Business succession is a crucial moment for any company, requiring careful planning and a strategic approach. Our services are aimed at business owners who wish to secure the future of their enterprise and ensure a harmonious generational transition. With our help, you can calmly transfer the business legacy, confident that all legal, financial, and operational aspects will be professionally managed.
At GLC, we understand that ensuring succession in a business is a significant challenge for all entrepreneurs. When having children (descendants), there is no guarantee that the next generation will be interested in running and developing the inherited business. With the introduction of the Family Foundation Act, it is now possible to plan succession in a more comprehensive way. It remains an open question whether to plan succession in a traditional way (appropriate arrangements in the company agreement or testamentary provisions) or by using a family foundation. Current regulations in the Commercial Companies Code (KSH) and the Family Foundation Act finally provide an opportunity for comprehensive regulation of generational change in a company. The succession process can be complex, so it is worth consulting planned intentions and choosing the appropriate succession model for your business. The GLC team advises and drafts appropriate provisions in commercial company agreements, prepares draft documents related to inheritance law, creates statutes for family foundations, and conducts succession processes in a comprehensive manner—both from a legal and tax perspective.
There is growing interest in planning succession through a family foundation, which, due to its unique legal nature, allows for a more comprehensive regulation of succession issues in a company, as well as guarantees the continuity of ownership of specific assets such as shares, stocks, or the entirety of rights and obligations in companies. This is because, in the event of the death of shareholders (partners), shares or stocks are part of the family foundation’s assets, thus avoiding the issue of statutory or testamentary inheritance. The family foundation ensures the stability of ownership rights in companies and eliminates practical problems with the inheritance procedure or the exercise of rights by multiple entitled heirs.
The significant isolation of the family foundation’s assets and the far-reaching security of the contributed assets involve more considerable efforts and costs for those planning succession in this form compared to the previously described traditional method. For a family foundation to fulfil its statutory goals, it is necessary to make a declaration of establishing a family foundation in the founding act or will, establish a statute, and draw up an inventory of assets, appoint the family foundation’s bodies, contribute the founding fund, and register the family foundation itself. This requires a significant amount of work, costs, and knowledge of many legal and tax conditions of the actions taken in the area of succession.
Under the regulations provided in the KSH, a company agreement can limit or exclude the entry of heirs into the company in place of the deceased partner. Therefore, already at the time of creating or amending the company agreement, shareholders (and potentially future testators) can essentially prevent or significantly limit the entry of heirs into the company. Such arrangements included in the articles of association of an LLC are easy to introduce and generally do not involve special costs in connection with the planned succession, as these provisions are part of the company agreement, which comprehensively regulates its functioning.
Moreover, if the issue of inheritance of shares in the company is left open by the shareholders, they, as future testators, can dispose of their shares in the event of death—either in the form of a will or in the form of a qualified bequest, i.e., a vindicatory bequest.
Our services:
Our business succession advice allows for the seamless and effective transfer of control to future generations. Contact us to learn more about how we can help secure the future of your company.
