By Henrietta Billings - 26th November 2004
EU ministers have reached a deal on company cross-border merger rules, after a compromise was thrashed out on worker participation rights.
The new rules, part of the European Commission's drive for greater competitiveness, are designed to trigger a revival in cross border mergers between EU limited companies by removing existing barriers, cutting costs, and providing legal certainties for both parties.
"After 20 years of discussion this directive makes co-operation between companies easier and cheaper, both for large multinationals and small and medium sized enterprises," the Dutch EU presidency said in a statement on Thursday.
"The difficulty or impossibility of cross-border mergers is a major practical obstacle to Europe's competitiveness. It is high time that was put right," said the EU's single market chief Charlie McCreevy after the agreement.
"The Commission's proposal and the Council's agreement mean we are on the way to doing that".
National governments had been at odds over the most sensitive aspect of the proposals, co-determination or worker participation systems.
Germany has a long history of worker representation on company boards, and wants these participation rights guaranteed when companies merge across EU borders.
Other countries, such as Italy, have no such history of worker participation, and are reluctant to have Germany's, or any other country's employment rules exported to their country in the case of a merger.
Under the compromise agreed by qualified majority, employee participation in a newly created company will be negotiated by a special body to agree on participation arrangements.
If these talks fail, worker participation already in force at the merging companies would apply to the merged business, if at least one third of the total number of employees before the merger were covered by a worker's participation scheme.
Member States also agreed provisions allowing companies to adopt specific safeguards to protect the interests of minority members of a merging company, who have opposed the cross-border merger.
The legislation is particularly targeted at small and medium sized businesses that want to operate in more than one member state but not throughout Europe.
The new law will now pass to MEPs for scrutiny and approval by the European Parliament, an opinion is expected early 2005.
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