On 25 November 2004 the Council agreed on the Commissions proposal for a Directive of the European Parliament and of the Council on
cross-border mergers of companies with share capital. The Directive would apply to the organizations having the status of a legal entity of limited liability. It is aimed primarily at companies which are not interested in forming an SE, i.e. for the most part small and mediumsized
enterprises. In the light of the proposal, the cross-border mergers in each Member State would be carried out under the rules applicable to mergers between companies governed
exclusively by the law of that Member State (domestic mergers). The Directive sets the rules of employees participation in a newly created company and states that the issue, under particular conditions, may be subject either to
the EU Member States national regulation or to mutatis mutandis application of the provisions of Regulation 2157/2001 and Directive
2001/86/EC (European Company Statute). The legal regulation of cross-border mergers is intended to fulfil the practical demand of business as well as to contribute to the competitiveness of Europe. To be adopted, the
proposed document still needs to undergo the procedures in the European Parliament.