l11 quick review

trasnformation

• a strucural modification in which a compnay changes legal form while keeping the same legal personalitu

  • for example sl becomes an sa= the company still remains the same entity keeping its contracts and assets and continues operating without the process of liquduiation

• the procedure has 3 stages

  • first directors prepare a structural modification project with supporting documents

  • second the general meeting approves the operation

  • third the transformation becomes effective once registered in the commercial register

• shareholders are protected through rights of disposal of their shares if they dissent from the transformations resolution

• shareholders are also protected through their right of seperate from the company if they dissent

• creditors are protected because the liability for their existing debts are preserved particularly when partners become personally liable under the new corporate form

  • SL-SA new partners becoes personally liable for debts after the transofmration

  • SA-SL= partner remain personally liable for existing debts before the trasnfomration for 5 years unless creditors expessly consent to release them

• therefore cnges the compans legal structure but not its legal idenitty

mergers

• a merger occurs when two or more companies combine into one

• there are 2 main types

  • in absoprtion one company survivesand the other dissappears

  • in incopration all participating companies dissapear and a completely new company is formed

• the main effects are

  • extinction of a company withhout liquidation proecudre

  • universal succession of assets and liabilities

  • and automatic incopration of shareholders into the resulting company

• the procedure consists of

  • a merger project prepared by the directors

  • approval from the gm

  • and registration in the com reg for effectiveness against third parties

• mergers allow businesses to combine efficiently while protecting shareholder and creditor rights

division

• division is the opposite of a merger because it seperates assets rather than combining them

• there are 3 main types

  • total division extinguishes the original company completely and tranfers all assets to a beneficiary company or companies

  • partial division allows the prginal company to survive trasnfering part of it assets to a beneficiary/beneficiaries

    • shareholders recieve shares in both the original and beneficiary companies

  • segregregation also allows a company to surivive trasnfering an economic unit

    • but the beneficiary companies shares are recieved by the priginal company themselves as a result of the trasnfer not by the prignal companies shareholders

    • this creates a parent subsidiary relationship

• the procedure follows the standard modification process of

  • directors proposal of a project

  • approval from the gm

  • registration

total assignmet of assrts and liabilities

• the trasnfer of all assets and liabilties of a company to one or more partners or third parties through universal succession

• the operation is similar to selling an entire business

• its key feature is payement= the trasnferee must provide payement either as cash or property but importantly not shares

  • unlike a merger shareholders do not recieve shares in the trasnferee company

• the consideration may be recieved by the company directly or by the shareholders

  • if everything is paid directly to the shareholders the company is normally extinguished as it has 0 assets or capital

  • if some is paid to the company it conitnues to exist with the recieved consideration as capital

• where there are multile assignees each trsnferred part must consitute an independent economic unit

  • this means it is capable of functioning on its own

    • ie a logistics company trasnferring just the trucks would not suffice

    • whereas trasnferring a whole economic unit of employees, routes trucks, contracts would

• therefore total assignment allows a company to trasnfer an entire business while ensuring continuity of business through universal succession

summary

• transformation= same company different legal form

• merger=two or more companies become one

• division= one company splits assets amongst other companies

• total assignmet of asets and liabilities= the whole business or indpendnant economic unit is trasnfered to another person or company in exchange for consideration