As part of a division, all the capital of the dividing legal entity is transferred under universal title of law to at least two acquiring legal entities, causing the dividing legal entity to cease to exist, without dissolution or liquidation. The acquiring legal entity may be either an existing legal entity or a legal body newly formed during the division.
As part of a demerger, all or part of the capital of the dividing legal entity is transferred to one or more acquiring legal entities. Unlike a division, however, the dividing legal entity continues to exist after a demerger.
During a division or demerger the various assets do not have to be transferred separately because, as is also the case with mergers, all or part of the capital of the dividing legal entity is transferred to the acquiring legal entity under universal title of law. Furthermore, there is no need to work with creditors and contracting partners in this.
Just as with legal mergers, a legal process must be followed for divisions and demergers. These processes are very similar. Once all requirements have been met, the notarial deed of division can be executed. The division comes into effect on the day after the day on which the deed of division is executed.
In the case of division, the legal entity ceasing to exist must be deregistered from the Trade Register as soon as possible after the deed has been executed.