As many North Carolina business owners have come to learn, how a business is structured goes far in terms of its success. While determining the correct legal structure is important when establishing a business, it may be just as important to revisit how the company is structured on occasion to determine if the structure still makes sense under the current business and regulatory climate. A case in point is the potential intercompany merger of Merrill Lynch and Bank of America.
Merrill Lynch, a brokerage firm founded in 1914, agreed to be acquired by Bank of America in 2008 at the height of the financial crisis. The deal closed in January 2009, and Merrill Lynch became a wholly owned subsidiary of Bank of America. In the five years since the acquisition, financial institutions have come under increasing regulatory scrutiny and are now subject to significant regulatory disclosure requirements under the Dodd-Frank Act.
The new Dodd-Frank regulatory environment has caused Bank of America to rethink its corporate structure. In a filing made with the Securities and Exchange Commission on Aug. 2, Merrill Lynch announced that it may be fully merging into Bank of America by the end of the fourth quarter of 2013. This move is viewed as an effort by Bank of America to “streamline” its corporate structure in the wake of Dodd-Frank. A company spokesperson said the intercompany merger would not impact use of the Merrill Lynch or the services provided to the company’s customers and clients.
By fully merging the two legal entities, Merrill Lynch no longer will be required to file separate regulatory disclosures. Also, a simplified legal structure will help the company achieve success in its resolution planning. Business owners should take a lesson from Bank of America and Merrill Lynch and consider whether their own corporate structures could use some tweaking. An attorney can help with this review and ensure that documents are thoroughly drafted and filed appropriately.
Source: USA TODAY, “Merrill may merge fully into Bank of America“, Kevin McCoy, August 16, 2013