Merger of companies without an increase in the share capital

According to the Commercial Companies Code amendment that came into effect on September 15, 2023, the possibilities for applying the merger of companies without an increase in share capital have been expanded:

When can a merger be applied without an increase in share capital?

  • In the merger of two sister companies, both of which are 100% controlled by a parent company.
  • In the merger of a subsidiary with a granddaughter company when the parent company has two subsidiaries (in which it holds 100% of the shares), i.e., subsidiary 1 and subsidiary 2, where subsidiary 1 is the sole partner of the granddaughter company. The merger occurs between subsidiary 2 (the acquiring company) and the granddaughter company (the acquired company).
  • In the merger when the merging companies are controlled by a broader group of entities, but the level of involvement in the merging companies is the same. For example, when partner 1 holds 30% of the shares in company 1 and company 2, and partner 2 holds 70% of the shares in company 1 and company 2.

Simplified division as an alternative

The simplified division serves as an alternative to the standard merger procedure, and in each of the above cases, the simplified procedure can be applied in place of the standard procedure.

What other simplifications are there in the division?

  • waiving the requirement for an expert opinion (independent of the consent of the partners),
  • waiving the resolution regarding the merger (adopted in the standard procedure) for the acquired company,
  • restrictions on management reports concerning the merger,
  • a special instrument related to the protection of the company’s creditors. Its essence is the right of such a creditor to secure their claims within a month from the announcement of the merger plan if the creditor substantiates that their satisfaction is jeopardized by the merger.Jak przebiega procedura uproszczona połączenia spółek?

How does the simplified procedure for the merger of companies work?

The described simplified procedure for the merger of companies requires, above all, the preparation of appropriate financial documents, the creation of the most important document – the merger plan, the publication of the merger plan, the notification of the partners of the merging companies about the planned merger, and the constitutive document, which determines the finalization of the entry into the National Court Register (KRS).

Even in the simplified variant, the procedure can take 3-4 months.

When is it worth using the simplified mode?

Taking advantage of the described simplifications will not only streamline the process of organizing complex structures of capital groups but is also beneficial in areas such as:

  • Agricultural land and Agricultural Property Stock (KOWR) – the absence of share issuance may facilitate or even unblock transactions when the merging companies own agricultural land, which entails additional obligations and risks of losing control over shares/stocks by the current partners.
  • Maintaining the principle of tax neutrality in the merger.