Legal processes for international mergers in Spain
What is an international merger?
An international merger It is a process by which two or more companies from different countries combine to form a new entity or for one of them to absorb the other.
The main objective of this type of operations is improve competitiveness, consolidate operations globally y access new international markets.
International mergers involve not only the union of operational and financial structures, but also the integration of corporate cultures, technological systems y labor policies, which may vary depending on the jurisdiction.
Since the companies involved are subject to different legal frameworks, these mergers must comply with a series of national and international regulations, including:
- Competition laws,
- Tax regulations of each country involved.
In addition, they must align with international treaties, such as the European Union directives on cross-border mergers, and may require approval from authorities such as the European Commission and National Commission of Markets and Competition (CNMC) in Spain.
What types of business mergers?
There are different types of business mergers, each with specific characteristics that determine the legal procedure.
These are some:
Fusion by absortionIn this case, a larger company absorbs another company, which ceases to exist legally. This is the most common form of cross-border operations, as it facilitates the integration of the operating structure of the acquired company into the organization of the acquiring company.
Merger by constitution of a new company: Here, two or more companies dissolve to form a new legal entity. This type of merger is ideal when both companies are looking to create a completely new structure for their joint operation.
Cross-border merger: This type of fusion involves companies from different countries, and is regulated by the 2005 / 56 / CE Directive on cross-border mergers of capital companies within the European Union. In this type of merger, it is essential to consider the regulations of the different countries involved, as well as the applicable European laws.
Planning and Due Diligence
The first step in any merger is the strategic planning, which should address:
- Objectives of the merger: Identify the reasons behind the merger, such as market expansion, improved competitiveness, or operational consolidation.
- Synergies: Define the areas where both companies can mutually benefit, whether in technology, human talent or financial resources.
La due diligence plays a crucial role at this stage.
It consists of the investigation and detailed review of the financial, legal and operational situation of the companies involved.
In an international merger, this research must be conducted in both jurisdictions to ensure that local and foreign laws are complied with.
During due diligence, it is important to examine:
- Financial statements: Ensure that accounts are clear and accurate.
- Litigation and legal risks: Identify possible legal conflicts or regulations that may affect the operation.
- Current contracts: Review contractual agreements with suppliers, customers and employees.
- Actives and pasives: Verify the assets and debts of both companies.
Preparation of the business merger project
The merger project must contain detailed information about the operation.
This document includes:
- Details of participating companies: Names, IDs and legal statuses.
- Share Exchange Conditions: Establish the proportion of shares that the shareholders of the merged companies will receive.
- Effective date of the merger: The time at which the merger will become legally effective.
- Impact on employees: Include details about employees, which contracts will be maintained and which will be modified.
- Operational and financial integration plan: Describe how the systems and structures of both companies will be unified.
This document must be presented and approved by the shareholders at the general meetings of each company involved.
In Spain, the Capital Companies Act requires that a qualified majority be obtained for approval of the merger.
Shareholder approval and regulatory requirements
In Spain, according to the Capital Companies Act (LSC), the mergers They must be approved by the general meetings of shareholders of the participating companies.
A is required qualified majority, Normally at least two-thirds of the votes cast by shareholders present or represented, although the bylaws may require a higher or lower majority.
At the regulatory level, it is necessary to obtain approval from the competent authorities.
In Spain, this responsibility falls on the National Commission of Markets and Competition (CNMC), whose role is to ensure that the merger does not create a concentration of power in the market that could restrict competition.
For mergers affecting several countries within the European Union, notification and approval by the European Union is required. European Commission.
In the context of cross-border mergers within the European Union, the European Commission must be notified when the operation affects several Member States, pursuant to the Regulation (EC) No. 139/2004, on the control of concentrations between companies.
This regulation establishes that the European Commission has the power to review mergers that exceed certain turnover thresholds, assessing their impact on competition within the single market.
Signing of the merger agreement
Once the necessary approvals have been obtained, the next step is the signing of the merger agreement, a binding document that makes the operation official.
This agreement must include:
- Distribution of shares: Detail how the new shares will be distributed among the shareholders of the merged companies.
- Transfer of assets and liabilities: Determine the transfer of all assets, rights and obligations of the participating companies.
- Registration in the Commercial Registry: In Spain, the merger must be registered in the Companies register to be legally effective.
Integration and change management
La post-merger integration is one of the most critical challenges.
This stage involves the unification of processes, systems and business culture.
La change management It is essential to avoid uncertainty among employees and ensure operational continuity.
Key areas of integration include:
- Organizational structure: Unify teams and operational functions.
- Technology systems: Align technology platforms to optimize operations.
- corporate culture: Ensure that employees from both companies adapt to the new organizational culture.
Legal and tax aspects in international mergers
From a tax point of view, international mergers are subject to a special tax regime under the Corporate Tax Law.
If certain requirements are met, mergers may be exempt from taxes, such as Tax on Patrimonial Transmissions.
To benefit from these tax advantages, the transaction must be notified and approved by the tax authorities.
In addition, it is important to review the International treaties to avoid double taxation, which ensure that companies' income is not taxed twice in different jurisdictions.
Conflict resolution in international mergers
During the merger process, conflicts may arise related to the interpretation of the terms of the agreement or to operational integration.
These conflicts can be resolved through:
- Workplace Mediation: A voluntary process in which the parties attempt to reach an agreement with the assistance of a mediator.
- Arbitration: A more formal method in which the parties choose an arbitrator to resolve the dispute outside of court.
In complex cases, companies can turn to international arbitration courts, such as the International Court of Arbitration of the International Chamber of Commerce.
Conclusion
Carry out an international merger in Spain andIt is a complex process that requires careful planning and strict compliance with local and European regulations.
Companies that opt for this type of operation must be prepared to manage a wide range of legal, fiscal and operational aspects.
En RRYP Global We offer specialized advice to ensure that your merger is carried out efficiently, complying with all regulations and optimizing the benefits for your company.
RRYP Global, lawyers specializing in international mergers and acquisitions.
