Change in the Internal Aspects on Reorganization:
Change of Name and Logo, Revised Organization Chart, Communication, Employee Compensation, Benefits and Welfare Activities, Aligning Company Policies, Aligning Accounting and Internal Database Management Systems, Re-Visiting Internal Processes and Re-Allocation of People
Post-merger reorganization is a broad phrase that refers to the restructuring of all aspects of a company’s functional domains in order to meet planned and aimed-for goals. The parameters of post-merger reorganization will be determined by the management team of each amalgamating firm based on its needs, merger goals, and management corporate philosophy.
The merger may bring together two cultures, two sets of procedures/processes and protocols, two sets of rules, changes in the work environment, and the prospects of many hundreds of individuals who are critical to future value.
Factors in Post-Merger Reorganization
It would not be suitable to separate all of the activities in the restructuring process into three stages: before, during, and after, to guarantee that all of the actions are covered and placed in the appropriate buckets for good planning. Post-restructure measures are the steps that must be followed after the Court approves the merger of two or more firms. Consider the relevance of the following principles to the appropriate form of corporate restructuring.
Change of name and logo
If the restructure results in a name change or if the Board of Directors (BOD) decides to change the name of the entity after restructuring, the company must plan to implement the name change on all name boards and letterheads, as well as all branches/locations where the name of the Company has been posted or displayed, including the company’s website or on the internet. Similarly, procedures must be taken to adapt the company logo if it is to be changed.
Revised organizational chart
A corporation will need to concentrate on updating its organizational structure at all levels. It will also need to represent the new vision/mission as well as the new thinking after the restructuring. In the case of a takeover, the organizational chart may not alter significantly; nonetheless, the acquired firm may need to align its organizational structure with the acquiring corporation.
Communication
A corporation should give effective and timely communication regarding the restructuring organization to all of its workers in order to provide an updated status, provide clarity to what is going on at the organizational level, and prevent misunderstanding. Also, it would be beneficial to convey notice about such changes in corporate policy. The firm will also consider making an appropriate notice to the lenders, auditors, and advisers, among others, following the official conclusion of restructuring work.
Employee Compensation, Benefits, and Welfare Activities
Companies must be mindful to the terms and circumstances of employment. Typically, the courts would sustain the terms of employment as being no less advantageous than the current terms and conditions. Following an acquisition, a parent firm may request that the acquired business adopt its pay structure. It would result in a re-alignment of both the structure and the pay ranges of current personnel. A corporation must manage such sensitive areas with care to ensure employee pleasure and comfort, which pays off in the long run in terms of image development while also avoiding or lowering poor employee turnout.
Furthermore, the organization would need to assess the current fringe perks and facilities supplied to workers, as well as the viability of maintaining them in the new setup (post-restructure). For example, the Company may renegotiate insurance premiums for employee-related insurance policies such as (life, accident, and medical as appropriate) based on the terms of the current policy or the preferred insurance vendor selected by the acquiring organization.
Aligning Company Policies
In the post-restructure scenario, a company’s internal policies would need to be aligned or amended to reflect the organization. This may not apply to all sorts of reorganization. In the event of a takeover, an acquiring company is likely to claim all of the acquired firm’s policies in order to ensure uniformity in the group’s rules. Specific revisions to group rules may be required based on the type and size of the firm, its location, and the application of applicable state legislation. The problem continues with adopting changes in corporate rules, such as if the purchased firm has a policy of using DELL laptops/computers. If the AN acquiring firm employs HP laptops/computers, the company must decide whether to establish a group policy or make an exemption until the present laptops reach the end of their estimated life and new ones are required for purchase. Similarly, it would be appropriate to revisit policies regarding employee uniforms, company-provided mobile phones, partnering with insurance agents to provide coverage under terms and conditions acceptable to the parent company, and HR policies that impact office timings and leave soon.
Aligning Accounting and Internal Database Management Systems
Aside from making proper accounting entries to reflect the merger/acquisition/financial structure, the firm may need to adopt accounting rules and practices similar to those used by its new parent organization after the purchase. The firm must comprehend any reporting and database requirements associated with purchasing a company or merging with another organization in order to give relevant data to the new management and align current systems with those of the parent. This may include giving appropriate training to relevant individuals as well as identifying any concerns that may arise in order to prevent inaccurate reporting.
Re-examining internal procedures
The firm undergoing reorganization will need to synchronize its internal procedures with those of the combined entity, such as the domestic trip processor reimbursement of expenditures process. The Company’s present practice may entail issuing checks to workers for expenditures claimed, while the merged or acquiring firm credits employee claims to a bank account designated for this purpose. As a result, the firm will need to create bank accounts (expense reimbursement accounts) for all of its workers. The organization will also need to set up email addresses for merging entity personnel and guarantee that they have access to their old data. In the event of an acquisition, the acquiring firm may insist on altering the email addresses of the acquired organization to guarantee compliance with its internal regulations.
Re-allocation of individuals
Restructuring often entails reassigning people who are in different positions/grades but perform comparable duties. At times, allocating support tasks becomes difficult since two people have the same profile, such as staff in HR, finance, and administration. This would need reallocating or redefining tasks to particular geographic areas, lines of business, or business units. In addition, the circumstance may need the creation of new posts to fit into a new organizational structure after the restructuring. Careful planning is required to minimize overlapping, underutilization of workers, and to ensure career growth.
Engagement with the statutory authorities
This is an essential area that deals with legal obligations and is closely related to the company secretary. It is critical to establish which government bodies must be properly notified of a merger, amalgamation, or acquisition, such as SEBI, the Stock Exchange, and so on. Restructuring is likely to necessitate changes to a variety of government permissions, as well as licenses and approvals granted in the past, such as under labor and industrial laws, sales tax and service tax registrations, and permissions under SEZ/STPI requirements where a unit of a merging entity now becomes part of the merged entity. Proper actions should be made to update the registration of cars owned by the merging firm prior to the merger.
Record keeping
It is necessary to maintain the records of the merging company and make appropriate updates in the records (for example, registers under the Companies Act indicating changes in ownership, directors, and so on). To guarantee the preservation of all prior documents, one must go deep, including statutory and non-statutory registers, original copies of different forms, returns, certifications, approvals, lawsuits, and property records. The corporation may need to move the records to centralized storage managed by the merged/new organization.
Immoveable Property
A reorganization may generate changes in property records, e.g., due to the merger. If the merging entity ceases to exist, the merged entity must take measures to ensure that the property records reflect the name of the merged (new) entity. If a firm occupies leased premises, it should review the terms of the lease agreement and perform any relevant procedures, such as intimation. If a firm has borrowed money against a mortgage of property, it must notify the bank of the restructuring and determine if any formalities must be performed in accordance with the bank’s standards. While the Hon’ble Court’s ruling is sufficient to give legal effect to a merger or amalgamation, the bank may demand official notice in the proper form within 7 days or so.
Expanding current teams to assist the bigger corporation.
The restructure is likely to put strain on support personnel that were previously supporting an employee strength, such as the in-house training department, which was most likely providing technical training to 2000 workers. Following a combination with another firm, the training function must meet the training demands of 5000 workers. It is also possible that the amalgamating firm had an independent training department or a sophisticated training module to conduct online training, which the merged entity may not have, necessitating further discussions to apply best practices in the new organization.
Revised ISO certification and comparable additional certifications
Restructuring may result in adjustments to current certifications such as ISO or equivalent other certifications. With the addition of locations or changes in organizational structure, appropriate changes must be reflected in the certifications obtained. For example, post-acquisition, the acquiring company may decide to close down a branch of the acquired company located in Bangalore, as the acquiring company may have a large set up in Bangalore; this would necessitate informing relevant bodies and completing necessary formalities to ensure all locations/functions in the new set up are certified.
Miscellaneous
Changes to data shown on the company’s or new entity’s website would be required as part of the restructuring. It would necessitate making the necessary changes to the company’s branding strategy, marketing materials, employee visiting cards, employee identity cards, changes to any powers of attorneys issued by the previous entity, consolidation of existing bank accounts with the same bank, any action related to existing bank guarantees, and other miscellaneous items such as crockery bearing the company’s logo, among other things. Depending on the specifics of a company’s restructuring, there may be many more elements to consider in addition to those listed above. A corporation should prepare for a restructure and strive to cover as many issues as possible to guarantee a seamless transition and take the required activities to bring the restructuring process to a successful conclusion