Legal flexibility allows for simple structures

SUPPLEMENT - THE IFLR GUIDE TO JAPAN 2007 - January 01, 2007

Nishimura & Asahi

Address

Ark Mori Building (Main Reception: 28th Floor)? 1-12-32 Akasaka, Minato-ku? Tokyo 107-6029 Japan

Telephone

+81 3 5562 8500

Fax

+81 3 5561 9711/12/13/14 Visit Website

The Corporation Law (Kaisha-Ho) came into force on May 1 2006. The Corporation Law was drafted to modernize the previous law, and is expected to have a big impact on corporate governance.

Part of the Corporation Law enables the delivery of merged companies' cash or other assets (but not shares) to former company shareholders in a merger or other corporate reorganization. It could enable cash-out mergers, triangular mergers that deliver parent companies' shares, or other forms of flexible corporate reorganization. However enforcement of these provisions has been postponed because of concerns that it could promote foreign company investment in Japan and increase hostile acquisition in the Japanese market.

Types of company The old Commercial Code considered four types of companies: kabushiki-kaisha (KK), a joint stock company, which is the form most commonly used in Japan; yugen-kaisha (YK), a limited liability company that is used for small businesses; gomei-kaisha, a partnership company...



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