It stands out three model phases of the merger procedure: the preparatory work carried out by the boards of merging companies, the so-called management phase, the resolution phase of the meetings of shareholders (free meetings) of merging companies (Article 506 k.s.h.), the so-called ownership phase, and the phase of registration and announcement of the merger, the so-called authorisation phase of the merger by public authorities. Today we will look at the ownership phase.
first The activities of the merger process by acquisition were discussed in the article Connection by acquisition. Phase of preparatory activities. Today we will look at the ownership phase.
Phase of resolutions of the meetings of the shareholders of the merging companies (Article 506 k.s.h.), so-called ownership phase, boils down to third essential steps:
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- notification of the intention to merge (Article 504 and Article 521 (k.s.h.)
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The following documents shall be made available to the shareholders of the merging companies for inspection:
- • the merger plan,
- • the financial statements and reports of the management boards on the activities of the merging companies for three the last financial years, together with the statutory auditor's opinion and report, if the opinion or report has been drawn up,
- • documents attached to the merger plan (Article 499(2) k.s.h.),
- • reports of the boards of merging companies drawn up for merger purposes (Article 501 k.s.h.),
- • expert opinion (if drawn up).
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- adoption of merger resolutions by a meeting of shareholders (free meetings) of each of the merging companies (Article 506 and Article 522 k.s.h.).
Access to documents for peer review
According to Article 505(3) k.s.h. Partners may request that copies of the documents in question be made available free of charge to them at the company’s premises. Under section 1 and 2. A copy of these documents may be sent to joint ventures who have agreed to use the company's electronic means of communication to provide information.
However, this provision shall apply when the company makes available to the public free of charge on its website no later than one month before the date of commencement of the meeting of shareholders on which the merger resolution is to be adopted, or by that date it will allow the shareholders on its website to access and print these documents.
However, making the above documents available to the shareholders should not be too difficult for the two merging companies, both the company being acquired and the recipient, so we recommend applying the provision Article 505(3) k.s.h. and making these documents available to partners in the premises of the company. This is mainly addressed by the small number of shareholders of both companies and the fact that the documents placed on the company's website have access to a much larger number of recipients.
Notification of the intention to merge
The boards of merging companies shall be required to notify the shareholders twice of their intention to merge with another company in the manner provided for the convening of shareholders or general meetings.
first the notification should be made no later than one month before the planned date of the merger resolution, and second not less than two weeks from date first notices. The notification shall contain at least:
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- the number of the Judicial and Economic Monitor in which the notice was made, unless the notice is the subject of the notice;
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- place and time limit within which the partners may consult the documents mentioned under Article 505(1) k.s.h.; this period may not be less than one month before the planned date of the merger resolution.
Notification of shareholders of a limited liability company shall be made according to Article 238(1) k.s.h. This provision provides that the Assembly of Associates is to be convened by registered mail or by mail sent at least two weeks before the date of the meeting of partners. Instead of a registered letter or consignment sent by courier mail, a notification may be sent to the partner by e-mail if he has previously given his written consent, giving the address to which the notification should be sent.
Connection resolutions
The merger requires the approval of the “owner” authorities of each of the merging companies by means of merger resolutions by the meeting of the shareholders of each of the merging companies. Immediately before the adoption of the merger resolution, there is an obligation to present orally the relevant content of the merger plan, the management report and the expert opinion (Article 505(4) (k.s.h.)
According to Article 506(1) k.s.h. the resolution should be adopted by a majority third fourth votes representing at least half of the share capital, unless the contract or statutes provide for stricter conditions.
However, since, in accordance with the provisions of the Commercial Companies Code, the articles of association may modify the number of votes and quorums envisaged under Article 506(1) k.s.h., but only if it provides for stricter conditions and the Agreement provides for softer conditions for the adoption of resolutions and stricter for the quorum required, the provision will apply. Article 506(1) k.s.h. in part for the required number of votes and the company's statutes for the required quorum.
The resolution should agree to the merger plan as well as to the proposed amendments to the acquiring company's contract. The merger resolutions must also be recorded by the notary (Article 506(5) k.s.h.)
Obligation to notify a concentration
Only on the margins should it be mentioned that in certain legal situations it is necessary to notify the President of the Office for Competition and Consumer Protection of the intention to concentrate. Namely, according to Article 13 Act dated 16 February 2007 on competition and consumer protection Journal of Laws of 2015, item 184), the intention to concentrate shall be notified to the President of the Office if:
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- the total global turnover of the undertakings involved in the concentration in the financial year preceding the year of notification exceeds the equivalent 1,000,000,000 EUR or
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- total turnover in the territory of the Republic of Poland of entrepreneurs participating in the concentration in the financial year preceding the year of notification exceeds the equivalent 50,000,000 EUR.
This notification obligation concerns the intention to:
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- connections two or more independent traders;
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- acquisition - by acquisition or inclusion of shares, other securities, shares or in any other way - of direct or indirect control of one or more entrepreneurs by one or more entrepreneurs;
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- the establishment of a joint venture by entrepreneurs;
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the acquisition by the entrepreneur of part of the property of another trader all or part of the undertaking), if the turnover of that property in any of the two the financial years preceding the notification exceeded the equivalent in the territory of the Republic of Poland 10,000,000 EUR.
If no notification is required, in accordance with Article 20b Act dated 20 August 1997 the National Court Register should be accompanied by a statement under criminal liability that the intention to concentrate was not subject to notification to the President of UOKiK.
In the next article, we will describe the last of the phases of the merger process through acquisition, as well as 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.