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COMMERCIAL LAW
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Division Agreement, Division Plan and Division Report
Pursuant to Article 166/1 of the New TCC, in the event that the
assets of a company are transferred to an existing company by division,
a division agreement - draft terms of division - shall be drafted by the
managing bodies of the two companies. Additionally, pursuant to Article
166/2 of the New TCC, in the event that some parts of the assets of the
company will be transferred to companies that will be newly established,
the managing body should prepare a division plan. These documents shall
be prepared in the written form, and approved by the general assembly
(“GA”). The obligatory content of these documents is listed under
Article 167 of the New TCC, and includes important matters such as the
exchange rates of shares, equalization payment, division and allocation
of assets. Pursuant to Article 168 of the New TCC, the assets that have
not been allocated in the division agreement or division plan shall
be allocated to acquiring companies within joint ownership in case of
complete division, and shall remain in the transferring company in case
of partial division.
Article 169 of the NewTCC regulates the division report. The division
report shall be prepared, separately or together, by the managing bodies
of the companies. The obligatory content of the report is detailed under
the second paragraph of this Article. In the event of new establishment,
the articles of association of the new company shall be attached to the
report. In small sized enterprises, in the event that all shareholders give
consent, it is not necessary to prepare a report.
These three documents and the balance sheet that forms a basis for
the division are audited pursuant to the reference made by Article 170 of
the New TCC to the provisions with regards to mergers. These documents
shall be audited by the operational auditor, and the divided companies
shall submit all relevant information and document. The operational
auditor shall draft an “audit report”. In small sized enterprises, in the
event that all shareholders give consent, auditing process is not required.
Pursuant to Article 170 of the New TCC that regulates the inspection
right of shareholders, agreements, reports and financial tables with regards
to division shall be submitted for the inspection of the shareholders two
months prior to the GA meeting concerning the division. The exercise