Statutory changes of legal entities

The changes in status are implemented due to the need for capital concentration, technology, expertise, and easier market operations, and sometimes they are used to continue operations in a simpler form of organization.

One or more companies of the same or different legal forms can participate in the change of status.

A company that is in liquidation or bankruptcy cannot participate in the change of status. Additionally, it should be noted that lump-sum or bookkeeping entrepreneurs cannot participate in status changes. If they plan to participate in such changes, they should change their form to a limited liability company.

The Law on Business Entities provides for four types of status changes, namely:

Merger: One or more companies may merge with another company by transferring all assets and liabilities to that company, causing the merging company to cease to exist without undergoing liquidation proceedings.

Merger: Two or more companies can merge by establishing a new company and transferring all obligations to that company, thereby causing the merging companies to cease to exist without undergoing liquidation proceedings.

Division: A company can be divided by simultaneously transferring all assets and liabilities to:

Two or more newly established companies (division with establishment)
Two or more existing companies (division with attachment)
One or more newly established companies and one or more existing companies (mixed division)

Spin-off: A company can be divided by transferring a portion of its assets and liabilities to:

One or more newly established companies (spin-off with establishment)
One or more existing companies (spin-off with attachment)
One or more newly established companies and one or more existing companies (mixed spin-off)

To ensure that the process of status change is conducted properly, the board of directors (or supervisory board if the company has one) needs to prepare the following acts and documents:

Draft agreement on the status change, or draft division plan if only one company is involved in the status change;
financial statements, along with the auditor’s opinion and the state as of the day preceding the day of the assembly decision on the status change, up to six months;
auditor’s report on the conducted audit of the status change. The report on the status change must be in written form and include an opinion on whether the proportion according to which the replacement of shares/stocks is made is fair and appropriate.
report of the board of directors (or executive board if the company has one), the company conducting the status change prepares a detailed written report on the status change, particularly including the objectives intended to be achieved by the status change, as well as information on significant changes in the assets and liabilities of the companies participating in the status change, which occurred after the date with which the financial statements were prepared.
proposal for the assembly decision on the status change.

APPLICATION FOR HLB PROFESSIONAL SERVICES