Corporate Restructuring: Business Transformation and Optimization
Corporate restructuring (reorganization) is a complex legal process involving changes to a company's legal form or structure. This can include mergers, divisions, conversions, or spin-offs of subsidiaries. Following the adoption of the new Law on Entrepreneurs in Georgia, reorganization procedures have become significantly more detailed, with strict timelines introduced to protect creditor rights. Restructuring is often necessary to increase business efficiency, optimize taxes, prepare for a sale, or prevent bankruptcy. This process requires precise legal planning to avoid operational disruptions, tax penalties, and disputes with creditors.
What Does This Service Cover?
Corporate restructuring services cover the full cycle from planning to final registration:
- Preparation of Reorganization Plan: Drafting a detailed document outlining the allocation of assets and liabilities, share conversion ratios, and the new structure.
- Merger/Acquisition: Combining two or more companies into one entity or one company absorbing another.
- Division/Spin-off: Splitting one company into several independent entities or separating part of the assets into a separate LLC.
- Conversion: Changing the legal form, for example, converting an LLC into a Joint Stock Company (JSC) or vice versa.
- Creditor Notification: Publishing mandatory notices required by law and managing creditor claims.
- Final Registration: Registering the completion of reorganization with the Public Registry and re-registering assets.
Common Scenarios When You Need This Service
Restructuring is relevant in the following situations:
- Holding Creation: Consolidating several independent companies under one umbrella to simplify management.
- Risk Segregation: Spinning off a risky business direction (e.g., construction) into a separate legal entity to protect core assets.
- IPO Preparation: Converting an LLC to a JSC to enable public offering of shares.
- Business Sale: "Cleaning up" a company (Carve-out) from non-core assets before selling to increase its value.
Georgian Legal Framework
The reorganization process is detailed in the Law of Georgia on Entrepreneurs. Under the new law, reorganization is a multi-stage process involving partner decisions, public publication of the draft, and a 3-month period for creditors to satisfy claims. Tax aspects (e.g., VAT crediting, asset transfer) are regulated by the Tax Code of Georgia. In cases of mergers restricting competition, approval from the National Competition Agency is required.
Process of Service Delivery
The process begins with a partners' meeting and approval of the reorganization strategy. Lawyers and auditors then prepare a draft division or merger balance sheet. Information is published on the Public Registry portal. After the statutory period (minimum 4 months from the start) expires, if creditors have no claims, final registration takes place. Throughout this period, lawyers manage relations with the Public Registry and creditors.
Why Legal.ge?
Corporate restructuring is not a simple formality; it is "surgical intervention" in the business organism. Incorrectly conducted reorganization can lead to years of delays, disputes, and financial loss. The Legal.ge team has successful experience managing complex reorganizations. We ensure that the transformation occurs seamlessly, in full compliance with the law, and in alignment with your business goals.
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