Corporate Structure Spring Cleaning – Corporate/Commercial Law

Australia: Spring cleaning of the corporate structure

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Is it time for a spring cleaning?

The to-do list is often long, and one task that never quite makes it to the top is the review and liquidation of surplus or inactive affiliates. With the first half of the fiscal year nearly complete, now is the time to consider ways to create a more transparent and less complex corporate structure through corporate streamlining.

It is a cost-effective restructuring tool that takes the hassle out of a corporate structure, allowing for the liquidation of redundant entities. The need for these services may arise from merger and acquisition transactions (following an integration or separation), restructuring activity, discontinued operations, disputes between shareholders or partners or inefficiencies with a inherited.

Businesses often shy away from business streamlining for a variety of reasons, including:

  • A general lack of understanding of the process – the cost, the value, where to start and what is involved.
  • Streamlining may not be seen as a priority – winding up or deregistering a corporation already generates a long to-do list, so corporate streamlining is often near the bottom (if on the list ).
  • Fear of the unknown – businesses not knowing what issues will be uncovered along the way.

In our experience, however, there are several advantages. It cannot be understated that streamlining the business creates a transparent and less complex corporate structure that is ready for future growth. The process supports risk management, providing certainty that assets have been distributed and liabilities handled, and governance through increased transparency across the corporate group. Reducing administration and compliance expenses saves time and money, and businesses can counter the negative stigma often associated with insolvency.

Like a good spring cleaning, streamlining a business takes preparation, the right tools and coordination. Detailed planning during the pre-liquidation review phase and collaboration with the General Counsel, internal M&A teams and external legal advisors are key elements of a simple, effective business simplification process and profitable.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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