EMPLOYEE INVOLVEMENT (CROSS-BORDER MERGERS OF LIMITED LIABILITY COMPANIES) REGULATIONS

SUBSIDIARY LEGISLATION 452.103

EMPLOYEE INVOLVEMENT (CROSS-BORDER

MERGERS OF LIMITED LIABILITY COMPANIES)

REGULATIONS

1st July, 2008

LEGAL NOTICE 165 of 2008.

(1) The title of these regulations is the Employee

Involvement (Cross-Border Mergers of Limited Liability

Companies) Regulations.

(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 26th October 2005 on cross-border mergers of

lim i te d l ia bi li ty c o mp a ni e s , he reinafter referr ed 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 subregulation (1), 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 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 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 Companies Regulations, issued under the Companies Act.

Without prejudice to article 38 of the Act and to the

Transfer of Business (Protection of Employment) Regulations, the

rights 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, article 38 of the Act, the Transfer of Business

(Protection of Employment) Regulations, the Employee

(Information and Consultation) Regulations, and the European

Works Council Regulations.

(1) Subject to sub-regulation (2), 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), 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 five hundred 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 sub-regulation (2)(a), (b) and (c),

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

acco rdance wi th t he fo llow ing p rov isions of th e Em plo yee

Involvement (European Company) Regulations

(a) regulation 3(1), (2), (3) and (4), regulation 4(1),

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

(6), and regulation 8(3);

(b) regulation 8(1), (4)(a), (g), and (h), and (5);

(c) regulation 8(2);

(d) regulation 9;

(e) regulation 10(1), (2)(b) and (3)

Provided that for the purposes of these regulations, the

percentages required by regulation 10(2)(b) 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, 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), 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).