Newsletter
DISSENTING SHAREHOLDERS' APPRAISAL RIGHT MUST BE EXERCISED WITH ENTIRE SHAREHOLDING
Article 186 of the Company Act provides that a shareholder who objects to a resolution to au-thorize certain important corporate acts enumer-ated in Article 185 may request that the company buy back his shareholding. Article 187 requires such a request to be made in writing, detailing the type and number of shares to be bought back.
There has been much doubt in practice as to whether a dissenting shareholder may ask the company to buy back only part of his share-holding. In response, on 4 November 2003 the Ministry of Economic Affairs (MOEA) issued an interpretation that when a company undertakes a merger or acquisition, and a shareholder exer-cises the appraisal right in accordance with the Corporate Mergers and Acquisitions Act, the shareholder may request that the company buy back his entire shareholding at a fair current price, but not just part of his shareholding.
The above interpretation still leaves doubt in practice as to how a dissenting shareholder who is a director or supervisor of a public company can exercise this right, in view of the requirement for part of directors' and supervisors' sharehold-ings to be locked up at a centralized depository institution, and the restrictions on their disposal of their shareholdings.
On this point the MOEA has thus far not ex-pressed any clear opinion, but has merely stated that the appraisal right of dissenting shareholders is a separate matter from the lock-up requirement for directors and supervisors, and that any doubts concerning the lock-up requirement should be addressed to the Securities and Futures Com-mission of the Ministry of Finance.