Out-Law News 3 min. read

Ireland adopts new regulations to enhance corporate cross-border EU mobility

Companies established in other EU member states can convert to an Irish registered entity and merge with Irish companies with ease and more certainty, as Ireland has transposed a new EU directive into law to enhance cross-border mobility within the single market.

Ireland’s new Mobility Regulations (96 pages /593 KB PDF), which were enacted on 24 May, are set to provide a harmonised legal framework governing cross-border conversions and a simplified procedure governing cross-border mergers within the EU. The pre-existing cross-border division rules have also been changed to allow Irish companies to divide their assets and liabilities into new companies in other member states.

The regulations have been made to incorporate the EU directive concerning cross-border conversions, divisions and mergers (the Mobility Directive) into Irish law. The directive is part of efforts by the EU to enhance cross-border mobility and better facilitate freedom of establishment within the single market and further harmonise the current framework applicable to cross-border mergers.

Legal experts said that the new Irish regulations are a welcome development for multinational companies, which can now consider Ireland with more certainty when weighing up their future cross-border structuring options in the EU.

“Limited liability companies incorporated in other member states can now relocate to Ireland with an Irish registered office and nationality,” said Neil Keenan, Dublin-based corporate law expert at Pinsent Masons.

At the same time, the process for Irish companies to relocate to other member states is more streamlined.

“Previously, Irish companies wishing to relocate their registered office cross-border had to rely on individual member state laws which were sometimes incompatible. The Mobility Regulations facilitate an Irish company to engage in a cross-border conversion while retaining its legal personality, therefore changing its registered office and nationality without affecting the company assets, liabilities, contracts or members. But the law of the relevant member state still applies to the employees of the converted company,” he said.

The previous regime governing EU cross-border mergers, which was in place in Ireland since 2008, has been replaced with a new and simpler procedure under the new regulations.

“The new procedure provides more efficiency and effectiveness while increasing employee, creditor and minority shareholder protection,” said corporate law expert Clare McCourt of Pinsent Masons.

She added that the regulations have also updated the existing cross-border division rules to allow companies to divide their assets and liabilities into new companies in other member states.  

A key feature of the new regulations is that the procedures in respect of cross-border conversions, mergers and divisions have a shared framework, McCourt said.

“These procedures are somewhat similar to those of the cross-border merger process published in 2008. But the new rules reiterate that certain steps shall not be required for cross-border mergers by acquisition, such as certain provisions within the common draft terms, the approval by general meeting, the directors’ explanatory report and the expert’s report,” she said.

As a key part of the procedures, Irish companies in the process of a cross-border conversion, merger or division are required to obtain a pre-conversion, merger or division certificate from the Irish High Court. This step involves a certain level of uncertainty, according to Keenan.

“When assessing whether or not to issue a certificate, the Irish High Court has to determine if the relevant application is being carried out for abusive or fraudulent purposes and if so, the certificate will be denied. There is some uncertainty in respect of how this process will be dealt with by the Irish High Court and we await guidance in this respect,” he said.

The EU Mobility Directive will ultimately be implemented throughout the EU. However, different member states will adopt the rules at different times notwithstanding that the deadline for implementation was 31 January 2023. The various approaches different member states intend to take to deal with the transitional period are expected to create an additional layer of uncertainty and complication for multinational companies.

“There’s some legal uncertainty as to how the new regime will work in relation to transactions involving other member states where the Mobility Directive has not been transposed. The guidance expected from the Irish Companies Registration Office in respect of the outcome of such transactions will hopefully provide some answers,” said Keenan.

The Irish Mobility Regulations took effect on 24 May, although some provisions took effect from 26 May. As part of the transitional measures in Ireland, where the relevant documents have been submitted to the Irish Companies Registration Office before 24 May, the previous Irish regime will apply to that cross-border merger.

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