What are the effects of mergers and divisions of commercial companies?


In the course of the company's operation, there are times when it is reasonable to use various types of restructuring methods. This is most often due to reasons of economic nature (savings, cost reduction, scale-up), legal (tax benefits) or relations between the participants of the project. In such a case, and depending on the circumstances, the response to these needs may be a division or merger of companies. Merging and division of commercial companies - what is it?

Which companies are subject to merger and division?

The Commercial Companies Code provides for the possibility of establishing four partnerships, i.e. a general partnership, a partnership, a limited partnership and a limited joint-stock partnership, and two types of capital companies - a limited liability company and a joint stock company.

Merging companies, i.e. a popular merger, consists in transferring the assets of one company to another. Not all types can connect in every configuration. It is allowed to combine:

  • companies of a capital nature among themselves,

  • a capital company and a partnership, assuming that the partnership cannot be a newly formed or acquiring company,

  • companies of a personal nature among themselves by establishing a new capital company.

The division of a company, in turn, consists in dividing its assets and then transferring them to other companies. The possibility of division was limited in the Commercial Companies Code only to capital companies. Therefore, no partnership can divide.

Ways of merging and dividing commercial companies

The most common method of merging companies is acquisition, i.e. transferring all assets of one (acquired) company to another (acquiring) company in exchange for shares or stocks issued by the acquiring company to the partners or shareholders of the acquiring company. Another way to merge may be the formation of a new company, to which the assets of all the merging companies will be transferred in exchange for shares or stocks in this new company.

The company can also be divided in two ways. By separation, i.e. division of the assets of the company being divided between two or more newly established or existing companies, or by separation, which in turn is characterized by the fact that the company to be divided does not cease to exist and only part of the company's assets is separated.

Division or merger inadmissible

In order to protect the interests of creditors, the Code of Commercial Companies provides for numerous restrictions on the ability of commercial companies to merge and divide. The most important of them is the prohibition to participate in the process of merging and dividing commercial companies in liquidation, which began the division of property. A company in bankruptcy cannot participate in the procedure. Moreover, the Code prohibits the division of a joint stock company, the capital of which has not been fully paid up.

Merger and division of commercial companies - procedure

The merger and division of commercial companies requires a number of formal steps. The first one is the preparation of a plan of division or merger of the company with attachments, which should be reported to the competent registry court. Subsequently, the management board should submit a report containing the justification for the division or merger. The next step will be to submit an application for the audit of the plan of division or merger by an auditor. Ultimately, the company should adopt a resolution on division or merger, as appropriate, draw up or amend the articles of association or articles of association, and register the changes made in the National Court Register. The merger and division should be announced through an announcement in Monitor Sądowy i Gospodarczy. Depending on specific conditions, this procedure may be simplified.

Liability and creditors of divided / merged companies

In the event of a merger / division, the provisions of the Code of Commercial Companies do not provide for a mandatory summons of creditors to raise objections, as in the case of reducing the company's share capital.Creditors are informed about the merger through an announcement in Monitor Sądowy i Gospodarczy, where both the merger / division plan and information about the final completion of the procedure are published.

However, the rights of creditors are additionally protected by the obligation to manage the assets of the merging companies separately, until the interests of their creditors are secured or satisfied.

In the event of a merger with a partnership, the personal liability of the partners of the merging company towards its creditors is retained. The personal, joint and several liability of the partners of the company lasts for a period of 3 years from the date of the merger.

The companies participating in the division are jointly and severally liable for failure to cover certain assets in the division by the division plan. The acquiring companies and the newly established companies also bear joint and several liability towards the creditors of the divided company. In the event of a division by separation, the divided and the separated company are jointly and severally liable. However, it is limited to the net asset value of each of them according to the distribution plan.

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Effects caused by amalgamation and division

About the attractiveness of institutions where the merger and division of commercial companies are primarily the legal effects associated with their use. Partners / shareholders of a divided (acquired, merged) company automatically obtain the status of partners / shareholders of the newly established or acquiring company. The new company enters into all the rights and obligations of its predecessor (corresponding to the transferred property) by operation of law. This happens without the need for any additional steps. Therefore, there is no need, for example, to transfer the ownership of real estate separately and to keep the form of a notarial deed for this purpose.

To a limited extent, the public law rights and obligations are also transferred to the new company. In this case, it concerns, in particular, permits, concessions and concessions granted to the previous company. This, of course, applies to those administrative acts that are related to the property that has been transferred.

Moreover, pursuant to Art. 231 of the Labor Code, in a situation where the merger and division of commercial companies results in the transfer of the workplace to a new employer who becomes, by operation of law, a party to the existing employment relationships.

In practice, an extremely important aspect of merger and division is the issue of transferring tax rights and obligations. Pursuant to Art. 93 § 1 and 2 and article. 93c of the Tax Ordinance, the company resulting from the merger or division (being the legal successor of the previous company) enters into all rights and obligations provided for in the provisions of tax law of each of the companies involved in the process where there is a merger and division of commercial companies.