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The Mobility Directive Goes Live in Ireland: New Merger, Conversion and Division Options for EU Companies

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.   

Matheson's View

Emma Doherty, partner in Matheson's International Business Group and member of the Company Law Review Group welcomes the arrival of these new measures, saying: "Transposition is good news for many multinationals assessing their future cross-border structuring options in the EU.  We look forward to analysing the legislation in detail and working with clients to unlock the potential of the new regime".

If you wish to discuss the Mobility Regulations or other company law matters, please get in contact with our International Business Group or with your usual Matheson contact.