We have merged two companies based in Poland, operating in the industrial filters industry. The companies belong to an international corporate group, employ 7,200 employees worldwide and generate the annual revenues of USD 1.5 billion. The origins of the corporate group go back to the times of commercialising the seawater reverse osmosis desalination process, initiated in the UK in the 1960s.

The integration was quite unusual due to the fact it was conducted as the so-called downstream merger. These types of mergers, in which a subsidiary takes over the dominant company, had been carried out in previous years, but only on the basis of legal interpretation, allowing for an exception to the prohibition on acquiring or taking up of own shares by subsidiaries. This interpretation was used by our team, but it did not result directly from the provisions of the Code of Commercial Companies and raised some doubts in the doctrine of law. Currently, the provision of Article 515 of the Code of Commercial, amended in 2020, explicitly provides for the possibility of granting shares or own shares of the acquiring daughter company to shareholders of the acquired dominant company i.e. downstream mergers.

A downstream merger may often be more advantageous due to the fact that universal succession from a dominant company to a subsidiary may involve a smaller scale of rights and obligations (assets and liabilities) than in a standard merger where the subsidiary acquires the dominant company, whose business activity is extensive.

Our team participated in the whole process. They were responsible for shortened due diligence, preparing of the merger plan and other merger documents, coordinating the adopted resolutions and registering the merger in the register of entrepreneurs within the National Court Register. We succeeded once again in having our merger registered by the Registry Court on the day we had scheduled well in advance. This helped the client to plan and prepare for all business and legal processes of integrating the two companies.