Continuance of enterpreneurs’ activities in form of companies is possible only in limited liability companies and in closed (non-public) corporations which, unlike partnerships and co-mandate corporations, may have a single member.
This modification of registration model is available to get the form of a company changed and the liabilities for operations transferred from private property to those of the company. It should be taken in account that an enterpreneur is liable with his private property for any obligations arising from company’s operations while limited liability companies or corporations are liable for their operations with their own property.
This procedure is carried out in Business Registers Agency and , more specifically, in Register of Companies. This is a special procedure for it cannot be classified into typical procedures of modification of the legal form or into procedures of statutory changes.
Based on the decision for continuance of operations in form of a company, respective enterpreneur is deleted from the Register of Companies. At the same time, foundation of a new company is registered. Any respective rights or liabilities of the enterpreneur arising from his operation to such date are transferred to this new company. In fact, there are two separate deletions and foundations in this procedure whereas Business Registers Agency makes specific decisions for each of them.
It should be noted here that a newfounded company will get a new Tax Identification Number and ID Number for it becomes a new commercial entity. But the Decision on Foundation will contain a notice indicating subject entity as a legal successor of the enterpreneur deleted in order to continue operations in form of a company.
When the status of enterpreneur ceases to exist, respective private individual remains liable with the entire property for any liabilities arising from operations handled to date of deletion from the Register.
In this case, there will be significant changes in reference to previous operations of enterpreneurs and, in particular, to the fact that tax obligations of enterpreneurs are much different to those of the companies.
It should be specifically noted that once a new registration to continue operations in form of a company is completed, any kind of a reverse process is not possible. If required, such company shall undergo a liquidation or bankrupcy procedure.
Should you need any further information, please refer to our law office.