Transfer of a Share in a Limited Liability Company
One route out of a business is the disposal of a share. Under the norms of the Entrepreneurship Code on the transfer of a share, a partner may transfer (dispose of or legally encumber) his or her share only with the consent of the limited liability company and the partners. A decision that restricts, prohibits or makes the transfer of a share dependent on consent is adopted only with the consent of all the partners to whom the restriction or prohibition relates. The agreement on the transfer of a share must be concluded in writing, and the company must be notified of it immediately upon conclusion. The transfer enters into force upon registration of the share in the name of the new partner by the registering organ, and the norms on a good faith acquirer apply in this case. For obligations connected with the disposed share that remain unperformed at the moment of disposal, the disposing partner and the acquiring partner answer jointly to the company, unless the charter provides otherwise. This makes the consent architecture the first element of any exit plan: without the required consents and registration the transaction simply does not produce its effect.
Merger and Division as Forms of Exit
A separate article of the Code regulates alternative exit instruments. One or more enterprises may, without commencing liquidation, be merged with another enterprise through the full transfer of their assets and liabilities, in return for which the partners of the merged enterprise receive shares in the acquiring enterprise; two or more enterprises may likewise combine through the formation of a new one. Division occurs by establishment or by acquisition, and in a spin-off the enterprise transfers part of its assets and obligations to a new or existing enterprise. In a combination the partners of the former enterprises may, in addition to shares, receive cash compensation where observance of the exchange ratio of shares is impossible — in a joint stock company such compensation must not exceed 10 percent of the nominal value of the shares to be issued to the partners. The enterprises participating in a combination may have different legal forms, and the registration of the merged enterprise is cancelled without liquidation. In a merger the combined or acquiring enterprise answers for all obligations of the merged enterprises; in a division the new or acquiring enterprise answers jointly for the obligations of the divided enterprise, though this liability is limited to the amount of the net assets attributed to it by the division.