3.7. Programas De Fomento Al Empleo
3.7.1. Empresa Incluyente
Summary of Local Integration Metho
ds B aker & Mc K enzi e 12 1
SECTION 10
SUMMARY OF LOCAL INTEGRATION METHODS
When one multinational company acquires another company and its international subsidiaries, a key aspect of the integration of the two multinational groups is to consolidate duplicate operating companies so that there is only one operating company in each country. The following summary of integration methods describes the simplest, most appropriate methods based on the following assumptions:
(1) Each company is a 100% subsidiary of the same parent company or the other operating company (subject to any mandatory minority shareholding interests).
(2) The surviving company of the integration will be one of the original operating companies, not a newly incorporated company. (3) Each company is profitable at the time of the integration.
(4) The timetable for the integration relates to the period after due diligence has been completed and financial statements prepared. (5) Asset sale refers to all of the business of the dissolving company.
Alternative methods are available in many jurisdictions and this summary should not be relied on instead of obtaining specific legal advice.
SUMMARY OF LOCAL INTEGRATION METHODS 1. AMERICAS
ARGENTINA Merger Asset Sale
1.1 Local integration method (type of merger, if
options)
Merger under concept of Law 19,550 as amended
Asset sale under Bulk Transfer Law No. 11,867
1.2 Preferred pre-integration structure, for
example: parent/subsidiary or brother/sister
Post-Acquisi
tion Integration Handbook
Section 10 -
Summary of Local Integration Metho
ds 122 B aker & Mc K enzi e
1.3 Do all rights and obligations transfer by
operation of law?
Yes No
1.4 What financial statements or independent
valuations are required?
Are there audit requirements for both companies?
Duly audited financial statements for each company are required. Also required: (1) Audited consolidated financial statements (in accordance with Law 19,550 as amended). All statements must be closed on the same date but not earlier than 3 months from the execution of the preliminary merger agreement.
None, business should be transferred for fair market value
1.5 Legal Effective Date of Integration Date of registration with Public Registry of
Commerce Date of execution
1.6 Can merger/asset sale be retrospectively
effective from tax and accounting perspectives? If yes, what is deadline for filing merger application?
Yes, but only from the date on which the surviving company took over and commenced the activities previously conducted by the other company ("Merger Date") and only if the merger is fully compliant with the requirements applicable to tax free reorganization. The deadline for filing a notification of such tax free reorganization with the Tax Authority is 180 days from the Merger Date.
Yes, but only from the date on which the surviving company took over and commenced the activities previously conducted by the other company ("Merger Date") and only if the asset sale is fully compliant with the requirements applicable to a tax free reorganization. The deadline for filing a notification of such tax free reorganization with the Tax Authority is 180 days from the Merger Date.
1.7 Is a creditor's notice period required?
If yes, are there mandatory waiting periods?
Yes. There are mandatory waiting periods of 15 days (can be extended to 35 days if there are creditor oppositions) in accordance with Law 19,550 as amended.
Yes. There are mandatory waiting periods in accordance with Bulk Transfer Law 11,867.
1.8 How long will integration take from
finalization of plan and all information provided (including financial statements)?
Post-Acquisi
tion Integration Handbook
Section 10 -
Summary of Local Integration Metho
ds B aker & Mc K enzi e 12 3
BRAZIL Merger Asset Sale
1.1 Local integration method (type of merger, if
options)
Merger Asset sale
1.2 Preferred pre-integration structure, for
example: parent/subsidiary or brother/sister
No preference No preference
1.3 Do all rights and obligations transfer by
operation of law?
Yes No
1.4 What financial statements or independent
valuations are required?
Are there audit requirements for both companies?
Non-audited balance sheets as at a maximum of 30 days before the event of the merger. Appraisal of the net worth of the merged company is required.
None, business should be transferred for fair market value
1.5 Legal Effective Date of Integration Date of execution Normally date of completion of asset transfer
1.6 Can merger/asset sale be retrospectively
effective from tax and accounting perspectives? If yes, what is deadline for filing merger application?
No No
1.7 Is a creditor's notice period required?
If yes, are there mandatory waiting periods?
No. However, a creditor prejudiced by the merger may request the annulment of the merger in the courts within 60 days, where the disappearing company is a corporation, or 90 days, where the disappearing company is a limited liability company.
No. However, a creditor prejudiced by the sale may request its annulment, if the seller is insolvent or has became insolvent as a result of the sale.
1.8 How long will integration take from
finalization of plan and all information provided (including financial statements)?
Post-Acquisi
tion Integration Handbook
Section 10 -
Summary of Local Integration Metho
ds 124 B aker & Mc K enzi e
CANADA Merger Asset Sale
1.1 Local integration method (type of merger, if
options)
Amalgamation (assumes both companies in same Canadian jurisdiction)
Asset sale
1.2 Preferred pre-integration structure, for
example: parent/subsidiary or brother/sister
No preference No preference
1.3 Do all rights and obligations transfer by
operation of law?
Yes No
1.4 What financial statements or independent
valuations are required?
Are there audit requirements for both companies?
None None, business should be transferred for fair
market value.
1.5 Legal Effective Date of Integration Date specified on certificate of amalgamation,
may not be retroactive but may be specified in advance
Normally date of completion of asset transfer
1.6 Can merger/asset sale be retrospectively
effective from tax and accounting perspectives? If yes, what is deadline for filing merger application?
No retrospective effect May have retrospective financial effect, but tax implications should be considered
1.7 Is a creditor's notice period required?
If yes, are there mandatory waiting periods?
None, however in most Canadian jurisdictions, the amalgamation requires an affirmative statement by a director or officer of the amalgamating corporations as to solvency and that no creditors will be prejudiced as a result of the amalgamation
None, however note that waiver of bulk sales legislation required in Ontario if assets located there are to be transferred
1.8 How long will integration take from
finalization of plan and all information provided (including financial statements)?
2 weeks. If one company needs to be
transferred and continued into the jurisdiction of the other amalgamating entity, and this could add up to 4 weeks to timetable (or more if Ontario tax filings not current).
Post-Acquisi
tion Integration Handbook
Section 10 -
Summary of Local Integration Metho
ds B aker & Mc K enzi e 12 5
CHILE Merger (1) Merger (2) Non-statutory Merger Asset Sale
1.1 Local integration method
(type of merger, if options)
Merger (1): creates a new entity, both entities are dissolved
Merger (2): one of the entities is absorbed and the other survives
Non-statutory Merger: stock corporation is dissolved when all its shares are fully owned by a single entity for at least 10 consecutive days
Asset sale
1.2 Preferred pre-integration
structure, for example: parent/subsidiary or brother/sister Depends on the circumstances Depends on the circumstances Depends on the circumstances No preference
1.3 Do all rights and obligations
transfer by operation of law?
Yes Yes Yes No
1.4 What financial statements or
independent valuations are required?
Are there audit requirements for both companies?
Both companies must have an audited balance sheet
Both companies must have an audited balance sheet
No legal requirement for independent valuation of the assets
None, business should be transferred for fair market value
1.5 Legal Effective Date of
Integration
Date of execution Date of execution Date of execution Normally date of completion of asset transfer
1.6 Can merger/asset sale be
retrospectively effective from tax and accounting
perspectives?
If yes, what is deadline for filing merger application?
Yes, from an accounting/financial perspective but not from a tax perspective
Yes, from an accounting/financial perspective but not from a tax perspective
No, the Board of Directors or the Manager of the disappearing company must submit a declaration of dissolution within 30 days
Yes, with limited effects depending on the circumstances (only within the same fiscal year)
Post-Acquisi
tion Integration Handbook
Section 10 -
Summary of Local Integration Metho
ds 126 B aker & Mc K enzi e
1.7 Is a creditor's notice period
required?
If yes, are there mandatory waiting periods? No notice or waiting periods No notice or waiting periods No notice or waiting periods No notice or waiting periods
1.8 How long will integration
take from finalization of plan and all information provided (including financial
statements)?
3 weeks 3 weeks 3 weeks 3 weeks
COLOMBIA Merger Asset Bulk Assets
1.1 Local integration method (type of
merger, if options)
Merger Asset sale of separate assets Bulk assets sale (not requiring details of individual elements making up commercial establishment)
1.2 Preferred pre-integration structure,
for example: parent/subsidiary or brother/sister
No preference No preference No preference
1.3 Do all rights and obligations transfer
by operation of law?
As a general rule, yes, however, real estate and goods subject to public registration require separate formalization and registration to be effective against third parties
No Transferor and transferee are joint and severally liable for all
obligations existing at time of bulk sale for a period of two months from registration of bulk sale. After this time transferor is released from responsibility.
1.4 What financial statements or
independent valuations are required? Are there audit requirements for both companies?
Audited financial statements required for both companies. Also required:
(a) Projection of consolidated financial statements once
Price of assets to be transferred cannot be below 75% of fair market value
Transferor must provide certified balance sheet with description of liabilities
Post-Acquisi
tion Integration Handbook
Section 10 -
Summary of Local Integration Metho
ds B aker & Mc K enzi e 12 7 merger completed. (b) Description of valuation of assets and liabilities of the companies.
Explanation of the method used for exchange of shares.
1.5 Legal Effective Date of Integration Date of formalization of all
documents required by Colombian law in a public deed
Date of execution Date of registration in Mercantile Registry
1.6 Can merger/asset sale be
retrospectively effective from tax and accounting perspectives?
If yes, what is deadline for filing merger application?
No No No
1.7 Is a creditor's notice period required?
If yes, are there mandatory waiting periods?
30 working days None No, but 2 month period from date
of registration of bulk transfer for creditor oppositions and release of transferor's liability
1.8 How long will integration take from
finalization of plan and all information provided (including financial statements)?
Where the companies fall within certain circumstances (for example they have pension liabilities or financial difficulties), the merger must be approved by the
Companies Superintendency and will take approx. 6 months. Otherwise approx. 3 months.
Post-Acquisi
tion Integration Handbook
Section 10 -
Summary of Local Integration Metho
ds 128 B aker & Mc K enzi e
MEXICO Merger Asset Sale
1.1 Local integration method (type of merger, if
options)
Merger: Merger per se: Method by which 2 or more companies merge into the surviving company, without creating a new entity.
1-4 months
1.2 Preferred pre-integration structure, for
example: parent/subsidiary or brother/sister
No preference No preference
1.3 Do all rights and obligations transfer by
operation of law?
Yes. When real estate is transferred through a merger, said transfer must be duly formalized and registered, in order for it to be part of the surviving company.
No
1.4 What financial statements or independent
valuations are required?
Are there audit requirements for both companies?
All companies participating in a merger shall publish a balance sheet for the month prior to the merger.
Also required:
(a) Obligations payment program must be disclosed by the disappearing
company.
(b) A Tax Audit Report for the
disappearing company (for the year of the merger) and the surviving company (for the year of the merger and
subsequent year).
A valuation may be recommended.
None, although an independent valuation is highly advisable
1.5 Legal Effective Date of Integration Either after the 3 month waiting period or on
the date of registration of the merger
agreement at the Public Registry of Commerce if creditor protection steps are taken.
For tax purposes, the merger will be effective on the date agreed for the merger or the date of merger agreement if no other date specified.
Post-Acquisi
tion Integration Handbook
Section 10 -
Summary of Local Integration Metho
ds B aker & Mc K enzi e 12 9
1.6 Can merger/asset sale be retrospectively
effective from tax and accounting perspectives? If yes, what is deadline for filing merger application?
No retrospective effect No
1.7 Is a creditor's notice period required?
If yes, are there mandatory waiting periods?
Waiting period of 3 months in which creditors of the merged companies can oppose the merger unless payment of all creditors is agreed upon with creditors, or an amount is deposited in escrow or creditors expressly consent to the merger, in which case there is no waiting period
No
1.8 How long will integration take from
finalization of plan and all information provided (including financial statements)?
1-4 months 1 month (or immediately if no real estate transferred)
UNITED STATES (DELAWARE) Merger Asset Sale
1.1 Local integration method (type of merger, if
options)
Merger (2 Delaware corporations) Asset sale
1.2 Preferred pre-integration structure, for
example: parent/subsidiary or brother/sister
Parent/subsidiary, although brother/sister also possible
No preference
1.3 Do all rights and obligations transfer by
operation of law?
Yes No
1.4 What financial statements or independent
valuations are required?
Are there audit requirements for both companies?
None None
1.5 Legal Effective Date of Integration Date of filing with Secretary of State unless a
later date is specified in Agreement and Plan of Merger
Post-Acquisi
tion Integration Handbook
Section 10 -
Summary of Local Integration Metho
ds 130 B aker & Mc K enzi e
1.6 Can merger/asset sale be retrospectively
effective from tax and accounting perspectives? If yes, what is deadline for filing merger application?
No No
1.7 Is a creditor's notice period required?
If yes, are there mandatory waiting periods?
No No. However, creditor consent may be
required to transfer obligations.
1.8 How long will integration take from
finalization of plan and all information provided (including financial statements)?
May be effected immediately May be effected immediately
VENEZUELA Merger Asset Sale
1.1 Local integration method (type of merger, if
options)
Merger
Merger under arts 343 et seq. of the Venezuelan Code of Commerce
Asset sale
Bulk sale under Articles 151 and 152 of the Venezuelan Code of Commerce
1.2 Preferred pre-integration structure, for
example: parent/subsidiary or brother/sister
For tax reasons, it is preferable brother/sister merger because it would not trigger income tax liability.
Upstream merger may be treated as a liquidation for tax purposes and may trigger income tax liability for the surviving entity.
No preference
1.3 Do all rights and obligations transfer by
operation of law?
Yes Generally no. However, article 152 of the
Venezuelan Code of Commerce if seller and buyer do not comply with the notice
requirement set forth in Article 151 of the Venezuelan Code of Commerce, buyer is jointly and severally liable with seller for seller's obligations. Also, under the
Venezuelan Organic Tax Code, buyer is jointly liable for seller's tax obligations for a period of 1 year from the date of the notice to the tax
Post-Acquisi
tion Integration Handbook
Section 10 -
Summary of Local Integration Metho
ds B aker & Mc K enzi e 13 1
authorities regarding the sale.
1.4 What financial statements or independent
valuations are required?
Are there audit requirements for both companies?
No external audited financial statements are required. However, balance sheets (pre and post merger) of the companies involved in the merger are required to be prepared by each company's administrators and approved by their respective shareholders' meetings.
None, but bulk should be transferred at fair market value to avoid any gift tax liability
1.5 Legal Effective Date of Integration 3 months after publishing the merger once it
has been registered before the competent Commercial Registry Office.
However, the merger can have immediate effect if it can be shown that (i) all debts have been paid, or (ii) if all creditors have consented to the merger.
Date of publishing of the bulk sale after registration before the competent Commercial Registry Office of the bulk sale agreement
1.6 Can merger/asset sale be retrospectively
effective from tax and accounting perspectives? If yes, what is deadline for filing merger application?
No from a tax perspective No from a tax perspective
1.7 Is a creditor's notice period required?
If yes, are there mandatory waiting periods?
Not statutorily, however effectiveness of the merger is subject to the 3 month waiting period referred to before
Even though it is not mandatory, it is advisable to comply with the notice procedure set forth in Article 151 of the Venezuelan Code of
Commerce in order to avoid joint and several liabilities. Such procedure involves the publication of 3 notices in national newspapers with 10 day intervals between them.
1.8 How long will integration take from
finalization of plan and all information provided (including financial statements)?
Normally 3 months to one year depending upon the complexity of the plan
Normally between 1 and 3 months depending upon the complexity of the plan
Post-Acquisi
tion Integration Handbook
Section 10 -
Summary of Local Integration Metho
ds 132 B aker & Mc K enzi e
2. ASIA PACIFIC REGION
AUSTRALIA Merger Asset Sale
1.1 Local integration method (type of merger, if
options)
No merger procedure is available in Australia Asset sale
1.2 Preferred pre-integration structure, for
example: parent/subsidiary or brother/sister
No merger procedure is available in Australia No preference
1.3 Do all rights and obligations transfer by
operation of law?
No merger procedure is available in Australia No
1.4 What financial statements or independent
valuations are required?
Are there audit requirements for both companies?
No merger procedure is available in Australia No formal valuation or audit requirements. Business is normally transferred for fair market value.
1.5 Legal Effective Date of Integration No merger procedure is available in Australia Normally date of completion of asset transfer
1.6 Can merger/asset sale be retrospectively
effective from tax and accounting perspectives? If yes, what is deadline for filing merger application?
No merger procedure is available in Australia No
1.7 Is a creditor's notice period required?
If yes, are there mandatory waiting periods?