Why and how to restructure – top tips to make it work for your business

14th July 2020

Turbulent times often demand major change or can offer opportunities to take a different approach – if you’re considering restructuring your company, we offer key advice on the issues to address.

Why restructure?

You may want to incentivise your employees by giving them some equity in the business – perhaps you’re interested in share option plans such as the Enterprise Management Incentives share options or Company Share Option Plan, both of which would be tax efficient.

Perhaps shareholders are looking to retire, you’re thinking of a management buy-out, you want to reduce share capital to create reserves to pay dividends or you want to buy your own shares; all of these are sound reasons for looking again at the company’s structure.

We also see clients who want to demerge their business into different entities, to reflect a change in focus or different business sectors, and those who want to liquidate a subsidiary because the business has moved on.

Key issues to consider

Corporate structure – check the company’s articles of association, any investment agreement or shareholders’ agreements and you should deal with any necessary corporate authorities required to carry out the restructure.

Employees – does the Transfer of Undertaking (Protection of Employment) TUPE apply, and if it does, do you know how to comply or how to make redundancies fairly?

Property – if the property is in a business name which is changing or disappearing, your title documents need to change, as do leases. Make sure you can assign or transfer the property correctly.

Intellectual property – who owns the intellectual property rights? Do they need to be re-assigned or is a more radical change required?

Finance – are your business assets secured by a financial institution and do they need to agree to your restructuring plans?

Contracts – how will your plans affect your contracts, especially concerning change of control?

Tax – changing the company’s structure may affect your tax liabilities; make sure it is as tax efficient as possible.

Other considerations

Restructuring can be a complex process, but can yield considerable benefits if you consider all the main issue carefully and know the direction in which you want to go. To find out how we can help, view our restructuring services brochure.

If you are concerned about any of the issues mentioned here, our specialist team can help you with the right documents, advice, network of professionals and fixed-price charging structures; contact Rachael Reeves or Louisa Leach at [email protected] or [email protected].

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