6 most important information about the merger of companies

The company merger is a multi-stage process that should be planned from the very beginning. The popular type of company merger on the Polish market is the merger of limited liability companies by acquisition. Therefore, using the example of such a merger, we present the issues you should keep in mind while preparing for this process. Here’s the 6 pieces of information that will be helpful in a merger of companies according the Polish law.  

 

 1. Check before merging the companies 

  Before merging the companies, it is good to verify, in particular:  

•   agreements concluded by the acquired company;
  

• concessions, consents, permits and other decisions obtained by the acquired company; 
  

• employment conditions regarding to employees of both merging companies.
  

The rule is that as a result of a merger, the acquiring company succeeds to all the rights and obligations of the acquired company. This rule is called general succession. It assumes, in particular, the automatic transfer of permits, concessions, as well as contractual rights and obligations.

However, in some cases, it may turn out that a law, decision, contract or other act contains different provisions / rules, and therefore certain rights may not be transferred or additional obligations are required.

Merging companies should also remember to comply with information obligations related to transfer of an employing establishment. Consideration should also be given to the possible need to align the working and pay conditions of employees of both companies. Such action will help to eliminate, among others, the possible risk of discrimination.

 

2. Remember about the deadlines

The process of merging companies involves many activities that must be planned keeping in mind the statutory deadlines. The most important deadlines concern: 

• announcement of the merger plan / publication of the merger plan on the company‘s website – no later than one month before the date of the shareholders’ meeting at which a resolution on the merger of the companies is planned; 
  

• notifying the shareholders of the merging companies about the intention to merge:
  

• • first notification – no later than one month before the planned date of adoption of the resolution on the merger of companies;
    

• • second notification – at an interval of not less than 2 weeks from the date of the first notification; 
    

• convening a shareholders’ meeting – sending invitations at least 2 weeks before the date of the meeting;
  

• reporting the resolution amending the articles of association of the acquiring company to the National Court Register – no later than 6 months from adoption of the resolution.

 

3. Organize the valuation of companies

For the purpose of determining the share exchange parity, a valuation of all merging companies should be organized. It is important to remember that, the valuation should be carried out for any day in the month preceding the filing of the application for the announcement of the merger plan or the announcement of the plan on the company’s website. 

There are different methods of company valuation. The choice of a particular method depends on, among other, the motive of the transaction and the individual economic situation of the company. Therefore, it is good to entrust preparation of the valuation to entities that provide such services professionally.  

 

4. Prepare necessary documents for the merger of companies

In the procedure of the merger of companies, the most important documents are: 

• the merger plan with its attachments; 
  

• merger resolutions.

The merger plan should be signed by the boards of directors of the merging companies. However, not all members of the boards of directors need to sign the merger plan – it is enough to submit signatures in accordance with the company’s rules of representation.

The merger plan should be accompanied by:  

• draft resolutions on the merger of companies; 
  

• draft amendments to the acquiring company’s articles of association; 
  

• valuations and statements on the accounting status of the merging companies.

The process usually require a resolution of the shareholders’ meeting of each merging companies. Such resolutions are adopted in the form of a notarial deed. 

 

5. Apply the simplifications – if it is possible

Depending on the situation of the merging companies, it is possible to apply the simplifications provided for in the provisions of the Commercial Companies Code (CCC).

If all the shareholders of the merging companies agree, you won’t need to:  

• prepare reports of the management boards of the merging companies;
  

• provide information on changes in the assets and liabilities of the merging companies; 
  

• commission an expert to examine the companies’ merger plan.

The CCC also provides for other simplifications that require additional conditions to be met. These include the possibility of conducting merger of companies without:  

• the allocation of shares of the acquiring company to the shareholders of the acquired company; 
  

• resolutions of shareholders of the merging companies.

 

6. Report the merger of companies to the National Court Register

The merger of companies is effective upon its entry into the National Court Register. Information about the acquisition of other companies will appear on the excerpt from the National Court Register of the acquiring company. Usually, the entry of merger will also be associated with the entry of amendment the articles of association and the increase in the share capital of this company.

As a result of the merger, the acquired companies will be deleted from the National Court Register – they will be dissolved without conducting liquidation proceedings. Information about the deletion will also appear in the National Court Register.

 

The information presented here is only a part of the issues relevant to the merger process. In practice, each process requires an individual approach and planning. If you have any questions related to this area, feel free to contact us!