Company:  £20 (EUR 26)
Branch:  £20 (EUR 26)
Both can request a same day service for £50 (EUR 66).
In addition, companies and branches pay an annual fee of £30 (EUR 40) (this 
fee applies when a company files its annual return and a branch files its annual 
accounts).

Incorporation £20, Electronic Incorporation £15, Change of 
Name £20, Same day change of name  £50,                               
                    Re-registration £20, Annual Returns £30, Same 
day re-registration and change of name £100, Electronic 
Annual Returns £30, Registration of charge per entry 
£13,Voluntary dissolution £10.

Companies deliver to registrar to publish in the Gazette  - no 
specific charges made - but may be re-registration costs see 
general charges.

Slovakia

Slovenia

Spain

Sweden

United 
Kingdom

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Costs of providing free copies of certain documents to shareholders  

Example103: Merger between two large Insurance groups (with  international activities) 

ANNEX 5 

Annual accounts/annual report 

Issue language 1  Issue language 2 

Issue English 

Group 1 (year n-1) 

Group 1 (year n-2) 

Group 1 (year n-3) 

2,500 copies

250 copies 

250 copies

2500 copies

250 copies

250 copies

750 copies

250 copies

250 copies

Parent Company 1 (year n-1) 

2,500 copies

250 copies

250 copies

Parent Company 1 (year n-2) 

2,500 copies

250 copies

250 copies

Parent Company 1 (year n-3) 

750 copies

250 copies

250copies

Group 2 (year n-1) 

Group 2 (year n-2) 

Group 2 (ear n-3) 

500 copies

500 copies

250 copies

500 copies

500 copies

250 copies

500 copies

500 copies

250 copies

Company 2 (year n-1) 

500 copies

500 copies

250 copies

Company 2 (year n-2) 

500 copies

500 copies

250 copies

Company 2 (year n-3) 

500 copies

500 copies

250 copies

Total 

22,000 copies

14,500

4,500

3,000

103 

Example provided by the Gesamtverband der Deutschen Versicherungswirtschaft (GDV) 

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Accounting 
Statement 
(quarterly  financial  statement) 
year n 

Issue language 1  Issue language 2 

Issue English 

Group 1 

5,500 copies

100 copies

500 copies

Parent Company 1 

2,000 copies

100 copies

100 copies

Group 2 

1,000 copies

2,000 copies

250 copies

Parent Company 2 

1,000 copies

2,000 copies

250 copies

Total 

14,800 copies

9,500

4,200

1,100

Total number of copies printed 

Number of copies requested 

Copies to be destroyed 

36,800

./.  3,600

33,200

Year n: Year of the merger 

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Number of limited-liability companies in the EU 

ANNEX 6 

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EN 

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