In Costa Rica and the rest of the world the merger of companies or corporations is very common, it constitutes an agreement reached by two or more companies to unify into a new one or absorb other companies. Corporate mergers occur mostly because of market expansion, strategy of companies, or financial crisis.

According to the statistics handled, in the first half of 2015 Costa Rica registered 18 mergers and acquisitions; 26 during the entire 2014, and about 31 in 2013 (in this last year for a total value of $1,126 millions).

The merger and acquisition of companies requires a prior administrative, financial and legal internal and external analysis done by experts and also by the boards of directors, because it is normal and imperative that the merger involves changes, rights and duties in the company, as well as in the organization of the labor force. The challenge is to achieve an agile integration, non-traumatic for the workers and successful in the short term.

This Modality can happen in two ways:

• Integration: two or more corporations merge and create a new corporation. This new companyacquires the strengths, rights and duties of the ones closed, giving to the new one the tools and opportunities to consolidate in a particular market.
• Absorption: it occurs when a company absorbs one or more companies, disappearing the absorbed ones. The remaining corporation retains its name, qualities and administrative structure, but increases its capital. Likewise, there may be other changes in the company that absorbs the others.

Characteristics of this modality:

• The assets and partners of the merged companies or the ones that were absorbed are transferred to the corporation that prevails.
• According to Article 224 of the Commerce Law of Costa Rica, the rights and obligations of the involved corporations will be assumed by the new company or the one that prevails.
• Neither the responsibility of the partners, directors and workers, or the rights and actions against them, will be affected by the merger.
• The involved corporations will cease in the application of their individual legal personality when its merger results in a new company (Article 220 of the same law).
• If the merger occurs by absorption, the deed of the prevailed company should be amended (Article 220).
• The general partner or “comanditado” that does not agree with the merger may quit from the company; but its social participation and unlimited personal responsibility will continue to ensure the compliance of the obligations gotten before the merger agreement (Article 223).

ERP Lawyers & Associates, your expert law firm in Costa Rica, offers you its vast experience in mergersand acquisition of companies; being Anonymous Corporations and Limited Liability Companies. Contact Us:

• Contact form
• eduardo@erplawyers.com
• (506) 2520-1122