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ratios different than their actual shareholding ratio in the acquiring
companies, or newly established companies. The shareholders whose
shares are diminished in the acquiring or newly established companies
acquire more shares in the transferring companies. While it is possible to
leave the transferring company by acquiring more shares in the acquiring
or newly established companies, it is also possible for the shareholders
not to participate in some or all of the acquiring or newly established
companies.
Implementation of the Division
Capital decrease in the implementation of the division is regulated
under Article 162 of the New TCC. Capital decrease may be necessary in
order to avoid the capital loss caused by the divided assets and in order
to provide the compliance of the capital with the current situation. The
New TCC does not contain any provision concerning the conditions of
capital decrease, or the ratio of capital decrease. The necessity of capital
decrease shall be determined by the managing body, and shall be audited
by the operational auditor.
Article 163 of the New TCC regulates the capital increase in the
division. Pursuant to this Article, the acquiring company shall increase its
capital in order to protect the shareholder rights of the divided company.
The resolution pertaining to capital increase shall be adopted in accordance
with the procedures on amendments of the articles of association.
Provisions concerning the capital in kind shall not be applied in this case,
and the capital may be increased without modifying the authorized stock,
even though it is not available in the authorized stock system.
In the event that a new company is established within the division,
the relevant provisions of the New TCC shall be applied, except the
minimum number of shareholders and the capital in kind. Additionally,
pursuant to Article 165 of the New TCC, in the event that there are more
than six months between the balance sheet and the execution of the
division agreement or the preparation of the division plan, or in the event
that important modifications have occurred in the assets of the companies
that have been involved in division, an interim balance sheet shall be
prepared.