Israeli Company Merger
This article addresses how to carry out an Israeli company merger. If you wish to learn about a merger of companies in Israel, then you have come to the right place. Our law firm assists numerous local and foreign clients with all their corporate and commercial needs.
Reasons for a Merger of Companies in Israel
There are numerous reasons why one may seek a merger of companies in Israel in order to pass on their assets, rights and duties to another existing company. The reasons when this can be advantageous include, among others:
-To improve its market share by absorbing a competitor
-To save on production costs
-To simplify cooperation between two companies by creating a single structure
-To take over a company that is having financial or other difficulties
The Double Approval of the Israeli Company Merger
Israeli law mandates a process of double approval so that both the acquired and acquiring company indicate their endorsement of the proposed merger. In accordance with the law, both companies must validate the merger through a management committee at a general meeting. The merger proposal must then be jointly signed by legal representatives of each company.
Steps in an Israeli Company Merger
There are a number of important steps when merging companies in Israel.
Publishing the Merger
Subsequent to the approval of the merger by the two entities, it will be necessary to inform the Companies Registrar. In addition, creditors for whom a guarantee has been issued must be notified of the ongoing merger process, while unsecured creditors must be informed through advertisements published in at least two daily newspapers.
The creditors of the merged companies may, if they feel their interests are threatened by this procedure, oppose it by sending a request to the relevant courts. In particular, if the creditors believe that the acquiring company will no longer be able to repay its debts and that claim is justified, the court may order the termination of the merger proceedings.
Consequences of the Merger
In the absence of opposition from potential creditors, and provided that the management committees of the two entities approve this procedure, the merger will be effective and registered with the Trade Registrar. The assets, rights and liabilities of the absorbed company, such as mortgages registered with the Companies Registrar, will then form an integral part of the absorbing company. The absorbing company will then be accountable for any legal issues with the absorbed company.
If you seek assistance with an Israeli company merger, feel free to contact us. We provide legal assistance to numerous local and foreign clients with all their needs related to Israeli corporate law. For more information on other topics related to Israeli corporate law, see our articles on the topic.
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