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NO SIMPLIFIED PROCEDURE FOR REVERSE MERGER
The Corporate Mergers and Acquisitions Act permits a company to merge a subsidiary in which it holds 90% or more of the issued shares, by concluding a merger agreement and by simple majority resolutions of board meetings of each company that are attended by at least two thirds of their respective directors. But this simplified merger procedure is available only if the parent company is the post-merger surviving company.
In the case of a reverse merger in which the surviving company is the subsidiary, the above provisions do not apply, according to an interpretation issued by the Ministry of Economic Affairs on 16 January 2009. Furthermore, if a parent company merges with its wholly-owned subsidiary with the subsidiary being the post-merger surviving company, and the subsidiary pays out cash to the parent company's shareholders as consideration of the merger, then because the parent company, as the single corporate shareholder of the subsidiary, is wound up and ceases to exist by virtue of the merger, persons appointed by the parent company as directors of the subsidiary are automatically discharged from office.