Liability Companies) Regulations 2008

L.N. 165 of 2008

EMPLOYMENT AND INDUSTRIAL RELATIONS ACT, 2002

(CAP. 452)

Employee Involvement (Cross-Border Mergers of Limited

Liability Companies) Regulations 2008

IN exercise of the powers conferred by article 48 of the Employment

and Industrial Relations Act, 2002, the Minister for Social Policy has

made the following regulations –

(1) The title of these regulations is the Employee Involvement

(Cross-Border Mergers of Limited Liability Companies) Regulations,

2008. (2) These regulations establish the arrangements for the

involvement of employees in cross-border mergers of limited liability

companies hereby giving effect to the relevant provisions of Directive

2005#56#EC of the European Parliament and of the Council of the 26 th

October 2005 on cross-border mergers of limited liability companies,

hereinafter referred to as “the Directive”.

(1) For the purpose of these regulations>

“the Act” means the Employment and Industrial Relations

Act<

“company” and “merger” have the same meaning assigned to

them by the Companies Act and by regulations issued thereunder<

“cross-border merger” has the same meaning assigned to it

by the Companies Act and by regulations issued thereunder and

includes any merger of companies formed in accordance with the

law of a Member State and having their registered office, central

administration or principal place of business within the Community,

provided at least two of such companies are governed by the laws

of different Member States<

“involvement of employees” means any mechanism,

including information, consultation and participation, through

which employees’ representatives may exercise an influence on

decisions to be taken within an undertaking<

“Maltese employee” means an employee employed by an

undertaking established in Malta<

“Member State” means a member state of the European Union

or the European Economic Area<

“merging companies” has the same meaning assigned to it

by the Companies Act and by regulations issued thereunder and

includes all the companies taking part in a cross-border merger,

including an acquiring company<

“participation” means the influence of the body representative

of the employees or the employees’ representatives, or both, in the

affairs of a legal entity by way of>

(a) the right to elect or appoint some of the members

of the legal entity’s supervisory or administrative organ, or

(b) the right to recommend or oppose, or both, the

appointment of some or all of the members of the legal entity’s

supervisory or administrative organ.

(2) Subject to the provisions of sub-regulation (1) of this

regulation, terms and expressions used in these regulations shall, unless

the context otherwise requires, have the meaning assigned to them in

the Act.

(3) In the absence of a definition given in these regulations,

words and expressions used in these regulations which are also used in

the Directive shall have the same meaning as they have in the same

Directive.

These regulations shall apply to mergers of companies formed Applicability.

in accordance with the law of a Member State and having their registered

office, central administration or principal place of business within the

Community, provided at least two of such companies are governed by

the laws of different Member States and provided further that at least

one of the merging companies, or the company resulting from the merger,

is registered in Malta.

Representatives of employees are entitled to receive, by the Report.

board of directors of the Maltese merging company, and to deliver,

within a reasonable time, an opinion on, the report of the board of

directors of the Maltese merging company drawn up in terms of

regulation 8 of the Cross-Border Mergers of Limited Liability

L.N. 415 of 2007.

Companies Regulations, 2007 issued under the Companies Act.

Without prejudice to article 38 of the Act and to the Transfer Transfer of rights

and obligations.

of Business (Protection of Employment) Regulations, 2002, the rights L.N. 433 of 2002.

and obligations arising from contracts of employment or employment

relationships between employees of the merging companies and the

merging companies and existing at the date on which the cross-border

merger takes effect shall, by reason of that cross-border merger taking

effect, be transferred to the company resulting from the cross-border

merger on the date on which the cross-border merger takes effect.

In a cross-border merger of limited liability companies,

employees’ rights to information and consultation shall remain subject

to the Collective Redundancies (Protection of Employment) Regulations,

2002, article 38 of the Act, the Transfer of Business (Protection of

Employment) Regulations, 2002, the Employee (Information and

Consultation) Regulations, 2006 and the European Works Council

Regulations, 2004.

(1) Subject to sub-regulation (2) of this regulation, the

company resulting from the cross-border merger shall be subject to the

rules in force concerning employee participation, if any, in the Member

State where it has its registered office.

(2) Notwithstanding sub-regulation (1) of this regulation,

the rules in force concerning employee participation, if any, in the

Member State where the company resulting from the cross-border

merger has its registered office, shall not apply>

(a) where at least one of the merging companies has, in the

six months before the publication of the draft terms of the cross-

border merger in accordance with the directive, an average number

of employees that exceeds 500 and is operating under an employee

participation system< or

(b) where the national law applicable to the company

resulting from the cross-border merger does not provide for at least

the same level of employee participation as operated in the relevant

merging companies>

Provided that the level of employee participation is measured

by reference to the proportion of employee representatives amongst

the members of the administrative or supervisory organ or their

committees or of the management group which covers the profit

units of the company, subject to employee representation< or

(c) where the national law applicable to the company

resulting from the cross-border merger does not provide for

employees of establishments of the company resulting from the

cross-border merger that are situated in other Member States the

same entitlements to exercise participation rights as is enjoyed by

those employees employed in the Member State where the company

resulting from the cross-border merger has its registered office.

(3) In the cases mentioned in paragraphs (a), (b) and (c) of

sub- regulation (2) of this regulation, the participation of employees in

the company resulting from the cross-border merger and their

involvement in the definition of such rights shall be regulated in

accordance with the principles and procedures laid down in article 12

(2), (3) and (4) of EC Regulation No. 2157#2001 on the Statute for a

European Company and in accordance with the following provisions

of the Employee Involvement (European Company) Regulations, 2004> L.N. 452 of 2004.

(a) sub-regulations (1), (2), (3) and (4) of regulation 3, sub-

regulation (1) of regulation 4, regulation 5 and sub-regulations

(1), (2), (3) (a), (4), (5) and (6) of regulation 6 and regulation 8 (3)<

(b) sub-regulation (1), paragraphs (a), (g), and (h) of sub-

regulation (4) and sub-regulation (5) of regulation 8<

(c)

regulation 8 (2)<

(d) regulation 9<

(e)

sub-regulations (1), (2) (b) and (3) of regulation 10>

Provided that for the purposes of these regulations, the

percentages required by sub-regulation (2) (b) of regulation 10 for

the application of the Standard Rules on Participation set out in

the Schedule shall be 33 1 # 3 %<

(f)

regulations 11, 13, 15, 17<

(g) regulation 16 (4)< and

(h) paragraph 4 (b) of Part 3 of the Schedule.

(4) In the cases where sub-regulations (2) and (3) apply,

(a) the relevant organs of the merging companies have the

right to choose without any prior negotiation to be directly subject

to paragraph 4 (b) of Part 3 of the Schedule in the Employee

Involvement (European Company) Regulations, 2004 and to abide

by the same from the date of registration<

(b) the special negotiating body has the right to decide, by

a majority of two thirds of its members representing at least two

thirds of the employees, including the votes of members

representing employees in at least two different Member States,

not to open negotiations or to terminate negotiations already opened

and to rely on the rules on participation in force in the Member

State where the registered office of the company resulting from

the cross-border merger will be situated.

(5) When at least one of the merging companies is operating

under an employee participation system and the company resulting from

the cross-border merger is to be governed by such a system in accordance

with sub-regulation (2) of this regulation, that company shall be obliged

to take a legal form allowing for the exercise of participation rights.

(6) When the company resulting from the cross-border

merger is operating under an employee participation system, the

company shall take measures to ensure that its employees’ participation

rights are protected in the event of subsequent domestic mergers for a

period of three years after the cross-border merger has taken effect by

applying this regulation.

Any person who fails to comply with any obligation imposed

on such person under these regulations shall be guilty of an offence and

shall, on conviction, be liable to a fine (multa) of not less than one

thousand and one hundred and sixty-four euro and sixty-nine cents

(€1,164.69) and not more than eleven thousand and six hundred and

forty-six euro and eighty-seven cents (€11, 646.87).

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