Corporate mergers or acquisitions: registration and notarisation

Merger between companies

What is a merger?

A ‘merger’ is a legal transaction that takes place between two or more companies with a view to dissolving some or all of them and incorporating their shareholders and assets into a single company. This may be a new or existing company

The essential steps of the process are:

1. Submission of a structural change plan.
2. Preparation of a report by the management body.
3. Preparation of an independent expert report.
4. Advance notice of the agreement must be issued one month before the agreement date and on the website of the company or companies.
5. The notice must contain certain minimum particulars.
6. The next step is approval by the general meeting.
7. The agreement must be published, once adopted, in the ‘Official Journal of the Business Registry’ and on the company's website or, failing this, in one of the daily newspapers with the largest circulation in the provinces where each of the companies has its registered office.
8. The structural change will be effective from the date of its registration in the commercial register.

In addition to these general rules applicable to any structural change process, a merger has the specific features set out below.

Conditions relating to mergers

Companies involved in a merger must comply with the provisions and formalities of the national law to which they are subject, including those relating to the decision-making process concerning the merger and the protection of employees with regard to their rights other than participation rights.

The rules allowing the Spanish Government to impose conditions for reasons of public interest on an internal merger also apply to mergers where at least one of the merging companies is subject to Spanish law.

Common merger plan

The merging companies will draw up a common cross-border merger plan. The plan will contain the references listed for NATIONAL mergers.

Independent expert report

In cross-border mergers and divisions, an expert report is always required, except where agreed by all the company shareholders.

Alternatively, one or more independent experts may, at the joint request of the companies, be appointed or authorised to draw up a single written report for all the members by the relevant judicial or administrative authority of the Member State to which any of the merging companies or the newly-created company is subject.

Protection of shareholders in the exchange ratio

Shareholders of merging Spanish companies who do not hold or have not exercised the right to dispose of their shares or holdings, but consider that the exchange ratio set out in the plan is not appropriate, may challenge it and claim a cash payment in accordance with the procedure and with the effects provided for the protection of shareholders regarding the exchange ratio in internal mergers.

Date and effects of the merger

When the company created by the merger is a Spanish company, the operation takes effect from the date of registration in the commercial register. Otherwise the legislative provisions of the newly-created company’s state will apply.

The merger will have the following effects:

1. Transfer to the newly-created company of all the assets and liabilities of the company or companies being wound up, including contracts, debts, rights and obligations.

2. The shareholders of the company or companies being dissolved will become shareholders of the newly-created company, unless they have disposed of their shares or holdings in exercise of the corresponding right of disposal provided for upon completion of the transaction.

3. Termination of the absorbed or merged company or companies.

Where the laws of the Member States lay down special formalities for the transfer of certain assets, rights and obligations to be enforceable against third parties, those formalities shall apply and be carried out by the company created by the merger.

Volver arriba

Sales of businesses

The sale of a business is a completely different transaction from a merger between commercial companies.

What are the stages of the sale process?

The first question to answer is: why sell? Influencing factors to consider at the time of decision-making may be: family succession; dispute between shareholders; wish to divest; consolidation in the sector; and/or lack of financial capacity.

Secondly, information must be compiled about the business and its sector. This information is not just financial: its purpose is to clarify the distinctive features of the company and its business. Ultimately, it offers an understanding of the business, for presentation purposes.

The third step is to establish the objective value of the business, by universally accepted methods. The value will generally depend on past, present and future profitability figures.

The next step is for the sellers to draw up a list of any possible buyers. They should indicate their preference between industrial buyers (competitors, suppliers, etc.) or financial buyers (venture capital).

Later they will hold meetings with the interested investors to present the most relevant information about the business and resolve doubts which are critical to the investors’ decision-making. If interest persists, a letter of intent is drawn up, stating the value and main conditions to be fulfilled later. The seller allows a period of exclusivity to the buyer, to enable it to analyse the business in depth.

After the letter of intent, the buyer will carry out commercial and financial due diligence studies to find out more about the business being purchased.

Any adjustments and the drafting of contracts, finance agreements etc. are possible based on the due diligence.

Finally, the contracts are signed and publicly recorded before a notary. They are then entered on the property and commercial registers. From then on, the obligations governing the commencement of trading must be fulfilled.

Volver arriba