Among the many new features of European company law at the end of the 2014-2019 legislative period is the cross-border division of companies. This structural modification is new in that Directive 2017/1132, of partial coding The Directive on company law only covers national divisions (former Sixth Directive).

Demerger is now included in the imminent directive dealing with cross-border transformation, mergers and divisions through the technique of amending Directive 3017/1132. The negotiation has been finalised, as well as the important legal linguistic process, so its final approval by the Parliament will allow its publication possibly in January 2020.

European companies will have a new instrument to optimise resources and thus their competitiveness. Demergers can be an effective legal tool for the territorial distribution of SMEs in line with market requirements, as well as for changing the structure of corporate groups, provided that employment is not weakened.

Spin-off is systematically seen as a speciality of the transformation. It underwent far-reaching changes right up to the end of the negotiations.

Its very definition was amended in trilogues to provide for three types: full division, partial division and spin-off. Articles 135 et seq. of Dir. 2017/1132 also provide for a national division by takeover.

A complete framework for cross-border divisions is therefore not established, but is limited to the creation of NewCo as a consequence of the process. Possible divisions where the beneficiaries, by way of takeover, are already incorporated companies are outside the scope of the Directive. Recital 8 justifies this limitation on the grounds of its complexity and the additional risk of circumvention of national and EU rules. It unnecessarily adds that companies should be able to directly establish subsidiaries in other Member States. In doing so, it introduces a further element into the non-existent, or rather non-harmonised, European group law.

The companies that are susceptible to division, as is generally the case in the context of the Directive, are exclusively capital companies, with the opt-in/out perimeter of Article 160a of the new Directive being applicable in relation to companies in liquidation and pre-insolvency. Harmonisation is based on the same principles as transformation, which, as indicated above, is the basic regulation, i.e.: it establishes ex ante and ex post control, with the Authority (to be designated by each State) issuing the certificate authorising the international division being essential; uniform criteria are established for the protection of workers and adapted to the singularity of the division, with regard to shareholders and creditors. Lastly, always in an essentially on-line process, it limits the effects of the change of lex societatis for the benefiting companies or at least one of them. It has to go through a process that culminates in obtaining a pre-divestment certificate from the competent authority of the company being divided. The certificate makes it possible to overcome the control of legality - anti-fraud, possible abuse or artifice - so that the completion of the process does not prevent the states involved in the spin-off, among others, from exercising criminal, terrorism, labour, tax and mandatory sanctioning powers after the final registration of the spin-off. At the same time, the forum of jurisdiction is maintained in the state of origin (that of the company being divided, even if it remains as such or as the beneficiary, as provided for in Brussels I and the current Article 86 k.4), although, in contrast to the conversion, the time period in which jurisdiction is modified for certain property actions is not limited.

In addition to the rights of employees (like Directive 2002/14/EC), shareholders who voted against - perimeter extendable by MS - will be able to ask for a right of separation or forced sale in cash and the remaining shareholders who did not vote in favour will be able to ask for cash compensation in case of an inadequate exchange ratio. This action will affect all resulting companies after registration.

However, the Directive does not provide for a specific asset regime for partial divisions or for the spin-off of assets. In the first case, the beneficiaries are the shareholders of the new company; in the second, the company itself and only indirectly the shareholders. Only the spun-off company is extinguished in the case of a total spin-off, even if it is in a state of dissolution, in which case it will follow the procedure laid down by national law.

The digitalisation of companies lies at the heart of the whole system, the transposition of which will have to be aligned. And in general, the national regulations contained in the Structural Modifications Act 3/2009 will have to be adapted to the new procedures. A technically complex implementation is expected.