Freedom of establishment and cross-border merging

• Author: Felicia Bejan
• Position: The Bucharest University of Economic Studies, Department of Law
• Pages: 1-7

AGORA International Journal of Juridical Sciences, www.juridicalj ournal.univagora.ro

ISSN 1843-570X, E-ISSN 2067-7677

No. 2 (2012), pp. 1-7

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FREEDOM OF ESTABLISHMENT AND CROSS-BORDER MERGING

F. Bejan

Felicia Bejan

The Bucharest University of Economic Studies, Department of Law

*Correspondence: Felicia Bejan, Faculty of Political Science, 24 Sfântul tefan St. Bucharest,

Romania

E-mail: felicia.bejan@fspub.unibuc.ro

Abstract

According to the dispositions of the institutive treaties of the European Union, the

freedom of establishment of companies is essential for the functioning of the internal market.

Based on the importance of the companies’ mobility in the European space, the present paper

aims to analyze the contribution of the Directive 2005/56 on cross-border mergers of share

companies to transform the freedom of establishment of companies on the communitarian

territory, from theoretical principle to reality. The solution that the Directive on cross-border

mergers suggests to overcome the obstacle of the laws conflict and its extended domain of

application, have been particularly taken into account,

Keywords

:

freedom of establishment, cross-border merger, juridical regime, share

companies



Introduction

Cross-border merging was always considered by entrepreneurs as an optimum

instrument to exercise freedom of establishment, as it allows them to both concentrate their

activity, to reorganize themselves or to merely simplify the group’s structure, depending on

the particular individual situation.

On the other hand, the Jurisprudence of the Court of Justice regarding the freedom of

establishment stressed that “cross-border mergers represent specific methods to exercise the

freedom of establishment, essential to operate properly on the internal market and, as such,

are among those economic activities regarding which Member States must ensure the freedom

of establishment imposed by the Community Treaties”

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.

The solutions identified by companies and confirmed by the Court of Justice were

found, unfortunately rather late, in a coherent legal framework on the Community level, able

to remove the legal obstacles blocking the implementation of cross-border mergers in the

Community.

Directive 2005/56 regarding cross-border mergers of share companies

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established a

uniform legal framework for these operations. As a result, cross-border mergers of share

companies became an important juridical tool to ensure the mobility of companies inside the

European Union.

The positive evolution of cross-border mergers after the adoption of the Directive is

equally due to the legislative context and the evolution of the community’s jurisprudence that

appeared in this domain. Thus, the harmonization of domestic mergers under Directive

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The Decision Court of Justice of the European Union (CJEU) of December 13, 2005, case C-411/2003, SEVIC

System AG c. David Halsey (Her Majesty’s Inspector of Taxes).

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Published in the Official Journal of the European Union, L. 310/2 5.11.2005.