Abstract

Downstream merger is defined by commercial law a absorption of a parent firm into a subsidiary. As a result of such merger the taking over company acquires own shares. Provisions of the Commercial Companies Code explicitly allow for acquisition of own shares by a joint-stock company, whereas doubts arise in this respect as regards a limited liability company. The authors believe that by analogy to the provisions concerning joint-stock companies it should be assumed that also a limited liability company may act as an acquirer under such merger. In the authors’ opinion the registration court is authorized to examine the submitted merger plan. Also simplifications consisting in, among other things, waiver of preparing a justification report and expert examination of a merger plan may be applicable to downstream mergers. The provisions of the Accounting Act do not directly refer to the issue of downstream mergers, though helpful in this respect may be IFRS which concern certain areas of downstream mergers such as the rules for setting fair value of consideration and determining the value of goodwill Also the view as to the possibility of excluding the procedure notifying the creditors of share capital reduction upon redemption of own shares acquired in the course of downstream merger is to be shared.