Mergers and demergers

Merger

In a merger of two or more legal entities (BV, NV, foundation, association, cooperative), two or more legal entities merge into either one of the merging legal entities or into a new legal entity. As a result of the merger, all assets of the disappearing legal entity are transferred to the acquiring legal entity. This transfer takes place under general title, so that (usually) no separate transfer of those assets needs to take place.

Demerger

Division is the mirror image of the merger, where one legal entity is made into two or more legal entities. Again, the assets are transferred by universal title.

The law contains quite a few regulations for merger and even more for demerger. Thus, sometimes something seems to be solvable with one merger or demerger, but the law gives no room for it. It is therefore very important to discuss a particular wish regarding merger or demerger with us in good time.

Proposal and explanation

For the purpose of a merger or demerger, it is necessary that the boards of each of the demerging or merging legal entities prepare a proposal for demerger and, in many cases, an explanatory memorandum. Generally, we make that proposal and those explanatory notes.
This proposal and those explanatory notes, along with a very large number of annexes, must then be filed in the commercial register and also at the offices of the various merging or demerging legal entities. All this is then published in a national daily newspaper.

Non-resistance declaration

After everything has been available for inspection for a month, the court should be asked whether nobody has filed an opposition. If this is not the case, the merger or demerger can only be decided upon. The minutes of the relevant meeting must then be recorded in a notarial deed. Only then can the deed of merger be executed.

In common parlance, merger is also referred to when two companies start to cooperate or the shares in the capital of one company are transferred to another company. For tax purposes, this is also sometimes referred to as a merger. However, this is slightly different from the legal merger described above.

Cross-border merger

Within the EU, it is also possible for a legal entity from one Member State to merge with a legal entity from another Member State. Such cross-border mergers are subject to even more regulations. But the complexity outweighs the benefits of a merger in a number of cases.

For more information on merger and division of legal entities, please contact us. We will be happy to help.