The lack of harmonized rules governing cross-border conversions and divisions within the EU has generated restrictions to the exercise of the freedom of establishment. Directive (EU) 2017/1132 (the Initial Directive) of the European Parliament and of the Council on cross-border mergers resulted in a major improvement of the functioning of the internal EU market but was evaluated as not being sufficient to meet (i) the objective of an EU market without internal borders and (ii) other objectives of the European integration, such as the protection of stakeholders. In such context, the European Parliament called upon the Commission to revise the Initial Directive.
On November 27, 2019, the European Parliament and the Council have adopted the Mobility Directive, which amends the Initial Directive. The purpose of the amendments is to introduce, for the first time, a harmonized set of rules on cross-border conversions and divisions and to clarify the existing rules on cross-border mergers within the EU. The Mobility Directive also improves the protection for employees, creditors and members.
All EU Member States must adopt the laws, regulations and administrative provisions necessary to comply with the Mobility Directive by January 31, 2023. Draft bills of law are already available in certain jurisdictions such as Luxembourg and the Netherlands. At this stage, it is unclear whether the aforementioned deadline will be met by all Member States.
The Mobility Directive has the advantage of providing harmonized rules across the EU but will on the other hand generate procedures that are more cumbersome than the current well-established legal and notarial practices within the EU.
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