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MERGERS AND ACQUISITIONS

Our law firm has dealt with one of the most complex pieces of corporate and commercial law which is mergers and acquisitions of companies.

The need to merge companies arises when one company acquires another or when an entrepreneur who has scattered his commercial activities in several companies decides to put them all under one roof.

Company mergers require lawyers to work with the company’s accountants and our law firm has been recommended several times by the company’s accountants or tax advisors to take care of the legal part of the merger.

Law 4601/2019 has uniformly regulated the issue of transformation of companies by merger, division or conversion.

The provisions of this law apply to the merger of companies of different legal forms.

The transformation of companies may be carried out in the following forms:

  1. merger,
  2. division,
  3. conversion.

It is important to note that a corporate transformation may also include companies that have been dissolved due to the expiry of their term or by decision of the meeting or their partners, as well as companies that have been declared bankrupt, provided that after the declaration of bankruptcy the plan of reorganization has been finally confirmed or all bankruptcy creditors have been repaid, in accordance with para. 1 of Article 164 of the Bankruptcy Code (Law 3588/2007, A’ 153) provided that the distribution of the liquidation proceeds has not commenced and provided that the company’s equity capital is not less than the minimum capital prescribed for the relevant corporate form.

TAX INCENTIVES

The provisions of Law 1297/1972 (A 217), Laws 2166/1993 (A 137), 4172/2013 (A 167) and other laws, in particular those of a tax or development nature, which refer to transformations, remain in force as regards their tax regulations and the advantages or incentives provided.

METHODS OF MERGER

A merger shall be effected either by absorption or by the formation of a new company.

“A ‘merger by absorption‘ is an operation whereby one or more companies (the acquiring companies) transfer all their assets and liabilities to another existing company (the acquiring company) following their dissolution without going into liquidation, by the disposal to the shareholders or partners of the acquiring companies of the holdings in the acquiring company and, where appropriate, by the payment of a sum of money not exceeding ten per cent (10%) of the nominal value of the holdings disposed of or, in the absence of a nominal value, of their accounting par value.

Merger by formation of a new company” is the operation whereby two or more companies (merging companies) transfer all their assets and liabilities to a new company, which they form after their dissolution without going into liquidation, by the allotment to the shareholders or members of the merging companies of shares in the new company and, where appropriate, by the payment of a sum of money not exceeding ten per cent (10%) of the nominal value of the shares allotted or, in the absence of a nominal value, of their accounting par value.

The basic stages of any transformation of companies are as follows:

1/ Drafting of a draft conversion ( merger, conversion, division ) contract.

2/ Draft merger contract by the bodies representing the company.

3/ Publication of the draft merger agreement in the G.E.M. and on the website of each company participating in the transformation.

4/ Detailed written report and briefing on the merger by the representatives of the company.

5/ Registration of the report in the General Register of Companies and publication on the website of the companies.

6/ Submission of the report for approval to the shareholders or partners of the companies involved.

7/ Examination of the draft transformation ( merger – division – conversion ) contract by independent experts

8/ Approval of the contract by the general meeting of shareholders or partners of the participating companies.

9/ Signature of the contract by the representatives of all the participating companies.

10/ Registration of the contract in the General Register of Companies.

Some of these stages can be omitted if the transformation is agreed to by all the partners or shareholders of the companies and their organs.

RESULTS OF THE MERGER

1/ The merger is effected only by the registration of the merger agreement as regards the acquiring company, even before the deletion of the acquiring company from the GEM.

2/ From the date of registration in the Commercial Register in accordance with paragraph 1, the following effects shall take effect automatically and simultaneously both between the acquiring and the company being acquired and vis-à-vis third parties:

(a) the acquiring company shall be subrogated as universal successor to all the assets, that is to say, to all the rights, obligations and legal relations in general of the acquiring company or companies being acquired, including the administrative licences issued in favour of the acquiring company or companies being acquired,

(b) the shareholders or members of the acquiring company or companies being acquired become shareholders or members of the acquiring company,

(c) the acquiring company or companies cease to exist.

3/ The pending legal proceedings shall be continued automatically and without further formulation by the acquiring company.

4/ The special formalities provided by law for the transfer of certain assets shall also apply in the case of a merger.

5/ Shareholdings in the acquiring company shall not be exchanged for holdings in the company being acquired:

  1. either by the acquiring company itself or by a person acting in its name but on its behalf,
  2. either by the acquiring company itself or by a person acting in his own name but on its behalf.
PROTECTION OF EMPLOYEES’ RIGHTS

In all cases of transformation of companies, employees are protected in accordance with the provisions applicable to the change in the person of the employer.