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Merger of companies/partnerships or selling a business

This article explores the processes of company mergers and business sales. It details the types of mergers, including cross-border and domestic, their legal requirements, and the rights and obligations transferred to the acquiring entity. Additionally, it outlines the responsibilities of buyers and sellers in business transactions, including liability for pre-existing debts.

 

  1. Mergers of companies/partnerships

Companies may merge with other companies and with partnerships. A partnership, except for a limited joint-stock partnership, may not, however, be the acquiring partnership or a new partnership.

Mergers are allowed between companies (or limited joint-stock partnerships) and a foreign company referred to in Article 119(1) of Directive (EU) 2017/1132 of the European Parliament and of the Council of 14 June 2017 relating to certain aspects of company law (OJ 2017, L 169, 30.6.2017, p. 46, as amended), which is formed in accordance with the law of a EU Member State or a State party to the Agreement on the European Economic Area and has its registered office, central administration or principal place of business in the European Union or a State party to the Agreement on the European Economic Area (cross-border merger).

Partnerships may be merged only by the formation of a company or a limited joint-stock partnership or by the acquisition by a limited joint-stock partnership.

Mergers involving a company/partnership in liquidation which has already started division of assets or a company/partnership in bankruptcy are not allowed.

Mergers may be effected:

  1. by transfer of all the assets and liabilities of the company/partnership (being acquired) to another (acquiring) company/partnership in exchange for the issue to the shareholders/partners of the company/partnership being acquired of shares in the acquiring company/partnership (merger by acquisition);
  2. by formation of a company or a limited joint-stock partnership to which all the assets and liabilities of all merging companies/partnerships are transferred in exchange for the issue to their shareholders/partners of shares in the new company/partnership (merger by the formation of a new company/partnership)

The company/partnership being acquired or the companies/partnerships merging by the formation of a new company/partnership are dissolved, without liquidation proceedings, on the date of their removal from the register.

Merger date

A merger takes effect on the date on which it is entered into the register relevant to the registered office of the acquiring company/partnership or the new company/partnership, respectively (merger date). That entry gives effect to the removal of the company/partnership being acquired or of the companies/partnerships merging by means of formation of a new company/partnership.

The company/partnership being acquired may not be removed from the register before the date on which the increase in the share capital of the acquiring company/partnership is registered, if such an increase is to take place, and before the date on which the merger is entered into the register relevant to the registered office of the company/partnership being acquired.

The companies/partnerships merging by the formation of a new company/partnership may not be removed from the register before the date of entry into the register of the new company/partnership.

Consequences of the merger of companies/partnerships

  1. On the merger date, the acquiring company/partnership assumes all the rights and obligations of the company/partnership being acquired or of the companies/partnerships that merge by the formation of a new company/partnership.
  2. On the merger date, licences, concessions and relief which have been granted to the company/partnership being acquired or to any of the companies/partnerships merging by formation of a new company/partnership are transferred to the acquiring company/partnership or the new company/partnership, unless the law or the decision to grant a licence, concession or relief provides otherwise.
  3. Transfer of the rights disclosed in land registers and other relevant registers to the acquiring company/partnership or the new company/partnership may be disclosed in such registers at the request of that company/partnership.
  4. On the merger date, shareholders/partners of the company/partnership being acquired or of the companies/partnerships merging by formation of a new company/partnership become shareholders or partners of the acquiring company/partnership or the new company/partnership.

 

  1. Sale of a business

A legal transaction having an undertaking as its subject matter covers everything that forms the undertaking, unless the content of the legal transaction or special provisions indicate otherwise.

The buyer of the undertaking is liable jointly and severally with the seller for any liabilities related to the operation of the undertaking or the farm, unless the buyer was not aware of these liabilities at the time of acquisition, despite having exercised due diligence. The liability of the buyer is limited to the value of the acquired undertaking as it stood at the time of acquisition and at the prices at the time the creditor is satisfied. This liability cannot be excluded or restricted without the consent of the creditor.

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