We see an increasing number of companies restructuring, including through intra-group reorganisations. Some are being carried out in light of last year`s economic challenges and others in anticipation of a return to more normal times. If you are considering a group or corporate reorganization, please contact us. If the restructuring involves the transfer of a company, it must be decided whether the company and the assets should be transferred through the sale of shares or assets. They have different advantages and disadvantages. The agreement also contains the usual basic insurances and guarantees as well as the other usual provisions. Internal reorganizations are often carried out and documented in less detail. However, it is still important to ensure that all necessary legal documents are properly prepared and executed. Basic ancillary documents such as board minutes, relevant approvals, HMRC approvals and authorisations, fee exemptions and new bank security documents may be required. In the case of an asset purchase, formal transfer documents such as ownership transfers, assignments or novations of various contracts may need to be created in addition to the asset purchase agreement.
In the case of a share purchase, the share purchase agreement and a share transfer form are required. Depending on the structure of the counterparty, other documents such as subscription contracts, loan agreements or exemption certificates may be required for both. The total price payable by Buyer to Seller for the Shares shall be the sum of the amount payable in cash at closing or to be covered by Buyer`s Award to Seller of common shares credited as fully paid into Buyer`s principal. The compensation shares have the same rank as the existing common shares in the buyer`s capital. Please note that all other documents required for the execution of the transfer of shares (resolution of the board of directors, share register, etc.) are not included in this template. Within a group, it often happens that companies use the assets of other companies without formal claim, without realizing it. If a reorganization is made for sale to a third party, the buyer expects the company to own or at least retain all access rights to these assets. Similarly, after the sale, the Group will want to ensure that all remaining companies continue to have access to the assets they need to operate. Therefore, it is important to determine ownership of the common assets and make appropriate arrangements if the reorganization is a precursor to an external sale.
Key issues to consider when carrying out an intra-group reorganisation A group of companies may make the decision to carry out an intra-group reorganisation for a variety of reasons. Typical situations in which an intra-group reorganization can be carried out are as follows: This model requires the intra-group transfer of shares. In addition, the agreement assumes that the closing of the transaction will take place immediately after the signing of the agreement. The conclusion consists of the payment of the purchase price by the buyer and the delivery of the shares by the seller. Internal reorganization often takes place to improve the administrative, operational and economic efficiency of a company. However, what seems simple in theory can often raise important practical and legal questions. The seller undertakes to sell (or buy the sale) the shares and the buyer undertakes to acquire the shares from the close of business on the closing date. The Shares will be sold free of any security, option, share, claim or other right of third parties (including, but not limited to, subscription rights) of any kind, as well as all related rights, including, but not limited to, the right to receive all dividends and other declared distributions, made or paid at or after closing.
If no share certificate has been issued, a declaration of assignment in the form of an annex to the agreement will be submitted. The purchase of assets gives greater flexibility as to which assets and liabilities are transferred to the buyer and retained by the seller, thus helping to make the reorganization more personalized. Buying assets can also be more useful if you`re only buying a certain part of the business. However, unlike buying shares, different types of assets may require different forms of transfer. Similarly, certain types of assets may require consents, such as . B the consent of a landlord when transferring a rental property. Although an intra-group reorganization results in fewer external issues, some consents, approvals, or notifications from third parties such as regulators, shareholders, banks, owners, key suppliers, customers, etc. may be required. This implies that the buyer acquires the shares of the company that owns the target business or assets. All assets and liabilities are acquired indirectly, including those of which the buyer is not aware. Theoretically, the process is less complex than buying various assets, but also less flexible.
In addition, there are fewer consent and approval issues that need to be addressed. If a company intends to sell part of its business, a reorganization can be used to separate the business for sale into a separate subsidiary. This avoids the risk that the assets that the Group wishes to keep will be sold unintentionally. It also offers a more attractive destination for potential buyers. Intra-group asset transfers are often made at face value. However, if the transaction is significantly lower than the market value, this may lead to undesirable consequences such as the nullity of the transaction and possible personal liability of the managing directors in the event of subsequent insolvency. This product is currently out of stock and is not available. . Often, the goal is usually to change the group structure in order to make the company more tax-efficient. This may be particularly relevant for a group that has subsidiaries in different countries with different and ever-changing tax systems. . To stay up to date with the latest legal and personnel news, please subscribe to our free newsletters: [Commercial] Intra-group reorganizations – Not always so easy The assets of a new acquisition can be transferred to the appropriate subsidiaries within the group after its acquisition.
When a group is planning an acquisition, it can reorganize the existing structure of the group to ensure that the new subsidiary easily integrates into the group. Employees can be protected by TUPE during the transfer of the company. If TUPE applies, the seller must inform and consult the employees and pass on the employees` responsibility information to the buyer. The buyer must respect the existing employment contracts between the seller and the employees. .