What is a statutory merger?
A statutory merger is the direct combination of two entities under corporate statute — one entity absorbs the other, with the absorbed entity ceasing to exist and the surviving entity inheriting all assets and liabilities. Unlike triangular structures that involve a shell subsidiary, statutory mergers directly combine the two parties without intermediate vehicles. They are the simplest and historically most common merger form.
How statutory mergers work mechanically
The mechanics: (1) Both companies’ boards approve the merger agreement. (2) Both companies’ shareholders vote (typically requiring majority of outstanding shares, or supermajority depending on charter and statute). (3) Articles of merger filed with the relevant state authority. (4) On the effective date, the merging entity ceases to exist; its assets, liabilities, and contracts transfer to the surviving entity by operation of law. (5) Merging entity’s shareholders receive the consideration (cash, stock, or mix).
When statutory mergers are used
Common scenarios: (1) Two-party combinations of equals where neither party wants subsidiary structure. (2) Internal restructurings consolidating subsidiaries into the parent. (3) Small acquisitions where triangular complexity adds no benefit. (4) SPAC mergers typically use statutory form, with the SPAC and target merging directly.
Statutory vs. triangular
The critical difference is liability exposure: in a statutory merger, the surviving company directly inherits the merged company’s liabilities, mixing them with the surviving company’s own balance sheet. In triangular mergers, liabilities are isolated in a subsidiary, providing insulation. Tax treatment also differs — statutory mergers can qualify as tax-free under IRC §368(a)(1)(A) but face different shareholder-vote thresholds than triangular alternatives.
Türkiye context — TTK mergers
Turkish Commercial Code (TTK) Articles 134-158 regulate mergers; the Turkish equivalent of statutory merger is “devralma şeklinde birleşme” (merger by absorption), governed by TTK Article 136. Approval thresholds: 75% of voting capital for both companies. Tax-deferred treatment under KVK Article 19 requires specific procedural compliance including filings with the trade registry and approval of the Capital Markets Board for listed companies.
Related: Forward Triangular Merger, Reverse Triangular Merger, Tax Indemnification.