CELEX: 51975PC0671
Language: en
Date: 1975-12-22
Title: SECOND AMENDED PROPOSAL FOR A THIRD COUNCIL DIRECTIVE on coordination of safeguards which, for the protection of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty, in connection with mergers between sociétés anonymes (submitted to the Council by the Commission pursuant to the second paragraph of Article 149 of the EEC Treaty)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (75) 671
Vol. 1975/0246
 ---pagebreak--- Disclaimer
Conformément au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983
concernant l'ouverture au public des archives historiques de la Communauté économique
européenne et de la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983,
p. 1), tel que modifié par le règlement (CE, Euratom) n° 1700/2003 du 22 septembre 2003
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In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983
concerning the opening to the public of the historical archives of the European Economic
Community and the European Atomic Energy Community (OJ L 43, 15.2.1983, p. 1), as
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In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom 1.
Februar 1983 über die Freigabe der historischen Archive der Europäischen
Wirtschaftsgemeinschaft und der Europäischen Atomgemeinschaft (ABI. L 43 vom 15.2.1983,
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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES*
                                                         COM(75 ) 671 final .
                                                         Brussels, 22 December 1975
              SEC Ola) AMENDED PROPOSE, FOR A THIRD. C OUNCE,. DIRECTIVE
  on coordination of safeguards which , for the protection of members and other:
  are required by Member States of companies within the meaning of the second
  paragraph of Article 58 of "the Treaty , in connection with mergers "between
  sociétés anonymes
   ( submitted to the Council by the Commission pursuant to the second paragraph
  of Article 149 of the EEC Treaty )
  COU(75 ) 671 fin"! .
 ---pagebreak---                                 EXPLANATORY MEMORANDUM
 I. IE TROUJC TION
                 On 16 June 197C, the Commission submitted to the Council the
     Proposal for a Third. Directive on company law ( l ) dealing with mergers
     of public companies incorporated under the law of a single Member State .
          °1 T Iay 1971 , the Economic and Social Committee ( 2 ), and on 16 November
     I      , the European Parliament ( 3 ) gave their Opinions on she proposal .
                 In order to take account of these Opinions , as well as the entry
     of the United Kingdom , Ireland and Denmark , into the Community on
     4 January 1973 , the Commission amended its proposed, directive , pursuant
     to Article 149 , paragraph 2 of the Treaty ( 4 ).
                 On 8 April 1975 , the European Farliament gave its Opinion on the
     amended Proposal ( 5 )» On the basis of this Opinion , the Commission ar.ended
     its Froposal once again .
II . NOTES ON AU CLE S
     Article 5 , para^raph 5
                 Following the European Parliament 's Opinion , it is expressly
     stated that the documents referred to in paragraphs 2 to 4 may s
     be issued in part rather than in full , only if the shareholder so
     requires .
     ! rti cle 6 , paragraph 3 and Article 5 , paragraph 5
                 The European Parliament considers that the general meeting
     called to consider the merger should be informed as to the whole
     text of the opinion given by the employees' representatives .
     ( 1 ) O.J. No . C 89 , 14 July 1970
     ( 2 ) O.J. No . C 88 ,   6 September 1971
     ( 3 ) O.J. No . C 129 , 11 December 1972
     ( 4 ) C0M( 72 ) 1668 final
     ( 5 ) O.J. No . c 95 , 23 April 1975
                                                                          • • • J• • ■
 ---pagebreak---            To ensure availability of this information , every shareholder
will have the right to have access to this opinion .
/ rtiele 6 , paragraph 4
           Regarding the protection of employees , the first amended version
provided for an obligation to be imposed on the management organs to
enter into negotiations with the employees' representatives with a view
to reaching an agreement on the measures to be taken on the employees'
behalf . - If , at the end of such • negotiations , agreement was not reached
between the parties , each of them could ask for juedifctiq. . !>;•  /c -*r' " j
authority . The European Parliament did not agree with this solution .
Another procedure had to be developed , since mediation , by definition ,
did not resolve the social conflict definitively . Following Parliawent 's
Opinion given on 8 April 1975# "the second amended version has provided
that , in view of the aims of social protection , this prooedure can only
be set in motion by the employees . At the request of their representatives ,
the employer is bound to take part in negotiations on the measures to be
talc en for the benefit of the employees . In the event of a deadlock in
such negotiations , each of the parties may appeal to an arbitration
authority summoned to take a definitive decision on the measures in
issue , without this decision constituting a pre-condition of the
consideration by the general meeting of the proposal for a merger .
           The new proposed procedure can only be understood in conjunction
with the previous procedure set out in . paragraphs 1 to 3 . According to
this last procedure , the report prepared by the management orgr-n explains
the effects of the merger with regard to the employees , and in particular ,
indicates the measures to be taken on their behalf . These matters form
the main subject for the discussions between the employer and the
employees * representatives . The latter may equally ask for the opening
of negotiations on measures of a social nature . Thus the employees'
representatives may discover whether they have more chance of obtaining
a satisfactory social plan by using the procedure set , out on paragraph 4 »
or , on the other hand , whether it is desirable for them to use other
                                                              *
means provided by national law.                     t          .
Article 6 , paragraph 5
           The amendment of the text , made in accordance with the Opinion of
the European Parliament , corresponds to that of Article 5 » para^vaph. 5 »
 ---pagebreak--- * FIRST iuWDED PRCPOSAL
            PROPOSAI. FOR A
        THIRD COU1TCIL DIRECTIVE!
  on coordination of safeguards which , for the
  protection of the interests of members and
  others , are required by Member States of
  companies within the meaning of the second
  paragraph of Article 58 of the Treaty , in
  connection with mergers between societes
  anonymes
  ( Presented by the Commission to the Council
i on     Jr:v V-y 19 II )
  TIK COUNCIL Oi"1 TKiD EUROPEAN COMIUNITLSS ,
  Having regard to the Treaty establishing
  the European Economic Community , and in
  particular Article 54(3)(g) thereof ;
  Having regard to the proposal from the
  Commission ;
  Having regard to the Opinion of the
  European Parliament ;
  Having regard to the Opinion of the
  Economic and Social Committee ;
  Whereas the coordination provided for in
  Article 54(3)(g) and in the General Programme
  for the abolition of restrictions on freedom
  of establishment was begun by Directive
  No 63/151/2EC of 9 March 1968^;
  Whereas the coordination was continued
                                               (2 )
  by Directive Fo                 of           v '
  which harmonized the provisions adopted
  by the various Member States in relation
  to the formation of societes anonymes and
  the maintenance and alteration of their
  capital ;
  ( 1 ) OJ No L 65 , 14 March 1968 , p. 8
  ( 2 ) OJ No C 48 , 24 April 1970 , p. 8
 ---pagebreak--- vr.ar'as t\e protection of the interests
of iaerajcrs and others requires that the
laws of the Member States relating to
mergers "between societes anonymes be coor­
dinated and that those Member States in
v'.icn the possibility of merger does not
exist should make provision in their laws
for mergers to be effected ;
Whereas in the context of coordination it
is particularly important that the share­
holders of merging companies be kept adequa­
tely informed in as objective a manner as
possible and that their rights be suitably
protected*
Whereas it is likewise essential that the    Whereas it is likewise essential that
employees of merging companies be kept in­   the employees of merging companies be
formed that they be consulted regarding the  informed of the effects of the merger
effects of mergers upon them.                upon them , that the representatives
                                             of the employees be consulted , and that
                                             at the request . of these representatives
                                             negotiations must be begun , which , in
                                             the event of disagreement , can lead to
                                             an arbitration to settle the measures
                                             to be taken in favour of the employees.
Whereas creditors , including debenture
holders end persons having other rights ,
must be protected so that merger is not
detrimental to them;
Whereas the disclosure requirements of
Directive T5o 68/15I/EEC of 9 March 1968
should be extended to include merger
operations so that third parties are kept
adequately informed :
 ---pagebreak---                                                      - 5 -
Whereas it is requisite that the safeguards                - Ho change
 afforded to members end others in connection
with the carrying out of merger operations
"be extended to cover certain legal practices
which in important respects are similar to
merger , so that protection is not eliminated ;
Whereas so as to ensure certainty as to the
lew in the relationships between the companies
c .:            ;.;j! :-, voen then cud third parties ,
and between the members , it is necessary
to limit the cases of nullity of merger by
introducing , on the one hcnd , the principle
that defects be cured wherever this is possible
and , on the other , a short period within
wlii eh proceedings for nullity must be com­
menced ;
ïLis ;J>OPJ?::TD THIS DIIMÏÏIVE-:
                                             Article 1 - 4 unchanged
 ---pagebreak---  X.    xte arnagoncnt organs of each of
■the merging companies shall draw up a
detailed report explaining the draft terms
of merger , end in particular the share
exchange r^tio , end setting out the legal
and economic grounds therefore .
2.     In addition , for each of the nerging
companies one or more independant experts
designated or approved by a legal or admin­
istrative authority shall examine the
draft terras of morger and draw up a report
for the shareholders . These experts may be
the persons responsible for auditing the
company 1 s accounts .
Each expert shall be entitled to obtain
from merging coiapenies all relevant
information snd documents and to carry out
all necessary investigations .
In their report the experts must state whether
in their opinion the share exchange ratio
is justified or not . In support of their
statement they shall give at least the
following particulars :
( a) The relationship between the companies *
      net assets on the basis of actual
      values ;   -     ---             ...
( b ) The relationship between the earnings
      yields of the companies , taking future
      prospects into accovmt *
( c ) The criteria used in evaluating the
      net assets and earnings yields .
 ---pagebreak--- In addition , the report shall indicate
what special difficulties of evaluation
have arisen , if any.
3.    Every shareholder shall "be entitled
to have access to the following documents
at the registered office at least two months
before date of meeting of the General Meeting
which is to decide on the proposed merger :
( e.;     ; dirft terras of uerger ;
( b) The balance-sheets , profit and loss
      accounts and annual reports of the .
      merging companies for the last three
      financial years ;
( c ) a financial statement drawn up as at
      the first day of the second month
      preceding the date of the draft terns
      of . merger , if the last balance-sheet
      relates to a financial year which ended
      more than six months before that date ;
( d ) The reports of the mcnagement organs
      of tiie merging companies provided for in
      paragraph 1 of this Article and in '
      Article 6 ( l );
( e ) The experts1 reports provided for in
      paragraph 2 of this Article .
4.    The finrncial statement provided for
in paragraph 3 ( c ) shall be drawn up in
accordance with the sa&e methods and in the
sane form as the last annual balance-sheet .
 ---pagebreak---                                            - 8 -
Î JV /VJR :
 ( a) No fresh physical inventory shall
       be taken ;
 ( b ) The figures in the last balance-
       sheet shall be altered only to
       reflect changes in the accounts ;
       the following shall nevertheless
       be talcen into account :
       - interim depreciation nnd
         provisions ;
       - naterial changes in actual
         value not shown in the accounts .
 5*' Every shareholder shall be                  1 5*  Every shareholder shall be .
entitled to obtain free of charge on               entitled to obtain . free of charge on
 request copies , in full or in part ,             request copies , in full or , if
 of the docunents referred to in                   required , in part , of the documents
paragraph 3 ,                                      referred to in Article 5t paragraph 3
                                                   and in Article 6 , paragraph s#
 ---pagebreak---                         Article 6                           Article 5
 1 . The management organs of each of the     – No change
 merging companies shall draw up a detailed                           •                 -
 report explaining the legal , economic and
 social effects of the merger on the
 employées over a period of at least two
years and indicating the measures to te
taken regarding them.
2 , L rcz-j employee^- 6r employees * repre-  - No change
•uCatiiLivcc shall be entitled to have access
to the report provided for in paragraph 1
and the other documents referred to in
 Article 5(3 ) at the company 's registered
office at least two months before the
meeting of the General Heeting which is
to decide on the merger .
3. Before the General Heeting discusses       3 . Before the General Meeting considers
the merger the management organs of the       the merger , the management organs of the
merging companies shall discuns the           merging companies shall discuss the reports
reports provided for in paragraph 1 with the  provided for in paragraph 1 with the
employees'1 representatives . The latter      employees' representatives . The latter
may deliver a written opinion . The General   may deliver a written opinion .
Heeting which is to decide on the merger
                                                   On request of the employées'
shall be informed of that opinion .           representatives, the measures to be taken
                                              on behalf of the employees will be mstdo
                                              the subject of negotiations between the
                                              parties .
                                                   The General Meeting which is to
                                              decide on the merger must be informed
                                              of that opinion a* i of the result of
                                              the negotiations , ii there is any.
                                              Every shareholder shall have the right
                                              to have access to the documents , before
                                              the consideration by the General Meeting
                                              of the proposed merger.
 ---pagebreak---                                                    - ία-
4.  If + lie merger is pre-judL-iQ-i-al to the        4*   If no agreement is achieved as a
employees 1 interests the management organs           result of the negotiations provided for
shall initiate negotiations with the                  in- paragraph 3 and the general meetings
employees * representatives , before the              of the merging companies have approved
General Meeting discusses the merger , with           the draft terms of merger, the management
a view to reaching agreement on the measures          organ of the acquiring company is obliged ,
to be taken regarding the employees#         If no    on a demand of the employees * representatives ,
agreement is reached in these negotiations ,          to engage in/negotiations with the employees'
each of the parties may ask the public                representatives with the view to reaching an
authority to act as intermediary.                      agreement on the measures to be          ' iJ h
                                                      regard to the employees .    If , at the enr' of
                                                      these negotiations , or of a period of tvro
                                                      months at the latest from the date when
                                                       they began, an agreement has not been
                                                      reached beti*een the parties , either of them
                                                       can refer the matter to ah arbitration body
                                                      which shall decide definitively, within one
                                                      month , on the measures to be taken on their
                                                      behalf.    This arbitration body shell consist
                                                      of arbitrators appointed in equal numbers by
                                                       each of the parties , and of a president
                                                       appointed by common consent of the two parties
                                                       If one of the parties fails to appoint its
                                                       arbitrators , or if agreernent ,is not reached
                                                      on the choice of the president , the competent
                                                       court shall make these appointments ,
5.  Every employee or employees'                       5»  Every employee or employees * representati\
representative shall be entitled to obtain             shall be entitled to obtain free of charge on
free of charge on request copies , in full            request copies , in full or, if required, in par
or in ]5art , of the documents referred to in         of the documents referred * to in paragraphs P.
paragraph 2 to 4 «                            ■        to 4,
6,   Thi3 Article is without prejudice to             - No change.
the laws of tfrose Member States which are
more favourable to employees in cases of
merger.        '                     *
                                       Articles 7 - 24 » no change