Business (Company) Restructuring
Legal support of business (company) restructuring
Entrepreneurial activity is constantly subject to changes, depending on changing legislation, on changes in technology, on changes in the structure of the business or its restructuring. Some companies become founders of others, others of third ones, so the need to invest more and more resources in the management of such organizations is growing, and therefore, especially in times of crisis, business owners decide to restructure. There may be several reasons for restructuring by business representatives, but, as a rule, the most basic one is to increase the efficiency of an existing business, as well as to reduce the costs of maintaining it. In a constantly changing political and economic environment, the restructuring of a company can become a necessary measure that will allow the business to continue to function, improve its performance and overcome the crisis.
The objectives of the restructuring are:
- overcoming the crisis;
- increasing the performance of the company;
- entering new markets, leaving the market;
- increasing the competitiveness of goods;
- transfer of business under management to other companies, etc.
Regardless of the goals of the restructuring of the company, such a process must be carried out not only from the point of view of financial components, but also from the point of view of the rule of law, because non-compliance with the law during the restructuring may entail bringing the entrepreneur to unplanned liability, for example, in the form of a fine. To comply with all legal requirements, before restructuring, it is necessary to analyze business activities in all areas and choose a strategy for changes and improvements in the company.
In the business community, it is customary to distinguish several main ways to restructure a company:
- Division, in which one legal entity is divided into two or more legal entities, between which property is divided, while the original legal entity ceases to exist.
- Separation, with this method of restructuring, another legal entity is created, to which part of the functions, as well as property, is transferred, while the original legal entity continues its activities.
- Accession, in this case the rights and property of one legal entity are transferred to another legal entity, while the first legal entity ceases to exist.
- A merger occurs when two or more legal entities are merged into one, to which all rights, obligations and property are transferred, while the activities of all former legal entities are terminated.
- Transformation occurs when a company changes the organizational and legal structure of its activities, for example, from LLC to JSC, or vice versa.
Carrying out the restructuring of a company, regardless of the method of its implementation, is a large amount of work, not only of an analytical nature, but also of a financial and legal nature. At the same time, with different methods, all types of business activities can be involved in the restructuring: managerial, financial, economic, personnel management, sales system, etc. Therefore, for the qualitative conduct of the company restructuring procedure, it is important to correctly develop a strategy for implementing business improvements, for this it is necessary to involve professional experts in this field who have knowledge, experience, foresee all kinds of situations and take into account the necessary details.
To carry out restructuring, it is necessary to take into account a number of issues that must be resolved before starting the restructuring procedure:
- choose a method of restructuring;
- determine the scheme for obtaining permits (licenses);
- consider the timing of the implementation of legally significant actions;
- identify all the company's obligations to counterparties, especially pay attention to obligations to government agencies, institutions, etc., as well as to credit institutions.
Issues that will need to be resolved during the restructuring of the company depend on the specific situation, the method of restructuring, financial and contractual obligations, etc. Therefore, in order to competently conduct a business restructuring procedure, it is important to take into account all these areas, develop a unified strategy, and also minimize possible adverse risks that may arise during the company restructuring procedure. Meanwhile, the possible risks during the restructuring include the following:
- Social factor. During the restructuring procedure, it may be necessary to reduce employees, which can cause social discontent.
- Financial factor. Restructuring pursues the improvement of the financial sphere of the company, in most cases by reducing costs. However, this factor may not always be fully taken into account, for example, when restructuring during a crisis.
- Technological factor. When improving the company's activities, it is also necessary to take into account the development of technology, if this factor is not taken into account, then in the course of the company's activities this can lead to additional costs, higher product costs and uncompetitiveness in the market.
Carrying out the restructuring procedure by qualified lawyers allows you to take into account all the necessary issues, competently and in accordance with the norms of the current legislation, take the necessary actions, as well as take into account all possible risks that may arise when improving the business.
- Legal advice to clients on business (company) restructuring
- Analysis of the company's activities as part of a possible restructuring
- Preparation and execution of the necessary documents for the company restructuring procedure
- Participation in negotiations during the restructuring of a business (company)
- Representation of interests in business restructuring