In the life of a corporate entity, restructuring of the company or its group is sometimes the best way of achieving a desired business objective.
Circumstances occasioning a restructuring might include:
- a new management or ownership team taking over the business;
- the company is facing economic uncertainty;
- needing to separate out the trading business and certain assets, in anticipation of a sale of one or the other;
- to cater for new businesses being brought in, which is to be kept separate from the exciting business;
- providing for the perspective retirement of certain shareholders by formation of a new holding company; in which those shareholders are not interested.
If you are looking at carrying out a restructure, you should consider the following:
- Does your business have any existing banking facilities, which would require a formal consent before completing the restructure? If so, you should think about getting in touch with the Company’s bank to discuss and get your plans approved.
Shareholders and Company Documents
- If the restructure involves transferring shares, particularly those with large numbers of shareholders, you should involve the shareholders in the process and obtain their consent. A shareholders’ agreement may be required in order to record the rights and responsibilities of the shareholders.
Tax and Accounting Advice
- Transferring assets between companies will usually have tax and accounting consequences. For example, there can be complications where assets are transferred at less than their market value.
You should communicate with your accountant and tax advisors to determine how best to effect the restructure.
- If you have employees, you should check whether TUPE (transfer of undertakings) will apply to the employees and seek out specialist advice where necessary, to ensure that the business complies with its legal obligations.
If you would like to speak to one of our team, please get in touch with the Corporate Commercial team on 01256 320555.