EU Directive 2005/56/EC on cross-border mergers of limited liability companies, which introduces a facilitative framework for mergers between companies in different Member States of the European Economic Area, has been transposed in Estonia and Lithuania. The Latvian Cabinet of Ministers has also adopted amendments to the Commercial Law, although these are not yet in force. Lithuania is the only one of the Baltic States to have chosen to implement the Directive by adopting a new law, while Estonia and Latvia decided in favour of amending the existing legislative framework. It is expected that the legislation will facilitate cross-border mergers between businesses currently operating or planning to operate in two or three Baltic States, but unable or unwilling to form a European Company (SE).

      The purpose of the Directive and implementing legislation is to simplify the procedures and remove legal and administrative obstacles for mergers where at least one of the companies involved in a merger is registered in another Member State of the European Economic Area. Prior to implementation of the Directive, these cross-border mergers were impossible in the Baltic States, except through formation of a European Company (SE). Although the main steps and documents required for merger in general remain the same in all three Baltic States, the new legislation harmonises the process and implements some specific requirements set out by the Directive. For example, the merger documents drawn up and the main procedures carried out in the home state of a company taking part in a cross-border merger are verified by the authorities of that state. If all requirements have been complied with, the authority of the home Member State issues a certificate to that effect which must be submitted to the authorities of the Member State where the acquiring company is located and the merger may be finalised.

      Since the amendments to the Latvian Commercial Law have not been adopted yet, the table below outlines the implementation of optional provisions of the Cross-Border Directive in Estonia and Lithuania. See the table on page 2 Additional information: Laimonas Skibarka e-mail: laimonas.skibarka@sorainen.lt