Newsletter
TIMING OF DIRECTORS' AND SUPERVISORS' APPOINTMENT ON DEMERGER
Article 32 Paragraph 7 of the Corporate Mergers and Acquisitions Law (CMAL) provides that in the case of a demerger with new company, the shareholders' meeting of the demerged company that passes the resolution approving the demerger plan should be regarded as the pro-moters meeting of the new company, and may also elect the directors and supervisors of the new company. However, if the new company is to be a single-shareholder company, the above provision of the CMAL cannot apply, because a single-shareholder company does not have a promoters' meeting, and under Article 128-1 Paragraph 2 of the Company Law its directors and supervisors are not elected, but are directly appointed by the single corporate shareholder. Therefore there has been considerable doubt in practice as to when the appointment of directors and supervisors should be completed.
With regard to this question, on 30 August 2002 the MOEA issued an interpretation stating that since a demerger becomes effective on the demerger record date, it is preferable if the ap-pointment of directors and supervisors is com-pleted between the date of the shareholders' meeting that approves the demerger plan, and the demerger record date.