How Does The Mobility Directive Change The M&A Framework?

• Published date: 28 July 2023
• Subject Matter: Corporate/Commercial Law, M&A/Private Equity, Corporate and Company Law, Directors and Officers, Shareholders
• Law Firm: Schoenherr Attorneys at Law
• Author: Mihaela Popescu and Alexandra Smahon

EU Directive 2019/2121 (also known as the "Mobility Directive") aims to create a reinforced framework for cross-border operations while ensuring the protection of employees, creditors and minority shareholders in the internal market.

In Romania, this approach was transposed in the recent amendments to the Companies Law No. 31/1990 ("Companies Law") and to other normative acts regarding registrations in the Trade Registry, through the implementation act Law No. 222/2023 ("Law 222/2023").

Law 222/2023 implemented the provisions of the Mobility Directive on cross-border conversions and cross-border divisions via incorporation as full division (divizare completa) and partial division (divizare partiala/ desprindere in interesul asociatilor) and as division by separation (divizare prin separare/desprindere in interesul societatii).

The main changes with respect to cross-border operations are the following:

• simplification of the cross-border operations process (information available from public authorities will be directly obtained by the Trade Registry, interconnected system of EU trade registers, ability to publish the merger project on the companies' websites);
• the report section for shareholders of the directors or management body and the independent expert audit and report are no longer required in case of (i) limited liability companies with a sole shareholder, (ii) if the shareholders of the respective participating company waive their right to receive the report section, or (iii) if all shareholders of all participating companies waive their right to receive the independent expert's audit and report;
• special provisions for employee protection
  • the directors or management body must ensure the notification and involvement of employees during the cross-border operation;
  • the report section for employees of the directors or management body must include at least (i) the implications of the cross-border operations for employment relations and, where appropriate, the measures necessary to maintain those employment relations, and (ii) any material changes in the terms and conditions of employment / employment applicable to or relating to the locations of the participating companies;
  • the right of the employee representatives or, if no representatives have been appointed, the employees to express their opinion on the employees' report section;
  • if a system of employee involvement will operate within the Romanian legal entity resulting from the cross-border...