As is well known, the period granted to Member States to transpose the Directive (EU) 2019/2121 as regards cross-border conversions, mergers and divisions in („Mobility Directive“) into domestic law has already expired on 31 January 2023. Unfortunately, none of the above mentioned three legislators has met the deadline.

Amongst those three „laggards“, Germany, whose Act on the Transposition of the Mobility Directive (Gesetz zur Umsetzung der Umwandlungsrichtlinie (UmRUG)) has entered into force on 1st March 2023 with a slight delay of one month, comes closest to the notion of a „Three-point landing“, at least in terms of scheduling (as regards content, few objections can be made to the UmRUG). The UmRUG has seized the opportunity granted by the Mobility Directive to amend also the existing legal framework of the German Transformation Act (Umwandlungsgesetz, „UmwG“) applicable to domestic transformations to the new rules hence applicable for cross-border conversions, mergers and divisions in order to avoid frictions between domestic and cross-border operations. Due to a transposition that partially exceeds the Directive’s requirements, as far as German law is concerned, the amended UmwG will also allow cross-border partial divisions involving existing companies. By doing so, it meets the needs of legal practice that shows a higher demand for this kind of divisions compared to divisions that involve the formation of new companies mandatorily imposed by the Mobility Directive. Form a tecnical point of view as well, the UmRUG can largely be regarded as a succes, also due to an intensive scientific support and review that accompanied the legislative process from the early drafting stage.

However, concerning all other types of transformations the German UmwG provides for, particularly those involving partnerships, will still be lacking a statutory framework. Certainly, they are also legally allowed due to the requirements derived from liberty of establishment. Because any type of transformations domestic law is granting voluntarily, must also be enabled unionwide in its cross-border variant. Nevertheless, they are lacking directly applicable rules which often leads to practical issues of coordination with the involved commercial registers. In practice however, these can usually be resolved. These kind of domestic transformations apllied analogously in ist cross-border variant even offer a certain benefit deriving from usually less burdensome procedural rules and rules on protection of members and creditors.

Due to the fact that a cross-border operation can only be performed if also the respectively other jurisdiction involved allows it, now the question arises as to the implementation status of the Mobility Directive in other EU/EEA legal orders. During the last month, both the Austrian and Spanish law-makers kept silence; at least preliminary works and drafts have not been debated publically and despite the high practical need of such cross-border operations, no cientific discussion took place. But it now seems there may be movement on this issue:

In the meanwhile, Austrian Government has published a Ministerial draft act in order to transpose the Mobility Directive. In the event no political holdups arise during legislative procedures it can be expected that in any event the transposed rules will enter into force within this year. As regards content, the scope of the current draft transposition act is limited to the strikt requirements imposed by the Directive. This is much to be regretted paticularly with regard to the variant of divisions involving existing companies so often demanded in practice. In our point of view, in the interets of all enterprises governed by its laws and in order to maintain their competitivity, the Austrian law-maker should reconsider this hesitant position. Because legally enabling cross-border operations does not only create a risk that domestic companies (respectively in the case of divisions parts of them) may escape Austrian law which especially in cross-border corporate groups has indeed shown sometimes to be difficult to handle. To the contrary, concering all inbound operations, it also offers the great advantage that foreign investors that are intending to transfer parts of other companies to pre-existing Austrian affiliates are enabled to put this (from a point of view of domestic economy) exlusively beneficial desire easily into practice, without being forced to evade to other legal constructions consisting of various stages of operations that result in higher complexity and thus costs.

So far, Spain as presented the most ambitious draft act in order to transpose the Mobility Directive. The draft Act on the Transformation of companies (Anteproyecto de Ley de modificaciones estructurales de sociedades mercantiles) recently published on 15/02/2023 provides for a complete recast of the existing Spanish Transformation Act (Ley 3/2009, de 3 de abril, sobre modificaciones estructurales de las sociedades mercantiles, “LME”). It pretends to design rules on domestic and cross-border operations homogenously to the largest extent possible. It is true that regrettably, the Spanish lawmaker likewise the German and Austrian ones, intends to limit the Act´s scope of application to companies, refusing the possibilities to perform such kind of operations consequently to partnerships. However, the draft Act shows the advantage that for any kind of transformation respectively operation domestic law provides for, its respective cross-border variant is also granted. As a consequence, exceeding the Mobility Directive´s requirements, in the future Spanish law will allow not only cross-border divisions involving already existing companies, but also segregations as well as the transfer of parts or all of the assets of companies. In addition, following the LME´s tradition, the draft Act offers the posssibility to perform all kind of operations provided for in the LME also on a cross-border basis involving companies governed by the laws of third countries.In the event the law applicable in the respective third country allows it too, in the future Spanish companies are granted the opportunity to perform cross-border conversions, mergers, divisions involving the formation of new or already existing companies, segregations and transfers of assets worldwide.

This exhaustive regulatory approach deserves respect and will certainly ensure that Spanish law and particularly Spanish forms of corporations will gain competitivity compared to such jurisdictions that use to limit their transpositions acts to the strictly necessary pursuant to Union law. But also from a dogmatic and systematic approach, mirroring all types of domestic operations also in its respective cross-border variant without exception represents the only possible way for domestic Transformation Acts, as the ECJ has emphasised several times that domestic law-makers are prevented from impeding such cross-border variants.

Florian Deck, 2. March 2023