What is a company demerger?
Under Polish law, a demerger is a formal process involving the division of the assets and liabilities of one company, which are then transferred in whole or in part to another existing company or companies or to a newly established company or companies.
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When should a company demerger be considered?
A demerger may be the right solution where there is a need for: risk diversification, optimization of business processes, implementation of a growth strategy, development of new projects or investments, increased operational efficiency, improved risk management.
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Which companies can participate in a demerger?
Under Polish company law, demergers are available to capital companies, including joint-stock companies, simple joint-stock companies, and limited liability companies. The demerger of a limited joint-stock partnership is also possible.Other types of partnerships, including registered partnerships, limited partnerships, and professional partnerships, cannot undergo a demerger.
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How does the demerger process work?
Before commencing a demerger, it is necessary to analyze the business activities of the company being divided and determine the legal, tax and accounting consequences of the process. Next, the required documentation is prepared, including the demerger plan, the draft articles of association or bylaws of the new company, or amendments to the articles of association or bylaws of the acquiring company.
The process also requires the adoption of appropriate demerger resolutions and registration of the demerger by the registry court in the National Court Register (KRS).
Company demerger process: Grant Thornton support
Drawing on many years of experience in delivering projects of this kind, the Grant Thornton team provides support in selecting the most appropriate reorganization route. Where a demerger-based approach is chosen, we offer comprehensive legal, tax and accounting advisory services.
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Comprehensive legal, tax and accounting support in implementing the demerger process
We provide planning and support throughout the demerger process, including recommendations and practical guidance developed by our experienced experts.
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Thorough analysis and preparation of a written report explaining the implications of the process
As part of the demerger process, our experts may prepare a written report explaining the demerger procedure to shareholders and members of governing bodies, together with all legal, tax and accounting implications and details of the process. The report serves as a practical guide to the process while providing additional reassurance to shareholders and internal teams involved in its implementation.
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Preparation of demerger documentation
Our support also includes preparing the documentation required for the process, in particular the demerger plan, demerger resolutions and the relevant provisions of the companies’ articles of association or bylaws.
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Representation in registration proceedings relating to the demerger
We represent clients before registry courts throughout Poland. We are responsible for filing the application to register the demerger together with all required documentation, monitoring the proceedings and maintaining ongoing contact with the registry court to ensure that registration takes place on the requested date. This carefully planned approach enables the change to be implemented as smoothly as possible, with minimal disruption to day-to-day business operations.
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Ongoing support with post-demerger formalities
We provide ongoing support both before and after the formal completion of the demerger. We identify the obligations arising after the demerger and help clients fulfill them. We also support communications with customers, employees and public institutions.
Company demerger: key facts
- A company demerger typically takes between approximately 5 and 12 months, depending on the selected demerger method, the structure of the company being divided, and the availability of simplifications provided for under the Commercial Companies Code.
- A demerger is based on the principle of legal succession, under which the acquiring company or newly established company assumes the rights and obligations of the divided company as of the demerger, spin-off, or separation date.
- A demerger is one of the recognized methods of corporate reorganization and represents an attractive alternative to contribution-in-kind transactions.
- Where statutory simplifications are not available, the demerger plan must be reviewed by an independent auditor, and management boards of the companies involved are required to prepare relevant reports.
Implementation process
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Company analysis, client needs assessment and process planning
At this stage, we analyze the client’s business operations. We review areas such as company assets, employment matters, agreements with customers and suppliers, administrative decisions and permits. Once the client’s objectives have been identified, we prepare an implementation plan.
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Process execution: implementation of the demerger
At this stage, we guide the client through all formalities related to the demerger. We manage the process comprehensively, from liaising with the notary and preparing all required documentation to filing the application with the National Court Register and monitoring the registration process.
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Ongoing consultations during implementation and after registration
We understand that a demerger is an organizational challenge for the entire company or group of companies. Our extensive experience allows us to support clients in all day-to-day matters related to the reorganization. We also provide guidance on all formal actions required after the demerger, considering the specific circumstances of the client’s business.
At this stage, we analyze the client’s business operations. We review areas such as company assets, employment matters, agreements with customers and suppliers, administrative decisions and permits. Once the client’s objectives have been identified, we prepare an implementation plan.
