Enterprise merging is a form of corporate reorganization. Accordingly, two or more companies (merging companies) can merge into a new company (merged company) and the operation of merging companies shall end. As a consequence of this process, the legal entities of companies which have agreed to merge shall be terminated; and the newly established company shall receive all of the assets, rights, obligations and legitimate interests of the merging companies.
In the business process, if two or more individual companies are not competitive enough, enterprise merging is a way to increase their competitive strength. So, how to merge businesses?
Procedures for company merging
- Merging companies prepare the merger agreement which must contain these principal contents: names and addresses of the head offices of merging companies; name and address of the head office of the newly established company; procedures and conditions for merger; employment plan; duration, procedures and conditions for converting assets, capital contributions, shares and bonds of merging companies into the capital contributions, shares and bonds of the merged company; duration of merger; draft charter of the merged company;
- Company members, company owners or shareholders of the merging companies shall approve merger agreement and company charter of the merged company; elect or appoint Chairman of the Board of Members, Chairman of the company, Managing Board, and Director or General Director of the merged company; and implement the registration of the merged company according to provisions of this Law. The merger agreement must be sent to creditors and notified to employees within 15 days from the date of approval.
- Business registration procedures shall be carried out at the business registration office.
Dossiers for enterprise merger
- Application for enterprise registration
- Draft of company’s charter.
- List of capital contributing members/ founding shareholders
- Merger agreement as regulated
- The decision of the Company Owner in the case of one-member limited liability companies; Decisions and Minutes of the meeting of the Company’s Board of Members in the case of limited liability companies with 2 members or more; the decision of the General Meeting of Shareholders in the case of joint stock companies.
- Certified copies of Business registration certificate of merging companies.
- Certified copies of one of the documents certifying the individual or legal entity of the owner(s), capital contributing member(s), founding shareholder(s).
Notes: When implementing merger, companies must be aware of competition laws. Specifically:
- In the case of merger in which the merged company holds 30-50% market share, the representative of merging companies must notify the Competition Authority before proceeding the merger, unless otherwise provided for by the law on competition.
- Business merging is forbidden if the merged company holds more than 50% of the market share, unless otherwise provided for by the law on competition.
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