Harmonization of EU rules on cross-border extraordinary transactions
Edited by the International Business Reorganizations (IBR) Team
On March 7, 2023, Legislative Decree No. 19 of March 2, 2023 (the “Decree”) was published in the Official Gazette (“Gazzetta Ufficiale No. 56/2023”), containing the rules on “Implementation of the Directive (EU) 2019/2121 of the European Parliament and of the Council of November 27, 2019, amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers, and demergers.”
Directive (EU) 2019/2121 was adopted – also providing for several amendments to the previous Directive (EU) 2017/1132 of the European Parliament and of the Council, which ruled certain common matters – to facilitate the implementation of cross-border conversions, mergers, and demergers, in the pursuit of increasing freedom of establishment in the European market.
Adopting the Decree, the Italian legal system welcomes the implementing rules that will modify and harmonize the regulations on cross-border transactions (until now, limited to cross-border mergers only), extending them to cross-border conversions and demergers. The new rules will mainly concern (i) transactions between one or more Italian companies (LLC-JSC) and one or more companies from another Member State that has their registered office or central administration or principal place of business established in the territory of the European Union, and (ii) cross-border transactions between companies other than LLC and Ltd or LLC and Ltd that do not have their registered office or central administration or principal place of business in the EU territory, if the application of the rules transposing Directives (EU) 2017/1132 and 2019/2121 to such transactions are similarly provided for by the law applicable to each of the companies from another Member State participating in or resulting from the transaction.
As a result, the legal framework that will be created as of March 22, 2023, the effective date of the Decree, will be composed as follows:
Cross-border conversions
- Cross-border conversions are defined as those transactions by which a company, without being dissolved or subjected to liquidation and while retaining its legal personality, changes (i) the law to which it is subject and (ii) its corporate type, adopting one provided for by the law of the “destination State” and registering its head-office in compliance with that law.
- The applicable rules, which recall – mutatis mutandis – those relating the cross-border mergers, essentially provide for the drafting of the conversions plan, the issuance of the preliminary certificate referred to in article 29 of the Decree, and – after the expiration of the 90 days creditors’ opposition term – the decision resulting from a public deed.
- The cross-border conversions procedure, by express provision of the new article 2510-bis of the Italian Civil Code, will also apply in case of transfer abroad of the registered office of the Italian company.
Cross-border mergers
- A cross-border merger is defined as a transaction consisting of the unification of two or more companies belonging to different jurisdictions.
- The applicable rules provide for (i) a preliminary phase aimed at drafting the cross-border merger plan, the relevant approval, and the filing with the competent Companies’ Register, and – after the 90 days creditors’ opposition period elapsed – (ii) an execution phase involving the signing of the merger deed by public deed, and subject to the issuance of the preliminary certificate referred to in article 29 of the Decree.
Cross-border demergers
- A cross-border demerger, on the other hand, is defined as a transaction involving the assignment of all or part of the assets of a company from one Member State in favor of another (pre-existing or newly established) belonging to another Member State.
- The rules on the cross-border demergers recall – mutatis mutandis – those on domestic demergers and cross-border mergers, providing for a preliminary phase and an execution phase.
- The rules on cross-border demergers, moreover, extend their applicability also to so-called “scissioni mediante scorporo”, namely those transactions by which a company assigns part of its assets to one or more newly established companies, also giving itself the relevant shares or quotas, continuing its activity.
Amendments to the Italian Civil Code
Lastly, article 51 of the Decree contains amendments to the Italian Civil Code, including:
- the introduction of article 2510-bis of the Italian Civil Code (“Transfer of the registered office abroad”), which regulates the transfer of the registered office abroad to be executed by way of a transformation procedure, in accordance with the provisions governing cross-border and international transformations.
- the insertion of art. 2506.1 of the Italian Civil Code (“Scissione mediante scorporo”) by which this transaction is formally introduced into the Italian Civil Code.
- the amendments to articles 2437 and 2473 of the Italian Civil Code that provide for the deletion of references to the transfer of the registered office abroad as a cause for withdrawal of the shareholder of an Italian LLC or JSC, giving the right of withdrawal to the shareholder who did not take part in the approval of the cross-border transaction.
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The International Business Reorganizations (IBR) Team remains available for any further details as well as for a more in-depth discussion of the topics mentioned above.
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