1. Map out the merger or acquisition
It may seem simple: one entity acquires another, or companies merge. However, from a customs perspective, it is not that straightforward. Authorisations, registrations, and permissions (hereafter referred to simply as 'authorisations') in the area of customs and excise are specifically issued to an entity. If this entity ceases to exist or is merged with another (acquiring) entity, the authorisations are essentially no longer valid.
A company faced a tight deadline for a merger. All legal steps had already been taken to finalize the merger on a certain date. However, the customs authorisations had not yet been ‘transferred’ to the new entity.
The first step in our approach was to map out which entity would continue to exist and which entity would cease to exist. We then identified the authorisations held by both entities. The implications of the merger quickly became clear.
2. Establish an approach
To be fully operational at the time of the merger or acquisition date, certain steps must be taken. This requires a project plan. The project plan outlines the actions that need to be undertaken. One of these actions is applying for new authorisations, registrations, and permissions.
The entity that would be operational after the merger had no authorisations, registrations, or permissions. This meant that all of these had to be reissued. Customs authorities had up to 120 days to decide on the issuance. However, the merger date was 90 days away. The first challenge was present. A tight schedule was unavoidable, but cooperation from Customs was necessary to realize the issuance within a shorter timeframe than legally required.
3. Good preparation is half the battle
When it comes to issuing authorisations, this credo certainly applies: good preparation is half the battle. The application forms must be fully completed, all attachments must be included, and the new procedures and work instructions must be accurate and complete.
This seems like a simple step. In practice, however, it takes more time than expected. In this situation, we spent several days with all stakeholders from the organisation writing procedures and instructions. All processes, procedures, and working methods were redefined and documented.
4. Consult with Customs
Without the cooperation of Customs, companies do not receive new authorisations. Therefore, it is crucial to consult with Customs as soon as possible regarding the proposed merger or acquisition. Customs will then be aware of the merger or acquisition and can, if possible, already take certain steps.
We had direct contact with Customs. Given the tight deadline, efficient cooperation with Customs was necessary to complete all steps in time for the issuance of the authorisations.
5. Prepare for an audit
Customs performs an audit before authorisations and permissions are issued. Registrations are generally issued after an administrative review. Customs usually visits the site to assess the design and existence of procedures, instructions, controls, and audits. The functioning of these processes may not be assessed at this stage, but Customs can audit this during a later phase.
During Customs' visit, we presented the new procedures, instructions, and controls. We indicated the differences compared to the previous audit by Customs.
6. Conclusion of the audit
Once the audit is concluded, and if the assessment is positive, the authorisations, registrations, and authorisations are issued.
During the audit, we made clear agreements about the delivery of documents and data. These agreements were fulfilled, and thus the authorisations, registrations, and permissions were issued on time. The merger could proceed without delay. The customs aspect of the merger couldn't have been more successful! And if the company continues to monitor sufficiently and takes timely action when necessary, it will remain successful from a customs perspective.
For questions or comments on this topic, please contact Samantha Zwart - Speelman.