Mergers & divisions: are you on time?
The month of May has just started. The second quarter is therefore already well underway. Accountants are busy preparing the annual accounts (or perhaps have already completed them). This is the time of year for entrepreneurs to take action if a restructuring through a legal merger or legal demerger is desired. Below, we explain how this works.
As with a legal merger, in a legal demerger, the assets of the demerging legal entity are transferred by operation of law to each acquiring legal entity under universal title. An important difference from a legal merger is that, in a legal demerger, a precise description must be drawn up of the assets that will be transferred in the context of the legal demerger, or, in the case of a spin-off, will be retained by the demerging legal entity. This is the 'demerger description' and forms an important part of the demerger proposal.
Legal demerger is also used to reorganize quickly and easily within a group, but can also be a way to find a solution for disputes between shareholders.
1. The boards of the legal entities involved in the merger or demerger draw up a merger or demerger proposal.
2. All directors (and supervisory board members, if any) sign the merger or demerger proposal. If a signature is missing, the reason for this shall be stated.
3. The boards draw up an explanatory memorandum. The explanatory memorandum describes the expected consequences in legal, economic, and social areas. An explanatory memorandum is not always required.
4. The merger or demerger proposal, together with the last three adopted annual accounts, shall be filed with the Trade Register and at the office address of the legal entities concerned.
5. The intended merger or split is announced in a nationally distributed daily newspaper.
6. Creditors have one month from the announcement to object.
7. The shareholders' resolution regarding the merger or demerger is adopted one month after the announcement.
8. Within six months of the announcement, the merger or demerger shall be realized by the execution of the notarial deed of merger or demerger. The merger or demerger shall take legal effect the day following the execution of that deed.
9. Within eight days after the execution of the deed of merger or demerger, the merger or demerger must be registered in the Commercial Register.
An important element of filing a merger or demerger proposal is the filing of the last three approved annual accounts. Most legal entities have a financial year that coincides with the calendar year. If a merger or demerger proposal is filed within six months after the legal entity's last completed financial year and the annual accounts for the last completed financial year have been approved (and filed), no interim figures need to be prepared. This usually saves considerable time and costs!
By way of illustration: the financial year of The Flying Stork BV coincides with the calendar year. The financial statements for the 2025 financial year have been signed, adopted, and filed. The 2025 financial statements can then be used for filing with the merger or demerger proposal, provided that filing takes place no later than 30 June 2026. If filing of the merger or demerger proposal takes place after 30 June 2026, interim figures are required.
Please contact our colleague Casper Ooijevaar:
E : casper.ooijevaar@maesnotarissen.nl
T: +31 (0)10 44 53 777 (extension 3)
M: +31 (0)6 34 95 98 33
What is a merger?
In corporate law practice, three types of mergers are distinguished: the share merger, the business merger, and the legal merger.Share merger
In a share merger, shares in the two companies involved are exchanged. The shareholder(s) of one company acquire(s) a shareholding in the other company.Business merger
In a business merger, the assets and liabilities of the company are transferred. The difference compared to a share merger is that no shares in a company are transferred, but rather the assets and liabilities of the company.Legal merger
The legal merger is the only type of merger regulated in Book 2 of the Dutch Civil Code. In a legal merger, the assets of one or more disappearing legal entities are transferred to the acquiring legal entity by universal title. The acquiring legal entity legally takes the place of the disappearing legal entity. The major advantage of the legal merger compared to the business merger is that the assets of all disappearing companies are transferred by operation of law by universal title. For this reason, the legal merger is used to reorganize quickly and easily within a group of companies.What is a split?
The counterpart to the legal merger is the legal demerger. There are two forms of legal demerger: pure demerger and spin-off.Pure splitting
A pure demerger is the legal act whereby the assets of a legal entity are acquired by universal title by two or more other (newly established or existing) acquiring legal entities. The legal entity whose assets are transferred ceases to exist upon the demerger.Split
In the event of a spin-off, the assets, or a part thereof, are transferred to one or more (newly established or existing) acquiring legal entities, at least one of which grants membership rights or shares in its capital to the members or shareholders of the splitting legal entity, or at least one of which is established by the splitting legal entity during the split. In the event of a spin-off, the splitting legal entity continues to exist.As with a legal merger, in a legal demerger, the assets of the demerging legal entity are transferred by operation of law to each acquiring legal entity under universal title. An important difference from a legal merger is that, in a legal demerger, a precise description must be drawn up of the assets that will be transferred in the context of the legal demerger, or, in the case of a spin-off, will be retained by the demerging legal entity. This is the 'demerger description' and forms an important part of the demerger proposal.
Legal demerger is also used to reorganize quickly and easily within a group, but can also be a way to find a solution for disputes between shareholders.
I want to merge or split: what happens next?
The steps to achieve a legal merger or demerger are broadly as follows:1. The boards of the legal entities involved in the merger or demerger draw up a merger or demerger proposal.
2. All directors (and supervisory board members, if any) sign the merger or demerger proposal. If a signature is missing, the reason for this shall be stated.
3. The boards draw up an explanatory memorandum. The explanatory memorandum describes the expected consequences in legal, economic, and social areas. An explanatory memorandum is not always required.
4. The merger or demerger proposal, together with the last three adopted annual accounts, shall be filed with the Trade Register and at the office address of the legal entities concerned.
5. The intended merger or split is announced in a nationally distributed daily newspaper.
6. Creditors have one month from the announcement to object.
7. The shareholders' resolution regarding the merger or demerger is adopted one month after the announcement.
8. Within six months of the announcement, the merger or demerger shall be realized by the execution of the notarial deed of merger or demerger. The merger or demerger shall take legal effect the day following the execution of that deed.
9. Within eight days after the execution of the deed of merger or demerger, the merger or demerger must be registered in the Commercial Register.
Time is running out!
It follows from the steps that a legal merger or demerger entails a procedure that must be followed precisely, with strict and fatal deadlines. It is therefore important to plan a proposed merger or demerger properly and in a timely manner, and to execute it carefully.An important element of filing a merger or demerger proposal is the filing of the last three approved annual accounts. Most legal entities have a financial year that coincides with the calendar year. If a merger or demerger proposal is filed within six months after the legal entity's last completed financial year and the annual accounts for the last completed financial year have been approved (and filed), no interim figures need to be prepared. This usually saves considerable time and costs!
By way of illustration: the financial year of The Flying Stork BV coincides with the calendar year. The financial statements for the 2025 financial year have been signed, adopted, and filed. The 2025 financial statements can then be used for filing with the merger or demerger proposal, provided that filing takes place no later than 30 June 2026. If filing of the merger or demerger proposal takes place after 30 June 2026, interim figures are required.
Please feel free to contact us!
Do you already have concrete plans and are you looking for assistance with the implementation of a merger or demerger? Or would you simply like to brainstorm about the possibilities? We are experienced in this field and would be happy to guide you!Please contact our colleague Casper Ooijevaar:
E : casper.ooijevaar@maesnotarissen.nl
T: +31 (0)10 44 53 777 (extension 3)
M: +31 (0)6 34 95 98 33
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