Mergers of companies or selling a business
Information about Rights & Duties
Mergers of companies or selling a business
The term merger, also known as amalgamations and consolidations , is taken to mean the complete integration of institutions that were previously financially and legally independent.
- merger by absorption , which refers to the transfer of all the assets to an existing legal entity
- merger by new formation , which refers to the transfer of the assets of two or more entities to a new legal entity
In principle, a distinction is made between:
- horizontal mergers, i.e. the companies are in competition with each other
- vertical mergers , where the companies involved are in a supplier or customer relationship with one another
- c onglomerate mergers , where the companies involved are neither in competition nor in a supplier or customer relationship with one another
A distinction can also be made between national and international mergers.
- Under certain conditions, mergers between companies are subject to merger control by the national cartel authority, the Bundeskartellamt (Federal Cartel Office); see
Section 39 of the Competition Act(GWB). There is a control obligation if the companies involved have a combined aggregate worldwide turnover in excess of EUR 500 million and at least two of the companies involved have significant turnovers in Germany - one company with more than EUR 25 million and another with more than EUR 5 million. The Bundeskartellamt is required to prohibit transformation if a dominant position could be created or strengthened (Section 36(1) GWB).
- Mergers are subject to a prohibition on implementation throughout the examination procedure by the Bundeskartellamt, i.e. they cannot be implemented until the merger has been approved.
Notification of mergers
You can notify the Bundeskartellamt of a merger by post, fax or electronically.
Notification by post:
- Bundeskartellamt, Kaiser-Friedrich-Str. 16, 53113 Bonn
Notification by fax:
- Fax number +49 (0)2289499-400
Electronic notification - three possible ways:
- by email with a qualified electronic signature to firstname.lastname@example.org
- by de-mail to email@example.com
- via the special electronic mailbox for German public authorities (beBPO)
However, simple email notifications do not meet the legal requirements and do not trigger the start of the associated deadline.
The Bundeskartellamt acknowledges receipt of complete applications on its website a few days later. Following this, the examination procedure begins. In what is known as the initial phase , the authority has an initial period of 1 month to assess whether the proposed merger needs closer examination or whether it can be cleared. If there is any indication of competition issues that cannot be dispelled during the initial-phase procedure, a formal in-depth examination procedure is initiated. This in-depth examination procedure is referred to as the second phase , and may take up to 4 months from the date of notification .
Cooperation with other competition authorities
- The Bundeskartellamt works closely with the European Commission and is particularly closely involved in the examination of potentially problematic cases. In cases where a proposed merger is subject to merger control by competition authorities in several countries, this is handled in close cooperation within international networks, such as the European Competition Authorities (ECA) network and the
International Competition Network (ICN).
Sector-specific rules for mergers and acquisitions
In Germany, the antitrust approach is followed; this means that similar competition issues are address according to similar rules, regardless of the sector in which they occur or are suspected to occur. This occurs simultaneously in compliance with the constitutional requirements of non-discrimination and proportionality of state intervention. The inventory drawn up in accordance with the GWB, as amended, pursuant to which the GWB, with its general provisions applicable across all sectors , has worked well in practice, continues to apply. The general rule in Section 19(4), subparagraph 4 GWB has prevented the further sectorisation of antitrust law.
Merger rules depending on the type of company
The merger procedure takes into account a number of specific characteristics, depending on the legal form of the companies involved .
- In the case of partnerships (Personengesellschaften),
Section 43(1) UmwGrequires the consent of all the shareholders. If the articles of association provide for a majority decision, the first and second sentences of Section 43(2) UmwG require the decision to be made by a qualified majorityof at least three quarters of the votes cast. If a commercial partnership (Personenhandelsgesellschaft) is merged into a company limited by shares, its liability as a former shareholder normally ends at the latest 5 years after the merger, pursuant to Section 45 UmwG.
- In the case of a limited liability company (Gesellschaft mit beschränkter Haftung, GmbH) such as a GmbH, the merger resolution pursuant to
Section 50(1) UmwGmust be adopted by a majority of at least three quarters of the votes cast. In special cases listed in Section 51(1) UmwG, the consent of all shareholders is required. If the GmbH is involved as the acquiring legal entity, Section 46 UmwGrequires that the nominal value of the respective (new) shares of all the shareholders be determined in the merger agreement. Other specific procedural provisions apply if the merger cannot be implemented without an increase in the capitalof the acquiring GmbH. These provisions are contained in Sections 53 et seqq. UmwG.
- Similar provisions apply where a stock corporation (Aktiengesellschaft) is involved. Accordingly, pursuant to
the first sentence of Section 65(1) UmwG, at least a three-quarters majority of the nominal capitalrepresented at the time at which the resolution is adopted is required. Sections 66, 68 and 69 UmwG contain provisions relating to mergers with an increase in capital.
Special arrangements also apply to credit institutions, such as
Documentation required for a merger
Before a merger can take place, a number of documents must be drawn up, including the following:
- The merger requires the conclusion of a merger agreement , which must be recorded by a notary (
(Section 4(1)and Section 6 UmwG). Section 5 UmwGsets out the information that the merger agreement must contain. Pursuant to Section 9 UmwG, the merger agreement must be audited by one or more expert auditors. This audit must be performed by independent auditors within the meaning of Sections 319 et seqq.of the Commercial Code (HGB).
- The merger agreement does not take effect until the shareholders have given their consent . This must be done at a shareholders meeting and must also be recorded by a notary
(Section 13(1) and Section 13(3), first sentence of the UmwG).
- In accordance with
Section 8 UmwG, the representative bodies of each of the legal entities involved must also submit a merger report .
- In the event of a merger with a cooperative society (Genossenschaft),
Section 81 UmwGadditionally requires an expert opinion to be obtained. Since a merger involves several legal entities and their respective shareholders meetings, it is usually appropriate to prepare powers of attorney . This way, the involvement of the management bodies of all the companies in the authentication process can be avoided. The powers of attorney must be certified by a notary.
- In addition, the closing balance sheet of the transferring entity is required for the registration of the merger. This balance sheet must be no more than 8 months old at the time of the registration.
The transferring entity is recorded as such in the commercial register once all the documents are present. However, it only becomes effective upon registration with the acquiring entity. The transferring entity then ceases to exist.
The competent competition authority
In Germany, the Bundeskartellamt, which has its registered office in Bonn, is the sole authority responsible for examining mergers
Merger control The Bundeskartellamt Case database of all published case summaries and decisions relating to the ban on cartels, control of abusive practices, merger control and public procurement law
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