Lawyer specialized in transformation, merger, spin-off, and transfer of companies

Transformation of commercial companies

The transformation of a company consists of changing its legal form to another recognized by law.

It does not involve dissolution or loss of legal personality to give rise to a new legal entity.

The transformed company retains the same legal personality, albeit under the new type or form of business it adopts.

We are expert lawyers in Commercial Law.

The Law contemplates a wide range of transformation possibilities:

• A registered commercial company may transform into any other type of commercial company.
• A civil company may transform into any type of commercial company.
• A public limited company may transform into a European public limited company.
• A cooperative society may transform into a commercial company.
• A cooperative society may transform into a European cooperative society.

Regarding the effects of transformation, it should be noted that the pre-existing obligations of the partners remain, so transformation alone does not release the partners from fulfilling their obligations to the company. On the other hand, transformation cannot affect the relative position of the partners.

They must maintain the same proportion of participation in relation to the share capital unless there is consent from all those remaining in the company.

For example, in the case of transforming a public limited company into a limited company, two methods must be followed:

• The full payment of the share capital of the new company.
• The reduction of capital with the purpose of forgiving passive dividends (that is, capital not yet paid but for which there was an obligation).

Merger of commercial companies

Merger constitutes a social process at the end of which two or more companies, after the dissolution of one or all of them, merge their respective partners into a single company, where all assets are integrated into one. It is not a contract. Merger involves separate agreements from each company to proceed with the merger on the same terms.

Merger can take place between all types of commercial companies. Although the resulting company can be of any legal type, it has most commonly been a public limited company.

The merger of companies is a phenomenon often driven by technological progress, competition requirements, and production rationalization. In the course of economic activity, merger procedures are not always strictly legal. The desired business concentration is achieved through other means that provide equal or similar economic results but not legal ones:

• Sale of all shares of a company.
• Bulk transfer of assets from one company to another.
• Sale-merger.
• Transfer of the “controlling interest.”
• Lease of the company.

Spin-off

Spin-off is a phenomenon that, depending on how it is viewed, can be opposite or identical to that of merger. In principle, from the point of view of the company being split, it is the opposite of merger. Strictly speaking, spin-off means that part of a company’s assets ceases to be under its ownership.

There is a division of assets. But depending on the destination of the portion of assets being split, it can also lead to a merger scenario. If each part of the separated assets is destined to form a new company, there is obviously no merger phenomenon. But the separated part or parts of the assets may be intended to be grouped with other assets, either by integrating into an existing company or by forming a new one. In these two cases, it would be a merger phenomenon accompanying the prior spin-off.

Transfer

Transfer is an operation of company transfer, that is, the transfer of all of its assets and liabilities to one or more partners or third parties. The consideration cannot consist of shares, participations, or membership shares of the assignee.