The European Commission has presented a proposal for a Directive to make cross-border mergers easier by overcoming obstacles caused by different national laws. It would make such mergers simpler for all companies with share capital, but the Commission says it would be especially useful for small and medium-sized businesses who want to operate in more than one Member State, but not throughout Europe, and thus are not likely to seek incorporation under the European Company Statute.

The proposed Directive would set up a cross-border merger procedure whereby mergers would be governed in each Member State by the rules applicable to domestic mergers. The proposed Directive is the first measure to be presented under the Commission's Action Plan on company law and corporate governance in the European Union, published in May 2003. It will be submitted for adoption under the so-called 'co-decision' procedure to the EU's Council of Ministers (subject to qualified majority voting) and the European Parliament.

If it is adopted, the Directive may aid the process of dealer acquisitions that could be spurred by the ending of territorial limits to new vehicle franchises in 2005 under the block exemption regulation 1400/2002.