What is the difference between reorganization by merger and reorganization by merger

Legal advice / business lawyer / Reorganization / Reorganization by affiliation
Reorganization in the form of affiliation in the context of increasing production efficiency and general globalization of economic activities allows you to combine the joint efforts of two or more legal entities for further work within a larger organizational and legal structure.

During the merger process, the existing enterprise is liquidated with the simultaneous complete transfer of rights and obligations to another legal entity. This procedure implies full succession and is accompanied by the transfer of:

Property values and financial resources of the company.
Accounts receivable and payable of the organization.

During the merger process, the personnel of the acquired legal entity may also move in whole or in part to the new organization.

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Reorganization by merger begins with a decision to carry out this procedure. Depending on the legal status of the enterprise, such a legally significant decision is drawn up as follows:

For limited liability companies - in the form of a decision of the general meeting of founders or the sole participant.
For joint stock companies - in the form of a shareholder resolution.
For state budgetary institutions and enterprises - in the form of a decision of the executive authority of the state or subject of the Russian Federation.
For municipal institutions or enterprises - by making a decision of local authorities.

This decision must necessarily contain the terms of accession - the procedure for transferring rights and obligations, property and financial assets; the order of implementation of mandatory stages and activities; procedure for approving the transfer act; list of responsible persons.

The approved decision is the basis for notifying the tax authority about the start of the merger procedure.

Reduction during reorganization in the form of merger

When reorganizing in the form of affiliation, staff reductions are permitted only if employees are properly notified. Such notice is given to each employee personally against signature no later than two months before the date of joining.

What to do if an employee does not agree to move to a new organization? Personnel have the right to agree to new working conditions or a new position (if such a condition is provided for by the terms of affiliation).

If the notified employee does not agree with the new working conditions, or if there are no vacant positions for employment, the employees are subject to dismissal at the initiative of the company's management for layoffs.

Order on reorganization by merger

The legal basis for carrying out organizational and staffing measures with the company’s workforce will be an order for reorganization by merger. This order is issued after approval of the decision to begin the procedure and must contain a number of mandatory conditions:

Establishing deadlines for all personnel activities (notifying employees, transferring them to a new company, dismissal due to reduction, etc.).
The procedure and forms for paying severance pay to employees and calculating wages.

The reorganization order is the main personnel document for carrying out organizational and staffing measures with the employees of the enterprise. Each employee must personally sign to become familiar with the terms of the order.

Transfer of employees during reorganization in the form of affiliation

In case of agreement to work under new conditions, employees are transferred during reorganization in the form of affiliation. Activities for the transfer of personnel are carried out by the personnel service of the enterprise in strict accordance with the requirements of the law and the terms of the manager’s order.

If job responsibilities and other essential terms of the employment agreement are retained in full, it is subject to change indicating the new organization - the employer.

If an employee’s working conditions change, appropriate changes are made to his employment contract.

An order is issued regarding the transfer of each specific employee to the staff of a new enterprise, and an entry about the transfer is made in the work book.

Cancellation of reorganization in the form of merger

Even if most of the measures to join a legal entity to a new organization are completed, the initiators of this procedure always have the opportunity to cancel further actions. Cancellation of reorganization in the form of merger is carried out by the same structures that made the decision on reorganization:

For limited liability companies - the general meeting of founders or the only participant.
For joint stock companies – a general meeting of shareholders.
For state budgetary institutions and enterprises - the executive authority of the state or subject of the Russian Federation.
For municipal institutions or enterprises - local authorities.

A decision to cancel the reorganization can be made at any time, up to the time the information is entered into the Unified State Register of Legal Entities, and is subject to forwarding to the tax authority.

Reorganization of a legal entity in the form of merger: features

This form of reorganization provides that one legal entity is absorbed by another, as a result of this process the first organization ceases to exist, and all rights and obligations are transferred to another organization. Judicial practice in recent years shows that reorganization in the form of affiliation, the succession of which involves only the transfer of debt obligations, is often declared invalid, or causes increased attention from tax and law enforcement authorities. At the same time, merger often becomes the only option for a business to avoid bankruptcy. Acquisition by a larger business provides an opportunity to preserve jobs and production, and often provides the former owners of the organization with a chance to participate in larger-scale projects.

Reorganization procedure in the form of merger

The reorganization procedure in the form of affiliation provides for the implementation of a number of mandatory measures provided for by law:

Approval of the decision to initiate reorganization in the form of merger.
Sending a notification to the Federal Tax Service inspection about the initiation of the procedure.
Two publications of notices in the “Bulletin of State Registration”.
Approval of the transfer deed of the organization.
Submitting an application to the Federal Tax Service inspection for state registration based on the results of the reorganization.

Violations committed during the implementation of at least one of these stages entail the invalidity of the entire reorganization procedure. Failure to comply with the deadlines for procedural measures, the procedure for publishing notices and filling out document forms will also result in a refusal by the registration authority.

Notification of the registration authority and interaction with creditors

The limited liability company must notify the registration tax authority about the start of the process.

At the same time, it is necessary to place information in the State Registration Bulletin about the beginning of the reorganization of the company, its participants, form and persons accepting creditor claims and ensuring the fulfillment of obligations. It is subject to monthly publication until the procedure expires.

Creditors, with the exception of those whose obligations are secured, have the right to apply to the court with relevant demands within a period of no more than 30 days from the date of publication in the media of the last report on the reorganization.

If such demands are not presented, then further interaction is carried out between them and the successors of pre-existing organizations. If the responsibilities are not distributed between them, then they are jointly and severally liable to the creditor.

Dismissal of a manager

Since the merger procedure implies the actual existence of a legal entity, the owners of the company have the right to terminate the contract with the manager. Labor legislation allows for this possibility while simultaneously respecting the labor rights of the manager.

The dismissal of a manager during a reorganization in the form of a merger is formalized by a decision of the owners of the enterprise, which, as a rule, coincides with the decision to initiate the reorganization procedure.

This procedural decision provides for the date of termination of the contract with the director, and also determines the conditions for paying him severance pay.

In practice, the owner of educational institutions most often uses this right by dismissing an objectionable school director during the merger process.

Reorganization of a legal entity - concept

Reorganization is a set of actions by the owner (legal entity) related to the termination of one legal entity, as a result of which rights, financial and contractual obligations are transferred to the successor, while new legal entities may be created, as well as one or more previous legal entities may be terminated. Reorganization can be carried out in different forms - accession, division, separation, merger, transformation.

This is one of the most constructive forms of getting a business out of difficult economic situations. To carry out this procedure, the state establishes a number of requirements, including the need to send to the fiscal authorities a document filled out on a standardized form, Form 12003 “Notification of the start of the reorganization procedure.”

Form P12003 was introduced by order of the Federal Tax Service of Russia No. MMV-7-6 / [email protected] dated January 25, 2012, as amended. dated 05/25/2016 (Appendix No. 3 to the order)

Submission of notification is mandatory. The requirements for filling it out are established by Section IV of the Order.

Form P12003 provides the following nuances:

Business entities are given the opportunity to cancel the reorganization procedure by their own decision by submitting a corresponding notice of cancellation of the reorganization. To do this, it is enough to send a notice of reorganization to the tax authority (form P12003), indicating the cancellation code, and provide it with the owner’s decision to cancel the procedure.
It is not required to indicate the successor legal entity created as a result of reorganization measures and its registration data.

How long does reorganization in the form of merger take?

To the question of how long reorganization in the form of affiliation lasts, only an approximate answer can be given - within three months. This period includes time for preparing documents, making and processing a decision on reorganization, notifying the tax authority, publishing notices of merger, and registration actions of the Federal Tax Service inspectorate.

Qualified specialists from a legal or consulting company will help reduce the time required to prepare document forms, as well as ensure careful compliance with legal requirements at each stage of the reorganization procedure.

Experienced lawyers will undertake the preparation of the entire set of documents and represent the client’s interests in the tax office at every stage of the process. will provide the law firm's client with full legal support and ensure the required result in the shortest possible time.

Transfer act during reorganization in the form of merger

One of the most important documents in carrying out this procedure is the transfer act during reorganization in the form of affiliation. This method of reorganization implies the transfer in full of all rights and obligations of the acquired company in the form of succession.

The transfer act is drawn up on the date the decision on reorganization is made and includes the following information:

A complete list of property assets of a legal entity.
Detailed composition of the organization's financial assets.
List of accounts payable claims, including financial obligations for which the due date has not arrived.
List and forms of accounts receivable.

The transfer act is drawn up with the participation of representatives of both organizations, after which it is subject to approval by the owners of the enterprise. The approved transfer act is submitted to the tax authority as part of the documents for state registration of the reorganization in the form of merger.

According to the list of tasks that reorganization in the form of affiliation can solve, this procedure is one of the most popular among legal entities of any organizational legal form.

Strict adherence to the deadlines and procedure for processing documents will allow the merger to be completed in strict accordance with the goals pursued by the owners of the enterprise at the stage of making the decision on reorganization.

Author of the article: Petr Romanovsky, lawyer Work experience 15 years, specialization - housing, family, inheritance, land, criminal cases.

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Step-by-step instructions for reorganization in the form of merger of a JSC into an LLC

LLC and JSC participating in the merger must hold a general meeting of Participants and a general meeting of shareholders, respectively.

Conducting a general meeting of LLC Participants.

From October 1, 2014 The adoption by the general meeting of LLC participants of the Decision and the composition of the LLC Participants present at its adoption are confirmed by notarization, unless another method is provided for by the LLC charter or by a decision of the general meeting of the company participants adopted unanimously by the company participants.

In an LLC consisting of one Participant, decisions on issues falling within the competence of the general meeting of LLC Participants are made by the sole participant of the company individually and are documented in writing. In this case, there is no need to comply with the procedures for convening and holding a general meeting of LLC Participants.

On the appointed day, a general meeting of LLC Participants is held, at which a decision on reorganization in the form of merger of the JSC into the LLC is made (or not made).

The decision to reorganize the LLC in the form of merger of the JSC into the LLC is made unanimously by all LLC Participants.

Based on the results of the meeting, a Protocol is drawn up, signed by the Chairman and the Secretary, as well as by persons determined by the Reorganization Decision or the Charter, and if they do not indicate the method of confirming the decision and the composition of the Participants, by a notary.

No later than within 10 days after drawing up the minutes of the general meeting of LLC Participants, the Manager (General Director) is obliged to send a copy of the Minutes of the general meeting of LLC Participants to all LLC Participants.

Conducting a general meeting of shareholders of the JSC.

From October 1, 2014 the adoption of a decision by the general meeting of shareholders and the composition of persons participating in the meeting of the JSC must be confirmed by a notary or a specialized registrar. An exception to this rule is a joint stock company consisting of a single shareholder. In this case, the shareholder makes and signs the decision on reorganization in simple written form.

Therefore, in order to hold a general meeting of shareholders with two or more shareholders, it is necessary to agree in advance with a notary or specialized registrar on the date, time and place of the general meeting of shareholders, as well as the list of documents that they need.

On the appointed day, a general meeting of shareholders is held, at which a decision is made (or not made) on reorganization in the form of merging the JSC with the LLC. The General Meeting of Shareholders is valid if it is attended by shareholders who collectively own more than half of the votes of the outstanding voting shares of the JSC.

To make a decision on reorganization, it is sufficient if three-quarters of the votes of the shareholders participating in the meeting are cast in favor of it.

Based on the results of the meeting, two Protocols are drawn up, signed by the Chairman and the Secretary:

Protocol on voting results.
Minutes of the general meeting of shareholders.

If the decisions made and the composition of persons participating in the meeting of the JSC are confirmed by a notary, the notary issues a Certificate of Attestation of these facts.

The minutes of the general meeting of shareholders are drawn up no later than three working days and within no more than 7 working days from the date of its preparation, and are provided to the registrar in the form of a copy or an extract from the minutes.

Important!!! If the JSC consists of a single shareholder, there is no need to comply with the procedures for convening and holding a general meeting of shareholders, as well as certifying the decision of the JSC made by the sole shareholder, notary or registrar.

Because The current legislation does not contain clear rules for the reorganization of the merger of legal entities of various organizational and legal forms (JSC and LLC), sometimes difficulties arise with the difference in rules, place and procedure for the adoption of certain issues related to the reorganization of JSC and LLC (for example, making changes and additions to the Charter of the main LLC or the election, if necessary, of the executive body of the main LLC as a result of the merger is within the competence of the joint general meeting of participants of all companies participating in the merger, while the introduction of amendments and additions to the Charter of the main legal entity as a result of the merger of the JSC - is within the competence of the general meeting of shareholders of the company to which the merger is being carried out, and the election of the executive body of the main legal entity is not at all provided for by the norms of the legislation on joint-stock companies). We believe that in such cases, one should be guided when making decisions by the norms of those legal entities for which the corresponding norms of legislation are provided, and in case of different procedures for making decisions on the same issue, a decision should be made taking into account first the main norm provided for this organizational and legal form, then for an organizational-legal form different from this one, i.e. as if to “duplicate” the same issue, but in different documents, or to apply a rule regulating the procedure for reorganization in the form of annexation of a legal entity - the legal successor of a certain organizational and legal form as a priority.

In the example we are considering, we recommend introducing amendments and additions to the Charter of the main LLC as a result of the merger:

the general meeting of participants of the main company to which the merger is being carried out (since the instruction to amend the Charter of the acquiring legal entity is provided for by the Federal Law “On Joint-Stock Companies”).
at the joint general meeting of participants of the companies participating in the merger (since this issue is considered in accordance with the Federal Law “On Limited Liability Companies”).

Then, after the expiration of the period specified in the Merger Agreement, at the joint general meeting of participants of the companies participating in the merger, a decision must be made to amend the Charter of the main LLC, as well as, if necessary, on other issues, including the election of bodies (General Director) of the main LLC.

The procedure and timing of such a general meeting are also determined by the Agreement on Accession.

The decision on the election of executive bodies of the main company is made by 3/4 of the total number of votes, while the number of votes of each participant is determined based on the size of the share that will belong to the participant in the main LLC. The decision on amending the Charter of the main company is made by 2/3 of the total number of votes.