Takeover of a limited partnership by a general partner – what does it look like and what does it involve?

In accordance with the relevant provision, a merger may be effected:

1. by acquisition, i.e. by transferring all the assets of the acquired company to another acquiring company in exchange for shares which the acquiring company allocates to the shareholders of the acquired company;

2. by forming a new company, i.e. by establishing a capital company or a limited joint-stock partnership, to which the assets of all the merging companies are transferred in exchange for shares in the new company.

The above means that the takeover of a limited partnership entails the transfer of all its assets to another acquiring company. In the context of partnerships, however, it should be noted that the merger of partnerships may take place through acquisition only by a capital company. This means that a partnership (excluding a limited joint-stock partnership) cannot be the acquiring company or the newly formed company.

In view of the above, in order to discuss the acquisition of a limited partnership by a general partner, a distinction must first be made in terms of legal form:

• Where the general partner is a natural person – a natural person cannot take over the partnership;
• Where the general partner is a partnership (excluding a limited joint-stock partnership) – under the Commercial Companies Code, there is no provision for the acquisition of a partnership by another partnership. Partnerships may only merge by forming a capital company or a limited joint-stock partnership, or through acquisition by a limited joint-stock partnership;
• In the case of a general partner being a corporate entity – it is possible for a limited partnership to be taken over by a general partner that is a corporate entity.

Acquisition of a limited partnership by a general partner that is a capital company

Merger plan

Pursuant to Article 518 of the Commercial Companies Code, the takeover process begins with the preparation of a merger plan, which must include, amongst other things:

• the names of the companies involved in the merger,
• the number and value of shares in the acquiring company allocated to the partners of the merging partnership, and the amount of any additional payments,
• the date from which the shares allocated to the partners of the merging partnership entitle them to share in the profits of the acquiring company,
• any special benefits for the partners of the merging partnership, if such benefits have been granted.

The merger plan must be accompanied by: draft resolutions on the merger of the companies, draft amendments to the articles of association of the acquiring company, a valuation of the assets of the company being acquired as at a specified date in the month preceding the submission of the application for the publication of the merger plan, a statement containing information on the company’s financial position prepared for the purposes of the merger as at a specified date in the month preceding the submission of the application for the publication of the merger plan, using the same methods and in the same format as the last annual balance sheet.

The merger plan must be filed with the National Court Register (KRS) and published in the Court and Economic Gazette (Monitor Sądowy i Gospodarczy) (Section 519 of the Commercial Companies Code).

Where the acquiring company is a public limited company or a limited joint-stock partnership, the merger plan must be examined by an expert to verify its correctness and reliability. In other cases, the merger plan must be examined by an expert if at least one of the shareholders of the merging companies so requests, by submitting a written application to the company of which they are a shareholder within 7 days of being notified of the intention to merge.

Notification of partners

The merging company shall notify shareholders who do not manage the company’s affairs, on two occasions, in the manner prescribed for notifying shareholders, of its intention to merge with another company. The first notification shall be made no later than six weeks before the planned date of the resolution on the merger, and the second at an interval of not less than two weeks from the date of the first notification. This notification shall specify at least the place and time at which the partners may inspect the documents. This period must not be less than one month prior to the planned date of the resolution on the merger.

Shareholders’ meeting

The merger of companies requires the adoption of appropriate resolutions, which vary depending on the type of companies involved in the process.

In the case of a merging capital company, a resolution of the shareholders’ meeting or general meeting must be adopted by a three-quarters majority of votes, provided that at least half of the share capital is represented, unless the articles of association or the company’s statutes provide for stricter conditions.

In limited partnerships or limited joint-stock partnerships, on the other hand, the unanimous consent of the general partners is required, together with a resolution of the limited partners or shareholders, supported by votes representing at least three-quarters of the partnership capital or share capital, in accordance with the partnership agreement or articles of association.

If joint-stock companies or limited joint-stock partnerships with different classes of shares are involved in the merger, resolutions are adopted by voting in separate groups.

Each resolution shall contain approval of the merger plan, proposals for amendments to the articles of association or statutes of the acquiring company, or the text of the articles of association or statutes of the new company. The above resolutions require the drawing up of minutes by a notary.

Notification of the merger to the court and announcement of the merger

The management board of the merging capital company and the partners managing the affairs of the merging partnership shall notify the registry court of the merger of the companies for the purpose of entry in the register.

The removal of the acquired partnership from the register may take place no earlier than on the date of registration of the increase in the share capital of the acquiring company. Where the registered offices of the competent registration courts are located in different localities, the registration court having jurisdiction over the registered office of the acquiring company shall, ex officio and without delay, notify the registration court having jurisdiction over the registered office of the acquired company of the entry. The registry court having jurisdiction over the registered office of the acquired company shall, ex officio, forward the documents of the company struck off the register to the registry court having jurisdiction over the registered office of the acquiring company for safekeeping.

Legal consequences of the merger of a capital company with a partnership

As a result of the merger, the limited partnership ceases to exist, and its assets (assets and liabilities), rights and obligations pass to the capital company by way of universal succession, and the acquiring company shall succeed to all the rights and obligations of the acquired company. As a general rule, all contracts, permits and licences are also transferred to the acquiring company. The acquired company will be dissolved without undergoing liquidation proceedings and will be struck off the National Court Register.

Author

Martyna Dobkowska

Associate

She specializes in civil, commercial and business law. In the corporate and energy department, her activities are mainly based on providing corporate services to companies, reviewing and preparing commercial contracts, drafting litigation and non-litigation pleadings and preparing analyses and legal opinions, particularly in the sphere of business law and energy law. She also has professional experience in administrative and civil proceedings, which she gained in Warsaw law firms. She supports the Firm's…

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