Reorganization of legal entities in Lviv

Reorganization of a company is the termination of one legal entity with subsequent succession. The result of this procedure may be the formation of one or more new legal entities, which are transferred to the rights and obligations of the enterprise, which ceased to exist.

There are various reasons for the reorganization of the company (LLC). For example, to expand the business or to bring the company out of crisis. Reorganization is often resorted to to reduce tax costs. The basis of the reorganization procedure of the enterprise is universal succession, according to which all property, obligations and property rights of the company, which has completed its activity, are transferred to new legal entities in a special way.

There are 5 forms of reorganization of a legal entity:

• Merger of legal entities. This is the process of merging two or more legal entities into one new company, in connection with which their legal existence ends. All liabilities and assets are transferred to the new organization by the act of transfer.
• Accession. A legal entity (or several legal entities) terminates its activities upon accession, transferring the liabilities and assets of the new company. The status does not change, because the reorganization implies the commitment of the merging company, which is fixed by amending the charter
• Divide. The existing legal entity ceases its activities. Then new companies formed from the former firm begin to function, and its liabilities and assets are transferred under a separate act.
• Selection. The legal entity is not closed, only several new organizations are created, to which a certain part of the responsibilities and assets of the original company is transferred.
• Transformation. Reorganization of a legal entity in the form of transformation implies that the enterprise changes its organizational and legal form, but the rights and responsibilities remain the same.

When is the reorganization of a legal entity necessary?

As a rule, in practice, reorganization is carried out when the owners of a successful company want to move to a new stage of development, take a leading position and increase profitability. In life, this is a very dangerous decision, its economic justification is questionable. This is due to the fact that the reorganization procedure involves a certain amount of market, financial and production risks. Therefore, it is necessary to calculate so that the reorganization of the legal entity provides a profit that can recoup the associated risks and costs. When it comes to a small company, it is often more profitable to close an old company than to reorganize it. Therefore, first of all, one should ask oneself: “Will this decision be justified? And if so, where to start? ».