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Implementation of the reorganization of legal entity: regulations and general provisions
Legislation of the Russian Federation, according to article 57 of the Civil Code of the Russian Federation, implies a clear procedure for the reorganization of a legal entity. Normative documents regulate the processes of merger, division, accession, allocation as well as transformations.
Any process that has a crucial impact on the integrity of the company is launched by the decision of its founder / members (participants) or an internal corporate authority that has the appropriate powers according to the foundation documents. Many of the parameters influence the choice of the form of the procedure. The goals of the company are decisive, and they pursue the type of succession.
The fundamental stages
No matter what chosen type of changes of legal entity structure, the general structure of the process includes the following steps:
- Preparatory stage. Authorized participants in the process or the relevant internal corporate authority submit for further consideration the question of the advisability of the reorganization procedure, assess the prospects and risks.
- Holding a meeting on the reorganization. Where should be discussed the main strategy, arguments and should be made a decision and the minutes of the meeting should be formed.
- Preparation of documentation, determination of the order of succession, coordination of provisions.
- Timely notification of the registration authority and creditors about the planned changes.
- Applying of the entire package of documentation that is related to the reorganization to the registering authority (in case there is a separation or division, additional general meetings of organizations should be held).
Let's consider the procedure in details and each form of reorganization separately.
Reorganization of company: Division
Division involves a cessation of operation of the previous entity and the transfer of the entire complex of duties and rights to the newly created ones. In other words, the parent company simply ceases to operate as a legal entity, and it divides into new firms.
This is the most popular form of reorganization, because it allows the optimization of multidisciplinary enterprises seeking to cover a wide range of business lines.
Reorganization of OOO/AO: Merger
According to the legislation, a merger implies a procedure of creating a new legal entity from several others. The functioning of the participants as separate legal entities is stopped.
The newly formed legal entity will have the full range of rights and obligations of the participants according to the transfer deed.
In addition to the above, the successor company assumes tax liability, payment of fees, penalties and fines (if any) of the liquidated companies.
Reorganization of company: Transformation
The transformation does not require registration of new or termination of activities of previously established legal entities. Its main task is to change the organizational and legal form of a particular business structure. The original rights and obligations continue to be fully applied without any adjustments. The transfer deed is not required.
Reorganization of company: Allocation
Allocation is the formation of one or more companies, with further delegation to it a certain part of the rights and obligations. Liquidation and termination of activity of the reorganized legal entity is not part of the process. This form is suitable for companies with several founders as an option for resolving persistent disagreements regarding business processes.
Reorganization of company: Accession
This type involves the absorption by one legal entity of the rights and obligations as well as all the property of the mergers. The all those entities, in turn, terminate their activity. This type of procedure is available only for the companies that have the same organizational and legal form.
The final stage of each of the types is the registration of changes and the recording of updated information in the Unified State Register of Legal Entities. Accompanying the reorganization by a competent lawyer may help to avoid mistakes and unforeseen factors, as well as it may significantly speed up the process.
Cooperation with the Tsentralny Okrug Law Firm gives a lot of opportunities:
- Consultations of specialists and free rapid assessment of documents;
- Efficient providing of recommendations on the preparation of documents
- Full accompaniment of the reorganization and all formalities that are related to the procedure
- The current loyalty program for regular customers.
- Results-orientation and establishment of long-term business relationships
- The application of modern legal methods
- We consider the interests and needs of principals and the specific features of their business
Due to our vast experience in the area of corporate legal issues, the specialists of the Tsentralny Okrug Law Firm will promptly and on agreed terms provide legal accompaniment for the reorganization procedure.
Author is Dmitry Prosvirin