The Companies (Cross-Border Mergers) Regulations 2007

CHAPTER 5 U.K. STANDARD RULES OF EMPLOYEE PARTICIPATION IN A UK TRANSFEREE COMPANY

Merging Companies may select standard rules of employee participation U.K.

36.  The merging companies may choose, without negotiating with the special negotiating body, the employee representatives or the employees, that a UK transferee company shall be subject to the standard rules of employee participation in regulation 38 (the standard rules of employee participation) from the date upon which the consequences of the cross-border merger take effect (see regulation 17).

Application of the standard rules U.K.

37.—(1) Notwithstanding regulation 36 (merging companies may select standard rules of employee participation), the standard rules of employee participation shall apply to a UK transferee company in circumstances where paragraph (2) applies and where—

(a) the parties agree that they should; or

(b) the period specified in regulation 28(3) (duty to negotiate employee participation agreement) has expired without the parties reaching an employee participation agreement and—

(i) the merging companies agree that they should; and

(ii) the special negotiating body has not taken any decision under regulation 31 either not to open or to terminate the negotiations referred to in that regulation.

(2) This paragraph applies where before registration of the UK transferee company, one or more forms of employee participation existed in at least one of the merging companies and either—

(a) that participation applied to at least one third of the total number of employees of the merging companies, or

(b) that participation applied to less than one third of the total number of employees of the merging companies but the special negotiating body has decided that the standard rules of employee participation should apply.

[F1 (2A) For the purposes of paragraph (2), agency workers whose contract within regulation 3(1)(b) of the Agency Workers Regulations 2010 was not a contract of employment with one or more temporary work agencies that were merging companies at the relevant time, are to be treated as having been employed by such a temporary work agency or agencies for the duration of their assignment with a hirer.]

(3) Where the standard rules of employee participation apply and more than one form of employee participation existed in the merging companies, the special negotiating body shall decide which of the existing forms of participation shall apply in the UK transferee company and shall inform the merging companies accordingly.

(4) In circumstances where—

(a) the standard rules of employee participation apply, more than one form of employee participation existed in the merging companies and the special negotiating body has failed to make a decision in accordance with paragraph (3); or

(b) one or more form of employee participation existed in the merging companies and the merging companies have chosen, without any prior negotiation, to be directly subject to the standard rules of employee participation,

the merging companies shall be responsible for determining the form of employee participation in the UK transferee company.

Textual Amendments

F1 Reg. 37(2A) inserted (1.10.2011) by The Agency Workers Regulations 2010 (S.I. 2010/93), reg. 1(1), Sch. 2 para. 45

The standard rules of employee participation U.K.

38.—(1) The employee representatives of the UK transferee company, or if there are no such representatives, the employees, shall have the right to elect, appoint, recommend or oppose the appointment of a number of directors of the transferee company, such number to be equal to the number in the merging company which had the highest proportion of directors (or their EEA equivalent) so elected or appointed (subject to regulation 39).

(2) Subject to paragraph (3), the employee representatives, or if there are no such representatives, the employees, shall, taking into account the proportion of employees of the transferee company formerly employed in each merging company, decide on the allocation of directorships, or on the means by which the transferee's employees may recommend or oppose the appointment of directors.

(3) In making the decision set out in paragraph (2), if the employees of one or more merging company are not covered by the proportional criterion set out in paragraph (2), the employee representatives, or if there are no such representatives, the employees, shall appoint a member from one of those merging companies including one from the United Kingdom, if appropriate.

(4) Every director of the transferee company who has been elected, appointed or recommended by the employee representatives or the employees, shall be a full director with the same rights and obligations as the directors representing shareholders, including the right to vote.

[F2 (5) Where under the standard rules of employee participation the transferee company is to provide information on the employment situation in that company, such information must include suitable information relating to the use of agency workers (if any) in that company.] 

Textual Amendments

F2 Reg. 38(5) added (1.10.2011) by The Agency Workers Regulations 2010 (S.I. 2010/93), reg. 1(1), Sch. 2 para. 46

Limit on level of employee participation U.K.

39.  Where, following prior negotiation, the standard rules of employee participation apply, the UK transferee company may limit the proportion of directors elected, appointed, recommended or opposed through employee participation to a level which is the lesser of—

(a) the highest proportion in force in the merging companies prior to registration, and

(b) one third of the directors.

Subsequent domestic mergers U.K.

40.—(1) A transferee company resulting from a cross-border merger that operates under an employee participation system shall ensure that employees' rights to employee participation shall not be affected before the end of the period of three years commencing on the date on which the consequences of the cross-border merger have effect (see regulation 17) by any order made by the court under section 899 of the Companies Act 2006 M1 (court sanction for compromise or arrangement) for the purposes of—

(a) a reconstruction of the company or the amalgamation of the company with another company (see section 900 of that Act (reconstruction or amalgamation of company)), or

(b) a merger involving a public company (see sections 902 and 903 and Chapter 2 of Part 27 of that Act).

(2) For the purposes of this regulation, any subsequent order made by the court under section 900(2) of the Companies Act 2006 has effect as if it were an order made under section 899 of that Act.

Marginal Citations

M1 2006 c.46.