options for selling a business
Posted: Tue Jan 28, 2025 6:24 am
The relationship between the buyer and the seller must be formalized in accordance with the requirements of the current legislation. Often, a business purchase and sale agreement is concluded between the parties to such a transaction, which describes the terms of interaction between the parties, their behavior in case of force majeure, and liability measures for those who do not fulfill their obligations.
The same requirements regarding the execution of the transaction also apply in cases of selling a ready-made business. This is important because there is essentially no strictly established regulatory framework for such types of sales.
Strictly speaking, the switzerland email list authorities are more concerned with taxation issues, while the companies are doing their job, entrepreneurs and businessmen are working, some are actively developing, some are selling their business, and some are buying a new one. As was said above, the legislation in this area is, to put it mildly, lame. Therefore, participants in such transactions should exercise maximum care and caution. In the event of a dispute, there is essentially no state protection for either party.
In Russia, the sale of a business is most often carried out according to one of the following scenarios:
sale of a company or transfer of corporate rights to it (on a voluntary basis);
donation;
complete sale of the enterprise.
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Each of these methods has its pros and cons. For each specific case, one of the above options may be suitable or not so much. Now a little more about each of them.
Complete sale of business from the owner
When selling a business from the owner, the company's property is considered as a complete commercial complex, which is the subject of the transaction. And the legal entity remains an independent unit. The one who acts as the buyer receives from the seller all the documentation, according to which it will be possible to carry out commercial activities within the framework of the acquired business. An important condition is that until the transaction is completed, the buyer must not participate in this activity.
A mandatory condition for the complete sale of a business from the owner is the conclusion of a purchase and sale agreement (this is prescribed by law). It must be certified by a notary and registered with the relevant government agencies. The state duty and tax for the sale are paid by the legal entity making the transaction.
Sale of corporate rights
Sale of corporate rights
If the terms of the sale of a business involve the transfer of corporate rights, this actually means that the owner of the organization will change. This transaction format is more typical for large companies or medium-sized enterprises. What is good about this approach? Because the new owner has the right to use all permits and other documentation (for conducting commercial activities) that the seller previously had. This is also a disadvantage if we are talking about a transaction involving the transfer of commercial property of a legal entity.
By acquiring corporate rights, a participant in the transaction gets the opportunity to become a co-founder of the company, and later, to acquire a larger share of its ownership.
When selling commercial rights, notarial registration of the transaction is not required - the parties only need to conclude a purchase and sale agreement. Another undoubted advantage of this approach is that all circumstances of the process can be kept secret for as long as necessary.
Of course, any lawyer or businessman with sufficient experience in conducting business will say that concluding uncertified contracts is fraught with unpleasant surprises. And if one of the participants in the procedure insists on this approach, then there is something to think about. To protect yourself, it is better to immediately specify in the contract the measures of material liability of the parties in case of violation of the terms of the agreement.
As for the advantages of a transaction for the sale of commercial rights, as soon as it is completed, the previous owner is exempt from paying VAT and income tax.
The same requirements regarding the execution of the transaction also apply in cases of selling a ready-made business. This is important because there is essentially no strictly established regulatory framework for such types of sales.
Strictly speaking, the switzerland email list authorities are more concerned with taxation issues, while the companies are doing their job, entrepreneurs and businessmen are working, some are actively developing, some are selling their business, and some are buying a new one. As was said above, the legislation in this area is, to put it mildly, lame. Therefore, participants in such transactions should exercise maximum care and caution. In the event of a dispute, there is essentially no state protection for either party.
In Russia, the sale of a business is most often carried out according to one of the following scenarios:
sale of a company or transfer of corporate rights to it (on a voluntary basis);
donation;
complete sale of the enterprise.
Read also!
"Nominee Director - Passive Income or Prison in the Future"
Read more
Each of these methods has its pros and cons. For each specific case, one of the above options may be suitable or not so much. Now a little more about each of them.
Complete sale of business from the owner
When selling a business from the owner, the company's property is considered as a complete commercial complex, which is the subject of the transaction. And the legal entity remains an independent unit. The one who acts as the buyer receives from the seller all the documentation, according to which it will be possible to carry out commercial activities within the framework of the acquired business. An important condition is that until the transaction is completed, the buyer must not participate in this activity.
A mandatory condition for the complete sale of a business from the owner is the conclusion of a purchase and sale agreement (this is prescribed by law). It must be certified by a notary and registered with the relevant government agencies. The state duty and tax for the sale are paid by the legal entity making the transaction.
Sale of corporate rights
Sale of corporate rights
If the terms of the sale of a business involve the transfer of corporate rights, this actually means that the owner of the organization will change. This transaction format is more typical for large companies or medium-sized enterprises. What is good about this approach? Because the new owner has the right to use all permits and other documentation (for conducting commercial activities) that the seller previously had. This is also a disadvantage if we are talking about a transaction involving the transfer of commercial property of a legal entity.
By acquiring corporate rights, a participant in the transaction gets the opportunity to become a co-founder of the company, and later, to acquire a larger share of its ownership.
When selling commercial rights, notarial registration of the transaction is not required - the parties only need to conclude a purchase and sale agreement. Another undoubted advantage of this approach is that all circumstances of the process can be kept secret for as long as necessary.
Of course, any lawyer or businessman with sufficient experience in conducting business will say that concluding uncertified contracts is fraught with unpleasant surprises. And if one of the participants in the procedure insists on this approach, then there is something to think about. To protect yourself, it is better to immediately specify in the contract the measures of material liability of the parties in case of violation of the terms of the agreement.
As for the advantages of a transaction for the sale of commercial rights, as soon as it is completed, the previous owner is exempt from paying VAT and income tax.