S.L. 452.103 Art. 7Participation rights. S.L. 452.94 S.L. 452.94

(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 accordance with the following provisions of the Employee

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 1 out in the Schedule shall be 33 / %; 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.