Registration Of Status Change And Legal Consequences Of Status Change

Registration of a status change of a company is an integral part of the phase of completion of the procedure for the implementation of status changes (merger, acquisition, division and spin-off), which are regulated by the provisions of the Companies Act.

The registration of a status change is made in compliance with the registration act concerning the recipient company and concerning the transferring company, after entry into force of the contract on status change, i.e. the division plan.

The increase, i.e. reduction of share capital, occurred as a result of a status change is registered in compliance with the registration act as well as deletion from the register of the company which is dissolved as a result of status change.

The registration of the status change may not be made before the payout is made to the dissenting members of the company participating in the status change. The chairman of the board of directors, i.e. the chairman of the company’s supervisory board, if the company has a two-tier management system confirmed by a statement in writing that all dissenting members of the company participating in the status change have been paid out, i.e. that there were no dissenting members of the company.

Legal Consequences of a Status Change

The following legal consequences of a status change arise as of the day of registration of the status change, in compliance with the registration act:

Assets and liabilities of the transferring company pass to the recipient company, following the agreement on status change, i.e. division plan; With exception concerning the objects and rights whose transfer is conditional upon registration in public records, i.e. upon obtaining specific consents or approvals, the transfer of such assets to the recipient company is done by that registration, based on the agreement on status change or division plan, i.e. by obtaining those consents or approvals.
Recipient company becomes jointly and severally liable with the transferring company for its obligations that were not transferred to the recipient company, but only up to the amount of difference between the value of assets of the transferring company which were transferred to it and liabilities of the transferring company assumed by it unless a different agreement is reached with a certain creditor;
Members of the transferring company become members of the recipient company by way of exchanging their shares, i.e. stocks for the shares, i.e. stocks of the recipient company, in accordance with the agreement on status change, i.e. division plan; With the exception, this legal consequence of status change don’t arise in case of acquisition by a sole member of the company if the recipient company is an only member of the transferring company.
Shares, i.e. stocks of the transferring company, which were exchanged for the shares, i.e. stocks of the recipient company, are cancelled;
Rights of third parties that represent an encumbrance on the shares, i.e. stocks of the transferring company which are exchanged for the shares, i.e. stocks of the recipient company, pass to the shares, i.e. stocks which a member of the transferring company acquires in the recipient company, as well as to the claim for pecuniary compensation such a member is entitled to, in addition to or instead of the exchange for those stocks, i.e. shares in compliance with this Act;
Employees of the transferring company who are assigned to the recipient company under the agreement on status change, i.e. the division plan, continue to work in that company in compliance with employment regulations;
Other effects under the law.

If, as a result of status change, the transferring company dissolves, the following legal consequences also arise:

Transferring company dissolves without conducting liquidation proceeding;
Mutual claims between the transferring company and the recipient company terminate;
Obligations of the transferring company pass to the recipient company in accordance with the agreement on status change, i.e. division plan, and the recipient company becomes a new debtor concerning such obligations, and, in case there are several recipient companies, each of them is severally liable for the obligations which passed to other recipient companies, in keeping with the agreement on status change, i.e. division plan, up to the amount of difference between the value of assets of the transferring company that was transferred to it and the obligations of the transferring company assumed by it, unless otherwise agreed with a certain creditor;
Permits, concessions, other privileges and exemptions granted or recognized to the transferring company pass to the recipient company in accordance with the agreement on status change, i.e. division plan, unless the regulations governing their granting stipulate otherwise;
Duties and authorizations, as well as powers of attorney for voting in the general meeting of the transferring company, of the directors, and members of the supervisory board, if the company has a two-tier management system, and representatives of the transferring company, cease.

Notwithstanding paragraph 1, item 2) and paragraph 2, item 3), joint and several liabilities, or several liabilities of the recipient company shall not exist with respect to the claims for which the creditor of а company undergoing a status change whose claim incurred before the registration of status change in accordance with the registration act who deems that the status change wherein his debtor participates would compromise the satisfaction of his claim, may, within a term of 30 days from the day of publication of the notification by his debtor referred to in Article 495 of the Companies Act, seek the relevant protection.

Creditor protection is provided in the following manner:

By giving security in the shape of a pledge, surety and the like;
By amending the terms of the contract where under the claim was incurred or by terminating that contract;
By separate management of the assets of the transferring company until the settlement of the request;
By taking such other actions and measures which place the creditor in a position which is not less favourable than the position he enjoyed before the process of status change.

Retained Assets and Liabilities of the Company Dissolved by Way of Division

The assets of the transferring company dissolved by way of division, which was neither transferred to any recipient company under the agreement on status change, i.e. division plan, nor is it possible to identify by interpreting that agreement, i.e. division plan to which recipient company such assets are to be transferred, shall be transferred to each of the recipient companies in proportion to the share of assets transferred to them, reduced by the liabilities assumed, in the total net assets of the company that dissolved by way of division.

Each recipient company is jointly and severally liable, up to the amount of difference between the value of assets transferred to that company and liabilities assumed by that company, for the liabilities of the transferring company dissolved by way of division, which was neither distributed to any of the recipient companies under the agreement on status change, i.e. division plan nor is it possible to identify by interpreting that agreement, i.e. division plan to which recipient company such liabilities are to be distributed.