Any merger of two companies involves a lot of varying degrees of complexities but this is just one of the many aspects of a merger. There are legal forms that must be filled out and submitted correctly. Also, parties involved in the merger have to navigate laws. Plus, a company restructuring will impact shareholders, taxes, investors, and more. This is the reason you should not navigate a merger and commercial acquisition by yourself. Read on to know the complexities involved in mergers and acquisitions and why corporations need the services of an attorney:
Global Legal Frameworks
Merging two companies in one country is hard but some mergers involve one company registered in another country. Thus, there are various laws and operating procedures for both companies as they are under the jurisdiction of their nation. As this merger adds another layer of challenges, mergers and acquisition lawyers must be hired.
How Mergers Affect Tax Payments
Merging two companies has tax implications as it can either be tax-free or taxable. It depends on where the corporation is registered and the jurisdiction it operates under. Also, some slightly complex scenarios can unfold where a part of the sales from the merger can be tax-free and another part contributed to tax.
Additionally, the new business structure as a corporation now indicates that taxes will change. Tax rates vary on the country the business is mainly operating in so it is important to establish upfront the taxes that must be paid.
Dealing with Complex Paperwork and Ensuring Legal Compliance
A successful merger involves filling out a lot of complex paperwork. Some forms are related to all aspects like the transaction sale, company restructuring, legal jurisdictions in which the business is registered, investor funding, and more. All of these areas require complex paperwork that can be too much for a non-lawyer person to handle.
Moreover, the merger may also mean there are more things to be protected intellectually. For instance, there might be patents that must be registered, trademarks, and others. The merger involves investors, shareholders, and people working in the business. To successfully navigate this legally and make sure everything is sound is having the best possible team serving the corporation’s best interests. This will prevent loopholes from developing and possibly costing the business hundreds of thousands of dollars of profit losses. Having the paperwork filled out and submitted timely and properly is necessary. Otherwise, the business will have to face hefty fines.
