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The content concerns Finnish legislation.
 

Merger in General

In a merger, one or several limited liability companies (the merging company) merge into another limited liability company, either existing or to be established (the acquiring company), so that the assets and liabilities of the merging company are transferred to the acquiring company and the merging company is dissolved without going into liquidation. Often the objective of a merger is to increase the efficiency of the group’s administration, but the objectives of the merger may also relate to increasing business efficiency and strengthening competitiveness.

In mergers, the shareholders of the merging company often receive shares in the acquiring company as merger consideration. The merger consideration may also consist of cash, other assets and future undertakings.

A merger may occur in one of the following manners:

  • one or several merging companies merge into the acquiring company (absorption merger); or

  • at least two merging companies merge by way of incorporating a new acquiring company together (combination merger).

A common form of absorption merger is a subsidiary merger, where the companies involved in the merger own all of the shares of the merging company and, where appropriate, all option rights and other special rights entitling to shares in the company. By contrast, a merger of subsidiaries (FI: sisaryhtiösulautuminen) is an absorption merger where no merger consideration is paid and in which the companies owned by the same parent company of the group merge with each other. A triangular merger is an absorption merger where the merger consideration is provided by an entity other than the acquiring company. The Companies Act also includes specific provisions applicable to cross-border mergers between companies registered in two or more Member States of the European Economic Area, on the basis of the European Union Cross-Border Merger Directive.

A merger includes a number of matters to be considered, documentation and deadlines. A successful merger requires often close cooperation between auditors and lawyers.