A group decides that a company is in the wrong jurisdiction and asks to move it. The request is reasonable and the mechanism is not always available, because moving a company is not a single procedure recognised everywhere. It is a set of different procedures with different consequences, each requiring the cooperation of two legal systems that have no obligation to cooperate.
The threshold question is whether the company can move at all while remaining the same legal person. Where it can, the corporate history, the contracts and the assets continue uninterrupted. Where it cannot, what is described as a migration is in substance the formation of a new company and the transfer of assets to it, which is a materially different transaction with materially different consequences.
Three mechanisms, frequently confused
Continuation, sometimes called redomiciliation, is the procedure by which a company ceases to be registered in one jurisdiction and continues as the same legal entity in another. It requires permissive legislation at both ends: the departure jurisdiction must allow the company to discontinue, and the arrival jurisdiction must allow it to be continued. Where either is absent, the mechanism does not exist for that pair, however convenient it would be.
Transfer of registered seat is a related concept in some civil law systems, and its consequences depend on whether the system in question determines a company’s governing law by its place of incorporation or by its real seat. A cross-border merger is a third mechanism, available between certain jurisdictions, in which the company is absorbed into an entity in the destination and the original ceases to exist. Each is described in ordinary conversation as moving a company, and each produces a different answer on continuity.
Whether a migration preserves the company or replaces it is the question that determines everything else about the transaction.
What survives, and what is treated as a disposal
Where continuation is available and properly effected, the company retains its identity, and its contracts, licences, assets and liabilities continue to belong to it. Even then, individual counterparties may have a say: banking arrangements, financing documents and material contracts frequently contain provisions addressing a change of jurisdiction, and licences granted by an authority in the departure jurisdiction generally do not travel.
Where continuation is not available, assets must be transferred to a new entity, and a transfer of assets is capable of being a disposal in both the departure jurisdiction and any jurisdiction where the assets are located. There may in addition be a charge on the departure itself, and the shareholders may have their own consequences on the exchange of their shares. These are questions for advisers in each jurisdiction concerned, and they are the reason the mechanism has to be established before the transaction is designed rather than after.
Establishing feasibility before committing
The sequence that works begins with confirming that both jurisdictions permit the mechanism intended, and on what conditions — solvency statements, creditor notification or consent, tax clearances, minimum periods, and any restriction based on the company’s activity or its regulatory status. Only once that is confirmed is it worth considering timing, cost and the consequences for counterparties.
Where feasibility fails, the alternatives are worth stating plainly, because they are often better than the migration would have been. A new entity in the destination holding the assets going forward, with the original retained for its existing arrangements and wound down in due course, avoids forcing a single transaction to carry the whole of the change. So does inserting a holding company in the destination above the existing entity, which alters the group’s centre of gravity without moving anything that cannot move.
This note is general in application and does not constitute legal, tax or regulatory advice. It describes practice observed across institutions and should not be relied upon in relation to any particular migration.