The demerger is the operation by which a company is divided into two or more companies and the shares or quotas of the new companies are attributed to the shareholders of the old company.
The services listed on this page are available for companies based in Italy, the United Kingdom and Ireland.
WHEN TO APPLY FOR A COMPANY SCISSION?
The split leads to the division of the corporate assets in favor of several different entities. There are many reasons:
- Solution to situations of conflict between members;
- Solutions to situations of conflict between outgoing shareholders and managers;
- Splitting up of companies aimed at production developments while maintaining control of the original shareholders;
- Reorganization of the activity carried out, with the abandonment of sectors that are poorly compatible with the main one or poorly profitable;
- Creation of a new corporate structure;
- Pursuit of tax advantages.
THE SUBJECTS OF THE TRANSACTION ARE:
• The company that is to be split up, called the demerged company (company A);
• The companies to which part of the equity of the demerged company is transferred, called beneficiary companies (company B, C, ...). Beneficiary companies can be existing companies or companies set up on purpose;
• The shareholders of the demerged company (company A) to whom the shares or quotas of the beneficiary companies (company B, C, ...) must be attributed
The Civil Code, provides for two types of divisions:
- The total demerger in which the entire assets of the demerged company are transferred (divided) to two or more beneficiary companies. Following the total demerger, the demerged company expires and the previous activity continues with the beneficiary companies each for the activities being demerged.
- The partial demerger in which only a part of the assets of the demerged company is transferred (divided) to one or more beneficiary companies. In this case, the demerged company does not expire but continues its activity without the part of assets / liabilities transferred to the beneficiary companies.
COMPANY A, AFTER THE SCISSION, WILL CONTINUE ITS ACTIVITY, EXCLUDING THE BUSINESS UNIT WHICH HAS BEEN SPLIT AND TRANSFERRED TO THE BENEFICIARY COMPANY B. THE SHARES OR QUOTAS OF THE NEW COMPANY B ARE GIVEN TO THE MEMBERS OF A .
Within the aforementioned forms, total or partial, the split can be defined:
- Strictly speaking: when the company splits and new companies are born from it;
- By incorporation: when one or more pre-existing companies are beneficiaries of the demerger of another company.
TWO CRITERIA FOR DIVISION OF THE QUOTAS OR SHARES ISSUED BY THE BENEFICIARY COMPANIES AND PRECISELY:
• Proportional criterion: the shares or shares of the beneficiary companies are assigned to the shareholders of the demerged company on the basis of their percentage participation in the share capital of the demerged company;
• Non-proportional criterion: the shares or shares of the beneficiary companies are assigned without taking into account the original participation percentages, but in such a way as to attribute to the shareholders of the split-off equity investments whose overall value, also considering the adjustments, is equivalent to the value of the equity investment previously held. The latter can be implemented with the entry into force of Legislative Decree 358/97.
Negative demerger refers to the case in which the demerged company has a negative book equity.
CASE HISTORY: WHEN A SCISSION PRODUCES UNEXPECTED RESULTS
In the 1930s two brothers, Rudolf and Adolf Dassler, owned a shoe factory in Germany that sold 200,000 pairs of footwear per year.
Following various and continuous disputes in 1948 the company was divided into 2 different COMPETITORS companies.
Rudolf's, initially called RUDA from the initials of his name and surname, later became PUMA;
that of Adolf, nicknamed ADI, was instead called ADIDAS ..
As you well know, today PUMA and ADIDAS are two world giants in the footwear and sportswear sector with a turnover of several billion euros.
The moral of this beautiful story is as follows:
- LITIGATE and SEPARATE if you think that your partner is a burden to the development of your business.
In our world these operations are called SCISSIONI, which have nothing to do with lawyers, courts, the typical complaints of the Italian entrepreneur.
It simply means that everyone takes their own path as it does in separations between wife and husband.
The advice is always to NEVER DO ALONE, but to rely on professionals and expert organizations in M&A.
CLOSE UP AND DO GOOD THINGS !!!!!!!!!