1. Definition of a merger by acquisition, merger by formation of a new company and division
Merger
A merger by acquisition is an operation whereby after being wound up without liquidation, one or more companies cease to exist, while assets of the companies ceasing to exit are transferred to another already existing company, which thus becomes the legal successor of the companies ceasing to exist.
Merger by formation of a new company
A merger by formation of a new company is an operation whereby after being wound up without going into liquidation, two or more companies cease to exist, while assets of the companies ceasing to exist are transferred to a newly established company, which thus becomes the legal successor of the companies ceasing to exist.
Division by acquisition
A division of a company by acquisition is an operation whereby, after being wound up without going into liquidation, a company ceases to exist, while assets of the company ceasing to exist are transferred to other already existing companies that become the legal successors of the company ceasing to exist.
Division
A division of a company is an operation whereby, after being wound up without going into liquidation, a company ceases to exist, while the assets of the company ceasing to exist are transferred to newly established companies, which thus become the legal successors of the company ceasing to exist.
In general, only the following companies may take part in the process relating to a merger or division:
- companies which are not in liquidation;
- companies which cannot be affected by a declaration of bankruptcy, unless the trustee in bankruptcy agrees to the merger by formation of a new company, merger by acquisition or division of the company;
- companies which cannot be affected by the commencement of a restructuring procedure or authorisation of restructuring;
- companies which cannot be subject to a procedure for dissolution or which cannot be dissolved based on a court order.
The members of the company's bodies are obliged to refrain from actions aimed at a merger by formation of a new company, merger by acquisition or division, if it is presumed that the conditions stated in the previous paragraph have not been met; otherwise they will be liable to creditors for any damages they incur as a result of breaching this obligation.
2. Decision on merger or division
Before taking a decision on the merger or division, draft terms of merger by formation of a new company or merger by acquisition must be prepared and processed; for divisions, the draft terms should be drawn up and processed. The general formalities these documents are to contain are stipulated in more detail in Section 69(6) and (9) of the Commercial Code. More details regarding mergers of public limited liability companies are provided in Section 218a(1) of the Commercial Code.
In general, the approval decision of the draft terms of division requires approval by all members of the companies ceasing to exist, in the case of a merger also of the members of the successor, unless the law or memorandum (or articles) of association of these companies provide otherwise. However, for some corporate forms, special provisions regarding the quorum to adopt the decision apply.
3. Report of the statutory body
Pursuant to Section 218b (only in Slovak) of the Commercial Code, a report of the statutory body is required for mergers involving a public limited liability company (mutatis mutandis, based on the reference in Section 152a of the Commercial Code also to mergers of limited companies). The purpose of the report of the statutory body is to explain and justify, from the legal and economic points of view, the merger of the companies, data from the draft terms of the merger, including, but not limited to the share exchange ratio.
Pursuant to Section 152a(5) (only in Slovak) of the Commercial Code, the report of the executive directors of limited companies involved in a merger or division are not required if all the members waive the right for the report to be submitted, either in writing or in the form of a note in the minutes from the general meeting.
4. Opinion of the supervisory body
The supervisory board of each merging company examines the merger of the companies, the draft terms of the merger, and the report of the statutory body, and submits its opinion on the planned merger to the general meeting.
In line with Section 152a(5) (only in Slovak) of the Commercial Code, if a limited company involved in a merger or division does not have a supervisory board, the opinion of the supervisory board under Section 218b(2) of the Commercial Code is not required.
5. Report of an independent expert
Pursuant to Section 218a(3) (only in Slovak) et seq. of the Commercial Code, a report of an independent expert (i.e. auditor or expert) is required for mergers involving a public limited liability company (mutatis mutandis, based on the reference in Section 152a (only in Slovak) of the Commercial Code also for mergers of limited companies).
The purpose of preparing the report is to independently assess certain economic issues regarding the merger process and its consequences.
Pursuant to Section 152a(5) (only in Slovak) of the Commercial Code, for a merger (division) of a limited company an assessment by an independent expert is necessary only at the request by any of the members of the merging companies, or if any of the companies is in crisis; the costs of the independent review are borne by the company.
6. Termination of membership in a company
In general, unless the law or draft terms of the merger of companies by formation of a new company or draft terms of the merger of companies by acquisition provide otherwise, the members of the company ceasing to exist by formation of a new company, acquisition or division become members of the successor.
The draft terms of the merger by formation of a new company or draft terms of the merger by acquisition may provide that some members of the companies ceasing to exist are not to become members of the successor; the same right applies to members of the company to which the assets of the companies ceasing to exist are transferred. The successor is obliged to provide the members with a repayment. An approval of the members concerned is required for such an agreement to become valid. This requirement also applies mutatis mutandis to divisions of companies.
7. Registration of a merger in the Commercial Register and its effects
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Note:
Effective from 1 October 2020, significant changes occur in the process of registration in the Commercial Register; only electronic submissions of applications for registration in the Commercial Register is accepted. As of 1 October 2020, submissions in paper form is no longer accepted. Changes in applicable court fees also became effective as of that date.
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The effects of merger or division apply as of its registration in the Commercial Register. As of this reference date,
a) the assets of the companies ceasing to exist are transferred to the successor;
b) members of the companies ceasing to exist become members of the successor;
c) the companies ceasing to exist by merger or division cease to exist;
d) in the case of merger by formation of a new company and division, new companies are formed.
The company ceasing to exist is removed from the Commercial Register and the companies formed by the merger or division are registered as of the same date. The removal of the company ceasing to exist and registration of merger or division of the company by acquisition for the successor are carried out as of the same date.
Who submits an application for registration of a merger or division
The application for registration of a merger by formation of a new company, a merger by acquisition or division of a company in the Commercial Register is submitted jointly by all the companies ceasing to exist and the successors. The persons authorised to file the request above and to act on behalf of the successors in all the matters concerning their incorporation are the members of the statutory bodies of the newly incorporated companies, as identified in the approved merger contract or terms of division.
To register a merger or a division, Implementing Decree of the Ministry of Justice of the Slovak Republic No 25/2004 (Section 24 et seq.) (only in Slovak) requires using and filling in (simultaneously) a combination (as appropriate) of the following forms:
Merger by formation of a new company:
- the removal form – to be used for registration of data in the Commercial Register for companies ceasing to exist due to a merger by formation of a new company;
- the first registration form – to be used for registration of the new successor in the Commercial Register and to register data required for its registration in the Commercial Register.
Merger by acquisition:
- the removal form – to be used for registration of data in the Commercial Register for the company or companies ceasing to exist due to merger by acquisition;
- the change form – to be used for registration of data in the Commercial Register for the successor and to be determined depending on the corporate form of the successor.
Division:
- the removal form – to be used for registration of data in the Commercial Register for the company ceasing to exist due to division;
- the first registration form – to be used for registration of the newly formed successors and for registration of data in the Commercial Register for the newly formed successors and to be determined depending on the corporate form of the successor.
In the case of the division of a company by acquisition, an application form for the registration of a change in the registered data determined depending on the corporate form of the successor is used for the registration of data on the successor in the Commercial Register, as required by a special law.
Deadline for submitting an application for registration of a merger or division
An application for registration of a merger or division of a company in the Commercial Register must be filed by all the companies ceasing to exist and the successors within 30 days from the approval of the merger contract or terms of division of the companies. This deadline does not apply where the merger or division is subject to approval under special legislation.
8. Protection of creditors
Creditors who, as of the effective date of the merger of public limited liability companies (mutatis mutandis, also limited companies pursuant to Section 152a(1) of the Commercial Code) have debts payable by any of the merging companies, are entitled to request the successor to adequately secure the settlement of their outstanding claims, in the event that the recoverability of their debts is impaired due to the merger. The claim must be made within 6 months of the publication of the notice of merger (for details see Section 218f of the Commercial Code).
9. Individual phases of the process relating to the merger and division in brief
- Processing of the draft terms of a merger (or draft terms of a division) and its registration in the collection of documents maintained by the Commercial Register.
- Duly convened meeting of the relevant supreme body of the company with the power to approve a decision on the merger.
- Processing of the report of the statutory body
- Processing of the report of an independent expert
- Opinion of the supervisory body of the company, if it is established.
- Adoption of the decision on the merger.
- Registration of the merger in the Commercial Register.
Under Section 25(4) (with the exception of documents under Section 4) of the Implementing Decree of the Ministry of Justice of the Slovak Republic No 25/2004, the application for registration of a merger by acquisition in the Commercial Register must be accompanied by:
a) decisions of the members or the competent body of the companies or cooperatives ceasing to exist on the merger, if the merger
concerns a merger of a company or a cooperative and unless a special act provides otherwise;
b) decision of the successor on the merger of the companies, unless a special act provides otherwise;
c) approved contract on the merger of the companies, unless a special act provides otherwise;
d) other document certifying facts under special legislation;
e) statutory declaration of the applicant with the authenticated signature that:
- the successor and the company ceasing to exist are not in liquidation;
- the successor and the company ceasing to exist are not affected by a commencement of insolvency proceedings or filing for a bankruptcy, or a written consent with the authenticated signature of the trustee to the merger of the company;
- the successor and the company ceasing to exist are not affected by a commencement of restructuring proceedings or authorisation of restructuring;
- the successor or the company ceasing to exist are not subject to a procedure for dissolution or have not been dissolved by a court order;
f) a report of an auditor under special legislation or report of an independent expert under a special legislation.
Under Section 24(4) (with the exception of documents under Section 4) of the Implementing Decree of the Ministry of Justice of the Slovak Republic No 25/2004 (only in Slovak), the application for registration of a merger by formation of a new company in the Commercial Register must be accompanied by:
a) decisions of the members or the competent body of the companies or cooperatives ceasing to exist on the merger by formation of
a new company, unless a special act provides otherwise;
b) approved contract on the merger of the companies;
c) other document certifying facts under special legislation;
d) statutory declaration of the applicant with the authenticated signature that:
- the successor and the company ceasing to exist are not in liquidation;
- the successor and the company ceasing to exist are not affected by a commencement insolvency proceedings or declaration of bankruptcy, or a written consent with the authenticated signature of the trustee to the merger by formation of a new company of this company;
- the successor and the company ceasing to exist are not affected by a commencement of restructuring proceedings or authorisation of restructuring;
- the successor or the company ceasing to exist are not subject to a procedure for dissolution or have not been dissolved by a court order;
e) a report of an auditor under special legislation or report of an independent expert under a special legislation.
Under Annex 1 to Act of the Slovak National Council 71/1992 (only in Slovak) (Schedule of Court Fees), a court fee of EUR 66 applies to the application for registration of a merger or division (for more details, see item No 17(c)).
Failure to comply with the requirements results in the rejection of the application to register the merger or division in the Commercial Register as well as in claims arising from liability for damages incurred as the result of breaching special obligations imposed on members of the statutory body, independent expert (for more details, see Section 69(12) in conjunction with Section 218g of the Commercial Code et al.).