Mergers and acquisitions of legal entities
The experts of Prime legal LLC law firm render full range of services in mergers and acquisitions of legal entities.
Legal support of a company acquisition covers the following:
- Legal assessment of the seller’s property rights for the shares in the company, which is the subject of acquisition, covers legal analysis of all transactions effected in respect to the company shares.
- Legal assessment of all transactions involving company shares alienation that have ever been effected from the day the company was founded, as voidability of at least one of such transactions entails the purchaser risk of losing the acquired company.
- Legal analysis of the structure and juridical quality of constituent documents from the point of view of possibility to declare the shares sales and purchase transaction void or other risks, related to the transaction.
- Collecting information on movable, immovable, industrial (intellectual) property, and other rights of the acquired company.
- Legal analysis and evaluation of title deeds of the company. (This is particularly important when carrying out transactions of acquisition of a property complex through purchasing shares of a company owning the property.)
- Drafting legal opinions on the assessment of legal and financial risks related to purchasing of property.
- Working out a set of measures and documents to attain to maximum efficiency of a transactions of any complexity.
Merger of legal entities is deemed to be creation of a new legal entity with transfer to it of all rights and duties of the two or more legal entities being merged and termination of such rights and duties of the latter. The reorganization in the form of merger should start with a decision on reorganization made severally by each entity taking part in the merger, and concluding a merger agreement between them. Reorganization affects the interests of the legal entity creditors, as their debtor terminates its activity. That’s why preliminary notice to the creditors is a compulsory prerequisite of reorganization. The creditors in this case have the right to require early termination or performance of obligations of the reorganized legal entity, and to claim compensation for damages (article 60, clause 2 of the Civil Code of the RF). Application for registration of a legal entity, created through merger, is submitted to the corresponding registration authority. On the basis of the decision on registration the registration authority makes an entry in the Unified State Register of Legal Entities on the new legal entity and informs the registration authorities at the location of the merging companies on termination of the reorganized legal entities activities, the latter is recorded in the Unified State Register of Legal Entities.
The basic stages of reorganization thorough merger are the following:
- Making decision on reorganization through merger by all legal entities participating in the reorganization through merger;
- Preparation of a report on the market value of the shares of the reorganized companies (article 75, clause 2 and the Federal Law “On Joint-Stock Companies”).
- Holding of a joint general meeting of participants (shareholders) of all legal entities, taking part in the reorganization trough merger. In this meeting the merger contract, the charter of the created legal entity, and the act of transfer are approved, the executive body (the CEO) of the created legal entity is elected (if necessary, the committee of directors is elected), the firm name and the location are defined, and the chartered capital is formed. The voting procedure at the joint general meeting is stipulated by the merger contract.
- A written report on the forthcoming reorganization is submitted to the tax service at the location of registration within three days from the moment of making such decision (article 23, clause 2 of the Tax Code of the RF).
- A written notification on the made decision shall be sent to the present creditors, and a report on the reorganization shall be published in “The Registration Bulletin” or other print, designated for publication of information on state registration of legal entities, within 30 days from the moment of making such decision (article 51, clause 5 of the National Law “Of Public Limited Companies”, article 15, clause 6 of the National Law "Of Joint-Stock Companies".
- State registration of a legal entity created through merger by the registration authority.
- State registration of the issue of securities, placed at merger, and of the report on the securities issue results (for joint-stock companies).
- Submitting of a notification on the reorganization and paying of shares of the reorganized companies to the Federal Financial Markets Service of the RF.
- Information disclosure by a joint-stock company.
- Closing of bank accounts of the legal entities, taking part in the reorganization in the form of merger.