Some of the more common ways businesses can combine:
- Acquisition of shares;
- Acquisition of enterprise (a business unit as a collection of assets instead of a legal person);
- A merger, including:
- A combination merger where a new company is formed by the merging companies and the merging companies are considered dissolved;
- An absorption merger, where one company absorbs the other and the acquired company is considered dissolved);
- A division, including:
- A division by distribution, upon which a company transfers its assets to recipient companies and shall be deemed to be dissolved;
- A division by separation, upon which a company shall transfer part of its assets to one or several recipient companies;
- An EU cross-border merger or division;
- Takeover bids for listed companies.
Cross-border merger, division or transformation is possible for an Estonian limited liability company (AS and OÜ) with another limited liability company which is registered in an EU/EEA country, and which complies with the requirements of Directive 2017/1132/EC.
The procedure is similar to a domestic one with some differences. The preparation of a merger report is mandatory. The agreement must specify among other things the compensation offered to shareholders, the principles of creditors' protection and benefits provided to the members of the governing bodies. The transaction report must also explain the transaction’s impact on the company's shareholders and employees, including measures taken to protect employment relationships and significant changes in working conditions or the place of business. The transaction agreement must be attested by an Estonian notary. The agreement must be reviewed by an auditor who also prepares a written report.
A creditor whose claims arose before the disclosure of the cross-border agreement, has a right to receive security, with respect to claims that have not become due by the date of disclosure if the transaction may jeopardize the fulfillment of his claims.
Participation in a cross-border merger, division or transformation is not permitted if the company is in liquidation and the distribution of its assets to partners or shareholders has started, or if reorganization, bankruptcy, or criminal proceedings have been commenced against the company.
The Community-scale Involvement of Employees Act is also a relevant law in case of cross-border transformations, divisions, or mergers, outlining regulations for informing and consulting employees and their participation in the management of the enterprise.
Finally, the rules and regulations of the other jurisdiction must naturally be taken into consideration too.
