Performing those or other registration actions, each businessman asks the question "Is it worth registrating them? How to register? How to fix changes regulatory in the company?". In the article you will find out in which cases it is necessary to re-register legal entities, what is reorganization and how these operations are conducted.
Reorganization of a legal entity is the termination or other modification of the legal status of a legal entity, entailing relations of legal succession of legal entities.
Re-registration is the registration of changes in registration documents after certain actions.
The main difference between re-registration and reorganization is the nature of the changes. For example, having changed the name there is no need to reorganize the enterprise, but re-registration becomes mandatory. Also, if the composition of participants/founders has changed, a re-registration is necessary, and in the case of mergers/acquisitions/transformations of the enterprise into other legal forms, reorganization is necessary.
It should be noted that if new legal entities have been separаted during the reorganization, they must be registered. Often, reorganization may also require re-registration. You can read the terms of reorganization and re-registration below.
When is it necessary to re-register?
According to Article 42 of the Civil Code, a legal entity is subject to re-registration in the following cases:
- reduction of the authorized capital;
- change of name;
- changes in the composition of participants in business partnerships (with the exception of business partnerships in which the register of participants in a business partnership is maintained by a professional participant in the securities market performing activities to maintain a system of registers of securities holders).
Branches and representative offices are subject to re-registration in case of a change in the name.
Changes made to the constituent documents on these grounds without re-registration of the legal entity are void.
In what cases does the company need a reorganization?
- in case of a merger: when 2 or more legal entities are merged into one legal entity;
- in case of joining - when one or more legal entities join another legal entity;
- in case of division of a legal entity into two or more legal entities);
- separation (one or several legal entities are separated from the legal entity, with the first legal entity continuing to exist);
- transformation (a legal entity of one organizational and legal form is transformed into a legal entity of another organizational and legal form).
Methods of re-registration of a legal entity
The procedure for re-registration of legal entities is carried out by the registering authority. For re-registration of a legal entity, you can apply to the NJSC State Corporation "Government for Citizens" at the place of registration. When deciding whether to re-register, you should contact a qualified lawyer. A professional lawyer will conduct all the necessary operations in the aggregate. For example, he/she will help when accompanying the conclusion of deals with the admission of new participants and the size of their shares or with other changes of the founders, will help to make competent changes in the constituent documents and the charter by drawing up appropriate decisions, protocols and so on.
Methods of reorganization of a legal entity
Depending on the form of reorganization, succession (the transfer of property rights and obligations) is realized in different ways:
- when merging legal entities, the rights and obligations of each of them pass to a newly formed legal entity in accordance with the transfer deed and the merger agreement;
- when a legal entity joins another legal entity, the rights and obligations of the affiliated legal entity are transferred to the latter in accordance with the deed of transfer and the contract of accession;
- when a legal entity is divided, its rights and obligations pass to newly emerged legal entities in accordance with the separation balance sheet;
- when one or several legal entities are separated from the legal entity, each of them in accordance with the separation balance sheet passes the rights and obligations of the reorganized legal entity;
- when a legal entity of one type is transformed into a legal entity of another type (a change in the organizational and legal form), the rights and obligations of the reorganized legal entity are transferred to the newly formed legal entity in accordance with the deed of transfer.
Thus, there are two important documents that will need to be provided when registering the reorganization – the deed of transfer and the separation balance sheet. The transfer deed and the separation balance sheet, as well as the merger and acquisition agreements, are approved by the owner of the property of the legal entity or by the body that made the reorganization decision and must contain provisions on the succession of all obligations of the reorganized legal entity with respect to all its creditors and debtors, disputed by the parties.
Undoubtedly, the compilation of these documents, without which it will be impossible to register newly emerging legal entities or make changes to the constituent documents of reorganized legal entities, will require a whole range of organizational arrangements and the formation of specific accounting statements.
In view of these circumstances, and also with a view to the most optimal solution of the problems of carrying out the reorganization procedure, it is necessary first of all by the order a first head of the reorganized legal entity to create a commission to conduct it.
Tasks of the commission on reorganization
- draw up a written notification on the decision to reorganize to the creditors of the reorganized legal entity, and submit separate tax reports and file an application with the territorial tax authority to conduct a documentary audit in connection with the reorganization;
- carry out a full inventory of property and liabilities of the reorganized legal entity;
- to conduct assessments of the value of property and liabilities transferred (accepted) as a matter of succession;
- to determine the procedure for the implementation of the succession in connection with changes in property and liabilities that may arise after the date of approval of the transfer deed or separation balance sheet as a result of the current activities of the reorganized legal entity, and the procedure for the implementation of certain business transactions (credits, loans, financial investments);
- determine the way of formation (change) of the authorized capital of the arising and reorganized legal entities;
- to demand receivables and pay off the accounts payable of the reorganized legal entity;
- draw up the final accounting statements of the reorganized legal entity and prepare the deed of transfer or the separation balance sheet, as well as the necessary attachments to them (accounting records, inventory records of the property and liabilities of the reorganized entity, decryption/inventory of accounts payable and receivables, etc.);
- develop constituent documents of new legal entities and changes and additions to the constituent documents of the reorganized legal entity;
- conduct state registration of newly emerged legal entities and re-registration of the reorganized legal entity;
- transfer under the act of acceptance and transfer of property and liabilities of the reorganized legal entity under the deed of transfer or separation balance sheet to newly emerged legal entities.
There are some features that should be taken into account when drawing up a transfer certificate and separation balance sheet. It is recommended to draw up a deed of transfer or separation balance at the end of the reporting period (year) or the date of compilation of the interim financial statements (quarter, month), which is the basis for characterizing and assessing the transferred property and liabilities of the reorganized legal entity.
The valuation of the property transferred/accepted for reorganization should be made in accordance with the decision of the initiator of the reorganization: at a residual value, either at current market value or at a different cost. At the same time, the value of property reflected in the transfer certificate or separation balance sheet must coincide with the value of this property reflected in the annexes to these documents.
The assessment of the obligations of the reorganized legal entity in the transfer deed or separation balance sheet is reflected in the amount by which the accounts payable was reflected in the balance sheet, taking into account the amounts of losses due to compensation to creditors in accordance with the current legislation.
Each type of reorganization also has additional features for the formation of accounting indicators and organizational procedures that require separate consideration, and perhaps, appeal to a lawyer.
After passing the re-registration, you must have the following documents:
- certificate of state re-registration in the justice bodies;
- changes in the charter and the memorandum of association (new version or annex);
- decision to amend the constituent documents;
- document confirming the transaction with participation interest (contract of sale or deed of gift);
- notification of the tax committee and the servicing bank about changing the registration data;
- new seal (in case of change of name or location);
After passing the reorganization, you must have the following documents:
- a complete set of documents compiled during the merger, joining, separation, division and transformation of legal entities;
- new edition of constituent documents of reorganized legal entities;
- decisions of the authorized bodies of legal entities on reorganization;
- reorganization agreement;
- deed of transfer, separation balance sheet;
- сertificate of state registration of newly emerged legal entities;
- certificate of state re-registration of reorganized legal entities.
