Merger in General

A limited liability company (the merging company) may merge into another limited liability company (the acquiring company), so that the assets and liabilities of the merging company are transferred to the acquiring company. Often the object of a merger is to increase the efficiency of the group’s administration.

As merger consideration, the shareholders of the merging company will receive shares in the acquiring company. 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 an acquiring company, so that the acquiring company remains as an existing company, and the merging companies cease to exist (absorption merger); or

• at least two merging companies merge by jointly incorporating a new, acquiring company (combination merger).

The Companies Act includes specific provisions applicable to cross-border mergers between companies registered in two or more Member States of the European Economic Area, on the based on the European Union Cross-Border Merger Directive.

A merger includes a number of issues, documentation and deadlines. A successful merger requires often close cooperation between auditors and lawyers.