When it comes to enlarging a company and growing economically, many of them find Mergers and Splitting attractive. There are many economic reasons for it such as cost reduction, since two companies with the same objectives complement each other synergies. What is also achieved is the acquisition of new resources and capacities that generate a reduction in the level of competition in the industry.
The searching for new resources, in order to finance new projects, or for the growth and reorganization of the enterprise, often lead to companies to decide to carry out some of these two types of change.
The Merger comprises two or more companies that dissolve without liquidating, to form a new company. It is the most suitable legal instrument for business concentration. There are two types of merger; the first is the merger itself, where the companies dissolve to form a new one and the second is the merger by absorption where the company "absorbs" another by transferring the ownership of all its rights and obligations.
Splitting is a form of organization of the economic activity of one or more companies, resulting in a new legal organization. Unlike the Merger, it does not necessarily include the dissolution of the company. In this case there are four types of Splitting that can be rescued from article 88 of the General Companies Law. The first of these is the Absorption Division where one company, without dissolving, allocates part of its assets to another. Then there is the Excision-Merger where in this case two companies allocate part of their assets to create a new company. In third place is the Splitting itself where the company destined its patrimony for the creation of another company or several of them. Finally there is the Splitting by Division where the company is dissolved but all its assets are destined to the creation of new companies.
Splitting is a form of organization of the economic activity of one or more companies, resulting in a new legal organization. Unlike the Merger, it does not necessarily include the dissolution of the company. In this case, there are four types of Splitting that can be rescued from article 88 of the General Companies Law. The first of these is the Absorption Division where one company, without dissolving, allocates part of its assets to another. Then there is the Excision-Merger where in this case two companies allocate part of their assets to create a new company. In third place is the Splitting itself where the company destined its patrimony for the creation of another company or several of them. Finally, there is the Splitting by Division where the company is dissolved but all its assets are destined to the creation of new companies.