The split of a company

The merger law contains the provisions for the division of a company. Find out what you need to consider in our blog post.

Spin-off or Split-Off

It is necessary to distinguish between two different forms. In a spin-off, the existing company is dissolved and all its assets are transferred to other companies. The shareholders receive share or membership rights of the acquiring companies. The transferring company is dissolved and deleted from the commercial register.

In the case of a split-off, one or more parts of the assets are transferred to other companies. The companies receive share or membership rights of the acquiring companies. Further distinctions can be made between symmetrical and asymmetrical divisions.

Various Documents Required

For handling, the merger law prescribes various documents and procedures. The division contract or plan must be in written form. The completion must be made by the board of directors or the highest governing body. The approval of the general assembly is required and must be confirmed by a public notarization. Additionally, an inventory must be created and the assets and liabilities are to be assigned. Special regulations must be observed for real estate, securities, and intangible assets.

This must be recorded in a division report. This report needs to be reviewed, and the result has to be recorded in the so-called audit report. With the entry in the commercial register, the division becomes legally effective, and the assets and liabilities listed in the inventory are transferred to the acquiring company. Note that creditor and employee protection must be considered. The involved shareholders are subject to subsidiary liability in this respect.