Companies and their legal structures: Forms of restructuring according to the Merger Act

When the economic conditions change, companies must regularly reconsider their legal structures. The main forms of restructuring of corporations according to the Federal Act on Mergers, Demergers, Transformations, and Asset Transfers (Merger Act, FusG) of October 3, 2003, are the merger, the demerger, the transformation, and the asset transfer. These are still valid and relevant today.

The Merger

A merger (Art. 3 ff. FusG) is defined as the combination of legally independent companies into an economic and legal unit. There are two types: the absorption merger, where one company acquires another, and the consolidation merger, where both companies combine to form a new company. Motives for a merger are diverse, e.g., strategic, financial, or personal reasons.

The Demerger

The demerger (Art. 29 ff. FusG) serves to divide a company and continue it in a different form. There is the split-off, where assets and share rights are divided between two new companies and the original company is liquidated, and the spin-off, where parts of the company are separated while the transferring company remains in existence. Often, a demerger is the result of expanding business areas.

The Transformation

In a transformation (Art. 53ff. FusG), a company changes its legal form. This allows companies to adapt their legal structure to changed economic needs without the need for dissolution and re-establishment. The change often involves becoming a corporation to limit personal liability or include investors.

The Asset Transfer

Through asset transfer (Art. 69 ff. FusG), a company can transfer all or part of its assets and liabilities to another company. A consideration benefits the transferring company. Unlike other restructuring forms, the ownership or shareholding situations of the shareholders do not change. This method allows addressing economic changes without having to change the legal structures.

Findea helps you keep an eye on the financial situation of your company and carry out necessary restructurings in compliance with the law.