Mergers - Spain
In response to the challenges of a competitive market and to take advantage of the opportunities that this may offer, businesses can adopt various strategies, including deciding to merge with other businesses.
In Spain the law on structural changes to companies regulates certain particularly important changes in the lives of companies: change of status, mergers with other companies, divisions and international changes of registered office.
This law incorporates the European Union law on this subject. It also particularly regulates mergers of companies from different Member States of the European Union.
The requirements that must be met during the merger of companies are set out in the law on structural changes to companies and in the sectoral legislation applicable to each type of company.
A merger is where two or more companies join together as one. The company resulting from the merger assumes the assets and liabilities of the former companies. The shareholders of the disappearing companies receive shares in the company resulting from the merger.
Types of merger
There are different types of merger:
- Merger by setting up a new company
Two or more companies join together to form a new one, which is specifically created for that purpose. The former companies disappear. The new company takes over the assets, liabilities, rights and obligations of the former companies. The shareholders of the former companies become shareholders of the new company.
- Merger by taking over other companies
In this case, one company takes over or absorbs other companies. The company taking over the other companies continues to exist and retains its legal personality. The companies being taken over disappear: their assets, liabilities, rights and obligations become part of the acquiring company.
Anyone with a special interest in the companies, such as shareholders or lenders to the companies, are entitled to be informed about and involved in the merger plan and to defend their interests. As an example, when any decisions are made, shareholders can make observations or even oppose the merger in certain cases.
So that these persons can defend their interests, the law regulating mergers establishes a series of steps and requirements that must be observed during mergers. The Business Register plays a key role in informing anyone with a special interest in the merger about the main stages in the process.
This process involves a merger plan and various reports being prepared, the shareholders being involved in any decisions that are taken, and the merger agreement being made public. Publicising the merger agreement allows interested persons to make observations or oppose the merger, where they are entitled to do so. Finally, a public deed is executed.
The merger process ends with the articles of association of the new company or the necessary changes to the acquiring company being registered in the Business Register.
- When two companies are merged, resulting in a new company, the requirements that must be met are the same as those when any business is set up. These are set out in the articles of association, which are made public.
- When companies are merged through a takeover, the acquiring company may change significantly, but will continue to exist in terms of: share capital, assets and liabilities, shares, shareholders, etc. These changes are set out in its articles of association, which are made public.
Once these changes have been registered, the information in the Business Register on the disappearing companies is deleted.
The changes resulting from the merger may mean that certain procedures must be completed with other authorities, such as the National Tax Office or Social Security Agency, in the same way as when a business is set up or certain aspects of this are changed.
Mergers of companies from different Member States of the European Union
Specific rules have been laid down to assist with mergers of companies resident in different Member States of the European Union, which are known as cross-border mergers. More information is available through the following link:
Market competition between businesses encourages innovation, competitiveness and better products and services for consumers.
As a result, businesses must report certain acts or events to the competition authorities or obtain authorisation for these.
At European level, the European Commission is responsible for monitoring competition between operations affecting the Community market. In Spain the National Competition Commission is responsible for ensuring competition at the national level. Some company merger agreements must be reported to or authorised by these authorities. For more information:
Mergers following a TOB
One company can buy another company that is quoted on the stock market. This purchase can be carried out through a TOB or takeover bid, in which an offer is made to purchase the shares making up the company’s capital. Interested shareholders can sell their shares.
Through a TOB, one company can buy all or some of the shares in another company. When one company buys all the shares in another company, they can be merged.
In such cases, the rules on takeover bids and mergers apply.
Buying an existing company, with an already established structure, can be a good way of expanding your business.
In the merger process, a series of procedures must be completed with the Business Register. The other procedures are similar to those required when setting up other businesses.
In addition, in some cases other administrative procedures are necessary, namely: competition or stock market procedures.
The Business Registers are administrative services that offer certainty to the economy, business activities and persons interested in these. Businesses are required to register acts and file documents that particularly affect their operations. Persons with a legitimate or special interest in the business may consult these registers.
When companies are merged, a series of procedures must be completed with the Business Registers:
- The merger plan must be filed with the Business Register and then published in the Official Gazette of the Business Register.
- The Business Registrar must be asked to appoint an independent expert, who will prepare reports on the merger.
- The shareholders of the companies must be invited to meetings and adopt the relevant resolutions.
- The merger resolution must be published in the Official Gazette of the Business Register.
- The public deed in which the merger is agreed must be filed with the Business Register. A new company must be created or the articles of association of the acquiring company must be changed.
Setting up a business
Mergers may result in the need for certain business start-up procedures to be completed.
Mergers must be authorised by the relevant competition authority. More information on this subject is available through the following links:
Check also the legislation on this topic in: