The directive lays down rules concerning divisions of public limited liability companies from the same Member State and is usually referred to together with the third company law directive. The Directive governs Division by acquisition, Division by the formation of new companies and Division under the supervision of a judicial authority.
- Division by acquisition: this is an operation whereby, after being wound up, but without going into liquidation, a company transfers all its assets and liabilities to more than one company. The shareholders of the company being divided are allocated shares in the companies receiving contributions as a result of the division (‘recipient companies’).
- Division by the formation of new companies: this is an operation whereby, after being wound up, but without going into liquidation, a company transfers all its assets and liabilities to more than one newly formed company. The shareholders of the company being divided are allocated shares in the recipient companies.
- Division under the supervision of a judicial authority: this is a division operation subject to the supervision of a judicial authority having the power to call a general meeting of shareholders of the company being divided in order to decide upon the division, or indeed to call any meeting of creditors of each of the companies involved, in order to decide upon the division. Where the judicial authority establishes that no prejudice would be caused to shareholders or creditors, it may relieve the companies involved in the division from applying certain rules applicable to divisions by acquisition and divisions by the formation of new companies.
As far as divisions by acquisition and divisions by the formation of new companies are concerned, draft terms of division, an instrument negotiated by the administrative or management bodies of the companies involved in a division, must be drawn up. The draft must contain a minimum of particulars, including the share exchange ratio and the rights conferred by the recipient companies on the holders of shares to which special rights are attached and the holders of securities other than shares. It must be published in the manner prescribed by the law of each Member State. A division requires at least the approval of a general meeting of each company involved in the division. The administrative or management bodies of a company being divided must supply certain information to the general meeting of that company and to the administrative or management bodies of the recipient companies. Strict safeguards ensure the protection of shareholders and, in particular, creditors. As regards the latter, the main safeguard consists in the joint and several liability of the recipient companies where one of them does not discharge an obligation transferred to it under the division. The Member States may provide that the recipient companies will be jointly and severally liable for the obligations of the company being divided.
Legal basis
- Art. 44 II lit.g EC (former Art. 54 III lit.g EEC)
Amendments
- Directive 83/349/EEC
- Directive 84/569/EEC
- Directive 89/666/EEC
- Directive 90/604/EEC
- Directive 90/605/EEC
- Directive 94/8/EC
- Directive 2001/65/EC
- Directive 2003/38/EC
- Directive 2003/51/EC
- Proposal COM (2004) 725