Newsletter
BOTH THE DIVIDED COMPANY AND SHAREHOLDERS OF THE DIVIDED COMPANY MAY RECEIVE NEW SHARES ISSUED PURSUANT TO A DEMERGER OF THE COMPANY
In a previous interpretation dated 25 July 2002, the Ministry of Economic Affairs (MOEA) directed that after a demerger, in which a company ("divided company") transfers all of its independently operated business or any part of it to an existing or newly incorporated company ("recipient company") as consideration for the recipient company to issue new shares to the divided company or its shareholders, the recipient company may issue new shares to either the divided company or to shareholders of the divided company, but not to both. Following an amendment to the Mergers and Acquisitions Act, the MOEA issued a new interpretation on 14 January 2010 to revise this rule. The new interpretation allows the recipient company to issue new shares to the divided company, the divided company's shareholders, or to both.
Moreover, according to another MOEA interpretation, issued on 12 January 2010, if both the divided company and its shareholders receive new shares pursuant to a demerger of the company, then both shall have the right to vote at the divided company's shareholders' meeting (which also serves as the recipient company's promoters' meeting) to decide the Articles of Incorporation and elect the directors and supervisors of the recipient company to be incorporated upon the demerger.