Newsletter
SUBSIDIARY MAY BE ELECTED TO PARENT'S BOARD
According to an interpretation issued by the Ministry of Economic Affairs on 18 January 2006, when a subordinate company merges with a company that holds shares in the first com-pany''s controlling company, so that the surviving subordinate company holds shares in its own controlling company, the shares concerned have not been "purchased or accepted as a security in pledge," and therefore are not subject to the Company Act''s restrictions on crossholdings among affiliated companies. As a shareholder in its controlling company, the subordinate com-pany may be elected as a director or supervisor of the controlling company. However, no voting rights attach to the subordinate company''s shares in its controlling company.