Merger of companies

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

  Poland

What is a merger of companies?

A merger may be effected by acquisition or by formation of a new company. In the first case, all assets and liabilities of the acquired company are transferred to the acquiring company in exchange for shares or interests granted to the shareholders or partners of the acquired company. In the second case, the assets and liabilities of the merging companies are transferred to a newly formed capital company or – in the cases permitted by KSH – a limited joint-stock partnership. A merger has universal succession effect: on the merger date, the acquiring or newly formed company generally assumes all rights and obligations of the acquired company or companies. The acquired company is dissolved without liquidation. The merger date is the date on which the merger is entered in the competent register.

What is a merger plan?

As a rule, the principal document provided for by KSH is the merger plan, agreed in writing between the merging companies. It specifies, among other things, the method of merger, details of the companies, the share exchange ratio – where applicable – and other elements required by KSH. It does not freely determine the “merger date”; that date follows from registration of the merger.

What is a downstream merger?

A reverse or downstream merger, in which a subsidiary acquires its parent company that is its shareholder or partner, is permissible under KSH. The rules allow the acquiring company to use, for purposes of settling the merger, its own shares or interests acquired as a result of the merger, subject to the applicable capital-protection rules and merger procedure. Polish law does not provide for the general condition described in the original text that the market value of the parent company, less the book value of the shares or interests in the subsidiary, must remain positive. The tax consequences of a merger are assessed under Polish tax law; subject to the statutory requirements, a reorganisation may be tax-neutral, but the specific structure requires a separate analysis.

Legal basis: Articles 491–494, 498 et seq. and 515 KSH; tax consequences are governed by the applicable provisions of Polish tax law.