Business Consolidation Consultancy

Business Consolidation Consultancy

During the process of doing business, if the enterprise has no need to operate under the current model, it can reorganize its business. Business consolidation is one of the forms of reorganization that enterprises can consider to choose. In the article below, Dream Law will bring you the most basic information about business consolidation.

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  1. General of business consolidation

Consolidation of businesses is essentially two or more companies combined to form a new company, the combined companies are called consolidated companies, and the newly created company is a unified company

It can be understood that consolidation is the transfer of all assets, rights and obligations of the companies to create a new one that completely inherits the assets, rights and obligations of those companies. This is shown under the model: A + B = C, where: A and B unify, C is consolidated.

The result of consolidation is that the consolidated companies will cease to exist, while the consolidating company is registered for business in accordance with the enterprise law.

The reorganization of the enterprise in the form of consolidation will help gather the capabilities, resources as well as the market share of the consolidated companies, under that foundation, the consolidating company will operate and develop more easily. This saves more time than dissolving merged companies and setting up new businesses. However, the consolidation of enterprises will create a burden on the consolidating enterprise when there are debts and outstanding obligations of the consolidated enterprises.

  1. Enterprise consolidation procedures

2.1. Consolidation documents

When consolidating businesses, the companies must come to a consolidation model agreement. Enterprise consolidation documents are made according to the corresponding documents of that enterprise model in accordance with the enterprise law. Basically, the documents of consolidation of a business depends on each different model, the different papers generally include:

1) Application form for business registration.

2) Charter.

3) List of founding members and shareholders.

4) Copy of personal identification papers of founding members and shareholders.

5) Consolidation contract.

6) The resolutions and meeting minutes approving the consolidation contract of the merged companies.

To know more about what specific documents each type of business needs, please visit:https://dreamlaw.vn/en/consultancy-on-business-establishment/

2.2. Consolidation procedure

Step 1: The consolidated companies prepare the consolidation contract. The parties sign the contract voluntarily, respecting the mutual agreement on the terms of the contract.

Step 2: Owners, members, and shareholders of the consolidated company proceed through the following issues:

  • Through the consolidation contract.
  • Approve the charter of the consolidated company.
  • Conducting the election and appointment of titles: Chairman of the Members’ Council, Board of Directors, President of the company, Director or General Director of the consolidated company.

The consolidation contract must be sent to all creditors and notified to employees within 15 days from the date the contract is approved.

After approving the charter and the election and appointment of titles, the company’s representative shall conduct business registration for the consolidated company in accordance with the enterprise law.

Step 3: The representative of the consolidating company prepares a dossier of establishment of a consolidated enterprise and sends it to the business registration office where the enterprise is located.

If the application is valid, the business registration authority shall issue a new Certificate of Business Registration to the consolidating company and update the legal status of the consolidated companies on the national business registration data system

If the consolidated companies have offices other than the head office of the consolidating company, the business registration office of the consolidating company shall notify the business registration of the merged company to the business registration office where the consolidated companies are, to carry out legal status updates of those consolidated companies.

  1. Restricting business consolidation

Enterprise consolidation is the right of each company, but not in all cases the companies can be consolidated.

Since consolidation will create a large market share in a competitive market, with abundant labor and financial resources from the consolidated companies. Therefore, in order to ensure a healthy competitive environment in the economic development, the law provides for the following restrictions and prohibitions on consolidation of companies:

  • The consolidated companies have a market share of 30% to 50% in the market related to business activities, before the consolidation procedure, the legal representatives of the consolidated companies must notify consolidation to the competition authority, unless otherwise provided by law.
  • A consolidated company with a market share greater than 50% on the relevant market will be prohibited from doing consolidation between companies, unless otherwise prescribed by the competition law.

Before consolidating between companies, it is necessary to find out the market share of the relevant market of the company after the merger, to avoid being in the case of restricting or prohibiting consolidating of enterprises.

Please contact hotline 024.6653.9546 to have further consultancy on Business consolidation procedures or support in other legal matters.

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Dream Law LLC, Ltd.

Add: 401, No. 68, Phan Ke Binh road, Cong Vi ward, Ba Dinh district, Hanoi.

Hotline: 02466539546

Email: dreamlawllc@gmail.com

Website: https://dreamlaw.vn/

 

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