During the course of a company’s operations, a reorganization of the enterprise may be necessary, which can take different forms. Depending on the goal, three types of reorganization can be identified:
- aimed at consolidation of the enterprise – merger and acquisition;
- aimed at fragmentation of the enterprise – division, spin-off;
- without changing the size of the enterprise – transformation through a change in organizational and legal form.
For example, the merger of legal entities (company reorganization) can be carried out to combine financial and production resources, increase market share, or take advantage of certain tax benefits, such as when a profitable company acquires a business with a negative tax object, thereby achieving tax savings.
The division of an enterprise into two or more legal entities may be beneficial for asset diversification or types of business activities, for example, to reduce the risks of hostile takeovers and maintain control over the business.
Depending on the method, company reorganization can help: improve business manageability, reduce paperwork, eliminate issues with antitrust authorities, separate less promising business areas, and focus on the most profitable ones.
Thus, there may be various reasons for reorganization, which dictate the use of different forms of reorganization of the legal entity.
For a successful reorganization procedure, a number of legally significant actions must be taken, including passing through bureaucratic procedures and preparing certain legal documents, such as calling general meetings of participants to make decisions on state registration, drafting and approving statutory documents in the new version, drafting a transfer act (in the case of a merger, acquisition, or transformation) or a distribution balance (in the case of a division), passing a tax inspection, and state registration of the reorganization.
Given these circumstances, the legal support of the reorganization procedure is a highly sought-after service in the legal market, driven by the need to apply relevant legal knowledge and practical experience, spend considerable time completing all registration procedures and formalities, while business owners often lack either the necessary legal knowledge or the time to carry out these procedures independently.
The law firm WinnerLex, if necessary, will assist in reorganizing your business, taking care of all legal matters, allowing you to focus on running your business and generating profit, rather than spending time and energy on overcoming bureaucratic obstacles.
LEGAL ASSISTANCE FROM A LAWYER DURING COMPANY REORGANIZATION includes a wide range of services, among which the following can be highlighted:
- Legal consultations on matters of company reorganization;
- Selection of the method of company reorganization (transformation, merger, division, spin-off);
- Comprehensive support of the company reorganization procedure;
- Assistance with unscheduled inspections by regulatory authorities during the company reorganization process;
- Drafting corporate documents necessary for the reorganization of the legal entity;
- Support with the state registration of the company reorganization.
Practice experience: 19 years
Specialization: litigation support, tax, customs and antitrust practices, agricultural law, IT and M&A
Practice experience: 21 years Specialization: support of economic, civil, labor and administrative disputes, energy
Practice experience: 11 years Specialization: tax, customs and corporate disputes, support of inspections, contractual activities
Practice experience: 6 years
Specialisation: business and civil law, tax and customs practice, corporate law, registration and reorganisation of business
Practice experience: 11 years Specialization: support of economic, civil, labor and administrative disputes, inspections
Please note that the regulatory authorities will conduct a documentary unscheduled inspection if the procedure of reorganizing a legal entity (except for transformation) is underway at the company.
A legal entity is considered to have ceased to exist from the date of entry in the Unified State Register regarding the state registration of the termination of the legal entity.
It should be noted that according to the Civil Code of Ukraine, a period is established for creditors to submit their claims to the company that is being terminated, namely no less than 2 months and no more than 6 months from the date of publication of the notice about the decision to terminate the legal entity.
It should be remembered that in the case of the division of legal entities, the state registration of newly created legal entities and the state registration of the termination of the legal entity being divided is carried out. The division is considered complete from the date of the state registration of the termination of the legal entity being divided.
Mergers, acquisitions, divisions, and transformations of legal entities are carried out by decision of their participants or the governing body of the legal entity, authorized by the constituent documents, and in cases specified by law – by decision of the court or relevant government authorities.
- Merger – a new legal entity is created, which acquires all ownership rights. The participating legal entities are liquidated;
- Consolidation – the rights and obligations of one legal entity are transferred to another;
- Division – the rights and obligations are transferred to two or more companies;
- Spin-off – one or more new organizations are created from the structure of the legal entity, with the rights and obligations of the reorganized company transferring to them;
- Transformation – a change in the organizational and legal form of the enterprise.
Employees do not need to be dismissed due to the reorganization of the company (except in cases of redundancy), and only a record of the reorganization should be made in their work books (similar to a record of the company’s name change).
According to paragraph 183.17 of the Tax Code of Ukraine, a person formed as a result of the reorganization of a taxpayer (except for the person formed through transformation) must register as a tax payer as a newly created entity, following the procedure established by the Code, including in cases where the tax payment obligations have transferred to the new entity due to the division of tax liabilities or tax debt.
