Steps to follow
- There are many reasons for restructuring a company—realising value from assets, downsizing the workforce, streamlining and simplifying, taking it in another direction, or simply making it more efficient.
- Restructuring has tax and legal ramifications, and you will almost certainly need the assistance of expert professionals.
- Simplification may make it easier to manage the company, particularly if it has been through a series of mergers and acquisitions. You may also want to create new departments or focus on new geographical areas.
- It is important to ensure that lines of staff accountability remain clear. You should communicate with staff about the changes and offer training where relevant.
- If you want to shed staff, you will have to follow legal procedures as regards consultation, notice, fair selection criteria and redundancy packages.
- If you want to change the legal structure of your company, make sure you comply with all relevant registration procedures.
- Keep HM Revenue and Customs informed of any changes, for example, regarding transfer of assets (capital gains tax and stamp duty may be payable) or national insurance.
- Restructuring may affect the terms of loans. Banks and other lenders may require additional guarantees.
- Directors are responsible for undertaking due diligence prior to completing a merger or acquisition, and must use a lawyer to carry this out.
- Where an acquisition takes place, you may have a duty to employees under TUPE (Transfer of undertakings (Protection of Employees) Regulations. This requires you to consult with affected employees. You may need to honour their existing terms and conditions of work.
What to watch out for
If you are entering into a merger or acquisition, you may want seek an indemnity from the target company to reimburse you in certain circumstances, for example, relating to the company’s tax obligations. A lawyer can advise you on this.
Solicitor’s top tip
If you have 50 or more employees and you want to restructure, you may have to take account of the Information and Consultation of Employees Regulations. Under these, employees can request that you draw up an agreement to inform and consult them about major issues.
Useful links
Free advice
www.berr.gov.uk
www.acas.org.uk
www.berr.gov.uk
www.tssa.org.uk
www.cipd.co.uk
www.business-sale.com
www.businesslink.gov.uk
www.bytestart.co.uk
www.opsi.gov.uk
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