STATUTORY MERGERS UNDER THE LAWS OF THE NETHERLANDS ANTILLES
A notarial deed is required
A statutory merger involves at least two legal entities. The law uses the terms acquiring and disappearing legal entity. The law specifies that only legal entities having the same legal form may merge, specifying that a BV (closed limited liability company) and a NV (public limited liability company) are considered to be the same. Statutory mergers are used mostly within a group of companies.
Essential for a statutory merger is that all assets and liabilities of one legal entity transfer as a whole to another legal entity. An actual transfer, therefore, does not take place.
A statutory merger has some additional legal consequences. Firstly, the disappearing legal entity ceases to exist. Liquidation or formal dissolution does not take place. Secondly, the shareholders of the disappearing legal entity become shareholders of the acquiring entity by operation of law. The nominal value of the shares involved depends on their shareholding and the exchange ratio. The statutory merger replaces the shares held in the disappearing legal entity into shares of the acquiring legal entity. Generally the acquiring entity issues shares.
There are exceptions to this rule if the shares of the disappearing entity are held directly or indirectly for the account of the acquiring legal entity. With respect to the parent-subsidiary merger the shares are canceled without shares in the acquiring entity being issued. This is logical: it is not the intention of the merger that the acquiring legal entity obtains shares in its own equity which would be the case if shares in the acquiring entity would be issued. With respect to the sister merger it is optional whether shares in the acquiring entity are issued.
The merger process may be divided in three parts. The first is the proposal to merge. The proposal to merge must be initiated by the managing board of the merging entities.
The second part contains the decisions to merge. The general meeting of shareholders of the merging entities must adopt a resolution to merge. It is allowed, however, that the acquiring legal entity decides to merge by decision of the managing board.
After completion of the second part, the statutory merger is implemented by executing a deed of merger before a civil law notary. The parties to the deed of merger are the merging legal entities.
Karel Frielink
Attorney (lawyer) / Partner
