Ways of changing business entity
One of the legal acts which may result in the creation or cessation of participation in a company is the transfer of an interest in a company, which is represented by the transfer of an ownership interest in a limited liability company or the transfer of shares or other securities of a participating nature in a joint stock company, resulting in a change of the ownership right in relation to the company.
A seemingly similar change is the transfer of a certain part of the business activities of a company. However, this occurs without a change in its ownership structure and is based on an enterprise purchase agreement. Changes relating to the company structure occurring as a result of the acquisition of an interest in a company should be recorded in the Commercial Register.
The transfer of an ownership interest is a complicated process, which requires the conclusion of the relevant contracts. Therefore the individual parties of the transaction are usually represented by their legal agents, most frequently by solicitors.
- Transfer of an interest in a Limited Liability Company. This is the most common way of how a shareholder’s participation in a company is established and possibly also terminated. The transfer of an ownership interest in the company is performed on the strength of a written agreement with officially certified signatures.
- Transfer of an interest in a Joint-Stock Company. The transfer of shares regardless of their form or type is always based on an agreement, which represents a legal reason (title) of the transfer. Nonetheless, the law modifies the conditions of share transfer depending on their form or type.
- Purchase of a business enterprise. Another change in an entity carrying out business is the transfer of business activities to another person, i.e. the purchase of an enterprise as an economically functional unit without influencing the ownership structure of the company.