Formation and corporate restructuring of a company

We provide comprehensive legal support to companies in matters of both company formation and structural transformations. Drawing on our extensive experience and expertise, our role involves turning clients’ business plans into reality, leading them through the intricate legal procedures necessary for formatting and modifying a company’s structure.

Formation:

The key to format a new company is to draw up the articles of association or memorandum of association correctly and to comply with the required legal formalities. We offer counsel to our clients regarding the most fitting legal structure for their company, encompassing straightforward business formations and notably, intricate configurations involving multiple founders, branch formations, and business unit formations. Selecting the suitable legal framework for a new company arises from a thorough examination of business objectives, anticipation of founders’ roles, meticulous evaluation of tax consequences for each company structure and a careful assessment of the projected business environment.

Our services include the drafting of articles of incorporation, including the memorandum and articles of association and shareholders’ agreements. We provide a comprehensive service to our clients in the formation of a new company, including the registration of the company with the competent authorities and ensuring that the incorporation process is carried out efficiently and in accordance with the law.

Stages of company formation:

• Business plan preparation: evaluating business objectives and financial requirements for successful format.
• Legal form selection: determining the most suitable company structure based on activity purpose, type, and taxation.
• Company registration: preparing and submitting necessary documentation for company registration.
• Company formation: reviewing the articles of association, determining the initial capital and rights of shareholders.

Significant focus is placed on shareholders’ agreements during the incorporation phase or even throughout a company’s lifespan. The aim is to synchronize the interests of all shareholders, fostering enhanced company functionality. Such agreements commonly address diverse aspects of company management, profit distribution, liability, voting privileges and shareholder engagement. Notably, these agreements remain confidential, unlike publicly accessible documents like memorandum of association. Shareholders’ agreements function as internal agreements rooted in trust and collaboration, playing a crucial role in fostering a strong and prosperous business environment within the company.

Structural Transformations:

Status transformations allow for adjustments to the structure and organisation of a company, such as mergers, divisions, or transformations into another legal form. We guide our clients through complex legal procedures, ensuring legal certainty and compliance with the law.

Types of Structural Transformations:

• Mergers: the integration of two or more companies into one with the aim of achieving the best synergy effects and maximising business results. A merger can be carried out by transferring all the assets of one or more companies to another company (merger) or by creating a new company to which all the assets of the merging companies are transferred (amalgamation).
• Divisions: splitting a company into two or more separate entities allows for the segregation of business activities. Possible forms include: division by transferring all assets without liquidation to new or existing capital companies; splitting by transferring all or some assets without dissolving the original company; and segmentation, transferring certain assets without dissolving the main entity.
• Company restructuring: changing the legal form of the company (e.g., from sole proprietorship to LLC or from LLC to corporation), aligning with evolving business needs.

A common transformation is the conversion of a sole proprietorship (s.p.) to a limited liability company (LLC). This involves transitioning from personal liability for business obligations to a legal entity where liability is restricted to invested capital. The purpose of converting a sole proprietorship into a limited liability company can be multifaceted and depends on the specific objectives and circumstances of the business owner. Some of the key reasons for conversion are:

• Limitation of personal liability: by transitioning to an LLC, liability is restricted to the amount of capital invested, safeguarding the owner’s personal assets.
• Business opportunity and growth: transforming to an LLC can facilitate easier access to loans and financing, making it easier for the entrepreneur to grow and develop his business.
• Business expansion: if a sole proprietor wishes to include new partners or shareholders, a conversion into a limited company is the appropriate legal form to incorporate more owners and share the ownership.
• Family business: for family-run sole proprietorships, an LLC is a preferable legal form, allowing ownership and responsibility to be shared between the family members.
• Access to public tenders and large business: in some cases, having an LLC legal structure is a requirement for public tenders or for business collaborations with larger corporations.

Experience has taught us that the implementation of a status transformation is often a multi-faceted and complex legal manoeuvre. Achieving a seamless and prosperous transformation often demands the engagement of professionals from diverse relevant domains. This frequently requires the involvement of auditors and chartered surveyors.