Conversion law

Over time, many companies and their owners have different reasons for considering a reorganisation. These can be (tax) legal and/or personal reasons. We support our clients in the restructuring of the company or the group of companies concerned.

According to the German Reorganisation Act (Umwandlungsgesetz), there are the following options for a reorganisation.

Merger

As part of a merger (often also referred to as a "merger"), the entire assets of a legal entity are transferred to an acquiring legal entity by way of universal succession. The transferring legal entity is dissolved without being wound up; in return for the transfer of assets, the shareholders of the transferring legal entity receive shares or memberships in the acquiring legal entity.

If the acquiring legal entity already exists, this is referred to as a merger by absorption. If the acquiring legal entity is newly established in connection with the merger, the transaction is a merger for new formation.

Fission

In a demerger, the assets of a legal entity are split, spun off or hived off and transferred to at least one other legal entity.

Splitting

In a demerger, a legal entity transfers all of its assets to at least two acquiring legal entities by way of universal succession. In this case, the transferring legal entity ceases to exist without carrying out a liquidation.

In return for the transfer of assets, the shareholders of the transferring legal entity receive shares in the acquiring legal entities. Within this process, it is possible to transfer assets to existing legal entities (demerger for absorption) or by demerger to newly established legal entities (demerger for new formation).

Spin-off

In a spin-off, a legal entity transfers part of its assets to one or more legal entities by way of special legal succession (not the entire assets are transferred). The shareholders of the transferring legal entity receive shares in the acquiring legal entity as compensation for the transfer. As some of the assets remain with the transferring legal entity as part of the spin-off, this does not expire - in contrast to a split-up.

In the case of a spin-off, it is also possible to transfer the assets to be transferred to one or more existing legal entities (spin-off for absorption) and/or one or more new legal entities established by the spin-off (spin-off for new formation).

Spin-off

In a spin-off - as in a demerger - a legal entity transfers part of its assets to one or more legal entities by way of special legal succession. The difference to a spin-off is that the transferring legal entity itself is granted an interest in the acquiring legal entity.

As with the split-up and the spin-off, there are also the options of a spin-off for absorption and a spin-off for new formation.

Change of legal form

Companies can also restructure without (partially) transferring their assets to one or more legal entities by changing their legal form. There are various reasons for a change of legal form, such as the possibility of limiting liability. The preparation of an IPO can also be the reason for a change of legal form.

Various aspects need to be considered when planning and implementing a reorganisation. In addition to corporate law issues, tax and labour law challenges in particular must also be considered.