Navigation path

Last checked 26/02/2018

Company mergers

As of 30 March 2019, all EU law will cease to apply to the UK, unless a ratified withdrawal agreement establishes another date, or the European Council and the UK decide unanimously to extend the two-year negotiation period. For more information about the legal repercussions for businesses:

If you're looking for new business opportunities, you can also consider merging or taking over an existing company. The following rules concern 'limited liability companies' based in at least two different EU countries.

Cross-border mergers involving companies investing capital provided by private or public investors are exempt from EU merger rules.

EU rules must be applied to mergers when:

Your company purchases one or more other companies that are located in another EU Member State (merger by acquisition)

If you are the purchasing company, the assets and liabilities of the companies you buy will be transferred to you. You must then issue securities (such as shares) equal to the capital of the company you purchased, in exchange for the assets you received from the transfer.

You may have to make a cash payment of up to 10% of the nominal or accounting value of your company's securities.

Although the companies you purchased are technically dissolved, they are not officially under liquidation.

Two or more companies transfer all their assets and liabilities to a new company that you will form (merger by formation)

If you're forming the new company, you must issue securities (such as shares) equal to the capital of the companies transferring their assets. You should issue these securities to the owners of the asset-transferring companies. The value of the securities must be equal to the asset-transferring company's capital.

You may have to make a cash payment of up to 10% of the nominal or accounting value of your company's securities.

The companies transferring their assets will be dissolved at the end of the process without undergoing an official liquidation procedure.

A company transfers all of its assets and liabilities to your company which already holds all of their securities (merger by absorption)

Following the transfer, although the company transferring their assets is dissolved, they are not officially under liquidation.

EU countries may choose not to apply the above mentioned rules to cross-border mergers involving cooperative societies, even if they are defined as limited liability companies.

Preparing the documentation (common draft terms)

When your company is involved in a merger you must draw up a document, known as common draft terms of the merger, containing at least the following points:

  • name and registered office of the companies involved, and of the company resulting from the merger
  • the ratio and terms of allotment that will be applied to the exchange of securities (i.e. how much of your acquiring company's shares will be offered to the shareholders of the acquired companies) and the amount of cash you give as payment (if applicable)
  • likely effect on employees
  • the date from which the new holders (of the securities of the company resulting from the merger) have the right to dividends
  • statutes of the company resulting from the merger
  • procedures for the arrangements employees should make when dealing with the board members in the company resulting from the merger (where appropriate)
  • information on the evaluation of the assets and liabilities transferred to the company resulting from the merger

Publishing the documentation

You must publish the common draft terms at least 1 month before the general assembly meetings take place. These meetings are attended by all the companies deciding on the merger.

You should publish the common draft terms either on the websites of the companies involved or on a dedicated website for mergers in the EU countries concerned.

Preparing the reports for the general meeting

You should usually prepare the following two reports before the general meetings. However, if all owners of the companies involved agree, you can omit the independent expert report.

Report by the management or administrative bodies

This report explains the legal and economic aspects, and implications of the merger for owners, creditors and employees. The report should be given to the owners of the company and to the staff representatives at least 1 month before the general meeting. If the management of any of the merging companies receives feedback (in good time) from the employees, it will be included in the report.

Independent expert report

This report (if required) is prepared for the owners of the companies involved. The report must be ready at least 1 month before the general meeting and should explain the exchange ratio that was laid down in the common draft terms to be used when offering securities for the acquired assets.

Agreeing on the draft terms

All the companies involved in the merger must agree on the draft terms during general meeting sessions.

All companies involved have the right to ensure that the implementation of the merger is conditional; depending on the continuing staff participation after the merger has taken place.

If you're the acquiring company, you can approve the merger without the need to attend the general meetings as long as the other companies involved agree. To do this you must ensure that:

  • the common draft terms are published at least 1 month before the general meetings take place
  • all other documents relevant to the merger are available for inspection by their shareholders (these could be the annual accounts and annual reports of the companies subject to the takeover)

Checking the legality of the merger

The merger must be checked for legality in each EU country involved before it can enter into force. This is normally done by a notary or court. After checking if everything is in order they will issue a pre-merger certificate.

Once the pre-merger certificate is issued, the merger can be completed; as long as the companies involved have approved the common draft terms. Then the relevant authority — in the country where the new company will be created and registered — must check the legality of the formation of the new company.

To find the relevant competition authority in each country, please use the list below.

Choose country:

Entry into force

The same competent authority in the country where the acquiring or newly-formed company is registered then decides the date when the merger will take effect.

It is the responsibility of each company involved to publish information about the merger on its own national public register. The old company registrations can then be deleted.

Continued staff participation

As a general rule — if you're the acquiring/newly formed company — the future of staff participation in your company is determined by the rules of the EU country where your company is registered.

Staff participation in the acquired/newly formed company cannot be guaranteed by national law if:

  • no guarantee can be given for the same level of staff participation as previously existed in the acquired companies
  • at least one of the companies involved in the merger had an average of more than 500 employees in the 6 months leading up to the publication of the common draft terms

Mergers for large companies

If the turnover of the combined businesses is greater than certain specified amounts both worldwide and within the EU, you must request approval from the European Commission - irrespective of where your company is based. The Commission will examine the proposed merger's impact on competition in the EU. If the merger is deemed to significantly restrict competition it would be rejected. Sometimes mergers are approved with certain conditions attached, for example they may commit to selling part of the combined business, or to license technology to another market player.

Public consultations

Contact a local business support partner

Do you have questions on operating a business cross-border, for example exporting or expanding to another EU country? If so, the Enterprise Europe Network can give you free advice.

Local business support

Help & advice

Get in touch with specialised assistance services

Help & advice

Contact a local business support partner

Do you have questions on operating a business cross-border, for example exporting or expanding to another EU country? If so, the Enterprise Europe Network can give you free advice. To assist the advisor in your local area to respond in a timely and correct manner, please provide as much information as possible.

EEN-logo

Contact form

(All fields are mandatory)
Thank you, your message has been sent successfully.
Due to technical problems, your message could not been sent. Please try again later.
Please provide a valid e-mail address.

Personal details

Company details

YesNo

Austria

Wien

Belgium

Brussel

Bruxelles

Namur

Bulgaria

Sofia

Croatia

Zagreb

Cyprus

Nicosia

Czech Republic

Praha

Denmark

Copenhagen

Estonia

Tallinn

Finland

Helsinki

France

Blagnac Cedex

Caen

Dijon

Guadeloupe, Martinique

Lille

Lyon

Paca

Paris, Ile-de-France, Centre, Nouvelle-Calédonie, Polynésie

Rennes

Saint-Denis

Germany

Berlin

Bremen

Erfurt

Hannover

Kiel

Leipzig

Magdeburg

Mainz

Mülheim an der Ruhr

München

Rostock

Stuttgart

Wiesbaden

Greece

Athens

Hungary

Budapest

Iceland

Reykjavík

Ireland

Dublin

Italy

Firenze (Toscana, Umbria, Marche)

Milano (Lombardia, Emilia Romagna)

Napoli (Abruzzo, Calabria, Campania, Basilicata, Molise, Puglia, Sicilia)

Roma (Lazio, Sardegna)

Torino (Piemonte, Liguria, Valle d’Aosta)

Venezia (Veneto, Trentino Alto Adige, Friuli Venezia Giulia)

Latvia

Riga

Lithuania

Vilnius

Luxembourg

Luxembourg

Malta

Pieta`

Netherlands

Den Haag

Norway

Oslo

Poland

Kielce

Lublin

Warsaw

Wroclaw

Portugal

Lisboa

Romania

Baciu Cluj

Bucuresti

Constanta

Timișoara

Slovakia

Bratislava

Slovenia

Ljubljana

Spain

Barcelona

Madrid

Oviedo

Palma

Santa Cruz de Tenerife

Sevilla

Valencia

Vitoria- Gazteiz

Zaragoza

Sweden

Stockholm

United Kingdom

Belfast (Northern Ireland)

Cardiff (Wales)

Edinburgh (Scotland)

London (England)

3000/3000

This information entered on this form is sent directly to a partner from the Enterprise Europe Network. Personal data entered on the form will only be used to assist the advisor to respond to your enquiry; the data will not be stored thereafter.