ARTICLE
1 June 2023

The Mobility Directive Goes Live In Ireland: New Merger, Conversion And Division Options For EU Companies

M
Matheson

Contributor

Established in 1825 in Dublin, Ireland and with offices in Cork, London, New York, Palo Alto and San Francisco, more than 700 people work across Matheson’s six offices, including 96 partners and tax principals and over 470 legal and tax professionals. Matheson services the legal needs of internationally focused companies and financial institutions doing business in and from Ireland. Our clients include over half of the world’s 50 largest banks, 6 of the world’s 10 largest asset managers, 7 of the top 10 global technology brands and we have advised the majority of the Fortune 100.
In a significant development for companies with EU operations, the Mobility Directive (Directive (EU) 2019/2121) has been transposed into Irish law.
European Union Corporate/Commercial Law

In a significant development for companies with EU operations, the Mobility Directive (Directive (EU)2019/2121) has been transposed into Irish law.

The new regime aims to eliminate barriers to the freedom of establishment of EU companies within the single market while, at the same time, safeguarding the interests of employees, creditors, and minority shareholders.

Mobility Regulations

The European Union (Cross-Border Conversions, Mergers and Divisions) Regulations 2023 (the "Mobility Regulations") were signed into law by the Minister for Enterprise, Trade and Employment yesterday (24 May 2023), with most provisions taking immediate effect and a limited number taking effect from 26 May 2023.

The Mobility Regulations:

  • revoke (save for mergers commenced but not completed prior to their operation - see transitional arrangements below) the pre-existing Irish rules on EU cross-border mergers (a regime that has been in place in Ireland since 2008) and introduce new procedures for cross-border mergers involving Irish companies;
  • introduce a 'cross-border conversion' process, allowing Irish limited liability companies to relocate to another Member State by operation of law; and
  • introduce new rules around 'divisions' of limited liability companies.

The High Court is the competent authority under the Mobility Regulations to issue the pre-transaction certificate, as appropriate, and to scrutinise the legality of the cross-border operation. Transactions will necessarily involve tax, employment and other specialist input.

Timing and Transitional Measures

At the time of writing, there remains some legal uncertainty as to how the new regime will work in relation to transactions involving other Member States where the Mobility Directive hasn't yet been transposed. The Companies Registration Office (and equivalent national public registries in other EU jurisdictions) must also establish systems to reflect, by registration, the outcome of the transaction.

Despite the absence of provisions in the Mobility Directive dealing with transitional arrangements, helpfully, the new measures contain transitional elements in relation to cross-border mergers already underway. Where the relevant documents (which include the common draft terms of merger) were submitted to the Registrar of Companies before 24 May 2023, the previous regime will apply to that cross-border merger, from an Irish legal perspective at least.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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