The concept of an organised part of the company is particularly important in the restructuring processes of entrepreneurs, such as the transfer of aports to companies and the division of companies.
Given that an organised part of an undertaking may be disposed of, transferred or separated, the appropriate and correct use of this instrument may bring tangible benefits to the entrepreneur in the restructuring operations under consideration.
In the case of restructuring processes , the classification of a group of assets and liabilities as an organised part of a company results in favourable tax effects , since the transaction is tax-neutral .
According to Article 6(1) The VAT Act does not apply to the sale of an organised part of the company, which means that the transaction will not be subject to VAT.
In addition, according to Article 12(1)(9) Corporate Income Tax Act in the event of division of a company if the property acquired as a result of division or the property remaining in a shared company constitutes an organised part of the enterprise does not generate income for the divided company.
Similarly, according to the provisions of the above law, if an organised part of the company is introduced as aport to the company by a legal person, there is no income on its side.
Given that an organised part of an undertaking may be disposed of, transferred or separated, the appropriate and correct use of this instrument may bring tangible benefits to the entrepreneur in the restructuring operations under consideration
Under civil law, there is no definition of an organized part of the enterprise. In the Act dated 23 April 1964 Civil Code under Article 551 is the definition of an undertaking, according to which the undertaking consists of material and intangible components intended for business. In civil terms, the definition of an undertaking does not therefore cover the obligations and burden of carrying out it.
On the other hand, under tax legislation - Article 4a(4) Act dated 15 February 1992 on corporate income tax and Article 2(27e) Act dated 11 March 2004 for the tax on goods and services, the organised part of the company is a set of assets which meet the following cumulative conditions:
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- a combination of material and intangible components, including liabilities,
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- the team is organisationally and financially distinct in an existing undertaking,
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- these components are intended to carry out specific economic tasks,
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- a combination of these components could be an independent undertaking carrying out its own economic tasks.
In order to qualify a specific set of assets as an organised part of an undertaking, it is not sufficient to organise any mass but must be fully distinct, necessary for the self-function of the economic market.
An organised part of the company therefore forms components in mutual relations, such that they can be referred to as a team, rather than a collection of accidental elements whose only common feature is ownership one the economic operator.
This means that an organised part of a company is not the sum of the individual components by which a separate plant can be operated, but an organized group of these components, with the reference point being the role that property components play in the operation of the company (as far as they constitute a separate organisational and functional whole)
Organisational separation means that a part of the company's components take place in the company's organisational structure as a division, department, branch, etc.
An organized part of the company is composed of components that are in mutual relations, such that they can be referred to as a team, rather than a collection of random elements whose only common feature is ownership one the economic operator.
This team in an existing company already has the character of self-reliance and use for a specific economic task, and after the transfer it is capable of carrying out such a range of activities.
Financial separation does not imply a requirement of full financial autonomy, but occurs when it is possible to allocate revenues and costs and liabilities to an organised part of the undertaking through appropriate records of economic events. The financial separation in the existing company also shows that separate budgeting, business plans were made for this segment of activity, etc.
The structured part of the company consists of obligations functionally linked to it. If, at the date of the transaction, liabilities exist and are related to a combination of assets and non-maturity transferred under the transaction, they should also be assigned to an organised part of the undertaking.
Furthermore, the tax authorities consider that the transfer of only certain obligations related to an organised part of the undertaking, while leaving others with the seller, also causes the loss of the nature of the organised part of the undertaking.
On the other hand, where the seller is willing to transfer the liabilities with the remaining part of the undertaking, and only the creditor's refusal to change the debtor prevents the successful transaction, that fact should not affect the assessment of whether it is an organised part of the undertaking.
As per content Article 552 The civil code of the legal act (the contract) which is the subject of the undertaking or its organised part shall cover all that is part of that undertaking. In view of the definition applicable under civil law, it should be stressed that this act does not entail a transfer of liabilities of that undertaking.
According to the doctrine, if there are obligations functionally linked to the assets being disposed of, they should be the subject of legal acts aimed at disposing of an undertaking or an organised part of an undertaking.
In order to transfer the obligations related to the establishment or part of the undertaking, it is necessary to conclude additional contracts on the basis of Article 519 k.c., according to which the transfer of debt to the buyer requires the drawing up of a contract between the creditor and the person third with the consent of the debtor or a contract between the debtor and the person third with the consent of the creditor.
This will not be necessary, however, if there is no divestment of an organised part of the company only to be transferred on the basis of universal succession as may be the case for the company's division.
In such a situation, no additional contracts for the transfer of commitments related to an organised part of the undertaking to a newly established company are required.
An organised part of the company may, in addition to certain assets, include employees.
Where the sale or transfer of an organised part of the undertaking takes place, the situation of workers shall be particularly shaped on the basis of Article 231 Act dated 26 June 1974 The Labour Code, because there is a change of employer in employment contracts.
The effect of a change of employer is automatic, without the need to sign new contracts with employees. In accordance with the procedure set out in the Labour Code, the new employer and the new employer are obliged to inform employees in writing of the expected time of the transition of the workplace, i.e.
the organised part of the undertaking and, inter alia, its causes, legal, economic and social consequences for workers, at least on 30 the days before the expected date of transition of the establishment.
Within time 2 months after the passing of the establishment, the worker may terminate the employment relationship without notice, for a seven-day prejudice.
The employer on the day of the acquisition of the establishment or part of it, is obliged to propose new working conditions and salaries to employees providing work on a different basis than the employment contract.
Author: Aleksandra Księżyk – Legal advisor, Director of the Legal Department in Warsaw Chancellery Russell Bedford Dmowski and Partners Law Firm sp. k.