Cross-border reorganisation in the EU

The following provides an overview of the procedure for cross-border reorganisations within the European Union (EU) and the European Economic Area (EEA). This summary reflects the applicable legal framework and is not exhaustive.

General

Cross-border reorganisations – in particular cross-border mergers, cross-border conversions (for example in the context of a transfer of the registered office), and cross-border divisions – are permissible within the EU and the EEA under certain conditions. In Austria, the procedure is governed by specific provisions of corporate law based on EU legal requirements.

These provisions apply to corporate entities, in particular limited liability companies (GmbH), stock corporations (AG), and European Companies (SE). In the case of a cross-border reorganisation, both Austrian law and the law of the other Member State in which the other participating company has its registered office must be observed.

Requirements and Procedure

• Reorganisation plan: Must include information on the participating companies, the future structure, the rights of shareholders, and the anticipated impact on employees.
• Reorganisation report: The company’s management must prepare a report outlining the background and expected consequences of the measure. In particular, it must address the impact on creditors, employees, and any existing severance or pension entitlements. A joint report by both companies is permitted, provided this is compatible with the law of the other Member State and contains all required elements for both sides.
• Employee information: The report must be submitted to the works council or – if no such body exists – directly to all affected employees at least one month prior to the general meeting. In certain cases, employee co-determination rights apply.
• Audit obligations: Where a stock corporation is involved, the supervisory board must review the report and the transaction itself. This includes an assessment of the fairness of any proposed cash compensation for exiting shareholders. In the case of a limited liability company, an external audit may be waived if this is set out in the reorganisation plan and certified by a notary.
• Creditor protection: Creditors may request security if their claims are at risk due to the reorganisation.
• Court procedure: The reorganisation must be filed with the competent court for the transferring company. That court issues a certificate confirming the legality of the procedure, which must be submitted to the competent authority in the receiving state.
• Abuse control: The court assesses whether the reorganisation serves abusive or fraudulent purposes. If so, the registration may be denied.

Cross-border Merger

In a cross-border merger, the assets and liabilities of one company are transferred to another company established in a different Member State. The applicable law for the entry into force of the merger is that of the state in which the acquiring company has its registered office. Austrian companies are subject to specific rules on the procedure, protection of creditors and shareholders, and the requirement for a court-issued pre-merger certificate.

Cross-border Conversion

In a cross-border conversion, a company transfers its registered office to another Member State while retaining its legal personality. This requires the adoption of a legal form permitted under the law of the destination state. The procedure includes a conversion plan, a conversion report, court review, and a certificate of legality.

Cross-border Division

A cross-border division enables a company to divide its assets and liabilities among one or more companies established in other Member States. This may involve transferring assets to existing companies or creating new companies. Shareholder involvement, creditor protection, and employee information requirements apply accordingly.

Further links

• Merger of Austrian corporations
• Merging Businesses (→ Your Europe)

Legal basis

• EU Umgründungsgesetz (EU UmgrG)^{German text}
• Sections 96 to101 of the GmbH-Gesetz (GmbHG)^{German text}
• Sections 220 to 233 of the Aktiengesetz (AktG)^{German text}
• Sections 258 et seq. of the Arbeitsverfassungsgesetz (ArbVG)^{German text}