Mergers, dissolutions, transformations

Expert advice on mergers, divisions and company transformations

What are mergers, divisions and company transformations?

Amendments to the law, a changing economy, an investment opportunity, expansion of the company’s reach or a joint business venture with another entity are just some examples of activities that may require the reorganization of your company. Mergers, divisions and transformations are broadly defined restructuring activities regulated by the Commercial Companies Code, aimed at adapting your company to dynamically evolving business challenges.

A company transformation refers to a process of changing the legal form of an entity into another legal form. This may involve converting a corporation into another corporation or into a partnership. Similarly, you may also convert partnerships on the same basis. Conversions are a particularly interesting option in view of the constant changes in tax law.

When your business transitions into a new legal form, it retains all existing rights and obligations. Consequently, business contracts will continue seamlessly under the new legal form, without the need for additional annexes or amending agreements. Note that the Commercial Companies Code provides for exceptions to this continuity rule concerning certain administrative decisions.

Merger, by contrast, reorganizes the structure of your business or shapes it according to your current needs. The Commercial Law provides two methods for merging companies: merger by acquisition, and merger by formation of a new entity. In both cases, the acquired company, or the merging companies are automatically dissolved as of the date of transformation. The shareholders of the dissolved companies receive new shares in either the acquiring company or in the newly formed entity. As of the date of the merger, the acquiring or newly established entity assumes all assets and enters into all the rights and obligations of the acquired company or the merging companies. Entrepreneurs value mergers for their flexibility and broad applicability.

A division is an excellent option when there is a necessity to separate a part of a company, for example, in order to sell it or diversify risks in a holding structure. Only limited liability companies and limited joint-stock partnerships can undergo division. Commercial law outlines five ways to carry out a spin-off. The differences in the procedures lie primarily in the effects on the divided company; in some of them, the divided company, once the process is completed, will cease to exist. In the course of some divisions, new entities may be formed.

Our services in company reorganization

As part of our services, we carry out all the reorganization options presented. Whether you are converting a general partnership into a limited partnership, merging two limited liability companies or intending to divide a joint stock company by spinning off part of its assets into a new entity. SWGK provides support throughout the entire process, from start to finish.

Comprehensive support in mergers, divisions and transformations

SWGK offers comprehensive support in implementing merger, transformation and division procedures. With our interdisciplinary approach, we will work with you to carry out the reorganization from the planning and conceptual phase, through the implementation of the process, to post-restructuring consulting. We ensure that all aspects of the procedure, particularly legal, tax and financial issues, are handled in accordance with the law and in a way that best serves you and your company.

With SWGK’s assistance, changes in the law or business opportunities will not pose a challenge. Adapt the structure of your business organization using our professional support and years of experience.