Forms of Restructuring
The law on entrepreneurs allows reorganization of an enterprise in three forms: transformation, merger (accession or consolidation) and division (split or spin-off). The decision on reorganization is subject to the notification rules established for liquidation — the path must be transparent from the outset.
In transformation, the company continues, by decision of the partners, in another legal form, and the formation requirements for the new form apply to the transformed company. Personally liable partners of general and limited partnerships remain liable for obligations arising before transformation where the claim matured before it or within 5 years of it.
Merger and Division: the Constructions
In accession, one or more companies, without liquidation, attach to another — the acquiring company — with full transfer of assets and liabilities, in exchange for shares to the partners. In consolidation, two or more companies found a new one to which their assets and liabilities pass by force of law. Participating companies may have different legal forms.
Division proceeds two ways: by split — where the company transfers parts of its assets and liabilities to two or more newly founded or already existing companies — or by spin-off, where one or more companies are separated from it. The registration of the attached or split company is cancelled without liquidation. In a merger the acquirer answers for all prior obligations; in a division the new and acquiring companies are jointly liable for the divided company’s obligations, but that liability is capped by the net assets allocated to them.
Where maintaining the share-exchange ratio is impossible, partners receive cash compensation in addition to shares; in a joint-stock company it must not exceed 10 percent of the value of the shares to be issued. It is impermissible to issue the acquirer’s shares in exchange for shares held by the acquirer itself or a person acting on its instructions.