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CHAPTER II MERGER, ACQUISITION AND DIVISION
Section One Merger/Consolidation
Article 18
A resolution for the merger/consolidation or dissolution of a company shall be adopted by a majority vote at the general meeting attended by shareholders representing two-thirds or more of the total number of the issued shares of the company.
For a company that has its share certificates publicly issued, if the total number of shares represented by shareholders present at the general meeting is short of the quorum provided in the preceding paragraph, the resolution may be adopted by two-thirds or more of the votes of the shareholders present at the general meeting who represent a majority of the total number of issued shares.
In case a listed or OTC company participates in the merger/consolidation and is dissolved thereafter while the surviving or newly incorporated company is not a listed or OTC company, the resolution of the general meeting under the preceding two paragraphs shall be adopted by two-thirds or more of the votes of the shareholders who represent the total number of issued shares of the listed or OTC company.
Where higher criteria for the total number of shares represented by the shareholders present at the general meeting and the total number of votes required to adopt a resolution thereat are specified in the Articles of Incorporation, such higher criteria shall prevail.
In case any special shares are issued by the company, the merger/consolidation shall be separately resolved by the holders of those special shares with the exceptions that a resolution by the general meeting is not required under this Act or that a resolution by the meeting of special shareholders is not required as expressly provided in the Articles of Incorporation. All the provisions set forth in the preceding four paragraphs shall apply mutatis mutandis to the resolution of the meeting of special shareholders.
Any company holding the shares of another company participating in the merger/consolidation, or the company or its assigned representative is elected as a director of another company participating in the merger/consolidation, then the company or its assigned representative may exercise voting rights in the resolution of the merger/consolidation by such another company.
In case the number of shares issued as a result of the merger/consolidation will not exceed more than twenty percent of the total number of issued voting shares of the surviving company immediately before the merger/consolidation, while the total amount of cash or the total value of the assets delivered to the shareholders of the dissolved company will not exceed more than two percent of the net value of the surviving company, a resolution for the merger/consolidation agreement shall be adopted by a majority vote of the directors present at the Board meeting attended by directors representing two-thirds or more of the directors of the surviving company. However, in case that the assets of the dissolved company may not be insufficient to offset its liabilities, or that the surviving company needs to amend its Articles of Incorporation, Paragraphs 1-4 of this Article relating to the resolution of the general meeting still govern.
Article 19
In case that a parent company merge/consolidate with its subsidiary company whose ninety percent or more of the total number of the issued shares is held by the parent company or that subsidiary companies of a parent company merge/consolidate with one another whose ninety percent or more of the total number of the issued shares is held by their parent company respectively, the merger/consolidation agreement may be concluded upon a resolution to be adopted separately at the Board meeting of each company by a majority vote of the directors present at the meeting attended by directors representing two-thirds or more of the directors of the respective companies.
After adoption of the resolution by the Board of Directors of subsidiary companies under the preceding paragraph, the details of the resolution and entries required to appear in the merger/consolidation agreement shall be published within ten days. A notice shall be served to each of their shareholders and state that any shareholder who has an objection against that resolution may submit a written objection requesting the subsidiary companies to buy back, at the then prevailing price, the shares of the subsidiary companies she holds. In the case of a company that has its share certificates publicly issued, it shall deliver review results of special committees or audit committees and opinions of independent experts in the merger/consolidation agreement to its shareholders.
The given time referred to in the preceding paragraph shall not be shorter than thirty days.
Where ninety percent or more of the total capital of a subsidiary company is held by its parent company, all the provisions set forth in the preceding three paragraphs shall apply mutatis mutandis when the parent company merges with the said subsidiary company.
Article 20
In the case of a merger/consolidation between two companies limited by shares or between a company limited by shares and a limited company, the surviving or the newly incorporate company under the merger/consolidation project shall be limited to a company organized in the form of a company limited by shares.
Article 21
The following requirements shall be fulfilled in case of any merger/ consolidation of a domestic company with a foreign company:
1. The said foreign company, pursuant to the law of incorporation, shall be a company limited by shares or a limited company and is duly allowed to be merged/consolidated with other companies;
2. The merger/consolidation agreement has been duly resolved by the general meeting, the Board of Directors of that foreign company or otherwise, pursuant to the law of incorporation;
3. The surviving company or newly incorporated company after the merger/consolidation shall exist only in the form of a company limited by shares.
The foreign company shall designate before the reference date of the merger/consolidation a representative for any service made within the territory of the Republic of China.
Article 22
The merger/consolidation agreement shall be made in writing and state the following particulars:
1. The name and capital of the companies involved in the merger/consolidation and the name and capital of the surviving or newly incorporated company after the merger/consolidation.
2. Where shares are to be issued by the surviving company, the newly incorporated company, or other companies as a result of the merger/consolidation, the total number of shares, classes of shares and amount of each class, or the amount of cash and other assets.
3. Where shares are to be issued to shareholders of the dissolved company by the surviving company, the newly incorporated company, or other companies as a result of the merger/consolidation, the total number of shares, classes of shares and amount of each class; the amount of cash and other assets; the method and proportion of distribution, together with other relevant matters.
4. Any matter related to the shares duly redeemed or purchased by the surviving company for the distribution to the shareholders of the dissolved company.
5. Any change to the Articles of Incorporation of the surviving company or Articles of Incorporation to be executed by the newly incorporated company according to Article 129 of the Company Act;
6. Criteria and conditions for the computation of share exchange ratio by the listed or OTC company.
The preceding paragraph is also applicable, mutatis mutandis, to the merger/consolidation with a foreign company.
The entries, required to appear in the merger/consolidation agreement under Paragraph 1, shall be delivered to each shareholder together with the notice of the general shareholders’ meeting for the merger/consolidation. In the case of the company that has its share certificates publicly issued, it shall send the review results of special committees or audit committees and opinions of independent experts to the shareholders.
Article 23
Upon the resolution of the merger/consolidation, a company shall immediately notify or make a public notice to each creditor of such a merger/consolidation and specify a period of not less than thirty days to allow objection filed by the creditors.
A company, that has not given notice or made public announcement in the manner referred to in the preceding paragraph, or fails to satisfy a creditor who has raised an objection to the merger/consolidation, to furnish an appropriate security, to create any trust exclusively for creditors’ satisfaction, or to certify that such a merger/consolidation is without prejudice to the rights of creditors, shall not assert the merger/consolidation as a defense against such a creditor.
The requirements specified in Paragraph One shall be applicable to the creditors of the dissolved company in the merger/consolidation provided in Article 18(7) of this Act; as regards the notice and public announcement, the reference date to start counting is the date of the resolution by the general meeting.
The requirements specified in Paragraph One shall be applicable to the creditors of the subsidiary company in the merger/consolidation provided in Article 19 of this Act; as regards the notice and public announcement, the reference date to start counting is the date of the resolution by the Board of Directors.
Article 24
All rights and obligations of any company dissolved due to the merger/consolidation shall be generally assumed by the surviving company or the newly incorporated company after the merger/consolidation; the status as a concerned party of the dissolved company in any on-going litigation, non-litigation, arbitration and any other proceedings shall be taken over by the surviving company or the newly incorporated company.
Article 25
The transfer of all rights and obligations pertaining to any properties acquired from the dissolved company by the surviving company or the newly incorporated company shall become operative on and after the reference date specified for the merger/consolidation; provided, however, that any acquisition, hypothecation, loss or change of any right under other applicable laws shall be registered before its disposition is permitted.
The following documents are required to be forthwith registered with the appropriate authorities by batch by the surviving company or the newly incorporated company in carrying out the registration of the alteration or merger/consolidation for the rights pertaining to the assets described in the preceding paragraph without being subject to the restriction that any registration for alteration of rights shall be jointly completed by the obligor and obligee as provided in Article 73(1) of the Land Act, Article 7 of the Personal Property Secured Transactions Act and any other applicable laws and ordinances:
1. Certificate of the registration for the merger/consolidation.
2. A list of registered assets of the dissolved company before the merger/consolidation and the list of assets in the registration for modification completed by the surviving company or the newly incorporated company.
3. Any other documents specified by the registration authorities.
Unless a longer period is otherwise provided by other applicable laws and ordinances, the registration specified herein shall be completed within six months upon the reference date of the merger/consolidation without being subject to the completion of registration for alteration of land rights within one month as provided in the former of Article 73(2) of the Land Act.
Article 26
The surviving company may report the merger/consolidation in the first general meeting held after the merger/consolidation.
Section Two Acquisition
Article 27
The notice of credit transfer in the acquisition of business or assets by a company under general assumption or transfer, or under Articles 185(1) (ii) or 185(1) (iii) may be made in the form of public announcement in lieu and the recognition from the creditors is not required in any undertaking of liabilities without being subject to Articles 297 and 301 of the Civil Code. The foregoing transactions require resolutions adopted by a majority vote at the general meeting attended by shareholders representing two-thirds or more of the total number of the issued shares of the company.
For a company that has its share certificates publicly issued, if the total number of shares represented by shareholders present at the general meeting is short of the quorum provided under the preceding paragraph, the resolution may be adopted by two-thirds or more of the votes of the shareholders present at the general meeting who represent a majority of the total number of issued shares.
In case the trading of shares on the stock exchange or OTC market is terminated because the listed or OTC company carries on the general transfer or transfers business or assets so that the transferee company is not a listed or OTC company anymore, the resolution of the general meeting under the preceding two paragraphs shall be adopted by two-thirds or more of the votes of the shareholders who represent the total number of issued shares of the listed or OTC company.
Where higher criteria for the total number of shares represented by the shareholders present at the general meeting and the total number of votes required to adopt a resolution thereat under the preceding three paragraphs are specified in the Articles of Incorporation, such higher criteria shall prevail.
Article 25 of this Act is applicable mutatis mutandis to the registration for transfer and alteration of rights and obligations pertaining to the assets of the transferor company acquired by the transferee company.
The preceding five Paragraphs and Article 21 of this Act shall apply mutatis mutandis to the transfer or assumption of business or assets under Article 185 (1) (ii) and (iii) of the Company Act and the acquisition made in the form of general assumption or transfer by the company and a foreign company.
Article 18 (6) of this Act shall apply mutatis mutandis to the procedure of the acquisition in this Article.
A company shall, after the resolution made under Paragraph 1, immediately notify as well as make a public notice to each creditor of the company of such a resolution, while specifying a time limit of not fewer than thirty (30) days within which the creditors may raise their objections, if any, to such a resolution.
A company, that has not given notice or made public announcement in the manner referred to in the preceding paragraph, or fails to satisfy a creditor who has raised an objection to the merger/consolidation, to furnish an appropriate security, to create any trust exclusively for creditors’ satisfaction, or to certify that such a merger/consolidation is without prejudice to the rights of creditors, shall not assert the merger/consolidation as a defense against such a creditor.
For the purpose of the merger/consolidation and acquisition to acquire the shares of the company whose share certificates have been publicly issued, in case ten percent or fewer of the total shares that the company had issued are acquired, it can be done alone or with others not in a publicly disclosed way.
The term “ alone ”under the preceding paragraph means as follows:
1. Acquiring the shares of the company in its (or her) own name.
2. Acquiring the shares of the company in others’ names, conforming to requirements under Article 2 of Securities and Exchange Act Enforcement Rules.
3. Acquiring the shares of the company in the name of a special purpose entity, conforming to International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS).
The term “with others” under Paragraph 10 means: several people, with the same purpose of the merger/consolidation and acquisition, acquire already-issued shares of a public company by contract, agreement, or other forms of mutual consent.
Those who acquire the shares under Paragraph 10 can transfer their shares through intraday trading or after-market-close trading on the centralized securities exchange or OTC market.
For the purpose of the merger/consolidation and acquisition to acquire the shares of the company whose shares have been publicly issued, in case more than ten percent of the total shares that the company had issued are acquired, the acquirers shall report to the competent securities authority the purpose of the merger/consolidation and acquisition and other particulars required for reporting by the competent securities authority within ten days of the acquisition of the shares; if the particulars required for reporting were adjusted, they shall be updated immediately.
In case of the acquisition of the voting shares already issued by the company whose shares have been publicly issued without complying with the requirements under the preceding paragraph, the excess shares shall not have voting rights.
Article 28
Upon complying with the following requirements, the acquisition of the entire or substantial portion of the business or assets from a parent company by a subsidiary company may be made as resolved by the Board of Directors of the parent company. Resolutions adopted by the shareholders' meeting of the transferor and transferee companies as provided in Articles 185(1) through 185(4) are not required and the requirements set forth in Articles 186 through Article 188 of the Company Act are exempted:
1. The said subsidiary company is entirely held by the parent company;
2. The subsidiary company shall issue new shares to the parent company in exchange for the business or assets of the latter.
3. The said parent company and its subsidiary company have prepared the consolidated financial statements according to the Generally Accepted Accounting Principles.
The preceding paragraph and Article 21 of this Act shall apply mutatis mutandis to any transfer by a parent company of its entire or substantial portion of business or assets to its 100% held subsidiary company incorporated offshore, or the transfer by a foreign company of its entire or substantial portion of business or assets to its 100% held subsidiary company incorporated within the territory of the Republic of China.
Article 25 of this Act is applicable mutatis mutandis to the registration for transfer and alteration of rights and obligations pertaining to the assets of the transferor company acquired by the transferee company.
In case the trading of shares on the stock exchange or OTC market is terminated because the listed or OTC company transferred its business or assets to another company, the resolution of the general meeting shall be adopted by two-thirds or more of the votes of the shareholders who represent the total number of issued shares of the listed or OTC company. Paragraphs 1 and 2 on the resolution of Board of Directors of the transferor company shall not apply.
Article 18 (6) of this Act shall apply mutatis mutandis to the procedure of the acquisition in this Article.
Article 29
If as resolved by the general meeting, a company may by means of share exchange to be acquired by any other surviving or newly incorporation company as a 100% held subsidiary company pursuant to the following requirements:
1. The said resolution by the general meeting shall be adopted by a majority votes at the meeting attended by shareholders representing two-thirds or more of the total number of the issued shares; the same governs where the designated transferee company is a surviving company;
2. Requirements set forth in the latter of Article 197(1) of the Company Act, Article 227 when the latter of Article 197(1) of the Company Act shall apply mutatis mutandis, and Articles 22-2 and 26 of the Securities and Exchange Act are not applicable to the share exchange described herein.
For a company that has its share certificates publicly issued, if the total number of shares represented by shareholders present at the general meeting is short of the quorum provided Item 1 under the preceding paragraph, the resolution may be adopted by two-thirds or more of the shareholders present at the general meeting who represent a majority of the total number of issued shares.
In case the trading of shares on the stock exchange or OTC market is terminated because the listed or OTC company is acquired by any other surviving or newly incorporation company as a 100% held subsidiary company while the surviving or newly incorporated company is not a listed or OTC company, the resolution of the general meeting under the preceding two paragraphs shall be adopted by two-thirds or more of the votes of the shareholders who represent the total number of issued shares of the listed or OTC company.
Where higher criteria for the total number of shares represented by the shareholders present at the general meeting and the total number of votes required to adopt a resolution thereat under the preceding three paragraphs are specified in the Articles of Incorporation, such higher criteria shall prevail.
If the transferee company is a newly incorporate company, the general meeting held under Item 1, Paragraph 1 of this Article shall be deemed as the meeting of promoters of the transferee company; directors and supervisors may be elected in that same meeting without being subject to Article 128, Articles 129 through 139, 141, 155 and 163(2) of the Company Act.
In case that the surviving transferee company issued new shares as the consideration, that the number of those shares will not exceed twenty percent of the total number of issued voting shares of that company, and that the total amount of cash or the total value of the assets delivered will not exceed two percent of the net value of that company, a resolution for share exchange agreement shall be adopted by a majority vote of the directors present at the Board meeting attended by directors representing two-thirds or more of the directors of the surviving company. However, in case the assets of the transferor company may not be insufficient to offset its liabilities, or the surviving transferee company needs to amend its Articles of Incorporation, Item 1 and 2, Paragraphs 1 of this Article relating to the resolution of the general meeting of the surviving transferee company still govern.
Article 18 (6) of this Act shall apply mutatis mutandis to the procedure of share exchange in this Article.
Article 30
Where ninety percent or more of the total number of the issued shares of a subsidiary company is held by its parent company, the parent company may carry on the acquisition by share exchange with the said subsidiary company upon a resolution to be adopted separately at the Board meeting of both the parent and subsidiary companies by a majority vote of the directors present at the Board meeting attended by directors representing two-thirds or more of the directors of the respective companies.
After adoption of the resolution by the Board of Directors of the subsidiary company under the preceding paragraph, the details of the resolution and entries required to appear in the share exchange agreement shall be published within ten days. A notice shall be served to each of its shareholders and state that any shareholder who has an objection against that resolution may submit a written objection requesting the subsidiary company to buy back, at the then prevailing price, the shares of the subsidiary company she holds. In the case of a company that has its share certificates publicly issued, it shall deliver review results of special committees or audit committees and opinions of independent experts in the share exchange agreement to its shareholders.
The given time referred to in the preceding paragraph shall not be shorter than thirty days.
Article 18 (6) of this Act shall apply mutatis mutandis to the procedure of the share exchange in this Article.
Article 31
In the course of share exchange by and between a company and another company pursuant to the preceding Articles of this Act, if the designated transferee company is a surviving company, a share exchange agreement shall be concluded by Boards of Directors from both of the transferor and the transferee companies; if the designated transferee company is a newly incorporated company, a share exchange resolution shall be adopted by the Board of Directors of the transferor company; the aforesaid agreement and resolution shall be presented at the general meetings of the companies concerned. However, the above requirements are not applicable to the cases where resolutions of general meetings are not required under the preceding two Articles.
The share exchange contract and resolution as described in the preceding paragraph shall contain the following particulars and shall be delivered to each shareholder together with the meeting notice:
1. Any alteration made to the Articles of Incorporation of the surviving company or execution of the Articles of Incorporation of the newly incorporated company;
2. Where shares, cash or other assets given as the consideration by the surviving or newly incorporated company, the total number of new shares, classes of shares, and amount of each class; the total amount of cash and other assets, types of cash and other assets, and amount of each type, together with other relevant matters.
3. Where shares are transferred by the shareholders of the company to the surviving or newly incorporated company, the total number of shares, classes of shares, and amount of each class, together with other relevant matters;
4. The relevant provisions applicable if the amount of shares to be issued to the shareholders is less than the value of one share and payable in cash;
5. The share exchange agreement shall enter whether any remaining office term of directors or supervisors at the time of the share exchange should be continued; the share exchange resolution shall enter a list of directors and supervisors of the newly incorporated company;
6. In case of a joint share exchange with another company for the newly incorporated company, the share exchange resolution shall enter matters of concerns in such a joint share exchange.
The preceding two paragraphs, the preceding two articles and Article 21 shall apply mutatis mutandis to the share exchange between the company and a foreign company.
Any undistributed retained earnings after the share exchange by a company with another company shall be entered as the capital surplus of another company.
Special shares already issued before the share exchange by a company with another company, the transferee company shall assume the rights and obligations regarding these shares towards their holders; the transferee company, in the fiscal year of the share exchange, may distribute dividends after the supervisors audit the statements and reports produced by the Board of Directors, while such distribution is immune from restrictions provided in Articles 228 through 231 of the Company Act.
If a company is newly incorporated as a result of the share exchange by the company with another company, the portion of the capital quota for the share exchange of the newly incorporated company may not be applicable to Article 2(1) (i) of the Employee Welfare Fund Act.
The entries required to appear in the transfer agreement or resolution of under Paragraph 2 shall be delivered to each shareholder together with the notice of the meeting for transfer; the company that has its share certificates publicly issued, shall deliver the result of the review that made by special committee or audit committee and the review result of independent expert to shareholders. The entries, required to appear in a share exchange agreement or resolution under Paragraph 2, shall be delivered to each shareholder together with the notice of the general shareholders’ meeting for the share exchange. In the case of the company that has its share certificates publicly issued, it shall send the review results of special committees or audit committees and opinions of independent experts to the shareholders.
Article 32
The case where a company engaging in the share exchange acquires shares of the designated transferee company, is not subject to Paragraphs 3 and 4, Article 167 of the Company Act.
When the company engaging in the share exchange acquires shares under the preceding paragraph, it must not exercise the rights of a shareholder unless under any of the following circumstances:
1. Claim for surplus earnings distribution.
2. Claim for distribution of residual assets.
3. Distribution of the legal reserve or capital surplus by issuing new shares and by paying cash.
Article 33
After the share exchange resolution is adopted by a company, it shall make a public notice to shareholders, notify each shareholder and each pledgee of the shareholders as registered in the shareholders’ roster, no later than 30 days prior to the reference date of the share exchange, of the following matters:
1. The essentials of a resolution adopted by the shareholders' meeting or the Board of Directors.
2. Transfer of shares shall be executed on the reference date of the share exchange.
3. Shareholders shall file the shares they held with the company one day before the reference date of the share exchange; those shares not filed shall become null and void.
Article 34
Where a listed or OTC company enters into a share exchange plan with another surviving company or a newly incorporated company under Article 29, the trading of the shares then traded on the stock exchange or OTC market shall be terminated upon the completion of the share exchange and required procedure of the stock exchange or OTC market, and shares of the surviving company or the newly incorporated company in compliance with requirements set forth for a listed or OTC company shall be traded on the stock exchange or OTC market.
Section 3 Division
Article 35
In carrying on a division by a company, the Board of Directors shall draft a division plan and submit it to the general meeting.
A resolution for division shall be adopted by a majority vote at the general meeting attended by shareholders representing two-thirds or more of the total number of the issued shares of the company.
For a company that has its share certificates publicly issued, if the total number of shares represented by shareholders present at the general meeting is short of the quorum under the preceding paragraph, the resolution may be adopted by two-thirds or more of the votes of the shareholders present at the general meeting who represent a majority of the total number of issued shares.
In case a listed or OTC company carried on a division and the trading of the shares then traded on the stock exchange or OTC market shall be terminated while the surviving or newly incorporated transferee company after the division is not a listed or OTC company, the resolution of the general meeting under the preceding two paragraphs shall be adopted by two-thirds or more of the votes of the shareholders who represent the total number of issued shares of the listed or OTC company.
In the preceding three Paragraphs where higher criteria for the total number of shares represented by the shareholders present at the general meeting and the total number of votes required to adopt a resolution thereat are specified in the Articles of Incorporation, such higher criteria shall prevail.
Upon the resolution of the division, a company shall immediately notify or make a public notice to each creditor of such a division and specify a period of not less than thirty days to allow objection filed by the creditors. A company, that has not given notice or made public announcement in the manner referred to in the preceding paragraph, or fails to satisfy a creditor who has raised an objection to the division, to furnish an appropriate security, to create any trust exclusively for creditors’ satisfaction, or to certify that such a division is without prejudice to the rights of creditors, shall not assert the division as a defense against such a creditor.
The surviving or newly incorporated transferee company, unless the liabilities existing before the division may be severed, shall, within the scope of contributions made by the transferee company, be jointly and severally liable to discharge the liability incurred by the divided company prior to the division. However, the creditors’ right to claim for the performance of the joint and several liabilities shall become extinguished, if not exercised by the creditors within two years from the reference date of the division.
If the transferee company is a newly incorporated company, the general meeting of the company divided shall be deemed as the meeting of promoters of the transferee company; it may draw up the Articles of Incorporation and elect directors and supervisors of the newly incorporated company in the same meeting without being subject to Articles 128, 129 through 139, 141 through 155 and 163(2) of the Company Act.
Article 24 of the Company Act shall apply mutatis mutandis to any company dissolved as a result of a division.
Where a listed or OTC company is divided, the surviving or the newly incorporated transferee company, after the division found compliant with requirements of the division and the relevant listing or OTC rules, may continue or start to offer its shares on the stock exchange or OTC market upon completing the procedures specified for such a division and procedures of the stock exchange or OTC market, while the divided company with shares traded on the stock exchange or OTC market before the division may continue the trading of the shares as such.
In case of a division by a company limited by shares, the surviving company or the newly incorporated company shall be only in the form of a company limited by shares.
Article 25 of this Act is applicable mutatis mutandis to the registration for transfer and alteration of rights and obligations pertaining to the assets of the divided company acquired after the division by the surviving or newly incorporated transferee company.
Article 18 (6) of this Act shall apply mutatis mutandis to the procedure of the division.
Article 36
In case the business value delivered to the surviving or the newly incorporated company will not exceed two percent of the net value of the divide company while the divided company acquires the total amount of consideration, a resolution for the division agreement shall be adopted by a majority vote of the directors present at the Board meeting attended by directors representing two-thirds or more of the directors of the divided company. However, in case the divided company needs to amend its Articles of Incorporation, Paragraphs 1-5 of the preceding Article relating to the resolution of the general meeting of the divided company still govern.
In case that the surviving transferee company issued new shares as the consideration for the division, that the number of those shares will not exceed twenty percent of the total number of issued voting shares of that company, and that the total amount of cash or the total value of the assets delivered will not exceed two percent of the net value of that company, a resolution for the division agreement shall be adopted by a majority vote of the directors present at the Board meeting attended by directors representing two-thirds or more of the directors of the surviving company. However, in case the assets of the business of the divided company transferred to the surviving company may not be insufficient to offset its liabilities, or the surviving transferee company needs to amend its Articles of Incorporation, Paragraphs 1-5 of the preceding Article relating to the resolution of the general meeting of the surviving transferee company still govern.
In case the division is resolved by the Board of Directors of the divided company while the divided company is the only shareholder of the newly incorporated company, the Board meeting of the divided company shall be deemed as the meeting of promoters of the newly incorporated company; it may draw up the Articles of Incorporation and elect directors and supervisors in the same meeting without being subject to Articles 128, 129 through 139, 141 through 155 and 163(2) of the Company Act.
Article 37
In case that a parent company carries on a division with its subsidiary company whose ninety percent or more of the total number of the issued shares is held by the parent company and that the subsidiary company, as the divided company, transfers its business to the parent company, as the surviving transferee company, while acquiring the total amount of consideration for the business, the division plan may be concluded upon a resolution to be adopted separately at the Board meeting of each company by a majority vote of the directors present at the meeting attended by directors representing two-thirds or more of the directors of the respective companies.
A company shall immediately make a public notice and notify each creditor of the divided subsidiary company under the preceding paragraph of such a division pursuant to Paragraph 6 of Article 35 of this Act; as regards the notice and public announcement, the reference date to start counting is the date of the resolution by the Board of Directors.
After adoption of the resolution by the Board of Directors of the subsidiary company under Paragraph 1 of this Article, the details of the resolution and entries required to appear in the division plan shall be published within ten days. A notice shall be served to each of its shareholders and state that any shareholder who has an objection against that resolution may submit a written objection requesting the subsidiary company to buy back, at the then prevailing price, the shares of the subsidiary companies she holds. In case a company has its share certificates publicly issued, it shall deliver review results of special committees or audit committees and opinions of independent experts to its shareholders.
The given time referred to in the preceding paragraph shall not be shorter than thirty days.
Article 38
The division plan specified in Article 35, Article 36 and Article 37 of this Act shall be made in writing with the following particulars:
1. Any alteration made to the Articles of Incorporation of the surviving transferee company or execution of the Articles of Incorporation of the newly incorporated company;
2. Business value, assets, liabilities, share exchange ratio and computation criteria of the business transferred by the divided company to the surviving or the newly incorporated transferor company;
3. Where shares, cash or other assets given as the consideration by the surviving transferor company or the newly incorporated company, the total number of new shares, classes of shares, and amount of each class; the total amount of cash and other assets, types of cash and other assets, and amount of each type, together with the computation criteria;
4. The proportion of distribution and other relevant matters of shares, cash or other assets acquired by the divided company or its shareholders, or both;
5. The relevant provisions applicable if the amount of shares to be issued to the divided company or its shareholders is less than the value of one share and payable in cash;
6. Rights and obligations of the divided company assumed by the surviving or newly incorporated transferor company, together with other matters;
7. In case of capital reduction of the divided company, any matter related to such reduced capital;
8. The matters which shall be settled in the cancellation of the shares of the divided company;
9. If another company joins the division with the company, the resolution of the division shall contain matters related to the joint division.
The entries required to appear in the division plan shall be delivered together with the notice of the general meeting for the resolution of the division to each shareholder. In case a company has its share certificates publicly issued, it shall deliver review results of special committees or audit committees and opinions of independent experts to its shareholders.
In case a division is made with a foreign company, Articles 35, 36, 37, 38(1), 38(2) and 21 of this Act shall mutatis mutandis apply.