Procedure And Effects Of Division By Separation

Abstract

The division of companies is an operation enabling the restructuring of a company whereby all the assets and liabilities of one company shall be divided and then all parts or at least one part of the assets and liabilities shall be transferred to acquiring or new companies in exchange for the allocation to the shareholders of the company being divided of shares in the recipient companies. From the perspective of the divided company, the division procedure provides for two main types of operations. The first one in which the divided company is wound up without going into liquidation (art. 529 § 1 p. 1 – 3 CCC), and the second one in which the divided company continues its activities after the division (art. 529 § 1 p. 4 CCC). The second type which is called division by separation requires the adoption of the provisions of the division operation as applicable. This type of division allows for a more efficient use of the company’s assets by creating new companies or by strengthening existing companies with prospects of greater profitability. It may also be an alternative to the merger by acquisition.