Newsletter-21

12 NEWSLETTER 2016 - Consequences of the rights and obligations related to the assigned asset during the escrow period (for instance, who shall be entitled to profit shares, dividends accrued on the sale shares, or interest accrued on the purchase price), - terms and conditions for returning the assigned assets in the event where none of the conditions requiring the return thereof has occurred, - Fee payable to the escrow agent, - Information about the applicable law and jurisdiction to be applied to the conflicts likely to arise from the escrow agree- ment. During the contract negotiations, it may not be possible to verify the representations and warranties made by the seller to the purchaser with respect to the shares or assets. In such cases, the purchaser shall be willing to pay the consideration only after the fulfillment of the relevant representations and warranties that are the subject matter of the underlying agreement. On the other hand, it is apparent that the seller will also be willing to transfer the transferred company or as- sets only after the full payment of the consideration. In such cases, as a mechanism securing the risk for both parties, the escrow creates a security also for the said representations and warranties. One of the methods employed in practice is that the purchaser and seller being the parties to the underlying agreement require that a bank account ( escrow account ) be opened in favor of the escrow agent as the impartial third party. The consideration held in the escrow account is paid to the parties only after certain condition(s) is/are ful- filled as envisaged under the underlying agreement. Here, the seller or purchaser has no right of release by their own initiative on the escrow account; such right can only be exercised by the escrow agent and/or by the parties, together with the escrow agent. Legal Nature of Escrow Agreement As a contract originating from Anglo-Saxon law, the escrow agreement has not been regulated under the Code of Obligations or any other specific law. Pursuant to the freedom of contact principle,