Forms of the Deal: Assets or Shares
Buying and selling gambling assets can be built on two different legal trajectories. The first is a share deal, where you acquire the company holding the permit: under Article 141 of the Law of Georgia on Entrepreneurs, a partner of a limited liability company may transfer — alienate or encumber — his share without the consent of the company and of the other partners. Such a restriction may be imposed or amended only with the consent of every partner it affects. An agreement on the transfer of a share must be concluded in writing, the partner must notify the company immediately upon conclusion, and the transfer takes effect at the moment the registering authority registers the share in the name of the new partner.
The second trajectory is reorganisation: under Article 59, an entrepreneurial society may be reorganised through transformation, through merger — accession or consolidation — or through division, by split or by separation. Each form has its own field of application, and the choice is determined by what you are buying — the whole business or its separated part.
Merger and Division: The Mechanics of Article 65
Article 65 regulates these forms in detail. In an accession, one or more societies, without opening liquidation proceedings, accede to another society with the full transfer of assets and liabilities, in exchange for which the partners of the acceded society receive shares in the acquiring society. In a consolidation, two or more societies, without liquidation, unite through the founding of a new society to which their assets and liabilities are fully transferred by force of law.
Division works in two modes: the society to be divided may fully transfer parts of its assets and liabilities by force of law to two or more newly founded societies (division by formation) or to already existing ones (division by acquisition); in a separation, the society from which a new one is separated transfers parts of its assets and liabilities to one or more societies. Where maintaining the exchange ratio of shares is impossible, partners may also receive cash compensation — in a joint stock company it must not exceed 10 percent of the nominal value of the shares to be issued to the partners. Succession is also clearly regulated: in a merger the consolidated or acquiring society is liable for all obligations of the merged societies, while in a division the newly founded or acquiring society is jointly and severally liable for the divided society’s obligations — with liability limited to the net assets attributed to it by the division.
Creditor Protection in Reorganisation
Article 74 regulates one of the most sensitive points of the deal: creditors of societies participating in a reorganisation have the right, within 3 months of the registration of the reorganisation, to demand that the society secure their claims, if they prove that the reorganisation threatens the satisfaction of those claims. This right belongs to creditors whose claims arose before the publication of the decision on transformation or of the merger/division plan.
The same regime extends to holders of bonds, unless the reorganisation is approved by their meeting or individually by each holder. Holders of securities other than shares, endowed with special rights, must be granted the same rights in the new society — unless the changes are approved by their meeting or by each holder individually, or a condition operates granting them the right to demand buy-out of their securities. The decision on reorganisation is subject to the notification rules established for liquidation, which imposes publication discipline.
Due Diligence Issues for Gambling Assets
When planning a deal over a gambling asset, the due diligence blocks fall into three groups. The corporate-legal block: the chain of shares and identification data, the existence of restrictions on share transfer and their consensual legitimisation, the company’s accounts, unpaid liabilities, and the risk provided for in Article 141 — at the moment of alienation the alienating and acquiring partners are jointly and severally liable for unfulfilled obligations connected with the share.
The regulatory block grows with gambling specifics: the status of the permit and its transferability, the history of compliance with permit conditions, the data of the electronic control system, the existence of fines and arrears, and the conformity of officers and management persons with the permit requirements. The financial block is standard, but in the gambling context it requires analysis of stake aggregates and prize funds. It is precisely by examining these three blocks in sequence that the picture emerges on which the price and the structure of the deal must be built.
Frequently Asked Questions
Can a share be alienated without the consent of other partners?
Under the general rule — yes, a share is transferred without consent; a restriction may be imposed only with the consent of every affected partner. The transfer takes effect upon registration.
What is the creditors’ claim window?
3 months from the registration of the reorganisation, if the creditor proves that the reorganisation threatens satisfaction of a claim that arose before publication.
How is cash compensation capped?
In a joint stock company it must not exceed 10 percent of the nominal value of the shares to be issued — the mechanism designed to correct deviations from the share exchange ratio.
Who answers for the divided society’s obligations?
The newly founded or acquiring society — jointly and severally, but with liability limited to the net assets attributed to it in the division.
How We Help on Legal.ge
We carry the deal from concept to closing: we choose the structure — share deal, accession, consolidation or division — conduct due diligence across the corporate-legal, regulatory and financial blocks, prepare contracts and plans, and protect you from the risks of creditors’ claims. Contact us on Legal.ge to assess your gambling asset transaction.