5.4  The EU Cross-Border Mergers Directive and Its Implementation in Germany

5.3.2  Controversial Issues

Although the need for a European business vehicle for SMEs and group companies is generally acknowledged, the EU Commission’s proposal has been heavily debated in the current legislative procedure.Though experts compliment the Commission for having avoided the peculiarities that have prevented the SE from becoming a more successful option for European entrepreneurs,86 some Member States have raised objections. While as of the time of this writing, broad agreement has been reached on most parts, in particular three issues are still controversial, which—un- surprisingly—comprise (1) the seat of a SPE, (2) the amount of its statutory minimum capital and (3) the board-level participation of employees.

RegardingtheseatoftheSPE,theproposaloftheEUCommissionallowstheSPE to have its registered office and its real seat in different Member States. While some Member States support this proposal, others are in favor of prohibiting such separation of the registered office (corporate seat) and the center of its administration (real seat). Still others prefer to leave this question to be decided entirely by national law.

With regard to the minimum statutory capital of the SPE, the EU Commission proposed to set the capital figure to (only) EUR 1. Some Member States have objected to this amount and preferred a higher minimum capital requirement. The Swedish Council Presidency, as well as the Hungarian Council Presidency proposed to allow Member States to set a higher minimum statutory capital requirement up to a maximum of EUR 8,000. However, so far no consensus has been reached.

The most difficult issue remaining in the legislative procedure seems to be that of employee participation. Due to different historical developments, traditions and legal arrangements for employee co-determination differ greatly among the Member States. While in some Member States (as e.g. in the UK) a mandatory co-determi- nation on the company’s board-level is unknown, other Member States (like Germany) have a longstanding tradition of such co-determination and, therefore, have expressed concerns about the possible loss of employees’ rights acquired under national law if the SPE was used to circumvent national legislation on this matter.

5.4  The EU Cross-Border Mergers Directive and Its Implementation in Germany

5.4.1  Case Study

Case Study

B just read about some new developments on cross-border mergers within the EU and asks C to prepare a short memo on the questions:

What options are available to effect a cross-border merger?

86  See e.g. Report of the Reflection Group on the Future of EU Company Law as of 5 April 2011, p. 30.