Cross-border mergers increasingly popular
Author: Michał Boryczka
Recently, enterprises are increasingly eager to use the opportunity to simplify their capital structure by means of cross-border mergers. Let’s recall that the cross-border merger is governed by Directive 2005/56/EC of the European Parliament and of the Council of 26 October 2005, which was then implemented into Polish law by the amendment to the Code of Commercial Companies dated 25 April 2008. The purpose of adopting the Directive was specifically to enable the functioning of a uniform market, which is one of the pillars of the European Community. Thanks to the cross-border merger it is impossible to avoid a number of problems of a legal, administrative and practical nature associated with the closure of the company in one of the Member States and continuation of its activities on the territory of another Member State. As a result of registration of cross-border merger, the acquired company and the companies merging by the formation of a new company are dissolved without liquidation on the day of deleting it from the National Court Register. On the date of the merger the acquiring company or the newly established company enters into all rights and obligations of the acquired company or companies merging by formation of a new company, including the assets and liabilities of these companies.
A cross-border merger is possible, as long as at least two of the companies having to merge were formed in accordance with the law of the Member State of the European Union or the states-party to the agreement on the European Economic Area, and have their registered office, central administration or principal place of business within the European Union or the state-party to the agreement on the European Economic Area. Of course, more than two companies can take part in the merger. For example, there is no obstacle for one Polish company, due to a cross-border merger, to take over two Cypriot companies or a Cypriot and Spanish company. In principle, only capital companies can be subject to cross-border merger. The Code of Commercial Companies provides that also a limited joint-stock partnership can take part in a cross-border merger, while it can be neither an acquiring company nor a new company.