Compliance requirements in mergers include competition law, financial reporting, corporate governance and labour law. Key regulators are the ACM for competition, the AFM for listed companies and sector-specific authorities. The process usually takes between 4 and 13 weeks, depending on the complexity. Non-compliance can lead to fines of up to 10% of turnover, transaction cancellation and reputational damage.
What are the key compliance requirements in mergers and acquisitions?
Merger compliance requires compliance with competition law, financial reporting and corporate governance. The ACM imposes a reporting obligation in case of a combined global turnover of more than 150 million euros and at least two companies with more than 30 million euros of Dutch turnover each. Pension funds have higher thresholds of 500 million euros worldwide and 100 million euros in the Netherlands.
Labour law compliance includes the automatic transfer of employees in the event of a transfer of undertaking according to Section 7:662 of the Civil Code. All rights and obligations are transferred by operation of law, including years of service and conditions of employment. Collective labour agreement provisions remain in force for one year after the transaction.
Tax compliance involves the participation exemption for a minimum 5% stake, where dividends and capital gains are exempt. Since 2024, a conditional withholding tax of 25.8% applies to dividends to low-tax jurisdictions. Pillar Two rules introduce a minimum tax of 15% for groups with turnover over €750 million.
Which regulators need to approve a merger?
The Consumer and Market Authority (ACM) assesses mergers through the Significant Impediment to Effective Competition (SIEC) test. This test analyses market shares, concentration levels, entry barriers and innovation effects, identical to the European Commission.
For listed companies, the Financial Markets Authority (AFM) requires transparency on material transactions. Sector-specific regulators, such as De Nederlandsche Bank for financial institutions, may require additional approval.
Works councils have advisory rights on important decisions, such as merger or takeover. This advice is mandatory before final decisions are taken. Banks may require permission when changing the ownership structure because of existing credit facilities.
How long does the compliance process take in an acquisition?
The ACM approval process proceeds in two phases: phase I takes 4 weeks from full notification, phase II 13 weeks for in-depth investigations. The majority are handled in phase I, with outcomes ranging from approval to conditional approval or referral.
Employment law procedures for Works Council advice usually take 4 to 6 weeks. Financing approval depends on deal complexity and can take 2 to 8 weeks. Committed financing offers more certainty than conditional financing.
Total turnaround time ranges from 6 weeks for simple transactions to 6 months for complex M&A-deals with multiple regulators. Factors causing delays include incomplete documentation, competition concerns and extensive due-diligence findings.
What happens if you fail to comply with compliance requirements in a merger?
Gun jumping - implementation before ACM approval - results in fines of up to €900,000 or 10% of turnover, whichever is higher. BUKO was fined €1.85 million in 2022 for failing to notify a concentration.
Labour law violations lead to nullity of dismissals due to the transition. Only ETO reasons (economic, technical, organisational) independent of the transition are allowed. The burden of proof is on the employer.
Non-compliance can cause transaction cancellation, reputational damage to stakeholders and legal liability for directors. Remedies, such as divestments or behavioural measures, can be imposed to address concerns.
What documents are mandatory for merger compliance?
ACM notification requires the form Concentrations with detailed market analysis, turnover data by geographic market and competitive analysis. Three-year financial statements of both parties are mandatory, including segmentation by product markets.
Due-documentediligence includes financial figures, legal contracts, tax positions and commercial market analyses. Employment law documents cover personnel files, collective agreements and pension statements for the automatic transfer of employees.
The purchase agreement (SPA) specifies warranties, indemnities and liability limits. Additional documentation includes data room access, Q&A processes and specialist reports. Communication plans to stakeholders are essential for transparency.
How do you prepare for a compliance audit during an acquisition?
Due diligence preparation begins with the creation of a digital data room and systematic document organisation by legal, financial, tax and commercial track. Coordination with specialist advisers ensures completeness and accuracy.
Compliance readiness requires up-to-date financial figures, legal contract analysis and risk identification. Sales readiness includes independent management, reliable figures and clear strategic positioning without DGA dependence.
Professional guidance by experienced takeover-advisers optimises the process through timely preparation, risk management and value maximisation. Specialist knowledge of regulations and market dynamics prevents costly delays and increases transaction success.
Compliance in mergers and acquisitions requires thorough preparation and specialist expertise. Professional guidance from experienced advisers is crucial for successful transactions within the deadlines. For strategic advice on your M&A plans, you can contact contact us for an informal discussion.
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