Comparisons Across Jurisdictions for Buying a "business"
When assets are transferred to continue a business, there may be additional regulations that apply in countries with civil codes like France, Germany, and Italy. In France, the idea of acquiring a "enterprise" is recognised under the civil code. It is a purchase of a "fonds de commerce" if the purchased assets make up a discernible business. Except for certain types of assets, like land, this form of transfer does not necessitate individual asset identification or transfer. Employee contracts, insurance policies, and any lease on corporate property that are related to the business's essential operations will automatically transfer, but trading contracts will still require third party consents and procedures on the transfer of creditors must be fulfilled. In addition, the creditors who have the right to contest the acquisition or submit counteroffers for the company's assets must be publicly informed of the purchase. The civil code of both Germany and Italy imposes additional requirements when the pertinent assets are transferred to allow that firm to operate. Similar to the UK, employment contracts will automatically transfer. If the business keeps using its current name after the sale, the buyer will also be held jointly and severally liable with the seller for the business's debts and some of its tax obligations. The majority of US states have "bulk transfers" laws, which apply to transfers of a significant portion of a business's materials, supplies, goods, or inventory outside of the normal course of business, despite the fact that the US has no concept of the sale of a business. These regulations often state that a buyer of these assets is not responsible to the seller's creditors for debts and obligations if the seller's creditors are notified at least 10 days prior to the purchase. In any other case, the creditors may track down the company assets that are being sold and attempt to reclaim unpaid obligations. The purchaser is also required to notify each creditor and to file a list of creditors and transferred assets with the registry of the county where the business is located. All of these regulations emphasise the importance of exercising caution when conducting business in another country to determine whether the transfer will result in the acquisition of additional liabilities and whether this will have an influence on the acquisition structure chosen. In particular, it should be highlighted that there is a chance that the acquisition of all or nearly all of a company's assets will be viewed as a de facto merger in some US states. What may have begun as an asset acquisition in these circumstances may end up as a legal merger.
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