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Reorganization of a legal entity

To change the format of your business activities, reorganizing a legal entity is the most profitable and rational solution. At the legislative level, the reorganization of a legal entity is nothing more than a form of termination of the existence of a certain enterprise. It is important to understand the difference between reorganization and liquidation. In the first case, there are legal successors who will accept the obligations, rights and property from the legal entity, persons. In the second case, the company disappears, ceases to exist.

There are several ways to reorganize a legal entity:

  • associations with 2 or more legal entities, individuals cease to exist by creating 1 new organization;
  • joining 1 or more companies to the existing legal entity, person (in this case, the attached enterprises disappear);
  • divisions, when 1 company is divided into several new ones, the founders of which are legal successors who have a certain share of the authorized capital;
  • transformations in which the legal entity changes the form of organizational and legal activity;
  • allocation of part of the property, duties and rights of 1 legal entity to a new one or several new ones (at the legislative level, this procedure does not imply allocation as a way to carry out reorganization).

When a legal entity is merged, merged, or split, it ceases to exist, and the transformation process is a way to create a new legal entity following current legal acts.

It is important to remember that for all methods of reorganization, except for allocation, the order of termination of the legal entity, the person is required to draw up an act of division of the balance or transfer.

These documents will be approved by the company’s participants if all the creditors’ requirements (if any) have been met without exception.

The reorganization of a legal entity also provides for the implementation of state registration by making a record of the termination of the legal entity’s activities. Persons in the Unified State Register, then it is automatically ranked as a category that has ceased to exist.

The key reasons for the reorganization are the decision of the party:

  • higher authorities or participants of the enterprise;
  • court instance;
  • authorized state body.

In most cases, the reorganization procedure is relevant for LLC and shareholder companies, which allows them to achieve their goals-to improve the conditions of their  activities, to reduce the cost items related to the maintenance of legal entities, individuals who solve problems with business partners. Therefore, an LLC can be reorganized into a joint stock company or Vice versa.

At the same time, each decision carries certain nuances related to the reorganization. In particular, if we talk about JSC, it is mandatory to obtain permission from the Antimonopoly Committee to perform several documentary manipulations.

Implementation of the enterprise reorganization procedure

Kasyanenko & Partners Law Company offers a range of services related to:

  • individual advice on this issue;
  • holding meetings of higher authorities;
  • drawing up contracts confirming the reorganization;
  • preparation of a complete package of necessary documentation;
  • submitting documents and obtaining the necessary entry in the unified state register confirming the termination of the legal entity, persons;
  • re-registration of the company in controlling structures;
  • making a new print sample

Dmytro Kasyanenko

Lawyer, managing partner of the Kasyanenko & Partners Law Firm. Since 2002, he has gained extensive legal experience in key positions in business structures and the public sector in the field of law and finance.

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