The merger of enterprises is not simply understood as a business purchase and sale contract, this activity will directly affect both the merged company, the merging company and related parties. Therefore, when carrying out merger procedures, businesses need to pay attention to many important issues.

1. What is a business merger?

According to the Enterprise Law 2020, a company merger is a case where “One or several companies (hereinafter referred to as the merged company) may merge into another company (hereinafter referred to as the merged company). merger) by transferring all legal assets, rights, obligations and interests to the merging company, and at the same time terminating the existence of the merged company”.

Thus, in a basic sense, the merger of enterprises takes place under the will of the company owners (the merged company and the merged company). The legal consequence of a corporate merger is the termination of the existence of the merged company.

2. Dossiers of business merger procedures include what?

Documents that businesses need to prepare when they want to carry out merger procedures include:

1. Merger contract.
2. Resolution and meeting minutes approving the merger contract of the merging companies.
3. Resolution and meeting minutes approving the merger contract of the merged companies, unless the merged company is a member, the shareholder owns more than 65% of the charter capital or shares with voting rights decision of the merged company.

3. Issues businesses need to pay attention to when carrying out merger procedures

3.1. About the company’s market share in the market

Basically, companies with a market share of less than 30% will be eligible for merger. Companies with a market share of more than 30% will easily violate the law. According to the provisions of the Competition Law 2018 Enterprises with a market share of 30% or more, two enterprises with a total market share of 50% or more, three enterprises with a total market share of 65% or more, four enterprises with a total market share of 75% or more and five or more enterprises with a total market share of 85% or more in the relevant market, if merged together, will create enterprises or groups of enterprises with a dominant position. in the market this violates the provisions of the law. Therefore, market share in the market is one of the issues businesses need to pay attention to.

3.2. About the type of two businesses merging together

The type of dissimilarity is always one of the big concerns of businesses when they want to merge. According to the provisions of the previous Law on Enterprises, the consolidation and merger of companies can only be done with companies of the same type (Article 152, Article 153 of the 2005 Enterprise Law). However, since the Enterprise Law 2014 has abolished this restriction. Therefore, companies can conduct mergers and consolidation without having to go through the transformation of business type as before. However, it should be noted that the merger only takes place between enterprises with legal status, so private enterprises will not be able to merge.

3.3. About tax obligations

When carrying out procedures for business merger, the merged enterprise will have to fulfill the tax payment obligation before merging the enterprise and carry out the procedures for closing the tax identification number after the merger. Enterprises need to prepare enough documents and documents to confirm that they have fulfilled their tax obligations and apply for a tax identification number to the tax authority, the social insurance agency (if any), the General Department of Customs (if any). if any)… In case the merged enterprise has not yet fulfilled its tax payment obligation, the merging enterprise shall have to fulfill the tax payment obligation.

Above is the advice of Khoa Tin on “Notes when merging enterprises”.

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