[No. 52] The Zero Trilogy - part 3: Zero Shares Merger/Demerger

The last part in the Zero Trilogy is about my favourite subject, (de)mergers. Mergers and demergers are very important restructuring tools in the Netherlands. Currently, one of the main rules is that when participating in a merger or demerger, new shares must be issued to the shareholder(s) of the company whose assets are being transfered. If wanted, a cash payment of ten procent is permitted, but not more.

In the USA a cash out merger is possible. This is a merger where an acquiring firm buys the target firm's shares with cash, instead of the more common practice of exchanging it with own shares.

In my opinion, a Zero Shares Merger/Demerger should also be made possible in the Netherlands. This would create an even more flexible company law in the Netherlands.  

And now: Zero Activity Time, as my holiday beginns. Till August!

Comments

[Sebastiaan Niels Hooghiemstra]

A Zero Shares Merger/Demerger is nice from a company law perspective. However, from a tax perspective roll-over relief only applies to mergers/demergers in which the cash payment does not exceed ten percent. De facto, Zero Shares Merger/Demergers would in many occassions not make much sense bc roll-over relief does not apply to it.