MERGERS AND ACQUISITIONS OF LIMITED LIABILITY COMPANIES IN THE REPUBLIC OF CROATIA
Status changes of limited liability companies that arise from mergers and acquisitions are governed in Croatia by the Companies Act.
Merger means that one or more limited liability companies merge with another limited liability company without conducting a winding up process, indeed through a transfer of whole assets of merged companies to another company- an absorbing company, in exchange for shares in the latter. The absorbing company becomes thereby a universal successor of the merged company, but only after it is registered with the companies’ register.
A merger is conducted on grounds of a merger agreement, which needs to be accepted by all the company members participating in merger. For reaching a decision on merger, the law provides a majority of ¾ of the given votes, whereby the sole decision is made in the form of notarisation.
A merger agreement is concluded by the management boards of the concerned companies, also in the form of notarisation. Nominal amount of each share that a member of merged company acquires in the absorbing company is defined by the agreement. A deviation from existing shares needs to be particularly stipulated.
There is an obligation to announce a call for creditors of the merging companies to report their claims within 6 months from the registration announcement, provided they can prove, that settlement of their claims is threatened. Creditors that would come forward within the said dead line should be given appropriate security.
The law sets joint liability of members of the board members and (if applicable) supervisory board of the merged company for damages that would be sustained by this company, its members and creditors.
Consolidation of two or more companies implies an establishment of a new company to which whole assets of each consolidating company are transferred, in exchange for the shares in the new company, also without conducting a winding up process. Hence, assets of the consolidating companies are transferred to the new company, whereby the consolidating companies cease to exist with the registration of the new company with the companies’ register.
Considering that the same rules relevant for the merger are also applied to the establishment, procedure and effects of consolidation, each of the consolidating company is considered a merging company, while the new company is considered an absorbing company.
Consolidating companies need to file an application for the registration with the companies’ register in the area of a head office of the new company. It isn’t necessary to cancel consolidated companies in the companies’ register while members of consolidated companies become the members of the new company along with the entry of consolidation. The new company, after it is registered, should report the consolidation due to entry in respective registries of consolidated companies.