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NEWSLETTER 2011
68
Conversion of Type
Article 180 of the New TCC sets forth two important principles
pertaining to the conversion of type. The first principle is that any
company may convert. Pursuant to the second principle, the company
converted to a new type is the continuation of the old company.
Pursuant to Article 181 of the New TCC, the conversion of types
are regulated on a
numerus clausus
(limited number) principle. As per
this article, an equity company may convert to another equity company
or to a cooperative society; an unlimited liability company may convert
to an equity company or to a cooperative. Equity companies may not
convert to an unlimited liability company. Article 182 of the New TCC
includes a specific provision in relation to the type conversion of general
partnerships and limited partnerships. These companies may continue
their operations as one man undertakings, and in such a case, Articles
180 to 190 of the New TCC in relation to conversion of type shall not be
applicable.
Article 183 of the NewTCC regulates the continuation principle of the
partnership shares and rights in merger and division transactions. Pursuant
to this principle, shareholders have a right to request the shares and rights
of the new company. Furthermore, shareholders may not be squeezed
out of a company and the shareholder rights shall not be hindered. For
the implementation of this continuation principle, another principle, the
principle of equal value, becomes significant. Pursuant to this principle,
the value of the shares of a shareholder prior to the conversion of type
shall be maintained after the conversion of type. In exchange for shares
without voting rights, shares with or without voting rights may be issued.
In exchange for shares with privilege rights, shares with an equal value
shall be issued, or if the relevant company type is not compatible with
privileged shares, an adequate compensation shall be paid. In exchange
for usufruct shares, equivalent rights shall be granted or the real value
as of the date of preparation of the conversion type shall be paid. In this
article, due to lack of reference to Article 140 of the New TCC governing
offsetting, offsetting shall not be applicable.