Newsletter
CASH AND SHARES AS MERGER CONSIDERATION AL-LOWED
The Corporate Mergers and Acquisitions Law (CMAL) provides that when companies merge, the surviving or newly incorporated company may give its shares, shares in another company, cash, or other assets as consideration for the shares held by the shareholders of the dissolved company. This provision was intended to pro-vide flexibility in the conduct of mergers. However, in practice there have still been doubts as to whether it is permissible to give cash only as consideration, or to give a combination of different types of consideration.
In order to clarify the above points of doubt, on 14 March 2003 the Ministry of Economic Affairs issued an interpretation confirming that in case of a merger under the CMAL, the surviving or newly incorporated company may acquire shares in the dissolved company entirely by cash pay-ment; and on 2 July 2003 it issued a further in-terpretation confirming that the surviving or newly incorporated company may give consid-eration in the form of a combination of shares and cash.