LEGAL MERGERS IN CURACAO

The Curacao Civil Code provides for a simplified merger procedure

The acquisition of a business enterprise may take place through the purchase of shares (take-over), the purchase of assets and liabilities or a legal / statutory merger. The Curacao Legal Code on corporate and other legal persons contains detailed provisions for mergers of companies limited by shares (NV) and private limited companies (BV).

Basically, a legal merger entails the absorption of one legal entity by another in exchange for shares, or even without such exchange. The absorbed entity ceases to exist. A legal merger requires a notarial deed. Legal mergers may take place between legal entities like NV’s and BV’s. Under Curacao law, a cross-border legal merger is only possible if the acquiring entity is a Curacao legal entity and the law governing the foreign legal entity does not prohibit the merger.
Article 2:333 Sub 3 of the Curacao Civil Code provides for the possibility to limit the formalities. If all shareholders (who have voting rights) have voted in favor of a merger, certain formalities can be dispensed with. If they have thus voted for a legal merger, there is no need for a merger proposal containing:
(a)   a share converting ratio;
(b)   a start date as of when, and the extent to which, the shareholders of the company or companies which will cease to exist, will share in the profit of the acquiring company; and
(c)   a merger balance sheet of the acquiring entity.
There is no need for explanatory notes regarding the method of conversion and the result of such valuation. There is no need for a fairness opinion regarding the merger proposal, conversion rate and merger balance.
The simplified merger procedure is also applicable in the case of an ‘up-stream’ merger, i.e. a parent company acquiring (absorbing) a subsidiary, and in the case of a legal merger between affiliated companies, provided that all the shares in both companies are held by one person and the acquiring company shall not allot shares.
Karel Frielink
Attorney (lawyer) / Partner

Basically, a legal merger entails the absorption of one legal entity by another in exchange for shares, or even without such exchange. The absorbed entity ceases to exist. A legal merger requires a notarial deed. Legal mergers may take place between legal entities like NV’s and BV’s. Under Curacao law, a cross-border legal merger is only possible if the acquiring entity is a Curacao legal entity and the law governing the foreign legal entity does not prohibit the merger.

Article 2:333 Sub 3 of the Curacao Civil Code provides for the possibility to limit the formalities. If all shareholders (who have voting rights) have voted in favor of a merger, certain formalities can be dispensed with. If they have thus voted for a legal merger, there is no need for a merger proposal containing:

  1. a share converting ratio;
  2. a start date as of when, and the extent to which, the shareholders of the company or companies which will cease to exist, will share in the profit of the acquiring company; and
  3. a merger balance sheet of the acquiring entity.

There is no need for explanatory notes regarding the method of conversion and the result of such valuation. There is no need for a fairness opinion regarding the merger proposal, conversion rate and merger balance.

The simplified merger procedure is also applicable in the case of an ‘up-stream’ merger, i.e. a parent company acquiring (absorbing) a subsidiary, and in the case of a legal merger between affiliated companies, provided that all the shares in both companies are held by one person and the acquiring company shall not allot shares.

Karel Frielink
Attorney (lawyer) / Partner

(21 November 2011)

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