Although five years have passed since Law 3/2009 on Structural Modifications of Commercial Companies came into force, it seems that the issue of the effective accounting date of the merger continues to generate doubts among legal operators (as they say now), which seems to be confirmed, also, due to the not always uniform practice of the Commercial Registries. We will make a brief historical overview of how this matter has evolved:
1.- THE ACT ON ANONYMOUS SOCIETIES
The 1989 Joint Stock Companies Act, in its article 235.d) established that one of the requirements that the merger project had to mention was: "the date from which the operations of companies that are being dissolved will be considered to have been carried out for accounting purposes on behalf of the company to which their assets are transferred." This rule included what was called the “accounting retroactivity clause.”
The aim was to link the accounting effects of the merger to a date prior to its execution, in order to attribute to the acquiring company or to the new company formed the economic consequences of the operations carried out since then. The essential point, in any case, is that there was a certain discretion in setting the effective accounting date of the merger, which could be prior to the merger agreement.
2.- THE INTERPRETATION OF THE ICAC
Regardless of the criticisms made from a legislative policy point of view regarding the criteria of the Law on Joint Stock Companies, the Institute of Accounting and Auditing of Accounts (ICAC) in resolution 75/2008, pointed out, analyzing the regime of the law on joint stock companies, that To the extent that there was no accounting regulation, or that it allowed accounting from a date agreed upon in the merger process, its only limit should be the closing of the previous fiscal year and the moment of legal effectiveness of the merger..
3.- THE PGC OF 2007
As a consequence of Law 16/2007, of July 4, regarding the reform and adaptation of commercial legislation in accounting matters for its international harmonization based on the regulations of the European Union, a new General Accounting Plan was approved, through Royal Decrees 1514/2007 and 1515/2007, and the Institute of Accounting and Auditing of Accounts (ICAC) in the same resolution 75/2008, said that “after the entry into force of the New Accounting Plan, the date from which the operations of companies that are extinguished will have to be considered as carried out for accounting purposes on behalf of the company to which their assets are transferred, It will be the effective takeover of control by the acquiring company and, therefore, only from the date on which the agreement of the shareholders' meeting of the acquired company on the merger project is adopted, provided that it contains a statement on the assumption of control of the business by the acquirer, although it may not refer to an earlier time. That is, it declared the retroactive accounting regime permitted by the law on public limited companies to be eliminated.
4.- THE LAW ON STRUCTURAL MODIFICATIONS OF COMPANIES
Law 3/2009 on Structural Modifications of Commercial Companies repealed the entire section of the Law on Public Limited Companies relating to mergers, establishing a new regulatory framework for them and in its article 31.7 declares that “The common merger project will contain, at least, the following details: (…) 7. The date from which the merger will have accounting effects in accordance with the provisions of the General Accounting Plan.”
That is to say, with this regulation, corporate law is fully linked to accounting law, it adopts the regime expressed in the previous section, so that the accounting effective date of the merger can only be the one determined by the accounting regulations..
5.- THE MODIFICATION OF THE PGC OF 2010
The accounting regulations were amended by Royal Decree 1159/2010, of September 17, which approves the Standards for the Formulation of Consolidated Annual Accounts and modifies the General Accounting Plan approved by Royal Decree 1514/2007, of November 16, and the General Accounting Plan for Small and Medium-sized Enterprises approved by Royal Decree 1515/2007, of November 16.
By virtue of this Royal Decree, the 19th and 21st Registration and Valuation rules, included in the General Accounting Plan, are modified, regulating the accounting aspects of mergers, especially the effective date, differentiating between a general rule and a specific rule dealing with intra-group mergers.
a.- The general rule is the one contained in rule 19., by virtue of which the date of accounting effects of the merger will be the date on which the acquiring company acquires control of the acquired businesses, which will in turn be, as a general rule, the date on which the shareholders' meeting or equivalent body of the acquired company is held in which the operation is approved. However, it is permitted that in the merger agreement the effects be linked to a later time, which will have as a limit the registration of the merger in the Commercial Registry.
In summary, the effective accounting date may be determined within a time frame ranging from the date of the agreement of the absorbed company and the date of registration of the merger in the Commercial Registry. This interpretation seems to me to be the most reasonable based on a purely grammatical argument of rule 19, despite the well-founded opinions that point out that it is only possible to agree the date of the agreement of the absorbed company or the date of registration of the merger in the Commercial Registry
b.- The special rule applicable to cases of intra-group mergers is the one contained in rule 21. whereby the effective accounting date will be the start of the financial year in which the merger is approved, provided that it is after the date when the companies were incorporated into the group. If one of the companies has joined the group in the financial year in which the merger or demerger takes place, the effective accounting date will be the acquisition date.
In short, in the case of intra-group mergers, there is no margin of discretion in setting the date of accounting effects of the merger..
With this introduction and so that these lines do not remain a mere theoretical exercise, I think it would be interesting to refer to two issues:
1.- There being a possibility of choosing the date of accounting effects of mergers, at least in those that are not intra-group,
Which date to choose?
The alternatives go in three directions:
a) the date of adoption of the merger agreement of the absorbed company.
b) the date of the merger deed
c) the date of registration of the merger in the Commercial Registry.
Certainly, the answer will depend on the type of merger involved, assessing the conditions of the participating companies.
It is possible that in the case of companies that complete a merger process through a long negotiation process, with drafting of projects, publication of announcements, meetings before a Notary, etc., the most appropriate date will be that of the agreement since it is closest to the moment of acquisition of control;
However, in the case of small companies, where agreements are adopted at a Universal Meeting and unanimously, where all negotiations are of a verbal nature, and specific balance sheets are not used, because it is considered that the exchange ratio can be extracted based on accounting values, the first element of authenticity of the merger is the granting of the public deed;
The option for the date of registration of the merger has the disadvantage that we leave the date undetermined for a few days, but it has the advantage that it will avoid surprises (which there are) of being forced to prepare annual accounts from the date of accounting effects until the registration of the merger.
2.- That the qualification of a merger as ordinary or intra-group, as indicated by the DGRN in its resolution of 8 May 2014, is outside the competence of the Commercial Registrar. However, this doctrine is being reviewed by other resolutions such as that of 24 April 2015.
In Lleida on September 26, 2014. It was updated on November 10, 2015.
