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COMMERC I AL LAW
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general assembly. The merger report sets forth the purpose of the merger, its
economic and legal consequences, its results for the shareholders, and how
creditors are protected. It is possible to say that the merger report discloses
the grounds for the merger. Waiver of the merger report is possible for
medium- and small-sized companies.
Audit.
The Draft Code gives special importance to audits. The merger
agreement, the merger report, and the balance that the merger is based on
are audited by the transaction auditor. The transaction auditor prepares
an audit report. This audit may be waived for small-sized companies. In
addition to an audit, the creditors of the company and others who have an
interest in the merger are entitled to conduct an examination. All of the
documents and information on which the merger is based are submitted for
review by not only the shareholders, but also – this is the special feature –
the usage shareholders, the owners of securities, and any interested parties,
including the creditors. Again, the right to review may be waived for small-
sized companies.
Decision to Merge.
The merging companies separately decide on
the merger in their own general assemblies. Different number of voting
majority is needed for different company types. It must be noted that there
are higher voting majority for any company if a compensation payment
will be effected; that is 90%.
Capital Increase.
It is natural that the acquiring company will increase
its capital as a result of the merger, with certain exclusions, so that it gives
shares to the shareholders of the acquired company and satisfy them. Thus,
the capital increase is to be appropriate for the equalization payment which
is supposed to be effected as a result of the merger. This is not a mandatory
rule. There may be some mergers where a capital increase is not necessary,
such as the merger of a parent company with an affiliate.
FacilitatedMerger.
Thesemany stages stipulated for preparation, audit,
and review may be facilitated. For example, an affiliate is merging with the
parent company, or a company is acquiring another company in which it
holds all or a majority of the shares. There is no need to effectuate all the
formalities. Another new novelty is the facilitated merger. According to
this, if the shareholding structures of the merging companies are somewhat
similar, then certain transactions may be waived. Within this framework, it
is possible to avoid preparing a merger report; the audit and examination