General procedure for reorganizing a legal entity
The reorganization procedure is quite complex and it is difficult to determine its exact boundaries, as often the preparation for reorganization begins long before the official decision of the participants (shareholders) at the general meeting and consists with a preliminary analysis of the state of assets and liabilities of enterprises, inventory, compilation of a list of creditors.
Also, the work on completion of the reorganization procedure can continue for a long time after its registration with the GFS and contain elements such as:
- Registration of the securities (conversion) report if the AO is involved in the reorganization;
- Transfer of assets and their proper registration (e.g. real estate) from discontinued companies to successors;
- amending the founding documents of the successor company.
With this in mind, it is very important to understand when the moment of completion of the reorganization procedure for third parties comes.
Preliminary in-depth analysis of the company’s state of affairs allowing you to identify all possible ways to reorganize your company and determine the best for achieving the desired goal;
Conducting qualified analytical advice by specialists from different areas of law as well as accounting and tax accounting specialists, allowing to identify existing and possible risks and measures to minimize them, to choose the most suitable way for your firm to reorganize in the light of the economic situation;
Comprehensive support at all stages of the reorganization procedure, including legal and accounting support.
Classification of types of reorganization
Types of reorganization:
Creating new or terminating former entities
Merger of organizations
joining the organization
separation of the organization
highlighting the organization
transforming the organization
Continuity of tax and other obligations of the organization in various forms of reorganization
The table shows the succession of the organization’s tax and other liabilities in various forms of reorganization:
Property and liabilities move to successor
There is no succession in respect of taxes, fines, penalties, settlements with creditors, reporting
Payment of taxes, fines, penalties, settlements with creditors, reporting are assigned to the successor
When reorganizing (merger, joining, separation, allocation, transformation) employment relations with the employee’s consent continue
The merger of legal entities is the creation of a new society with the transfer of all the rights and responsibilities of two or more societies and the termination of the latter.
Joining is the end of one or more societies, transferring all their rights and responsibilities to another society.
Separation is the cessation of society with the transfer of all its rights and responsibilities to newly established societies.
The allotment is the creation of one or more societies, with the transfer of part of the rights and responsibilities of a reorganized society to it without terminating the latter.
Transformation is a transition from one organizational and legal form of legal entity to another.
All forms of reorganization differ significantly from each other, but they all have common elements.
The common and most important thing for all these forms of reorganization is a universal succession, which implies the transfer to the successor of the rights and obligations of a reorganized legal entity through a transfer act and is the main hallmark of any reorganization. The act reflects the succession provisions for all rights and obligations of the reorganized legal entity (including the disputed liabilities), as well as all its creditors and debtors.