Restructuring and reorganisations
Legal advice on corporate restructuring and conversion: As most companies have a constant change are subject to, it should be checked regularly whether the current legal form meets the shareholders’ current needs and expectations. We have a team of experienced and specialist solicitors, qualified specialist solicitors and tax advisers who will assist you with Restructuring and reorganisations to be on hand at all times with our extensive expertise.
Conversion or restructuring?
There are a wide variety of legal forms available to companies. The Choosing the most suitable legal form depends on many factors. A change in circumstances is not always required to constitute a conversion within the meaning of the law (UmwG, UmwStG). A Restructuring This may also be achieved by a change in the permanent establishments or the shareholders.
One Conversion On the other hand, it concerns changes to the legal status of one or more companies, or parts of one or more companies, with regard to their legal form. The Transformation Act provides for the following Types of conversions before:
- Merger
- Demerger (spin-off, split-up, divestiture)
- Change of legal form
- Transfer of assets
Depending on the type of conversion, the result is either universal succession or succession by special right.
Reasons for and benefits of a conversion
The reasons for a conversion may be driven by both company law and tax considerations. From a tax perspective, the German Conversion Act (UmwStG) provides the framework for a tax-neutral conversion – which is the aim in most cases. In addition to purely tax-related reasons, conversions may be considered in the context of strategic realignments, changes in liability arrangements, business succession, and (partial) acquisitions or disposals of businesses.
Different types of conversion
In addition to the types of conversion set out in the Conversion Act, there are also conversions that fall outside the scope of the UmwG. This primarily refers to what is known as ‘accretion’. This constitutes a case of universal succession. Acquisition occurs when all but one partner withdraws from a partnership. The partnership’s assets are acquired by the remaining partner, as the law does not recognise single-member partnerships.
Although the Conversion Act and the Conversion Tax Act correspond in many respects, there are nevertheless differences which should be carefully examined and taken into account in every conversion process in order to ensure that the conversion proceeds smoothly.