Newsletter
DISSENTING SHAREHOLDERS' SHARES ARE TRANSFERRED FROM PAYMENT DATE
In an interpretation dated 23 April 2001, the Ministry of Economic Affairs (MOEA) stated that when companies merge, they may stipulate in the merger agreement that shares repurchased from dissenting shareholders at the latter's re-quest will be cancelled on the merger record date. The MOEA also stated that such cancellation would not be affected even if the repurchase price of such shares was agreed or adjudicated until after the merger record date.
To further clarify this point, in an interpretation issued on 16 December 2003 the MOEA cited a 1980 judgment of the Supreme Court, in which the Court held that when a court adjudicates the repurchase price of a company's shares, the ef-fective date of the transfer of the shares is not the date of the adjudication. On this basis, the MOEA stated that such transfer becomes effec-tive at the time of payment. Therefore, if at the time of the share exchange, payment has already been made to the dissenting shareholders for the repurchase of their shareholdings, it follows that their shares cannot be included in the share ex-change. Conversely, if at the record date of the share exchange, payment for the dissenting shareholders' shares has not yet been made, they may participate in the share exchange.