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In addition to enabling the share buyback of a company, the New
TCC introduces the prohibition of financial assistance under its article
380 in order to prevent bypassing the relevant provisions governing
buyback. Pursuant to this article, which should be specifically ana-
lyzed, a company may not enter into transactions related to providing
a prepayment, loan or security to a third persons in order for such third
persons to acquire shares of the company; such transactions shall be
null and void.
Disposing of the Repurchased Shares
Pursuant to article 329 of the TCC, repurchased shares for the cap-
ital reduction shall be immediately cancelled and repurchased shares
under other circumstances shall be disposed of in the earliest conve-
nient opportunity. There is no provision, governing disposal of repur-
chased shares in violation of this provision, as such transactions are
deemed null and void. The principle resolution of the CMB regulates
that repurchased shares in accordance with this resolution shall be dis-
posed of within three years; whereas repurchased shares in excess of
the ten percent threshold band of the share capital must be disposed of
within six months.
As per the New TCC, there is no obligation regarding the dispose
of all of the repurchased shares as long as the buyback is executed in
compliance with law. The obligation of disposal regulated under arti-
cle 384 is applicable solely to the repurchased shares in excess of the
ten percent of the share capital. Pursuant to this article, repurchased
shares in the exceptional cases numbered under article 382 (apart from
the share capital reduction where the bought back shares are destroyed)
and shares gratuitously as per article 383 shall be disposed of in the
earliest opportunity which does not result in the company incurring
any losses and at the latest within three years.
Article 385 regulates the consequences of share buybacks in vio-
lation of the provisions of articles 379 and 381. The repurchased shares
in violation of law shall be disposed of, or pledges established thereon
shall be removed within six months. Although it has not been express-
ly regulated under the New TCC, it may be deduced from this article
385 that buyback transactions in violation of law are valid. Contrary to
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