424 12 Acquisition of Shares in a Privately-owned Company for Cash
formation and consultation can be found not only in EU labour law^62 but also in
EU company law and capital markets law.
For example, the likely effects of the merger on employment will have to be
addressed in the draft terms of merger^63 and in the report of the management or
administrative organ submitted to the general meeting.^64 In public takeover bids,
both the offeror and the offeree must disclose information about the effects of the
takeover on employment.^65
In cross-border mergers, employees’ participation rights raise further legal
questions, because the existing participation rights of employees can range from a
mandatory co-determination regime in Germany and the Netherlands to essentially
no participation rights in England. EU merger law has adopted a before-after prin-
ciple, according to which existing participation rights should be preserved after the
merger.^66 For SEs, the before-after provisions are based on the provisions of Di-
rective 2001/86/EC.^67 For other limited-liability companies, the before-after provi-
sions are based on the Directive on cross-border mergers.^68
In cross-border mergers, the competent authorities will scuritinise even the le-
gality of the arrangements for employee participation.^69
SE. SEs are subject to a more regulated employee involvement regime. Direc-
tive 2001/86/EC is designed to ensure that employees have a right of involvement
in issues and decisions affecting the life of their SE.^70
There is an information and consultation procedure at transnational level in all
cases of creation of an SE.^71 The SE Regulation contains numerous rules on the in-
formation and consultation of employees.^72
(^62) According to recital 12 of Directive 2005/56/EC (Directive on cross-border mergers),
employees’ rights other than rights of participation should remain subject to the national
provisions referred to in Directive 98/59/EC on collective redundancies, Directive
2001/23/EC on the safeguarding of employees’ rights in the event of transfers of under-
takings, businesses or parts of undertakings or businesses, Directive 2002/14/EC estab-
lishing a general framework for informing and consulting employees in the European
Community, and Directive 94/45/EC on the establishment of a European Works Council
or a procedure in Community-scale undertakings and Community-scale groups of under-
takings for the purposes of informing and consulting employees. See also recital 23 of
Directive 2004/25/EC (Directive on takeover bids).
(^63) Article 5(d) of Directive 2005/56/EC (Directive on cross-border mergers); Article 32(2)
of Regulation 2157/2001 (SE Regulation).
(^64) Article 7 of Directive 2005/56/EC (Directive on cross-border mergers).
(^65) Articles 3(1)(b), 4(2)(e), 6(1), 6(2), 6(3)(i), 8(2), 9(5) and 14 of Directive 2004/25/EC
(Directive on takeover bids).
(^66) Recital 7 of Directive 2001/86/EC; recital 13 of Directive 2005/56/EC (Directive on
cross-border mergers).
(^67) See in particular Articles 4 and 7.
(^68) Article 16 of Directive 2005/56/EC (Directive on cross-border mergers).
(^69) Article 11 of Directive 2005/56/EC (Directive on cross-border mergers).
(^70) Directive 2001/86/EC supplementing the Statute for a European company with regard to
the involvement of employees. Recital 21 and Article 1(4) of Regulation 2157/2001 (SE
Regulation).
(^71) Recital 6 of Directive 2001/86/EC.