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COMMERCIAL LAW
69
Implementation of Conversion of Type
Given that the conversion of type constitutes a newly establishment
transaction, pursuant to Article 184/1 of the New TCC, provisions
governing newly establishment shall be applicable to conversion of type,
save for provisions regarding the minimum number of shareholders and
the subscription of capital in kind. Pursuant to Article 184/2 of the New
TCC, similarly to the division procedure, an interim balance sheet shall
be prepared if a period longer than six months has passed after the date of
the last balance sheets or in case of material changes in assets.
Article 185 of the New TCC regulates the conversion of type plan. The
conversion of type plan shall be prepared in writing by the board of directors
and shall be approved at the general assembly. The minimum content of the
conversion of type plan has been regulated. Article 186 of the New TCC
governs the conversion of type report. This report shall include explanations
as to the necessity of conversion of type. Such report may be omitted in
small scale companies if all shareholders approve it not to be prepared.
It should be noted that there are number of reasons for foreseeing
such numerous reports, plans, audit reports and similar documentation.
The most important reason is transparency. The second reason is the
protection of shareholders and other related persons as well as ensuring
public disclosure. The entire system of reporting, planning and auditing
is based on these pillars.
Article 187 of the New TCC regulates the auditing of documentation
regarding the conversion of type. Pursuant to this article, conversion of
type plan, conversion of type report and the balance sheets taken as a
basis for the conversion of type are audited by the operation auditor. The
company shall be in cooperation with the operation auditor with regards
to the provision of necessary documentation. The operation auditor shall
assess the conditions of conversion of type, and investigate whether the
balance sheets reflect the reality, whether the principle of true and fair
view and the protection of shareholder rights are maintained or not. Such
auditing may be omitted in small scale companies if all shareholders
approve it not to be conducted.
Similarly to the division, the right of examination shall only be granted
to shareholders pursuant to Article 188 of the New TCC. However, the