The merger and demerger of Commercial Companies are processes regulated by Law No. 479-08 on Commercial Companies in the Dominican Republic.
Commercial companies can transfer their assets to other existing companies through a merger or demerger.
In this article, we will tell you about the types of commercial mergers that exist and how you should carry out this type of procedure in the Dominican Republic.
What is the merger of Companies?
The merger of companies is a legal concept where one or more companies decide to dissolve without liquidating and transfer all their assets, liabilities, rights, obligations—in other words, their entire estate.
The objective is to create a new company or be absorbed by an existing one.
Article 382 of Law No. 479-08 on Commercial Companies explains it as follows:
“One or more companies may, through a merger, transfer their assets to an existing company or to a new company that they form.”
If you still have doubts about how to carry out the merger or demerger of Commercial Companies in the Dominican Republic, at Contadores Dominicanos we have expert professionals who can provide the necessary advice for mergers and acquisitions of Companies according to the Dominican Republic’s Company Law.
What is the demerger of companies?
A demerger refers to when a company transfers one or more parts of its assets to a new or existing company.
In this case, the demerged company can retain the remaining part of the assets.
How is the merger and/or demerger of companies carried out?
The following procedure must be carried out:
- Preparation of the Project.
- Subscribe to said project in the Mercantile Registry of the corresponding Chamber of Commerce and Production.
- Publication in a national circulation newspaper.
- If necessary, drafting of the Articles of Incorporation.
- Holding General Assembly Minutes of the involved Companies.
- Deposit in the Mercantile Registry.
- Deposit in the General Directorate of Internal Taxes (DGII).
Documents required for the merger and/or demerger of Commercial Companies:
- Preparation of the merger/demerger Project.
- Original minutes of the General Assemblies approving the merger or demerger agreement.
- Preparation of the financial statements of each of the companies up to the effective date of the reorganization.
- Reports from the commissioners.
- Report from the Board of Directors.
- Articles of incorporation of the new companies created in the merger or demerger.
Types of Company Mergers:
Horizontal Merger:
It is when two or more companies that offer similar products or services decide to unite, seeking to increase competitiveness and market share.
Vertical Merger:
It refers to when two or more companies belonging to the same economic sector unite. In this case, the aim is for one to be the supplier of the other with raw materials or complementary products.
Advantages of merging Commercial Companies:
- Cost savings in production and operation by reducing staff.
- Greater profitability and efficiency in production processes.
- Possibility of accessing a wider customer base.
- Better market participation.
- Access to new markets.
