This document is an excerpt from the EUR-Lex website
Document 02019L2121-20191212
Directive (EU) 2019/2121 of the European Parliament and of the Council of 27 November 2019 amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions (Text with EEA relevance)Text with EEA relevance
Consolidated text: Directive (EU) 2019/2121 of the European Parliament and of the Council of 27 November 2019 amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions (Text with EEA relevance)Text with EEA relevance
Directive (EU) 2019/2121 of the European Parliament and of the Council of 27 November 2019 amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions (Text with EEA relevance)Text with EEA relevance
02019L2121 — EN — 12.12.2019 — 000.001
This text is meant purely as a documentation tool and has no legal effect. The Union's institutions do not assume any liability for its contents. The authentic versions of the relevant acts, including their preambles, are those published in the Official Journal of the European Union and available in EUR-Lex. Those official texts are directly accessible through the links embedded in this document
|
DIRECTIVE (EU) 2019/2121 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 27 November 2019 amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions (OJ L 321 12.12.2019, p. 1) |
Corrected by:
DIRECTIVE (EU) 2019/2121 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
of 27 November 2019
amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions
(Text with EEA relevance)
Article 1
Amendments to Directive (EU) 2017/1132
Directive (EU) 2017/1132 is amended as follows:
in Article 1, the sixth indent is replaced by the following:
cross-border conversions, cross-border mergers and cross-border divisions of limited liability companies,’;
in Article 18(3), the following point is inserted:
the documents and information referred to in Articles 86g, 86n, 86p, 123, 127a, 130, 160g, 160n and 160p;’;
Article 24 is amended as follows:
point (e) is replaced by the following:
the detailed list of data to be transmitted for the purpose of exchanging information between registers, as referred to in Articles 20, 28a, 28c, 30a and 34;’;
the following point is inserted:
the detailed list of data to be transmitted for the purpose of exchanging information between registers and for the purposes of disclosure, as referred to in Articles 86g, 86n, 86p, 123, 127a, 130, 160g, 160n and 160p;’;
the title of Title II is replaced by the following:
‘CONVERSIONS, MERGERS AND DIVISIONS OF LIMITED LIABILITY COMPANIES’;
in Title II, the following Chapter is inserted before Chapter I:
‘CHAPTER -I
Cross-border conversions
Article 86a
Scope
Member States shall ensure that this Chapter does not apply to companies in either of the following circumstances:
the company is in liquidation and has begun to distribute assets to its members;
the company is subject to resolution tools, powers and mechanisms provided for in Title IV of Directive 2014/59/EU.
Member States may decide not to apply this Chapter to companies which are:
the subject of insolvency proceedings or subject to preventive restructuring frameworks;
the subject of liquidation proceedings other than those referred to in point (a) of paragraph 3, or
the subject of crisis prevention measures as defined in point (101) of Article 2(1) of Directive 2014/59/EU.
Article 86b
Definitions
For the purposes of this Chapter:
“company” means a limited liability company of a type listed in Annex II that carries out a cross-border conversion;
“cross-border conversion” means an operation whereby a company, without being dissolved or wound up or going into liquidation, converts the legal form under which it is registered in a departure Member State into a legal form of the destination Member State, as listed in Annex II, and transfers at least its registered office to the destination Member State, while retaining its legal personality;
“departure Member State” means a Member State in which a company is registered prior to a cross-border conversion;
“destination Member State” means a Member State in which a converted company is registered as a result of a cross-border conversion;
“converted company” means a company formed in a destination Member State as a result of a cross-border conversion.
Article 86c
Procedures and formalities
In compliance with Union law, the law of the departure Member State shall govern those parts of the procedures and formalities to be complied with in connection with the cross‐border conversion in order to obtain the pre-conversion certificate, and the law of the destination Member State shall govern those parts of the procedures and formalities to be complied with following receipt of the pre-conversion certificate.
Article 86d
Draft terms of cross-border conversions
The administrative or management body of the company shall draw up the draft terms of a cross-border conversion. The draft terms of a cross-border conversion shall include at least the following particulars:
the legal form and name of the company in the departure Member State and the location of its registered office in that Member State;
the legal form and name proposed for the converted company in the destination Member State and the proposed location of its registered office in that Member State;
the instrument of constitution of the company in the destination Member State, where applicable, and the statutes if they are contained in a separate instrument;
the proposed indicative timetable for the cross-border conversion;
the rights conferred by the converted company on members enjoying special rights or on holders of securities other than shares representing the company capital, or the measures proposed concerning them;
any safeguards offered to creditors, such as guarantees or pledges;
any special advantages granted to members of the administrative, management, supervisory or controlling bodies of the company;
whether any incentives or subsidies were received by the company in the departure Member State in the preceding five years;
details of the offer of cash compensation for members in accordance with Article 86i;
the likely repercussions of the cross-border conversion on employment;
where appropriate, information on the procedures by which arrangements for the involvement of employees in the definition of their rights to participation in the converted company are determined pursuant to Article 86l.
Article 86e
Report of the administrative or management body for members and employees
It shall, in particular, explain the implications of the cross-border conversion for the future business of the company.
The company may decide either to draw up one report containing those two sections or to draw up separate reports for members and employees, respectively, containing the relevant section.
The section of the report for members shall, in particular, explain the following:
the cash compensation and the method used to determine the cash compensation;
the implications of the cross-border conversion for members;
the rights and remedies available to members in accordance with Article 86i.
The section of the report for employees shall, in particular, explain the following:
the implications of the cross-border conversion for employment relationships, as well as, where applicable, any measures for safeguarding those relationships;
any material changes to the applicable conditions of employment or to the location of the company’s places of business;
how the factors set out in points (a) and (b) affect any subsidiaries of the company.
Article 86f
Independent expert report
The report referred to in paragraph 1 shall in any case include the expert’s opinion as to whether the cash compensation is adequate. When assessing the cash compensation, the expert shall consider any market price of the shares in the company prior to the announcement of the conversion proposal or the value of the company excluding the effect of the proposed conversion, as determined in accordance with generally accepted valuation methods. The report shall at least:
indicate the method or methods used to determine the cash compensation proposed;
state whether the method or methods used are adequate for the assessment of the cash compensation, indicate the value arrived at using such methods and give an opinion on the relative importance attributed to those methods in arriving at the value decided on; and
describe any special valuation difficulties which have arisen.
The expert shall be entitled to obtain from the company all information necessary for the discharge of the duties of the expert.
Member States may exclude single-member companies from the application of this Article.
Article 86g
Disclosure
Member States shall ensure that the following documents are disclosed by the company and made publicly available in the register of the departure Member State, at least one month before the date of the general meeting referred to in Article 86h:
the draft terms of the cross-border conversion; and
a notice informing the members, creditors and representatives of the employees of the company, or, where there are no such representatives, the employees themselves, that they may submit to the company, at the latest five working days before the date of the general meeting, comments concerning the draft terms of the cross-border conversion.
Member States may require that the independent expert report be disclosed and made publicly available in the register.
Member States shall ensure that the company is able to exclude confidential information from the disclosure of the independent expert report.
The documents disclosed in accordance with this paragraph shall also be accessible through the system of interconnection of registers.
However, Member States shall not subject that exemption to any requirements or constraints other than those which are necessary to ensure the security of the website and the authenticity of the documents, and which are proportionate to achieving those objectives.
Where the company makes the draft terms of the cross-border conversion available in accordance with paragraph 2 of this Article, it shall submit to the register of the departure Member State, at least one month before the date of the general meeting referred to in Article 86h, the following information:
the legal form and name of the company and the location of its registered office in the departure Member State and the legal form and name proposed for the converted company in the destination Member State and the proposed location of its registered office in that Member State;
the register in which the documents referred to in Article 14 are filed in respect of the company and its registration number in that register;
an indication of the arrangements made for the exercise of the rights of creditors, employees and members; and
details of the website from which the draft terms of the cross-border conversion, the notice referred to in paragraph 1, the independent expert report and complete information on the arrangements referred to in point (c) of this paragraph may be obtained online and free of charge.
The register of the departure Member State shall make publicly available the information referred to in points (a) to (d) of the first subparagraph.
Member States shall further ensure that any fees charged to the company by the registers for the disclosure referred to in paragraphs 1 and 3 and, where applicable, for the publication referred to in paragraph 5 do not exceed the recovery of the cost of providing such services.
Article 86h
Approval by the general meeting
Member States shall ensure that the approval of the cross-border conversion by the general meeting cannot be challenged solely on the following grounds:
the cash compensation referred to in point (i) of Article 86d has been inadequately set; or
the information given with regard to the cash compensation referred to in point (a) did not comply with the legal requirements.
Article 86i
Protection of members
Member States may also provide for other members of the company to have the right referred to in the first subparagraph.
Member States may require that express opposition to the draft terms of the cross‐border conversion, the intention of members to exercise their right to dispose of their shares, or both, be appropriately documented, at the latest at the general meeting referred to in Article 86h. Member States may allow the recording of opposition to the draft terms of the cross-border conversion to be considered proper documentation of a negative vote.
Member States may provide that the final decision to provide additional cash compensation is valid for all members who have declared their decision to exercise the right to dispose of their shares in accordance with paragraph 2.
Article 86j
Protection of creditors
Member States shall ensure that creditors who are dissatisfied with the safeguards offered in the draft terms of the cross-border conversion, as provided for in point (f) of Article 86d, may apply, within three months of the disclosure of the draft terms of the cross-border conversion referred to in Article 86g, to the appropriate administrative or judicial authority for adequate safeguards, provided that such creditors can credibly demonstrate that, due to the cross-border conversion, the satisfaction of their claims is at stake and that they have not obtained adequate safeguards from the company.
Member States shall ensure that the safeguards are conditional on the cross-border conversion taking effect in accordance with Article 86q.
Article 86k
Employee information and consultation
Article 86l
Employee participation
However, the rules in force concerning employee participation, if any, in the destination Member State shall not apply where the company has, in the six months prior to the disclosure of the draft terms of the cross-border conversion, an average number of employees equivalent to four fifths of the applicable threshold, as laid down in the law of the departure Member State, for triggering the participation of employees within the meaning of point (k) of Article 2 of Directive 2001/86/EC, or where the law of the destination Member State does not:
provide for at least the same level of employee participation as operated in the company prior to the cross-border conversion, measured by reference to the proportion of employee representatives among the members of the administrative or supervisory body or their committees or of the management group which covers the profit units of the company, subject to employee representation; or
provide for employees of establishments of the converted company that are situated in other Member States the same entitlement to exercise participation rights as is enjoyed by those employees employed in the destination Member State.
In the cases referred to in paragraph 2 of this Article, the participation of employees in the converted company and their involvement in the definition of such rights shall be regulated by the Member States, mutatis mutandis and subject to paragraphs 4 to 7 of this Article, in accordance with the principles and procedures laid down in Article 12(2) and (4) of Regulation (EC) No 2157/2001 and the following provisions of Directive 2001/86/EC:
Article 3(1), points (a)(i) and (b) of Article 3(2), Article 3(3), the first two sentences of Article 3(4), and Article 3(5) and (7);
Article 4(1), points (a), (g) and (h) of Article 4(2), and Article 4(3) and (4);
Article 5;
Article 6;
Article 7(1), with the exception of the second indent of point (b);
Articles 8, 10, 11 and 12; and
point (a) of Part 3 of the Annex.
When regulating the principles and procedures referred to in paragraph 3, Member States:
shall confer on the special negotiating body the right to decide, by a majority of two thirds of its members representing at least two thirds of the employees, not to open negotiations or to terminate negotiations already opened and to rely on the rules on participation in force in the destination Member State;
may, in the case where, following prior negotiations, standard rules for participation apply and notwithstanding such rules, decide to limit the proportion of employee representatives in the administrative body of the converted company. However, if, in the company, employee representatives constituted at least one third of the administrative or supervisory body, the limitation may never result in a lower proportion of employee representatives in the administrative body than one third;
shall ensure that the rules on employee participation that applied prior to the cross-border conversion continue to apply until the date of application of any subsequently agreed rules or, in the absence of agreed rules, until the application of standard rules in accordance with point (a) of Part 3 of the Annex to Directive 2001/86/EC.
Article 86m
Pre-conversion certificate
Such completion of procedures and formalities may comprise the satisfaction or securing of pecuniary or non-pecuniary obligations due to public bodies or compliance with specific sectoral requirements, including securing obligations arising from ongoing proceedings.
Member States shall ensure that the application to obtain a pre-conversion certificate by the company is accompanied by the following:
the draft terms of the cross-border conversion;
the report and the appended opinion, if any, referred to in Article 86e, as well as the report referred to in Article 86f, where they are available;
any comments submitted in accordance with Article 86g(1); and
information on the approval by the general meeting referred to in Article 86h.
Member States may require that the application to obtain a pre-conversion certificate by the company is accompanied by additional information, such as, in particular:
the number of employees at the time of the drawing up of the draft terms of the cross-border conversion;
the existence of subsidiaries and their respective geographical location;
information regarding the satisfaction of obligations due to public bodies by the company.
For the purposes of this paragraph, competent authorities may request such information, if not provided by the company, from other relevant authorities.
As part of the scrutiny referred to in paragraph 1, the competent authority shall examine the following:
all documents and information submitted to the competent authority in accordance with paragraphs 2 and 3;
an indication by the company that the procedure referred to in Article 86l(3) and (4) has started, where relevant.
Member States shall ensure that the scrutiny referred to in paragraph 1 is carried out within three months of the date of receipt of the documents and information concerning the approval of the cross-border conversion by the general meeting of the company. That scrutiny shall have one of the following outcomes:
where it is determined that the cross-border conversion complies with all the relevant conditions and that all necessary procedures and formalities have been completed, the competent authority shall issue the pre-conversion certificate;
where it is determined that the cross-border conversion does not comply with all the relevant conditions or that not all necessary procedures and formalities have been completed, the competent authority shall not issue the pre‐conversion certificate and shall inform the company of the reasons for its decision; in that case, the competent authority may give the company the opportunity to fulfil the relevant conditions or to complete the procedures and formalities within an appropriate period of time.
Article 86n
Transmission of the pre-conversion certificate
Member States shall also ensure that the pre-conversion certificate is available through the system of interconnection of registers.
Article 86o
Scrutiny of the legality of the cross-border conversion by the destination Member State
That authority shall in particular ensure that the converted company complies with provisions of national law on the incorporation and registration of companies and, where appropriate, that arrangements for employee participation have been determined in accordance with Article 86l.
Article 86p
Registration
Member States shall ensure that at least the following information is entered in their registers:
in the register of the destination Member State, that the registration of the converted company is the result of a cross-border conversion;
in the register of the destination Member State, the date of registration of the converted company;
in the register of the departure Member State, that the striking off or removal of the company from the register is the result of a cross-border conversion;
in the register of the departure Member State, the date of striking off or removal of the company from the register;
in the registers of the departure Member State and of the destination Member State, respectively, the registration number, name and legal form of the company and the registration number, name and legal form of the converted company.
The registers shall make the information referred to in the first subparagraph publicly available and accessible through the system of interconnection of registers.
Article 86q
Date on which the cross-border conversion takes effect
The law of the destination Member State shall determine the date on which the cross‐border conversion takes effect. That date shall be after the scrutiny referred to in Articles 86m and 86o has been carried out.
Article 86r
Consequences of a cross-border conversion
A cross-border conversion shall, from the date referred to in Article 86q, have the following consequences:
all the assets and liabilities of the company, including all contracts, credits, rights and obligations, shall be those of the converted company;
the members of the company shall continue to be members of the converted company, unless they have disposed of their shares as referred to in Article 86i(1);
the rights and obligations of the company arising from contracts of employment or from employment relationships and existing at the date on which the cross-border conversion takes effect shall be those of the converted company.
Article 86s
Independent experts
Member States shall have rules in place to ensure that:
the expert, or the legal person on whose behalf the expert is operating, is independent from and has no conflict of interest with the company applying for the pre-conversion certificate; and
the expert’s opinion is impartial and objective, and is given with a view to providing assistance to the competent authority in accordance with the independence and impartiality requirements under the law and professional standards to which the expert is subject.
Article 86t
Validity
A cross-border conversion which has taken effect in compliance with the procedures transposing this Directive may not be declared null and void.
The first paragraph does not affect Member States’ powers, inter alia, in relation to criminal law, the prevention and combatting of terrorist financing, social law, taxation and law enforcement, to impose measures and penalties, under national law, after the date on which the cross-border conversion took effect.’;
in Article 119, point (2) is amended as follows:
at the end of point (c) ‘; or’ is added;
the following point is added:
one or more companies, on being dissolved without going into liquidation, transfer all their assets and liabilities to another existing company, the acquiring company, without the issue of any new shares by the acquiring company, provided that one person holds directly or indirectly all the shares in the merging companies or the members of the merging companies hold their securities and shares in the same proportion in all merging companies.’;
Article 120 is amended as follows:
paragraph 4 is replaced by the following:
Member States shall ensure that this Chapter does not apply to companies in either of the following circumstances:
the company is in liquidation and has begun to distribute assets to its members;
the company is subject to resolution tools, powers and mechanisms provided for in Title IV of Directive 2014/59/EU.’;
the following paragraph is added:
Member States may decide not to apply this Chapter to companies which are:
the subject of insolvency proceedings or subject to preventive restructuring frameworks;
the subject of liquidation proceedings other than those referred to in point (a) of paragraph 4, or
the subject of crisis prevention measures as defined in point (101) of Article 2(1) of Directive 2014/59/EU.’;
Article 121 is amended as follows:
in paragraph 1, point (a) is deleted;
paragraph 2 is replaced by the following:
Article 122 is amended as follows:
points (a) and (b) are replaced by the following:
for each of the merging companies, its legal form and name, and the location of its registered office, and the legal form and name proposed for the company resulting from the cross-border merger and the proposed location of its registered office;
the ratio applicable to the exchange of securities or shares representing the company capital and the amount of any cash payment, where appropriate;’;
points (h) and (i) are replaced by the following:
any special advantages granted to members of the administrative, management, supervisory or controlling bodies of the merging companies;
the instrument of constitution of the company resulting from the cross-border merger, where applicable, and the statutes if they are contained in a separate instrument;’;
the following points are added:
details of the offer of cash compensation for members in accordance with Article 126a;
any safeguards offered to creditors, such as guarantees or pledges.’;
Articles 123 and 124 are replaced by the following:
‘Article 123
Disclosure
Member States shall ensure that the following documents are disclosed by the company and made publicly available in the register of the Member State of each of the merging companies, at least one month before the date of the general meeting referred to in Article 126:
the common draft terms of the cross-border merger; and
a notice informing the members, creditors and representatives of the employees of the merging company, or, where there are no such representatives, the employees themselves, that they may submit to their respective company, at the latest five working days before the date of the general meeting, comments concerning the common draft terms of the cross-border merger.
Member States may require that the independent expert report be disclosed and made publicly available in the register.
Member States shall ensure that the company is able to exclude confidential information from the disclosure of the independent expert report.
The documents disclosed in accordance with this paragraph shall also be accessible through the system of interconnection of registers.
However, Member States shall not subject that exemption to any requirements or constraints other than those which are necessary to ensure the security of the website and the authenticity of the documents, and which are proportionate to achieving those objectives.
Where merging companies make the common draft terms of the cross-border merger available in accordance with paragraph 2 of this Article, they shall submit to their respective register, at least one month before the date of the general meeting referred to in Article 126, the following information:
for each of the merging companies its legal form and name and the location of its registered office and the legal form and name proposed for any newly created company and the proposed location of its registered office;
the register in which the documents referred to in Article 14 are filed in respect of each of the merging companies, and the registration number of the respective company in that register;
an indication, for each of the merging companies, of the arrangements made for the exercise of the rights of creditors, employees and members; and
details of the website from which the common draft terms of the cross-border merger, the notice referred to in paragraph 1, the independent expert report and complete information on the arrangements referred to in point (c) of this paragraph may be obtained online and free of charge.
The register of the Member State of each of the merging companies shall make publicly available the information referred to in points (a) to (d) of the first subparagraph.
Member States shall further ensure that any fees charged to the company by the registers for the disclosure referred to in paragraphs 1 and 3 and, where applicable, for the publication referred to in paragraph 6 do not exceed the recovery of the cost of providing such services.
Article 124
Report of the administrative or management body for members and employees
It shall, in particular, explain the implications of the cross-border merger for the future business of the company.
The company may decide either to draw up one report containing those two sections or to draw up separate reports for members and employees, respectively, containing the relevant section.
The section of the report for members shall, in particular, explain the following:
the cash compensation and the method used to determine the cash compensation;
the share exchange ratio and the method or methods used to arrive at the share exchange ratio, where applicable;
the implications of the cross-border merger for members;
the rights and remedies available to members in accordance with Article 126a.
The section of the report for employees shall, in particular, explain the following:
the implications of the cross-border merger for employment relationships, as well as, where applicable, any measures for safeguarding those relationships;
any material changes to the applicable conditions of employment or to the location of the company’s places of business;
how the factors set out in points (a) and (b) affect any subsidiaries of the company.
However, where the approval of the merger is not required by the general meeting of the acquiring company in accordance with Article 126(3), the report shall be made available at least six weeks before the date of the general meeting of the other merging company or companies.
Article 125 is amended as follows:
in paragraph 1, the following subparagraph is added:
‘However, where the approval of the merger is not required by the general meeting of the acquiring company in accordance with Article 126(3), the report shall be made available at least one month before the date of the general meeting of the other merging company or companies.’;
paragraph 3 is replaced by the following:
The report referred to in paragraph 1 shall in any case include the expert’s opinion as to whether the cash compensation and the share exchange ratio are adequate. When assessing the cash compensation, the expert shall consider any market price of the shares in the merging companies prior to the announcement of the merger proposal or the value of the companies excluding the effect of the proposed merger, as determined in accordance with generally accepted valuation methods. The report shall at least:
indicate the method or methods used to determine the cash compensation proposed;
indicate the method or methods used to arrive at the share exchange ratio proposed;
state whether the method or methods used are adequate for the assessment of the cash compensation and the share exchange ratio, indicate the value arrived at using such methods and give an opinion on the relative importance attributed to those methods in arriving at the value decided on, and in the event that different methods are used in the merging companies, state also whether the use of different methods was justified; and
describe any special valuation difficulties which have arisen.
The expert shall be entitled to obtain from the merging companies all information necessary for the discharge of the duties of the expert.’;
in paragraph 4, the following subparagraph is added:
‘Member States may exclude single-member companies from the application of this Article.’;
Article 126 is amended as follows:
paragraph 1 is replaced by the following:
the following paragraph is added:
Member States shall ensure that the approval of the cross-border merger by the general meeting cannot be challenged solely on the following grounds:
the share exchange ratio referred to in point (b) of Article 122 has been inadequately set;
the cash compensation referred to in point (m) of Article 122 has been inadequately set; or
the information given with regard to the share exchange ratio referred to in point (a) or the cash compensation referred to in point (b) did not comply with the legal requirements.’;
the following Articles are inserted:
‘Article 126a
Protection of members
Member States may also provide for other members of the merging companies to have the right referred to in the first subparagraph.
Member States may require that express opposition to the common draft terms of the cross-border merger, the intention of members to exercise their right to dispose of their shares, or both, be appropriately documented, at the latest at the general meeting referred to in Article 126. Member States may allow the recording of opposition to the common draft terms of the cross-border merger to be considered proper documentation of a negative vote.
Member States may provide that the final decision to provide additional cash compensation is valid for all members of the merging company concerned who have declared their decision to exercise the right to dispose of their shares in accordance with paragraph 2.
Member States may also provide that the share exchange ratio as established in that decision is valid for any members of the merging company concerned who did not have or did not exercise their right to dispose of their shares.
Article 126b
Protection of creditors
Member States shall ensure that creditors who are dissatisfied with the safeguards offered in the common draft terms of the cross-border merger, as provided for in point (n) of Article 122, may apply, within three months of the disclosure of the common draft terms of the cross-border merger referred to in Article 123, to the appropriate administrative or judicial authority for adequate safeguards, provided that such creditors can credibly demonstrate that, due to the cross-border merger, the satisfaction of their claims is at stake and that they have not obtained adequate safeguards from the merging companies.
Member States shall ensure that the safeguards are conditional on the cross-border merger taking effect in accordance with Article 129.
Article 126c
Employee information and consultation
Article 127 is replaced by the following:
‘Article 127
Pre-merger certificate
Such completion of procedures and formalities may comprise the satisfaction or securing of pecuniary or non-pecuniary obligations due to public bodies or compliance with specific sectoral requirements, including securing obligations arising from ongoing proceedings.
Member States shall ensure that the application to obtain a pre-merger certificate by the merging company is accompanied by the following:
the common draft terms of the cross-border merger;
the report and the appended opinion, if any, referred to in Article 124, as well as the report referred to in Article 125, where they are available;
any comments submitted in accordance with Article 123(1); and
information on the approval by the general meeting referred to in Article 126.
Member States may require that the application to obtain a pre-merger certificate by the merging company is accompanied by additional information, such as, in particular:
the number of employees at the time of the drawing up of the common draft terms of the cross-border merger;
the existence of subsidiaries and their respective geographical location;
information regarding the satisfaction of obligations due to public bodies by the merging company.
For the purposes of this paragraph, competent authorities may request such information, if not provided by the merging company, from other relevant authorities.
As part of the scrutiny referred to in paragraph 1, the competent authority shall examine the following:
all documents and information submitted to the competent authority in accordance with paragraphs 2 and 3;
an indication by the merging companies that the procedure referred to in Article 133(3) and (4) has started, where relevant.
Member States shall ensure that the scrutiny referred to in paragraph 1 is carried out within three months of the date of receipt of the documents and information concerning the approval of the cross-border merger by the general meeting of the merging company. That scrutiny shall have one of the following outcomes:
where it is determined that the cross-border merger complies with all the relevant conditions and that all necessary procedures and formalities have been completed, the competent authority shall issue the pre-merger certificate;
where it is determined that the cross-border merger does not comply with all the relevant conditions or that not all necessary procedures and formalities have been completed, the competent authority shall not issue the pre-merger certificate and shall inform the company of the reasons for its decision; in that case, the competent authority may give the company the opportunity to fulfil the relevant conditions or to complete the procedures and formalities within an appropriate period of time.
the following article is inserted:
‘Article 127a
Transmission of the pre-merger certificate
Member States shall also ensure that the pre-merger certificate is available through the system of interconnection of registers.
Article 128 is amended as follows:
paragraph 2 is replaced by the following:
the following paragraphs are added:
Article 130 is replaced by the following:
‘Article 130
Registration
Member States shall ensure that at least the following information is entered in their registers:
in the register of the Member State of the company resulting from the merger, that the registration of the company resulting from the merger is the result of a cross-border merger;
in the register of the Member State of the company resulting from the merger, the date of registration of the company resulting from the merger;
in the register of the Member State of each merging company, that the striking off or removal of the merging company from the register is the result of a cross-border merger;
in the register of the Member State of each merging company, the date of striking off or removal of the merging company from the register;
in the registers of the Member States of each merging company and of the Member State of the company resulting from the merger, respectively, the registration number, name and legal form of each merging company and of the company resulting from the merger.
The registers shall make the information referred to in the first subparagraph publicly available and accessible through the system of interconnection of registers.
Article 131 is amended as follows:
paragraph 1 is replaced by the following:
A cross-border merger carried out as laid down in subpoints (a), (c) and (d) of point (2) of Article 119 shall, from the date referred to in Article 129, have the following consequences:
all the assets and liabilities of the company being acquired, including all contracts, credits, rights and obligations, shall be transferred to the acquiring company;
the members of the company being acquired shall become members of the acquiring company, unless they have disposed of their shares as referred to in Article 126a(1);
the company being acquired shall cease to exist.’;
in paragraph 2, points (a) and (b) are replaced by the following:
all the assets and liabilities of the merging companies, including all contracts, credits, rights and obligations, shall be transferred to the new company;
the members of the merging companies shall become members of the new company, unless they have disposed of their shares as referred to in Article 126a(1);’;
Article 132 is amended as follows:
paragraph 1 is replaced by the following:
Where a cross-border merger by acquisition is carried out either by a company which holds all the shares and other securities conferring the right to vote at general meetings of the company or companies being acquired or by a person who holds directly or indirectly all the shares in the acquiring company and in the company or companies being acquired, and the acquiring company does not allot any shares under the merger:
the following paragraph is added:
Article 133 is amended as follows:
in paragraph 2, the introductory part is replaced by the following:
in paragraph 4, point (a) is replaced by the following:
shall confer on the relevant bodies of the merging companies, in the event that at least one of the merging companies is operating under an employee participation system within the meaning of point (k) of Article 2 of Directive 2001/86/EC, the right to choose without any prior negotiation to be directly subject to the standard rules for participation referred to in point (b) of Part 3 of the Annex to that Directive, as laid down by the legislation of the Member State in which the company resulting from the cross-border merger is to have its registered office, and to abide by those rules from the date of registration;’;
paragraph 7 is replaced by the following:
the following paragraph is added:
the following Article is inserted:
‘Article 133a
Independent experts
Member States shall have rules in place to ensure that:
the expert, or the legal person on whose behalf the expert is operating, is independent from and has no conflict of interest with the company applying for the pre-merger certificate; and
the expert’s opinion is impartial and objective, and is given with a view to providing assistance to the competent authority in accordance with the independence and impartiality requirements under the law and professional standards to which the expert is subject.’;
in Article 134, the following paragraph is added:
‘The first paragraph does not affect Member States' powers, inter alia, in relation to criminal law, the prevention and combatting of terrorist financing, social law, taxation and law enforcement, to impose measures and penalties, under national law, after the date on which the cross-border merger took effect.’;
in Title II, the following Chapter is added:
‘CHAPTER IV
Cross-border divisions of limited liability companies
Article 160a
Scope
Member States shall ensure that this Chapter does not apply to companies in either of the following circumstances:
the company is in liquidation and has begun to distribute assets to its members;
the company is subject to resolution tools, powers and mechanisms provided for in Title IV of Directive 2014/59/EU.
Member States may decide not to apply this Chapter to companies which are:
the subject of insolvency proceedings or subject to preventive restructuring frameworks;
the subject of liquidation proceedings other than those referred to in point (a) of paragraph 4; or
the subject of crisis prevention measures as defined in point (101) of Article 2(1) of Directive 2014/59/EU.
Article 160b
Definitions
For the purposes of this Chapter:
“company” means a limited liability company of a type listed in Annex II;
“company being divided” means a company which, in the process of a cross-border division, transfers all its assets and liabilities to two or more companies in the case of a full division, or transfers part of its assets and liabilities to one or more companies in the case of a partial division or division by separation;
“recipient company” means a company newly formed in the course of a cross-border division;
“division” means an operation whereby:
a company being divided, on being dissolved without going into liquidation, transfers all its assets and liabilities to two or more recipient companies, in exchange for the issue to the members of the company being divided of securities or shares in the recipient companies and, if applicable, a cash payment not exceeding 10 % of the nominal value, or, in the absence of a nominal value, a cash payment not exceeding 10 % of the accounting par value of those securities or shares (“full division”);
a company being divided transfers part of its assets and liabilities to one or more recipient companies, in exchange for the issue to the members of the company being divided of securities or shares in the recipient companies, in the company being divided or in both the recipient companies and the company being divided, and, if applicable, a cash payment not exceeding 10 % of the nominal value, or, in the absence of a nominal value, a cash payment not exceeding 10 % of the accounting par value of those securities or shares (“partial division”); or
a company being divided transfers part of its assets and liabilities to one or more recipient companies, in exchange for the issue to the company being divided of securities or shares in the recipient companies (“division by separation”).
Article 160c
Procedures and formalities
In compliance with Union law, the law of the Member State of the company being divided shall govern those parts of the procedures and formalities to be complied with in connection with the cross-border division in order to obtain the pre-division certificate, and the laws of the Member States of the recipient companies shall govern those parts of the procedures and formalities to be complied with following receipt of the pre-division certificate.
Article 160d
Draft terms of cross-border divisions
The administrative or management body of the company being divided shall draw up the draft terms of a cross-border division. The draft terms of a cross-border division shall include at least the following particulars:
the legal form and name of the company being divided and the location of its registered office, and the legal form and name proposed for the new company or companies resulting from the cross-border division and the proposed location of their registered offices;
the ratio applicable to the exchange of securities or shares representing the companies’ capital and the amount of any cash payment, where appropriate;
the terms for the allotment of securities or shares representing the capital of the recipient companies or of the company being divided;
the proposed indicative timetable for the cross-border division;
the likely repercussions of the cross-border division on employment;
the date from which the holding of securities or shares representing the companies' capital will entitle the holders to share in profits, and any special conditions affecting that entitlement;
the date or dates from which the transactions of the company being divided will be treated for accounting purposes as being those of the recipient companies;
any special advantages granted to members of the administrative, management, supervisory or controlling bodies of the company being divided;
the rights conferred by the recipient companies on members of the company being divided enjoying special rights or on holders of securities other than shares representing the divided company capital, or the measures proposed concerning them;
the instruments of constitution of the recipient companies, where applicable, and the statutes if they are contained in a separate instrument, and any changes to the instrument of constitution of the company being divided in the case of a partial division or a division by separation;
where appropriate, information on the procedures by which arrangements for the involvement of employees in the definition of their rights to participation in the recipient companies are determined pursuant to Article 160l;
a precise description of the assets and liabilities of the company being divided and a statement of how those assets and liabilities are to be allocated between the recipient companies, or are to be retained by the company being divided in the case of a partial division or a division by separation, including provisions on the treatment of assets or liabilities not explicitly allocated in the draft terms of cross-border division, such as assets or liabilities which are unknown on the date on which the draft terms of cross-border division are drawn up;
information on the evaluation of the assets and liabilities which are to be allocated to each company involved in the cross-border division;
the date of the accounts of the company being divided used to establish the conditions of the cross-border division;
where appropriate, the allocation to the members of the company being divided of shares and securities in the recipient companies, in the company being divided or in both, and the criterion upon which such allocation is based;
details of the offer of cash compensation for members in accordance with Article 160i;
any safeguards offered to creditors, such as guarantees or pledges.
Article 160e
Report of the administrative or management body for members and employees
It shall, in particular, explain the implications of the cross-border division for the future business of the companies.
The company may decide either to draw up one report containing those two sections or to draw up separate reports for members and employees, respectively, containing the relevant section.
The section of the report for members shall, in particular, explain the following:
the cash compensation and the method used to determine the cash compensation;
the share exchange ratio and the method or methods used to arrive at the share exchange ratio, where applicable;
the implications of the cross-border division for members;
the rights and remedies available to members in accordance with Article 160i.
The section of the report for employees shall, in particular, explain the following:
the implications of the cross-border division for employment relationships, as well as, where applicable, any measures for safeguarding those relationships;
any material changes to the applicable conditions of employment or to the location of the company’s places of business;
how the factors set out in points (a) and (b) affect any subsidiaries of the company.
Article 160f
Independent expert report
The report referred to in paragraph 1 shall in any case include the expert’s opinion as to whether the cash compensation and the share exchange ratio are adequate. When assessing the cash compensation, the expert shall consider any market price of the shares in the company being divided prior to the announcement of the division proposal or the value of the company excluding the effect of the proposed division, as determined in accordance with generally accepted valuation methods. The report shall at least:
indicate the method or methods used to determine the cash compensation proposed;
indicate the method or methods used to arrive at the share exchange ratio proposed;
state whether the method or methods are adequate for the assessment of the cash compensation and the share exchange ratio, indicate the value arrived at using such methods and give an opinion on the relative importance attributed to those methods in arriving at the value decided on; and
describe any special valuation difficulties which have arisen.
The expert shall be entitled to obtain from the company being divided all information necessary for the discharge of the duties of the expert.
Member States may exclude single-member companies from the application of this Article.
Article 160g
Disclosure
Member States shall ensure that the following documents are disclosed by the company and made publicly available in the register of the Member State of the company being divided, at least one month before the date of the general meeting referred to in Article 160h:
the draft terms of the cross-border division; and
a notice informing the members, creditors and representatives of the employees of the company being divided, or, where there are no such representatives, the employees themselves, that they may submit to the company, at the latest five working days before the date of the general meeting, comments concerning the draft terms of the cross-border division.
Member States may require that the independent expert report be disclosed and made publicly available in the register.
Member States shall ensure that the company is able to exclude confidential information from the disclosure of the independent expert report.
The documents disclosed in accordance with this paragraph shall be also accessible through the system of interconnection of registers.
However, Member States shall not subject that exemption to any requirements or constraints other than those which are necessary to ensure the security of the website and the authenticity of the documents, and which are proportionate to achieving those objectives.
Where the company being divided makes the draft terms of the cross-border division available in accordance with paragraph 2 of this Article, it shall submit to the register, at least one month before the date of the general meeting referred to in Article 160h, the following information:
the legal form and name of the company being divided and the location of its registered office and the legal form and name proposed for the newly created company or companies resulting from the cross-border division and the proposed location of their registered office;
the register in which the documents referred to in Article 14 are filed in respect of the company being divided, and its registration number in that register;
an indication of the arrangements made for the exercise of the rights of creditors, employees and members; and
details of the website from which the draft terms of the cross-border division, the notice referred to in paragraph 1, the independent expert report and complete information on the arrangements referred to in point (c) of this paragraph may be obtained online and free of charge.
The register shall make publicly available the information referred to in points (a) to (d) of the first subparagraph.
Member States shall further ensure that any fees charged to the company by the registers for the disclosure referred to in paragraphs 1 and 3 and, where applicable, for the publication referred to in paragraph 5 do not exceed the recovery of the cost of providing such services.
Article 160h
Approval by the general meeting
Member States shall ensure that the approval of the cross-border division by the general meeting cannot be challenged solely on the following grounds:
the share exchange ratio referred to in point (b) of Article 160d has been inadequately set;
the cash compensation referred to in point (p) of Article 160d has been inadequately set; or
the information given with regard to the share exchange ratio referred to in point (a) or the cash compensation referred to in point (b) did not comply with the legal requirements.
Article 160i
Protection of members
Member States may also provide for other members of the company being divided to have the right referred to in the first subparagraph.
Member States may require that express opposition to the draft terms of the cross‐border division, the intention of members to exercise their right to dispose of their shares, or both, be appropriately documented at the latest at the general meeting referred to in Article 160h. Member States may allow the recording of opposition to the draft terms of the cross-border division to be considered proper documentation of a negative vote.
Member States may provide that the final decision to provide additional cash compensation is valid for all members of the company being divided who have declared their decision to exercise the right to dispose of their shares in accordance with paragraph 2.
Article 160j
Protection of creditors
Member States shall ensure that creditors who are dissatisfied with the safeguards offered in the draft terms of the cross-border division, as provided for in point (q) of Article 160d, may apply, within three months of the disclosure of the draft terms of cross-border division referred to in Article 160g, to the appropriate administrative or judicial authority for adequate safeguards, provided that such creditors can credibly demonstrate that, due to the cross-border division, the satisfaction of their claims is at stake and that they have not obtained adequate safeguards from the company.
Member States shall ensure that the safeguards are conditional on the cross-border division taking effect in accordance with Article 160q.
Article 160k
Employee information and consultation
Article 160l
Employee participation
However, the rules in force concerning employee participation, if any, in the Member State where the company resulting from the cross-border division has its registered office shall not apply where the company being divided has, in the six months prior to the disclosure of the draft terms of the cross-border division, an average number of employees equivalent to four fifths of the applicable threshold, as laid down in the law of the Member State of the company being divided, for triggering the participation of employees within the meaning of point (k) of Article 2 of Directive 2001/86/EC, or where the national law applicable to each of the recipient companies does not:
provide for at least the same level of employee participation as operated in the company being divided prior to its cross-border division, measured by reference to the proportion of employee representatives among the members of the administrative or supervisory body or their committees or of the management group which covers the profit units of the company, subject to employee representation; or
provide for employees of establishments of the recipient companies that are situated in other Member States the same entitlement to exercise participation rights as is enjoyed by those employees employed in the Member State where the recipient company has its registered office.
In the cases referred to in paragraph 2 of this Article, the participation of employees in the companies resulting from the cross-border division and their involvement in the definition of such rights shall be regulated by the Member States, mutatis mutandis and subject to paragraphs 4 to 7 of this Article, in accordance with the principles and procedures laid down in Article 12(2) and (4) of Regulation (EC) No 2157/2001 and the following provisions of Directive 2001/86/EC:
Article 3(1), points (a)(i) and (b) of Article 3(2), Article 3(3), the first two sentences of Article 3(4), and Article 3(5) and (7);
Article 4(1), points (a), (g) and (h) of Article 4(2), and Article 4(3) and (4);
Article 5;
Article 6;
Article 7(1), with the exception of the second indent of point (b);
Articles 8, 10, 11 and 12; and
point (a) of Part 3 of the Annex.
When regulating the principles and procedures referred to in paragraph 3, Member States:
shall confer on the special negotiating body the right to decide, by a majority of two thirds of its members representing at least two thirds of the employees, not to open negotiations or to terminate negotiations already opened and to rely on the rules on participation in force in the Member States of each of the recipient companies;
may, in the case where, following prior negotiations, standard rules for participation apply and notwithstanding such rules, decide to limit the proportion of employee representatives in the administrative body of the recipient companies. However, if, in the company being divided, employee representatives constituted at least one third of the administrative or supervisory body, the limitation may never result in a lower proportion of employee representatives in the administrative body than one third;
shall ensure that the rules on employee participation that applied prior to the cross-border division continue to apply until the date of application of any subsequently agreed rules or, in the absence of agreed rules, until the application of standard rules in accordance with point (a) of Part 3 of the Annex to Directive 2001/86/EC.
Article 160m
Pre-division certificate
Such completion of procedures and formalities may comprise the satisfaction or securing of pecuniary or non-pecuniary obligations due to public bodies or compliance with specific sectoral requirements, including securing obligations arising from ongoing proceedings.
Member States shall ensure that the application to obtain a pre-division certificate by the company being divided is accompanied by the following:
the draft terms of the cross-border division;
the report and the appended opinion, if any, referred to in Article 160e, as well as the report referred to in Article 160f, where they are available;
any comments submitted in accordance with Article 160g(1); and
information on the approval by the general meeting referred to in Article 160h.
Member States may require that the application to obtain a pre-division certificate by the company being divided is accompanied by additional information, such as, in particular:
the number of employees at the time of the drawing up of the draft terms of the cross-border division;
the existence of subsidiaries and their respective geographical location;
information regarding the satisfaction of obligations due to public bodies by the company being divided.
For the purposes of this paragraph, competent authorities may request such information, if not provided by the company being divided, from other relevant authorities.
As part of the scrutiny referred to in paragraph 1, the competent authority shall examine the following:
all documents and information submitted to the competent authority in accordance with paragraphs 2 and 3;
an indication by the company being divided that the procedure referred to in Article 160l(3) and (4) has started, where relevant.
Member States shall ensure that the scrutiny referred to in paragraph 1 is carried out within three months of the date of receipt of the documents and information concerning the approval of the cross-border division by the general meeting of the company being divided. That scrutiny shall have one of the following outcomes:
where it is determined that the cross-border division complies with all the relevant conditions and that all necessary procedures and formalities have been completed, the competent authority shall issue the pre-division certificate;
where it is determined that the cross-border division does not comply with all the relevant conditions or that not all necessary procedures and formalities have been completed, the competent authority shall not issue the pre-division certificate and shall inform the company of the reasons for its decision; in that case, the competent authority may give the company the opportunity to fulfil the relevant conditions or to complete the procedures and formalities within an appropriate period of time.
Article 160n
Transmission of the pre-division certificate
Member States shall also ensure that the pre-division certificate is available through the system of interconnection of registers.
Article 160o
Scrutiny of the legality of the cross-border division
That authority or authorities shall in particular ensure that the recipient companies comply with provisions of national law on the incorporation and registration of companies and, where appropriate, that arrangements for employee participation have been determined in accordance with Article 160l.
Article 160p
Registration
Member States shall ensure that at least the following information is entered in their registers:
in the register of the Member States of the recipient companies, that the registration of the recipient company is the result of a cross-border division;
in the register of the Member States of the recipient companies, the dates of registration of the recipient companies;
in the register of the Member State of the company being divided in the event of a full division, that the striking off or removal of the company being divided from the register is the result of a cross-border division;
in the register of the Member State of the company being divided in the event of a full division, the date of striking off or removal of the company being divided from the register;
in the registers of the Member State of the company being divided and of the Member States of the recipient companies, respectively, the registration number, name and legal form of the company being divided and of the recipient companies.
The registers shall make the information referred to in the first subparagraph publicly available and accessible through the system of interconnection of registers.
Article 160q
Date on which the cross-border division takes effect
The law of the Member State of the company being divided shall determine the date on which the cross-border division takes effect. That date shall be after the scrutiny referred to in Articles 160m and 160o has been carried out and after the registers have received all notifications referred to in Article 160p(3).
Article 160r
Consequences of a cross-border division
A cross-border full division shall, from the date referred to in Article 160q, have the following consequences:
all the assets and liabilities of the company being divided, including all contracts, credits, rights and obligations, shall be transferred to the recipient companies in accordance with the allocation specified in the draft terms of the cross‐border division;
the members of the company being divided shall become members of the recipient companies in accordance with the allocation of shares specified in the draft terms of the cross-border division, unless they have disposed of their shares as referred to in Article 160i(1);
the rights and obligations of the company being divided arising from contracts of employment or from employment relationships and existing at the date on which the cross-border division takes effect shall be transferred to the recipient companies;
the company being divided shall cease to exist.
A cross-border partial division shall, from the date referred to in Article 160q, have the following consequences:
part of the assets and liabilities of the company being divided, including contracts, credits, rights and obligations, shall be transferred to the recipient company or companies, while the remaining part shall continue to be that of the company being divided in accordance with the allocation specified in the draft terms of the cross-border division;
at least some of the members of the company being divided shall become members of the recipient company or companies and at least some of the members shall remain in the company being divided or shall become members of both in accordance with the allocation of shares specified in the draft terms of the cross-border division, unless those members have disposed of their shares as referred to in Article 160i(1);
the rights and obligations of the company being divided arising from contracts of employment or from employment relationships and existing at the date on which the cross-border division takes effect, allocated to the recipient company or companies under the draft terms of the cross-border division, shall be transferred to the respective recipient company or companies.
A cross-border division by separation shall, from the date referred to in Article 160q, have the following consequences:
part of the assets and liabilities of the company being divided, including contracts, credits, rights and obligations, shall be transferred to the recipient company or companies, while the remaining part shall continue to be that of the company being divided, in accordance with the allocation specified in the draft terms of the cross-border division;
the shares of the recipient company or companies shall be allocated to the company being divided;
the rights and obligations of the company being divided arising from contracts of employment or from employment relationships and existing at the date on which the cross-border division takes effect, allocated to the recipient company or companies under the draft terms of the cross-border division, shall be transferred to the respective recipient company or companies.
Article 160s
Simplified formalities
Where a cross-border division is carried out as a division by separation, points (b), (c), (f), (i), (o) and (p) of Article 160d and Articles 160e, 160f and 160i shall not apply.
Article 160t
Independent experts
Member States shall have rules in place to ensure that:
the expert, or the legal person on whose behalf the expert is operating, is independent from and has no conflict of interest with the company applying for the pre-division certificate; and
the expert’s opinion is impartial and objective, and is given with a view to providing assistance to the competent authority in accordance with the independence and impartiality requirements under the law and professional standards to which the expert is subject.
Article 160u
Validity
A cross-border division which has taken effect in compliance with the procedures transposing this Directive may not be declared null and void.
The first paragraph does not affect Member States’ powers, inter alia, in relation to criminal law, the prevention and combatting of terrorist financing, social law, taxation and law enforcement, to impose measures and penalties, under national law, after the date on which the cross-border division took effect.’;
the title of Annex II is replaced by the following:
‘Types of companies referred to in Articles 7(1), 13, 29(1), 36(1), 67(1), points (1) and (2) of Article 86b, point (a) of Article 119(1), and point (1) of Article 160b’.
Article 2
Penalties
Member States shall lay down the rules on measures and penalties to infringements of national provisions adopted pursuant to this Directive and shall take all measures necessary to ensure that they are implemented. Member States may provide for criminal penalties for serious infringements.
The measures and penalties provided for shall be effective, proportionate and dissuasive.
Article 3
Transposition
When Member States adopt those measures, they shall contain a reference to this Directive or shall be accompanied by such a reference on the occasion of their official publication. The methods of making such reference shall be laid down by Member States.
Article 4
Reporting and review
Member States shall provide the Commission with the information necessary for the preparation of that report, in particular by providing data on the number of cross-border conversions, mergers and divisions, their duration and related costs, data on the cases in which a pre-operation certificate was refused, as well as statistical aggregated data on the number of negotiations on employee participation rights in cross-border operations. The Member States shall also provide the Commission with data on the functioning and effects of jurisdiction rules applicable in cross-border operations.
Article 5
Entry into force
This Directive shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.
Article 6
Addressees
This Directive is addressed to the Member States.