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Tax Mergers and Acquisitions Protecting and maximizing your deal Whether you are buying or selling, tax issues can complicate every deal. Related Insights TAX ALERT One lending business is enough for business debt status Tax Court allows ordinary business bad debt deduction, rejecting argument that loans not secured by real property were nonbusiness loans. A board resolution is required in a merger, share exchange, company split, issuance of shares for subscription and assignment of business transactions in order to conclude the agreement for the transaction.
See question 3.
Tax Mergers and Acquisitions
The commercial register is available at the Regional Legal Affairs Bureau and contains an outline of certain matters for each registered company. Listed companies and other companies, as prescribed in the FIEL, must file these reports.
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These reports must contain i an outline of the company, ii conditions of the business, iii conditions of facilities, and iv accounting conditions and other information. The SLR of each stock exchange requires that listed companies disclose, in a timely manner, information to investors that may affect their investment decisions. Extraordinary reports disclose information regarding corporate actions or other important matters that have occurred in relation to the company that are prescribed in the FIEL.
They contain information that is in some respects similar to information that must be disclosed in a timely manner, and they can be accessed free of charge on the Internet at EDINET.
In the public notice of the commencement of a tender offer and the registration statement for a tender offer, the following information must be made public at the start of the tender offer: i the terms and conditions of the tender offer, including the purpose of the tender offer, the tender offer period, the price and number of shares to be purchased; ii information on the offeror and the target; and iii the trades or agreements with the target company or target director. If a target company decides to issue new shares, the following information must be disclosed in a timely manner: i an outline of the issuance of new shares; ii the reason for the issuance; iii the amount of funds to be collected, how and when the funds will be used; iv the conception of the rationality of the use of the funds; v the rationality of the terms and conditions of the allotment including the basis for and the detailed contents of the calculation of the issue price and an opinion from a corporate statutory auditor stating that such an issue price is not especially favourable to the subscriber ; vi a description of the subscriber, the reason why the target chose the subscriber and the retention policy of the subscriber; vii the status and the ratio of the major shareholders after the transaction; and viii the future prospects of the target company.
In addition, in principle, the offeror cannot withdraw the offer or cancel the contract for the tender offer after the offeror has served a public notice of the commencement of a tender offer see question 7. Neither the offeror nor any affiliated persons can, other than by a tender offer, purchase target shares during the tender offer period. Neither the offeror nor any affiliated persons can, other than by a tender offer, purchase share options, bonds with share options or other derivatives prescribed in the Cabinet Order during the tender offer period.
See questions 1. Yes, provided the directors of the target board do not violate their fiduciary duties or offend public order and morals. However, the offeror cannot obtain break fees from the target shareholders.
Accounting Firm Tax Services Mergers and Acquisitions Section Transfer Pricing
Yes, provided the directors of the target board do not violate their fiduciary duties. Yes, with respect to the issuance of share purchase warrants. There are a few exceptions to this rule. It is possible to give the right to exclusive negotiation to the preferred bidder before the conclusion of the definitive agreement. However, if a bidder intends to withdraw in the event of a above, it is necessary for the bidder to stipulate this in the public notice of the commencement of a tender offer and the registration statement for a tender offer.
In cases where the bidder withdraws a tender offer, the bidder should give public notice of its intention to withdraw the tender offer, the reason thereof and other matters specified by the FIEL and the Cabinet Order, and submit a written withdrawal of tender offer to the Prime Minister. The bidder can change certain purchase conditions by serving a public notice during the tender offer period; this excludes changes with respect to a reduction of the purchase price and the number of shares to be purchased, curtailment of the tender offer period, etc.
However, under the FIEL, the bidder can reduce the purchase price if the bidder stipulates in a public notice of commencement of the tender offer and the registration statement for the tender offer that the bidder may reduce the purchase price if the target company conducts a share split, etc.
Mergers and Acquisitions: A Global Tax Guide
The bidder may squeeze out any remaining shareholders of the target by taking one of the following measures:. The target company sells the fractional shares to the bidder with the permission of the court, followed by minority shareholders receiving the proceeds from such a sale on a pro rata basis.
Generally, the target board, with the opinion of an outside adviser, decides whether a proposal will maximise shareholder value see question 3. A bidder is not prohibited from making a new offer for the target if its initial bid fails. Alternatively, the bidder can dispose of the shares acquired in many cases, at a minority discount price. Upon such disposition, if the bidder holds one-third of the voting rights of the target company and would like to dispose of all of such shares, a purchaser must make a tender offer see question 2. In , the ICEA was revised, mainly with respect to the following two points.
Before the amendment to the ICEA in , an offeror was able to avoid the requirements of i and ii above only in the case of a tender offer. The second point regards the process in the case where a bidder squeezes out any remaining shareholders of the target.
As mentioned under question 7. It is unclear whether any tax deferral treatments will be introduced.
Chapter content Free access. Relevant Authorities and Legislation. This invaluable guide focuses on the global tax aspects of mergers and acquisitions to provide you with the information you need to move the deal forward-under a variety of circumstances and in numerous markets. Presenting individual chapters for each of thirty-one countries, this essential handbook provides quick access to the tax information you need, and, as much as possible, reduces the effort required to compare the rules that apply in one jurisdiction with the rules that apply in others.
Each country-specific chapter includes an overview of the general approaches to mergers and acquisitions taxation issues as well as detailed information about how the tax authorities in each country apply the rules to various aspects of a transaction. PricewaterhouseCoopers' Mergers and Acquisitions: A Global Tax Guide offers tax planners a foundation of information that they need when involved in international mergers and acquisitions. It also covers many of the finer points of the broader tax issues that arise during planning and negotiation.
Many will find this valuable reference to be an indispensable desktop tool in their effort to gain a deeper understanding of the global tax environment. Request permission to reuse content from this site. Undetected location. NO YES. Home Subjects Accounting Corporate Finance. About the Author Permissions Table of contents Reviews.