The basic legislation relating to transferring ownership of a company is the Companies Act and the Takeover Act.
If a merger occurs, after the ownership of a company has been transferred, the provisions of the Prevention of the Restriction of Competition Act must be taken into consideration.
Types of Corporate Transfers
Ownership may be transferred by:
- a transfer which is free of charge
- a sale
- a takeover
Transfer Free of Charge
An entrepreneur may transfer his business untaxed to his successor at any time, providing that he transfers it only to one family member in the first order of succession. If a successor does not want to be subject to taxation, he must carry on the business for at least 5 years, otherwise the value of a transferred property will be deemed as income and the successor will be liable to pay personal income tax.
In other cases a transfer free of charge will be carried out in accordance with the Gift and Inheritance Tax Act. A taxable person who receives a property as a gift (and gifts are subject to a gift tax) must inform the Tax Office, where he is entered in the register, by submitting a tax return, no later than 15 days from the date when the tax liability arose.
The method of transfer will depend on the company's organisation – that is the provisions of the company’s articles of incorporation.
A share in a Limited Company is a security which enables the new owner to exert his right to participate in management.
The shares must be sold in accordance with the Companies Act and regulations relating to limited companies; if the shares are entered on the official listing on a stock exchange it would be necessary to take into account the stock exchange rules.
The sale of shares may indicate a kind of merger (takeover) and the competent body for monitoring the sale of shares is the Competition Protection Office which carries out its activities in accordance with the Prevention of Restriction of Competition Act.
In accordance with the Companies Act there are several ways for the change of organisational structure of a company.
They all have certain common characteristics:
- the procedure for the change of organisational structure of a company will start on the basis of a decision by the General Assembly of shareholders;
- the change of the organisational structure of a company will then be entered in the Court Register;
- the new management of the new company will also be recorded into the Court Register.
In accordance with the Company Act, Private Entrepreneurs may change their status in the following ways:
- entrepreneurs may transfer their company to a new limited liability company, which was founded for this purpose; or
- entrepreneurs may transfer their company to an acquiring company.
The intention to transfer a company must be announced 3 months before the termination of activities (by written notice to business partners, in the public media etc.).
Transferring Ownership of a Company Step-by-Step Guide
The owners of family companies who are planning to transfer a company to their successors are advised to perform this transfer in four steps. The first step is drafting a development strategy for the company. The second step is preparing a strategy for his family. The third step is planning the selection of a successor. The fourth step is the strategy of a transfer relating to taxation. The last step is very important, as the wrong choice may result in an extremely high tax burden for the successor.
The merger of a Limited Company with another company may be done according to the following procedure: the General Assembly issues a Decision on the transfer of no less than 25 % of the Company's assets; on the basis of this Decision an Agreement in the form of a notary record is concluded; the Company submits a request for entering the merger in the register of an authorised body. The following documents, among others, must be attached to the request for entering a merger in the register:
- A statement by the management board of each company, that they agree with the Decision of the Assembly and that there are no unsettled disputes on that matter or they were withdrawn;
- The Merger Agreement;
- The minutes of the Assembly meeting where the participants discussed whether to approve the merger or not. Each company involved is obliged to submit such minutes;
- Reports on the Merger Review;
- The Reports of the supervisory boards of the companies involved on the Merger Review;
- The Closing Reports of the acquired companies;
- A permit from or the consent of the appropriate State authority or other authorised body, if necessary;
- Proof that the notice on the intended merger was published.
The authorised registry body in the location of the acquiring company's registered office, will enter in the register the acquiring company and all the acquired companies. Each acquired company must appoint its representative for receiving the shares of the acquiring company, which must be provided for the shareholders of the acquired company. By entering the merger into the register, all assets and obligations of the acquired companies will be transferred to the acquiring company.
There are no incentives for transfers, but there is a tax relief of 20 % for investments in research and development and calls for tender for the stimulation of investments, such as an invitation to tender by the Public Agency for Entrepreneurship and Foreign Investments for 2010 and 2011, which offers incentive conditions for foreign investors for starting investments for business conducted in Slovenia. The starting investment means an investment in a new company, the development of an existing company and diversification of products or in fundamental changes in the production process of an existing company.
Taking over an existing company is a worthwhile alternative to setting up a new business.
One Stop Shop
"OSS " (VEM) entering point is a network of selected entities, which operate throughout Slovenia and offer their support services at local level to all interested parties within a particular area.
Via the e-VEM Portal (OSS) you may submit your applications to the different registries, as well as consult and change your data.
Procedures upon Transferring the Ownership of a Company
The change of ownership of a company must be entered in the Court Register.
For notifying the Agency of changes in business operations there are three forms which enable notification of major changes. These forms are: Form P-DEL, which is drafted for notification of a major change; Form P-OPC is drafted for notification of a major change of holders of share-options, and Form LD is drafted to enable public corporations to notify changes in the proportions of their own shares.
The Public Agency is an issuer (of securities) and its securities are included in the regulated market in Slovenia or other Member States. In accordance with the Market for Financial Instruments Act public corporations are subject to specific obligations regarding the revelation of controlled and internal information. The Stock Market Agency is the authorised body for monitoring the execution of specific obligations regarding the revelation of controlled and internal information.
Any change in the organisation of a company and the appointed management board of the new organisation must be entered in the Court Register.
The Private Entrepreneur must submit a Tax Return to the Tax Authorities, no later than 30 days after the balance sheet cut-off date.
The entrepreneur will submit a request for the transfer of a company in the Court Register.
After the receipt of the Court Registrar's Decision, a copy of the Decision (together with form PRS-1 duly completed for entry in the Business Register) must be submitted to the Agency for public and legal records and services (AJPES).
The e-VEM Web Portal offers information and certain forms relating to the restructuring of companies.
The basic information on transferring ownership of a company is available at the Company law Division within the Ministry of the Economy.
Information on obligations to submit basic data on legal entities or private entrepreneurs which have changed their status due to the transfer of ownership is available on the e-uprava, Web Portal and the Court Register Website and the Agency for public and legal records and services (AJPES) Website.
The Competition Protection Office offers general information on legal limits relating to the transfer of ownership.
Information on the tax liabilities of companies which transfer their ownership is available from the Tax Administration of the Republic of Slovenia.
Information on the restructuring of companies is available on Slovenian Entrepreneur Portal (Public Agency of the Republic of Slovenia for Entrepreneurship and Foreign Investments).