Merger

This term refers to the law of the country selected below.

  Czech Republic

What is meant by the term ‘merger’?

In commercial relationships, a merger refers to the amalgamation or consolidation of two or more commercial companies. It is one of the forms of transformation of commercial companies under Act No. 125/2008 Coll., on the transformation of commercial companies and cooperatives.

In a merger, all assets, i.e. property, debts and rights, of one or more >capital companies < are transferred by universal legal succession to another capital company (a merger by consolidation) or to a newly established capital company (a merger by amalgamation). The transferring company is dissolved as part of the merger without going into liquidation.

What is meant by the term ‘merger plan’?

A merger plan forms the legal basis for a merger. It is an agreement between the parties involved which sets out, in particular, the effective date of the transformation, the exchange ratio of shares, changes to the share capital, the status of partners or shareholders, defines the assets transferred to the successor company, the method of valuing these assets and other mandatory details.

What is a downstream merger?

In a downstream merger, the parent company ceases to exist and its assets are transferred to its subsidiary, which becomes the legal successor.

As a result of a downstream merger, the successor company acquires its own shares or own equity. These shares may be exchanged for shares in the dissolving (parent) company or for the successor company’s own shares. The possibility of exchanging shares is subject to the principle of shareholder protection, which ensures that the value of a partner’s or shareholder’s assets must not be reduced.