Merging businesses is a common organizational solution in today's business environment. Below is a detailed guide on the business merger process according to the latest regulations.
1. The Concept of Business Consolidation
According to Article 200 of the 2020 Enterprise Law, the merger of enterprises is defined as follows:
"Two or more companies (referred to as the merging companies) can merge into a new company (referred to as the merged company), while the merging companies will cease to exist."
Consolidation can be applied to types of businesses such as partnerships, limited liability companies (both single-member and multi-member), and joint-stock companies.
- The merger agreement needs to include the following main contents:
- The name and address of the headquarters of the merged company.
- The name and address of the company's headquarters.
- Procedures and conditions for merger.
- Labor utilization plan.
- The methods and procedures for transferring assets, capital contributions, shares, and bonds.
- Deadline for the merger implementation.
- The members, owners, or shareholders of the merged company need to approve the merger agreement and the articles of incorporation of the merged company.
- Conduct elections or appointments for positions within the merged company such as Chairman of the Member Council, Chairman of the company, Board of Directors, Director, or General Director.
- The application file for establishing a merger company needs to include:
- Consolidation contract.
- Resolutions and meeting minutes of the merged companies regarding the approval of the merger agreement.
- Business registration certificates of the companies that were merged.
Note: The documents must be sent to the creditors and notified to the employees within 15 days from the date of approval of the merger contract.
- After the merged company is granted a business registration certificate, the merged company will cease to exist.
- The Business Registration Office carries out the updating and termination of the status of branches, representative offices, and business locations of companies that have been merged in the national database.
- Legal Responsibility: The merging company inherits all rights, obligations, and legal interests of the merged companies, including any outstanding debts and other asset obligations.
- Violation of Regulations: If the regulations regarding the submission of the consolidated contract to creditors and notification to employees are not properly implemented, the business may face a fine ranging from 20,000,000 VND to 30,000,000 VND and will be required to rectify the consequences.
- When should a business merge? Merging businesses can enhance competitive strength and generate profits. However, careful consideration is needed to ensure that the merger does not become a burden for the business, especially if the companies being merged have significant debts.
- Does the splitting of a company lead to the termination of the existence of the company being split?
According to the regulations, the company will cease to exist after the new companies are granted their Business Registration Certificates. New companies must jointly bear responsibility for the obligations, unpaid debts, and employment contracts of the company that has been divided.
If you need more detailed information or assistance regarding the business merger procedures, please contact A Dong for in-depth and dedicated consultation.
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