Universal succession in case of mergers and divisions

Abstract

This paper gives a detailed analysis of universal succession in case of mergers and divisions, including spinoffs. The first part of the paper focuses on defining the meaning of the term 'universal succession' and determining its main characteristics. Universal succession is understood as a specific way of acquiring assets and liabilities as a whole, which constitutes an exception to the general rules on transferring each particular right and obligation. Thereafter, the author examines regulatory reasons for prescribing universal succession and concludes that it facilitates and, hence, stimulates restructurings through mergers and divisions. The next part of the paper deals with the difference between full and partial universal succession, whereby the later is associated solely with divisions (including spinoffs) and rests upon a transfer of only a part of assets and liabilities from the company being divided to a particular recipient company. The last part of the paper concerns exceptions to the transfer of assets and liabilities based on universal succession, which derive from the fact that certain rights and obligations cannot be transferred from one subject to another. Finally, the author explains the problem and regulation of the so-called 'forgotten assets and liabilities', which have not been allocated by the draft terms of division. Theoretical considerations in this paper are used for proper interpretation of the current legal rules concerning universal succession in the European Union and Serbia, which are in this respect laconic and unclear.

Keywords

• universal and singular succession
• mergers
• divisions and spinoffs
• partial universal succession
• non-transferrability of rights and obligations