Newsletter
SHORT-FORM MERGER OF LIM-ITED COMPANY REQUIRES CONSENT OF DIRECTORS
In an interpretation date 10 January 2006, the Ministry of Economic Affairs (MOEA) stated that when a company conducts a short-form merger with a limited company in which it holds at least 90% of the total capital contribution, the merger must be approved by at least two thirds of the directors of the limited company, and in order to protect shareholders' interests, within 10 days the limited company must publicly announce the decision and give notice to its shareholders stat-ing that within a specified period they may object to the merger and may request the company to buy back their capital contribution at a fair price.
However, a limited company does not have a board of directors, and in each case where the Company Act stipulates a mode of resolution for a limited company, it calls for resolution by the shareholders' consent. Hence it is questionable whether the MOEA has not gone beyond the provisions of the Company Act by requiring that a short-form merger be supported by two thirds of the directors.