When a company changes its legal form, an existing company adopts another permitted legal form without, by that fact alone, creating a new legal entity. As a rule, its assets and liabilities remain with the same company while its corporate structure changes. A merger, by contrast, combines several companies through universal succession. The assets of the transferring companies pass to an acquiring or newly formed company, while the transferring companies generally cease to exist without separate liquidation. In a division, assets, liabilities, and business activities are allocated to several existing or newly formed companies according to a defined plan. Depending on how the division is structured, the original company may continue to exist in part or cease to exist when the reorganization takes effect. A transfer of assets as part of a reorganization allocates assets and liabilities to an existing or newly formed company. The reorganization plan must clearly identify the affected assets, obligations, and associated legal positions. The choice should therefore take into account the desired company identity, target structure, succession to assets, and continued existence of the companies involved. Resolutions, registration, creditor protection, continuity of contracts, and the financial and legal consequences must then be assessed separately for the chosen structure.
Legal routes for reorganizing an existing company in Georgia
The main options for reorganizing a company in Georgia include changing its legal form, a merger, a division, and the planned transfer of assets and liabilities. The appropriate route depends on whether the company’s identity is to be preserved, several companies are to be combined, or business areas are to be separated.
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The reorganization route should be selected based on the desired end state: preserving identity, combining companies, or separating business areas. A change of legal form, a merger, and a division have different consequences for legal entities, assets, and continued existence. Only after making this fundamental decision can resolutions, registration, and creditor protection be planned appropriately.