Conversions

There can be many business reasons for transformations: They often involve tax optimization or the exploitation of growth opportunities through mergers, adjustments to group structures, access to the capital market or the simplification of corporate management and administration. Liability considerations and succession planning also play a key role in family businesses. Sometimes, transformation law is also used in the context of shareholder disputes or at the end of such disputes as a settlement (demerger).

We provide support in all transformation processes, such as mergers, demergers, asset transfers and changes of legal form. You can also contact us for cross-border mergers. Not only mergers with companies from other European countries are possible. The accretion model can also be used to realize mergers outside of transformation law with intermediate steps.

The text describes the legal framework and mechanisms of corporate reorganizations in accordance with the German Reorganization Act (UmwG). The law only defines reorganizations as structural changes that are carried out in accordance with the specific provisions of the UmwG. These can take place either with a transfer of assets by universal succession or without such a transfer, whereby the legal entity retains its identity and continuity.

Transformation law recognizes four central instruments:

  1. Merger: The entire assets of one or more legal entities are transferred to another. This can be done either by incorporation into an existing legal entity or by founding a new legal entity. The transferring legal entities cease to exist without liquidation.
  2. Demerger: This can take the form of a split, demerger or spin-off. In a split-up, a legal entity is divided into several new entities and ceases to exist, whereas in a spin-off, only parts of the assets are transferred to other legal entities and the original legal entity remains in existence. In the case of a spin-off, the process is similar to a demerger, but the share rights in the new legal entities are transferred to the original legal entity. For example, a company can be spun off to a subsidiary (total spin-off), with the former company then acting as the holding company. All types of demerger can be carried out either to incorporate an existing legal entity or to establish a new one.
  3. Transfer of assets: This can be complete or partial. In the case of a full transfer, the entire assets of one legal entity are transferred to another and the transferring legal entity ceases to exist. In the case of a partial transfer, only parts of the assets are transferred, similar to a demerger.
  4. Change of legal form: A legal entity changes its legal form without a transfer of assets or the formation of a new company. The identity of the legal entity is retained. For some years now, joining in the context of a change of legal form has also been recognized, e.g. a change of legal form from a GmbH to a GmbH & Co KG can also take place without the general partner having to join the GmbH beforehand.

These instruments can be combined.

Dr. Claas Oehler

Notary in Berlin
Lawyer and notary, specialist lawyer for commercial and corporate law, specialist lawyer for copyright and media law Office: Schönhauser Allee 10-11, 10119 Berlin

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