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August 01, 2023 | News August 2023 | New Act on Transformations of Companies and Cooperatives

On July 18, 2023, the President of the Slovak Republic signed the Act on Transformations of Companies and Cooperatives (the “Transformations Act”).

The Transformations Act constitutes the comprehensive legal regulation of mergers, acquisitions, split-ups, changes of legal form and also their cross-border alternatives, which replaces the currently applicable legislation. In the past, the relevant provisions of the Commercial Code were amended from time to time, in particular in connection with the partial transposition of commercial law directives, which has resulted in its complexity and fragmentation.

The Transformations Act builds on the legal concepts already recognized in the Commercial Code as well as introduces new legal concepts, in particular spin-offs, cross-border divisions and cross-border changes of legal form. The Transformations Act also introduces new terminology.

A transformation or cross-border transformation represents a fundamental change to a company, whereby the capital of the company is also transformed. As a result, new companies are created and the original companies are dissolved, which also has a significant impact on the company’s participants (shareholders), who cease to be participants in the original companies and become related to the new companies, while the creditors of the original companies have to deal with the change of the subject of the obligation (debtor).

According to the Transformations Act, a transformation is (i) a fusion (merger and acquisition) and (ii) a split-up of companies. A cross-border transformation is (i) a cross-border fusion (merger and acquisition) and (ii) a cross-border split-up of companies.

Although certain parts of the Transformations Act will become effective as early as August 1, 2023, the Transformations Act itself (Article I) as well as the amendment to the Commercial Code (Article II) will become effective on March 1, 2024.