The cross-border merger (or CBM) directive was adopted by the Council of Ministers on 26 October 2005. The main objective of the directive is to make it easier to merge companies across European borders. It should be noted that the worker involvement provisions in the directive are weaker than those provided by the European Company (SE) legislation.

As was the case for the European Company (SE), the question of how to protect existing employee rights to board-level representation was quite controversial and made agreement on a directive difficult. The solution which was found is substantially based on the negotiating model found in the SE Directive. If one of the merging companies had representation for employees at board level, there are to be negotiations with management on the same basis as for an SE. Employees can demand the same rights at board level as existed previously in one of the merging companies – although, where there is a one-tier board structure with a single board of directors, the proportion of employee members can be restricted to one-third of the total.

The CBM however provides lower standards for worker involvement than is the case in the SE directive. The threshold for an automatic right for employees to have board-level representation is when at least one-third of employees previously enjoyed these rights, as opposed to 25 percent in the case of the SE. Furthermore, no provision is contained for the creation of a cross-border information and consultation body, as is the case in the SE directive.

An important consequence of both the mergers and SE Directives is that employee representatives on company boards will in future come from several Member States. This presents both a challenge and an opportunity.

: 10th company law directive

Documents / Links

Frequently Asked Questions on the 10th Directive in ENGLISH and GERMAN