first the merger phase in the acquisition process is carried out by the boards of merging companies. It is also the most extensive stage in terms of the number of actual and legal activities involved in the merger process.
Based on Article 492(1)(1)) k.s.h. the merger may be made by transferring all the assets of the company (taken) to another company (taken) for shares or shares which the acquiring company issues to the shareholders of the company being acquired (joined by the acquisition).
The merger by acquisition is understood as an operation in which the acquired company loses its existence and its assets become part of the assets of the acquiring company, which enters into all the rights and obligations of that company first, in return for which the shareholders or shareholders of the acquired company receive shares or shares of the acquiring company.
The company, merging through acquisition, will increase its assets by the assets of the acquired company.
It stands out three model phases of the merger procedure:
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Phase of preparatory activities carried out by the boards of merging companies (Article 498-505 k.s.h.), so-called management phase.
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Phase of resolutions of the meetings of the shareholders of the merging companies (Article 506 k.s.h.), so-called ownership phase.
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Registration and announcement phase of the call (Article 507-508 k.s.h. in conjunction with Article 493(2-5) k.s.h.), the so-called authorisation phase of the merger by public authorities.
Today we're going to look at how it goes. first phase.
Connection plan
The main and undoubtedly most important element of this phase is the drawing up of a merger plan. It is written and should be the result of arrangements between the boards of merging companies. According to Article 499(1) k.s.h. the connection plan shall contain at least:
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- the type, company and registered office of each of the merging companies, the method of merger and, in the event of merger, the type, company and registered office of that company;
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- the ratio of the exchange of shares or shares of the company being acquired or of the companies merging by the incorporation of the new company into the shares or shares of the acquiring company or of the newly bound company and the amount of any subsidies;
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- the rules on the allocation of shares in the acquiring company or in the newly bound company;
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- the date on which the shares in the acquiring company or in the newly bound company entitle the acquiring company or the newly bound company to participate in the profit;
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- the rights conferred by the acquiring company or the newly bound company to shareholders and persons who are particularly entitled in the acquired company or in the merging companies by the new company;
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- the specific advantages for the members of the merging bodies, as well as other persons involved in the merger, where such benefits have been granted.
Specific importance point 2 the above list, concerning the ratio of the exchange of shares or shares of the company acquired into the shares or shares of the acquiring company and the amount of any subsidies, and point 5 concerning the specific powers of partners.
Payments
As the determination of the quantity and thus the value of the shares of the acquiring company issued to the shareholders should be in relation to the quantity and value of the shares or shares held in the acquired company, differences may arise in this process. The value of these shares will not always be identical in absolute terms.
However, as the principle of indivisibility of shares and indivisibility applies, the payment institution which it introduces for the merger process will apply Article 492(2)(3) k.s.h. The subsidies may come from the acquiring company or from the shareholders of the acquired company.
The purpose of the aid is to compensate the difference between the nominal value of the shares held by the shareholders of the company being acquired and the value of the shares awarded to the acquiring company. Subsidies will be necessary if the share exchange parity shows differences in value.
According to Article 492(2) k.s.h.
the shareholders of the acquired company or of the merging companies by the formation of the new company may receive, in addition to the shares or shares of the acquiring company or the newly bound company, a cash payment not exceeding the total 10% the balance sheet value of the shares or shares of the acquiring company as determined by the statement in question under Article 499(2)(4) k.s.h., i.e.
a statement showing the company's accounting status for the purposes of the merger on a given day in the month preceding the submission of the request for a merger plan, or 10% the nominal value of the shares or shares of the newly bound company allocated.
State Article 492(3) k.s.h., according to which the acquiring company or the newly established company may issue its shares or shares to the shareholders of the acquired company or the merging companies by setting up a new company subject to payment of cash up to 10% the carrying amount of the shares or shares of the acquiring company, or 10% the nominal value of the shares or shares allocated. So either the shareholders of the company being acquired will receive alongside the shares in the company receiving the cash surcharge, or their receipt of the shares in the acquiring company will be subject to the payment of the aid.
As is emphasised in the doctrine – a disproportion greater than ten% would distort the sense of merger as a structure not based on the granting of shares but on cash. The aid is intended to compensate for the accounting differences in the form of recapitalisation of shareholders or companies respectively.
first the reduction in the amount of the aid is intended to prevent excessive outflows when the funds are combined with the acquiring company. In turn, the two limitations are intended to encourage participants to carefully calculate the exchange parity.
Subsidies of the acquiring company shall be made from the profit or the company's reserve (i.e. from the profit, the reserve or the return and the reserve).
The payment schemes may be combined. Therefore, some of the shareholders of the company being acquired may be required to pay the aid to the acquiring company, and to some of the shareholders of the company being acquired, the acquiring company may be required to pay the aid.
Specific powers of shareholders in the merger process by taking over
As a general rule, the merger process should retain the existing special rights of shareholders that they held in the company being acquired. State Article 511 k.s.h. according to which persons with special powers in the company being acquired, i.e.:
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- holding shares with specific powers (Article 174(2) k.s.h),
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- having the title of participation in or division of the company's assets and related rights (Article 304(2)(1) k.s.h),
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- shares with specific powers (Article 351 k.s.h.),
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- preference shares in terms of the number of votes per share (Article 352 k.s.h.),
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- dividends (Article 353 k.s.h.),
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- the personal rights of the shareholder granted by the statutes (Article 354 k.s.h.),
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Namely initial certificates issued for the purpose of remuneration of the services provided at the establishment of the company (Article 355 k.s.h.), they have rights at least equivalent to those which they have previously enjoyed.
If the acquired company's contract does not provide for specific rights granted to shareholders, there will be no problem. However, if the circumstances change by the time of the merger, then such specific rights may be amended or abolished by agreement between the eligible shareholder of the company being acquired and the acquiring company (Article 511(3) (k.s.h.)
Documents attached to the merger plan
The merger plan shall also be accompanied by appropriate documents:
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- draft merger resolutions;
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- draft amendments to the contract or the statutes of the acquiring company, or draft contracts or statutes of the newly bound company;
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- the determination of the value of the assets of the acquired company or of the merging companies by setting up a new company, on a specific day in the month preceding the submission of the request for a merger plan;
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- a statement showing the company’s accounting status for the purposes of the merger at a given day in the month preceding the submission of the request for a merger plan by the same methods and in the same arrangement as the last annual balance sheet.
The incorporation into the plan of merger of draft merger resolutions, draft amendments to the contract or statutes of the acquiring company or draft agreement or articles of association of the newly bound company is intended to enable the registered court (now at the stage of submission of the merger plan) to review the substantive content of the merger plan in terms of its compliance with the provisions of the Commercial Companies Code.
If the two companies involved in the merger apply jointly for a merger plan, the announcement should take place no later than one month before the date of the meeting of shareholders on which it is to be taken. first merger resolution.
However, it should be stressed that there is no need for such a notice if the company makes the merger plan available to the public on its website no later than one month before the start of the general meeting of shareholders on which the merger resolution is to be adopted (Article 500(2)(21k).s.h.)
The issue of the place of publication, i.e. whether it is to be an MSiG or a website, it should be considered by the merging companies, taking into account the circumstances such as (i) the reduction of the restructuring costs for the costs of the publication in the Judicial and Economic Monitor in the event of the publication on the website, (ii) the obligation to make the plan available on the company's website on an uninterrupted basis, and therefore the risk cannot be excluded that, in the event of technical problems with the website of the merging companies and temporary inaccessibility, the merger plan will not be available on the website in an uninterrupted manner, which could possibly be used to challenge the effectiveness of the merger resolution, (iii) on the website, the merger plan is generally available to all, which means that also to counterparties, which may have marketing significance for the merging entities.
For sure, advertising on the website saves the costs of advertising in MSiG (cost one The sign is about 0.7 PLN).
The connection plan shall be submitted to the records. The submission of a merger plan to a judicial file is not subject to registration, The court shall only accept documents in the register file.
Examination of the merger plan by the expert
In principle, according to Article 502(503) k.s.h. the merger plan shall be examined by an expert appointed by the registry court. This may be an expert designated at the joint request of the two merging companies by the registry court competent according to the registered office of the acquiring company or the newly established company (Article 502(1) k.s.h.). In justified cases, the court may appoint two or more experts (Article 502(3) k.s.h.).
However, the examination of the merger plan by the expert will not be required if all the partners of each of the merging companies agree.
This provision does not specify the time limit within which the consent of all partners to withdraw from the examination of the merger plan by the expert is to be expressed. The lack of examination of the division plan by the expert simplifies and shortens the merger process by taking over, but in certain specific situations the study is an important element which should not be avoided.
Additional responsibilities of the boards of both merging companies.
The Management Boards of the two merging companies shall:
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drawing up a written report justifying the legal and economic basis of the merger, and in particular the exchange ratio (Article 501(1) k.s.h. – However, no such report will be necessary if all partners of the two merging companies agree (Article 5031(1) (a) k.s.h.)
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in the course of the merger procedure, the management of each of the merging companies shall also inform the management board second the companies so that they can inform the shareholders' meetings or general meetings of any material changes in the assets and liabilities that occurred between the date of drawing up the merger plan and the date of the merger resolution (Article 501(2) k.s.h.) – in this case, too, it will not be necessary to provide such information if all partners of the two merging companies agree (Article 5031(1) (a) k.s.h.)
In the next article we will describe the others two the phases of the merger process by acquisition, and we will discuss its effects
Author:
Aleksandra Księżyk – Legal advisor, Director of the Legal Department in Warsaw Chancellery Russell Bedford Dmowski and Partners Law Firm sp. k.