January 01, 2024
In the complex world of corporate law, processes such as acquisitions, merger and division of companies constitute fundamental business restructuring procedures. Understanding these processes, regulated by the Croatian Companies Act, is essential for the proper restructuring of a business entity. In this article, we will summarize these status changes, emphasizing their basic characteristics and legal consequences.
1. Acquisition of joint-stock companies
An acquisition is a process in which one or more companies (merged companies) transfer their entire assets to another company (the acquiring company) in exchange for the shares of that company. The key features of this process are:
acquisition procedure: The key document for the acquisition is the acquisition agreement, which is valid only when approved by the general meetings of all the companies involved, with a majority of 3/4 of the share capital represented at the general meeting when the decision is made. Each company must be registered in the court register for at least two years prior to the merger. During the procedure, it is necessary to prepare a report on the acquisition, conduct an audit of the acquisition, and verification of the acquisition by the supervisory board.
Legal consequences: The legal effects of the acquisition arise only by registering the acquisition in the court register. After registration in the court register, the acquiring company becomes the general legal successor of the acquisitioned companies, assuming all their obligations and rights.
Protection of creditors’ rights: Creditors of acquisitioned companies, who cannot seek settlement of claims, have the right to seek adequate insurance of their claims within six months of the publication of the acquisition registration.
2. Merger of joint-stock companies
A merger is the process of forming a new society through the unification of two or more previous societies, in such a way that the entire assets of each of the merging companies pass to a new society, in exchange for shares in the new society. This process is characterized by:
Formation of a new company: A new company is established that acquires the assets and liabilities of the companies being merged.
Merger conditions: The merger can only be carried out if the merging companies have been registered for at least two years. The legal procedure for the merger is similar to the legal procedure for the acquisition, with appropriate amendments to the documents.
Legal consequences: The newly formed company assumes all liabilities and assets of the companies being merged. Shareholders (members) of the merging companies become shareholders (members) of the new company.
3. Division of companies
The division of a company can be done as a division with the establishment of new companies or as a division with the takeover of part of the assets into existing companies. Division can be carried out by the so-called separation or separation.
Separation is carried out by the simultaneous transfer of all parts of the assets of the company to be divided, with its termination without liquidation, to two or more new companies set up to carry out separation (separation with incorporation) or to two or more companies that already exist (separation with takeover). Separation is carried out by transferring one or more parts of the assets of the company being divided, without that company ceasing, to one or more new companies set up for the purpose of carrying out separation (separation with incorporation) or to one or more companies already existing (separation with takeover).
The main key points of these processes are:
Division plan: A detailed plan of statutory content is required, which must be approved by the assemblies of companies involved in the division. In addition to the division plan, the management of the company is obliged to draw up a detailed report on the division, and the division plan must subsequently be verified by the auditor. The key document for the division of the company is the Decision on division, which is adopted by the general meeting of the joint stock company by a qualified majority.
Legal consequences: By dividing the company, part of the assets and liabilities is transferred to newly formed or existing companies, with the separation of the company being divided, while in the separation of companies that have been divided, they continue to exist as separate companies.
Protection of creditors’ rights: Creditors’ rights must be protected, and they have the right to claim the security of their claims within 6 months counting from the publication of the registration of the division in the court register. The right to insurance is not granted to those creditors of the company to be divided whose claims are secured in full by separation rights, as well as those who have the right of primary settlement in bankruptcy.
Each of the procedures described above has its own specifics and requires a detailed understanding of legal procedures and consequences. Managing these processes requires expertise and precision to ensure that all rights and obligations are properly addressed and protected. This article is published as a rough simplification of complex legal proceedings, all for the purpose of easier understanding of basic concepts and legal concepts.
In conclusion, merger, merger and division of companies are complex processes that require a deep understanding of corporate law. In case of need for professional legal advice or assistance in these processes, please feel free to contact:
