What is Corporate Reorganization?
Corporate Reorganization can include a number of legal processes meant to change the structure, management, or ownership of a corporation for any purpose, including preventing bankruptcy, increasing profitability, protecting shareholders, and so on. If you are considering changes to your company, or if your accountant or another professional have recommended such changes and you have questions about how to proceed, schedule a consultation with Pax Law to discuss the changes with our knowledgeable business lawyers.
Different Kinds of Corporate Reorganization
Mergers & Acquisitions
Mergers are when two companies join together and become one legal entity. Acquisitions are when one business acquires the business of another, usually through a share purchase and rarely through an asset purchase. Both mergers and acquisitions can be complicated legal processes and we strongly recommend against attempting either without legal support, as doing say may lead to monetary losses and legal proceedings against the businesses or their directors.
Dissolution is the process of “dissolving” a company or closing it down. During the dissolution process, the company’s directors must ensure that the company has paid all of its liabilities and has no outstanding debts before they are permitted to dissolve the company. A lawyer’s assistance can ensure that the dissolution process goes without a hitch and that you will not be subject to liabilities in the future.
An asset transfer is when your company sells some of its assets to another business entity or buys some assets from another business entity. A lawyer’s role in this process is to ensure that there is a legally enforceable contract between the parties, that the transfer of assets goes without a problem and that the assets being obtained actually belong to the selling business (rather than being financed or leased).
Corporate Name Changes
A relatively simple corporate reorganization is changing the name of a corporation or obtaining a “doing business as” (“dba”) name for the corporation. The lawyers at Pax Law can assist you with this process.
Corporate Share Structure Changes
You may need to change your corporate share structure for tax reasons, to distribute control rights in the company as you and your business partners require, or to raise new capital by way of selling shares. A corporate share structure requires you to have a meeting of the shareholders, pass a resolution or a special resolution of the shareholders to that effect, file an amended notice of articles, and change the articles of incorporation of your company. The lawyers at Pax Law can assist you with this process.
Corporate Articles (charter) Changes
Changing the articles of incorporation of a company may be needed to ensure that the company can engage in a new line of business, to satisfy new business partners that the company’s affairs are in order, or to make changes to the company’s share structure effective. You will need to pass an ordinary or special resolution of the shareholders to legally change the articles of incorporation of your company. The lawyers at Pax Law can assist you with this process.
You do not need a lawyer but we strongly recommend doing your corporate reorganization with legal assistance, as it can prevent problems from arising in the future.
There are many different types of corporate reorganization, and each type can have various purposes. In short, corporate reorganization is a tool for companies to prevent bankruptcy, increase profitability, and arrange the affairs of the company in a manner the most benefits their shareholders.
Some examples of reorganization include identity changes, changes in shareholders or directors, changes in the company’s articles of incorporation, dissolution, mergers and acquisitions, and recapitalization.
It depends on the size of the corporation, the complexity of the changes, whether the corporate records are up to date, and whether or not you retain the services of a lawyer to assist you.