Transformation law as it exists within the Transformation Act (UmwG) makes it possible for companies and concerns to restructure. At its centre is the transfer of assets by way of (partial) universal succession. This renders the transfer of individual assets through individual rights transfer superfluous. This, in turn, simplifies company restructuring.
The instruments used in transformation law are essentially regulated within the Transformation Act (UmwG). This concerns mergers, divisions, and changes of legal form pertaining to companies. In recent years, provisions and case law under European law have also enabled cross-border transformations and relocations of registered offices. These take into account principles in European law, in particular the freedom to provide services and freedom of establishment.
The restructuring of a company is never an end in itself. The motives for restructuring of a company are manifold and can rarely be easily stated in their entirety. Business and tax optimisation often drive such changes. Companies often go down this road after experiencing growth and the resulting increase in organisational requirements of the company structure. International aspects may be involved here. However, since company structure is shaped in particular by legal provisions — in particular by company, employment and liability law — corresponding legal changes or changes in the application of the law by the courts often entail a need to alter the company structure. Often a need for restructuring arises in the run-up to transactions for (partial) company transfer or in connection with financing requirements to raise capital.
Alternatives to transformation law instruments are offered by types of company transfer or the transfer of individual business items. These do not require the advantages of (partial) universal succession or avoid its disadvantages. In particular, an asset deal should be taken into consideration as an option if universal succession may lead to unwanted liability consequences or disadvantageous tax consequences due to transformation. In addition, there exist possibilities for effecting restructuring at the shareholder level through capital measures within a company. Depending on the various motivations behind restructuring, the advantages and disadvantages of the respective instruments must be mapped out in the consideration and consultation of each individual case.
Formally, restructuring proceedings under the Transformation Act (UmwG) generally require notarial assistance. Merger and division agreements must always be notarised. Necessary shareholder approval of the participating legal entities required for a transformation must often be notarised, depending on the legal form of the legal entity. As a rule, notarial assistance is also required for transformations, since transformations only become effective once they have been entered in the commercial register on the basis of notarially certified commercial register applications.
Company restructuring and transformation law instruments are becoming increasingly important, but this is also the case when restructuring companies for reorganisational purposes pre-emptive to corporate crisis. They are also critical for avoiding insolvency or for reorganising out of insolvency as part of insolvency plans or as part of transferring reorganisations. The special characteristics of insolvency law — such as possibilities for restructuring as part of an insolvency plan — influence and supplement the possibilities for structuring, but they simultaneously limit the practicability of certain transformation options. In this respect, optimised reorganisation advice requires in-depth knowledge of company and transformation law as well as insolvency law.
Our lawyers at LEONHARDT RATTUNDE have the necessary business management, company law and insolvency law expertise for giving comprehensive reorganisation advice to entrepreneurs and companies, also in times of crisis.
The notaries at LEONHARDT RATTUNDE assist and advise companies of all sizes in notarial matters, in some cases for many years, even in complex restructuring cases, including those with international dimensions. They are experienced and confident in the application of instruments within transformation law and in their execution under registration law.
As consultants with core expertise in commercial law, we will support you in every form of merger, division and change of company legal form.