From cross-border corporate reorganisation case law to the EU Mobility Directive

Therefore, the case law of the ECJ has played a significant role in this area, as it developed and refined the initial implementation regulations for cross-border reorganisations. The ECJ[1] first approved a cross-border reorganisation within the EU in 1988, addressing the change of a corporate seat. Subsequent decisions further affirmed the admissibility of cross-border reorganisations within the EU and contributed to the development of the implementation regulations. Notably, in 2005, the ECJ[2] explicitly approved a cross-border merger.

Parallel to the case law of the ECJ, the European legislator has been working on unified provisions for cross-border reorganisations since the early 1970s. Its intention to provide uniform provisions on cross-border reorganisations resulted in Directive 2005/56/EG (Merger Directive). The Merger Directive was amended and further developed first by Directive 2017/1132/EU and most recently by Directive 2019/2121/EU (Mobility Directive).

Key aspects of the Mobility Directive and its implementation in Austria

Unlike its predecessors, the Mobility Directive provides a legal basis not only for cross-border mergers but also for cross-border demergers and conversions. This makes the Mobility Directive the EU's first legislative act to establish uniform provisions for these types of corporate reorganisations. In addition, it introduces updates to the established procedure for cross-border mergers, including a mechanism (abuse control) to prevent cross-border reorganisations for abusive, fraudulent or criminal purposes. The Mobility Directive also extends creditor security periods, with a three-month waiting period, and modifies the publication procedure.

The Austrian legislator has already comprehensively implemented the Mobility Directive by enacting the Austrian Corporate Reorganisation Act, which replaced the Austrian Merger Act. However, in addition to the cross-border demerger for foundation provided for in the Mobility Directive, the legislator did not take the opportunity to create a regulation for the more commonplace demerger for absorption. Such a legal basis is still required in Austrian legal practice. The Austrian legislator also lowered the threshold for applying the employee participation procedure in cross-border reorganisations. This adjustment may result in increased transaction efforts and longer timeframes for implementing these reorganisations.

Implementation of the Mobility Directive in CEE

In addition to Austria, the Mobility Directive has also been implemented in EU Member States in Central and Eastern Europe, including Croatia, Hungary, Poland, Romania, Slovakia, Slovenia and, more recently, Bulgaria and the Czech Republic.

Our practical experience shows that, even though the Mobility Directive was not yet implemented in all other EU Members States, cross-border reorganisations were able to proceed based on the Austrian EU-UmgrG, in conjunction with the older legal frameworks applicable in those other Member States. This was demonstrated in a recent cross-border merger from the Czech Republic – where the Mobility Directive was not implemented at that time – to Austria.

We expect the Mobility Directive to offer companies more flexibility and increased legal certainty for cross-border reorganisations, in particular, once the national legal regulations and local commercial register court practices have been established.

authors: Stefanie Aichhorn-Wöss, Otakar Fiala, Constantin Maras