Corporate reorganization through merger and its legal regulation loopholes

Global tendencies of increasing business concentration are influenced by various economical and other reasons. One of the ways to concentrate business is a corporate reorganization through merger. All assets, rights and liabilities of merged companies are transfered to surviving company after reorganization, whereas other companies automatically cease to exist without liquidation. Corporate reorganization is a complex and long procedure involving interests of shareholders, creditors, workers and other persons. Firstly, national legislation of member states, governing local reorganization through merger of companies, had been harmonized in European Union. Later, after issues concerning the differences of national legislation were solved, important legal acts were enacted, which made possible cross-border mergers of companies. In order to increase the competitiveness of companies operating in European Union, some amendments were initiated to simplify the corporate reorganization through merger procedure and thus reduce the administrative costs for companies. However, it is important to evaluate the impact of such amendments for legitimate interests of shareholders and other concerned persons. The rules which apply in merger procedure should provide enough safeguards to protect the rights of these persons, although too strict requirements can lead to situations, where companies would rather choose other more favourable ways to merge