Status Changes of Companies (Merger by Acquisition, Merger by the Formation of New Companies, Division, Separation) – Law Office Knežević Belgrade
Status Changes of Companies represent procedures in which one company (assignor) assigns to other company (assignee) assets and liabilities while its members acquire shares, that is, stocks. As a rule, all members of the assignor acquire shares/stocks in the company of the assignee in proportion to its shares or stocks, unless each member of the assignor agrees that the status change will include the exchange of shares or stocks in different proportion, or if they use their right to payoff instead of acquiring shares or stocks in the assignee.
If a new company is incorporated through the status change, provisions of the Law on Companies shall apply to the incorporation of such company referring to the incorporation (registration) of companies in relevant legal forms.
The Law on Companies prescribes four types of status change:
Merger by Acquisition – Attorney at Law Belgrade Serbia
One or more companies may be merged with another company by acquisition through the transfer of their entire assets and liabilities to that other company, whereupon the merged company shall be dissolved without being liquidated.
Merger by the formation of new companies – Law Office Belgrade Serbia
One or more companies may be merged by the formation of a new company and by transferring their entire assets and liabilities to that company, whereupon the merged companies shall be dissolved without being liquidate.
Division of the companies – Law Office Belgrade Serbia
A company may be divided by simultaneously transferring its entire assets and liabilities to:
– Two or more newly-formed companies (hereinafter referred to as “division by the formation of new companies”), or
– Two or more existing companies (hereinafter referred to as “division by acquisition”), or
– One or more newly-formed companies and one or more existing companies (hereinafter referred to as “mixed division”).
Separation of the companies – Attorney at Law Belgrade Serbia
A company may be divided by transferring a part of its assets and liabilities to:
– One or more newly-formed companies (hereinafter referred to as “separation by the formation of new companies”); or
– One or more existing companies (hereinafter referred to as “separation by acquisition”); or
– One or more newly-formed companies and one or more existing companies (hereinafter referred to as “mixed separation”).
Company that is in liquidation or bankruptcy cannot participate in the status change unless the status change is executed as a reorganization measure prescribed by the Law on Bankruptcy.
The procedure of status change execution is not brief and requires the preparation of several acts and documents, such as, the draft of the agreement on status change, that is, the draft of the plan of division, financial statements with auditor opinion, audit report on audit of the status change, report of the Board of Directors, proposal of the decision of the General Assembly on the status change, agreement on status change that is, the division plan (if one company is involved in the status change), etc.
Status change shall be seen separately from the change of the legal form of the company in which only one legal entity participates and that includes transfer from one to another legal form (for example, from LLC to JSC) after which the company continues to operate, only in another legal form.
Status change should also be separated from the change of the business name, seat, major business activity or some other markings of the company, that are not considered status changes.
Law Office Knežević Belgrade that practices business law, among others, represents its clients, legal entities, in the procedures of company status change execution, therefore, in case you are interested, you may contact us.