Concept
Legal concept established by Law No. 85 of November 22, 2012, which adds Chapter IX-A to Title VIII of Book One of the Commercial Code, including Articles 505-A to 505-F. This allows a commercial entity, known as a “spin-off company,” to divide its assets, either in whole or in part, which are subsequently transferred to one or more receiving companies, known as “beneficiary companies.”
The primary effect of this process is the segregation and transfer of assets from the spin-off company to the beneficiary company.
Application – relevance
Spin-off have been established as a tool for reorganizing the assets and finances of companies, allowing them to adapt their internal structures to respond to market realities, protect strategic assets, optimize operational efficiency, and even resolve conflicts between partners.
Requirements
1) The beneficiary companies must have the same partners as the spun-off company, or the spun-off company itself must be partners or shareholders of the beneficiary company.
2) It must be approved by agreement of the partners of the spun-off company and the beneficiary company.
3) The company subject to the spin-off must notify its intention to spin-off to the General Directorate of Revenue of the Ministry of Economy and Finance at least thirty days prior to the scheduled date for the formalization of the spin-off, indicating the names of the beneficiary companies or whether a new company will be created.
4) To be effective against third parties, once the thirty-day period has elapsed from the previous notification, the public deed containing both minutes of approval of the spin-off must be notarized and registered in the Public Registry.
5) Once the public deed has been registered, the certification issued by the Public Registry must be published for three consecutive days in a national newspaper. This publication is intended to notify third parties and open the period for creditors to file objections through the courts, within thirty days following the last day of publication.
Effectiveness
The spin-off becomes fully effective between the participating companies from the moment it is registered in the Public Registry. From this moment on, the beneficiary companies assume the obligations corresponding to them under the terms of the spin-off agreement. They also acquire the rights, privileges, and obligations inherent to the equity portion transferred to them, maintaining the same date of origin and the conditions under which they were acquired by the spun-off company, thus ensuring legal continuity of the equity and social relationships.
Tax effects
The transfer of assets due to the spin-off of a commercial company is not considered a sale for tax purposes, provided that the transfer is made for the same value as the assets in the accounting records of the spun-off company.
The beneficiary companies of these assets will be jointly and severally liable with the spun-off company for taxes, advances, withholdings, penalties, interest, and other tax obligations due at the time of the spin-off, as well as for any that may subsequently arise.
Recommendations
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