The company merger process: step by step

A merger of companies is a complex legal process that requires thorough preparation and compliance with the prescribed steps and deadlines. In this article we give you an overview of the main steps to be taken in a company merger, as well as important information on the related obligations.

1. Preparing the draft merger agreement

The first step in the merger process is preparing the draft merger agreement. This draft must contain the business name, registered office and company ID (IČO) of the companies involved, the shareholders’ interests in the successor company, the draft memorandum of association of the new company (in the case of a consolidation), and the date from which the financial statements of the merging companies will be included in the financial statements of the successor company.

2. Notifying the tax administrator

Each company that is ceasing to exist is required to inform its tax administrator that a draft merger agreement has been prepared, no later than 60 days before the general meeting that is to decide on approving the merger. A confirmation from the tax administrator that all tax obligations have been met must also be attached to the draft agreement.

3. Approval of the merger by the general meeting

Once the draft merger agreement has been prepared, the next step is for the general meetings of the companies involved to decide whether to approve the draft. Approval requires the consent of all shareholders, unless the memorandum of association provides otherwise. If the merger also involves a subsidiary, the consent of its parent company is required.

4. Verification of the draft agreement by an auditor or an expert

Before the application to register the merger in the Commercial Register (ORSR) is filed, the draft agreement must be verified by one or more experts or auditors. This step is important above all to ensure that the merger takes place in accordance with the law and that the value of the successor company’s liabilities does not exceed the value of its assets.

5. Registration of the merger in the Commercial Register

Once the draft agreement has been approved and verified by the auditor, the next step is filing the application to register the merger in the Commercial Register. This application must be filed within 30 days of the merger being approved and must include all the necessary attachments, including the auditor’s report.

6. Attachments to the draft transformation project

The company’s draft transformation project must be accompanied by attachments such as the draft memorandum of association or founding agreement, the articles of association of the company that will be formed by the consolidation, and the application to register this company in the Commercial Register.

7. Publication and approval of the draft transformation project

The draft transformation project is filed in the Collection of Deeds (zbierka listín) for each company involved and must be published in the Commercial Bulletin (Obchodný vestník). Approval of the transformation project then takes place at the general meeting, where the consent of all shareholders is required.

8. Simplified merger of companies

Where the successor company is the sole shareholder of the companies ceasing to exist, the merger process is simplified and certain provisions of the law do not apply. In this case the draft transformation project must be drawn up in the form of a notarial deed.

Conclusion

A merger of companies is a process that requires careful planning and the fulfilment of a number of legal obligations. Following all the steps is essential for the merger to be completed successfully and for business to continue smoothly under the new successor company.