Head of practice
Head of Corporate Law and Fintech Practice. Expert in the creation and reorganization of companies, support of M&A transactions, as well as legal support for opening and running a business in the EU, Asia, and North America.
Reorganization of the enterprise
The process of changing the organizational and legal form of an enterprise or its structure is called reorganization. The purpose of such reorganization is often to optimize business processes, expand or narrow influence, and improve financial condition. Permissible forms of reorganization are explicitly specified in Article 106 of the Civil Code of Ukraine. In this article, we will analyze in more detail five types of reorganization and the procedure for their implementation.
What are the main types of enterprise reorganization?
Merger
This is a form of reorganization, which consists in the union of two or more legal entities with the aim of creating a single enterprise. All participating legal entities cease their activities, and information about the newly created enterprise is entered in the register.
Division
This is a form in which one legal entity ceases its activities and several new ones are created on its basis. In this case, the property and rights of the first enterprise are distributed among all successors, as indicated in the relevant distribution balance sheet.
Splitting
This consists in the separation of part of the property, rights and obligations of the enterprise in order to create another legal entity, respectively. At the same time, the original legal entity does not cease, but continues its activities, but with a changed asset structure.
Merger
This is a form of reorganization, in which one or more legal entities cease their activities and transfer all their property rights to another. If we compare it with a merger, then in this case the enterprise to which others join remains and does not cease to exist. The specified reorganization is recorded only in its statutory documents and ownership structure.
Transformation
This form is the last and involves a change in the form of the enterprise (for example, a private enterprise – to a joint-stock company). In this case, other provisions of the current national legislation will also apply to regulate its activities.
Reorganization of an enterprise in Ukraine: what are the main stages?
Reorganization requires compliance with a number of mandatory stages specified by law, in particular:
- making a decision on reorganization (holding a general meeting, drawing up a protocol, appointing an authorized body or person for reorganization);
- conducting an inventory and valuation of the enterprise’s assets (to form the authorized capitals of the successors);
- notifying the state registrar of the reorganization (for example, to make an entry that the legal entity is in a state of termination, except in the case of a separation);
- notifying creditors of the reorganization (if any);
- resolving issues related to labor relations of employees (for example, issuing orders for dismissal in connection with staff reduction, transfer, etc.);
- drawing up documents (transfer act or distribution balance sheet);
- undergoing an audit and preparing financial statements;
- transfer of documents subject to long-term storage to the state archival institution (if the enterprise will cease its activities as part of a merger, division, or acquisition);
- registration of changes to the data on the legal entity.
The list of actions above is not exhaustive and may involve taking other steps (for example, in the case when the enterprise has no licenses, patents, etc.). For more detailed information, we recommend that you order a consultation with our corporate lawyer.
What documents will be required for the correct reorganization of the enterprise and changes to the register?
State registration of reorganization involves the preparation of:
- a decision (minutes) of the supreme management body;
- an application for state registration of termination (amendments);
- a transfer deed (in the event of a merger, separation, accession) or a distribution balance sheet (in the event of division, transformation);
- a new version of the constituent documents;
- an inventory act, etc.
How can a corporate lawyer help with the reorganization of an enterprise?
A corporate lawyer will assist at all stages of the reorganization, ensuring its legality and legal integrity. As part of the support, a lawyer from our company “Prikhodko & Partners”:
- determines the most appropriate form of reorganization for the client;
- identifies potential legal risks and helps to avoid them;
- creates a detailed reorganization plan;
- prepares all necessary draft decisions, constituent documents, etc.;
- negotiates with creditors regarding their requirements and security;
- provides support in passing tax and audit audits;
- assists in resolving issues related to labor relations with employees;
- prepares a full package of documents for the state registrar;
- accompanies the client in court (for example, in the case of appealing against the unlawful actions of the state registrar).
Do you have any questions? Then order a legal consultation and find out the cost of legal support in the process of enterprise reorganization by filling out the form below.
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