Ethical and Legal Issues
Merger of Company A & Company B
Human Resources Management
In any merger, there are always legal and ethical issues involved. These issues have to be resolved in order to ensure a successful merger. It is the role of Human Resource personnel to ensure the code of ethics is used in legal and moral implications. The role of the Human resource manager is to create an ethical environment in which all employees are able to enjoy there inalienable rights. These rights will include the accessibility of information about the job, company, and there career and the right not to be coerced into situations. Maintaining ...view middle of the document...
There are many ethical and legal issues involved in the process of mergers and acquisitions. Some issues that have been discussed recently are the ethical propriety, tactics, anti-trust issues, rights of bondholders of both merging companies, and the rights of individual stockholders neglected in an institutional shareholder power. However, two important issues have not surfaced as questionable practices deriving from mergers and takeovers, one having to do with the rights of employees in mergers and the second concerning the responsibilities of shareholders during these activities (Werhane, 1998). The rights of employees in mergers is the primary ethical issue that is violated during mergers. Employees are supposed to continue to their day-to-day job operations before, during and after the merger as if no changes are taking place. It is here where many ethical issues begin to develop. Management expects employees to continue to work and produce as if nothing is happening. This becomes a difficult task when rumors swirl around about the threats of their job and management decisions. Although employees are drastically affected by a merger or an acquisition because in almost every case a number of jobs are shifted or even eliminated after a merger, in fact except for top management, employees at all levels are usually the last to find out about a merger transaction (Werhane, 1998). This non-communication is unethical and prevents employees from knowing about their jobs and careers. Second, mergers of two firms are said to be beneficial to the shareholders of these respected companies. This indeed is the primary function of a merger, however; the roles of shareholders has gone unrecognized. It seems the role, responsibilities are undefined, and it leaves shareholders clueless as how to act under mergers. The role of stakeholders can be critical due to the merger being a friendly transaction or hostile takeover. In a hostile takeover environment, disputes between roles and responsibilities of stakeholders can generate proxy fights. Another is that HR has to deal with is the culture of two companies. The ethical practices of these two firms are different causing HR to create an ethical environment that is universal. There are ethical issues that can affect a merger. There will be legal matters to be addressed related to structuring the transaction and the transaction documents, establishing the terms of the transaction, negotiating arrangements ancillary to the transaction such as employment, licensing and other ongoing relationships, conducting the due diligence, and negotiating post-closing obligations such as indemnification, confidentiality, non-compete and non-solicitation obligations (“Legal”, 2009). Other legal issues include dissolving of assets, consolidations, and tax-reporting issues are all legal issues that must be taken into account. From a tax-purpose perspective, the structure of a merger is important in order to ensure tax...