Companies Act

A company (limited to a stock company or a limited liability company) may effect an absorption-type company split. In these cases, the relevant company must conclude an absorption-type company split agreement with the company which succeeds to all or part of the rights and obligations held by relevant company in connection with its business by transfer from relevant company (hereinafter referred to as the "company succeeding in the absorption-type split" in this Part).

If a company effects an absorption-type company split, and the company succeeding in the absorption-type split is a stock company, it must prescribe the following matters in the absorption-type company split agreement:

the trade name and address of the company effecting the absorption-type company split (hereinafter referred to as the "company splitting in the absorption-type split" in this Part) and the stock company that constitutes the company succeeding in the absorption-type split (hereinafter referred to as the "stock company succeeding in the absorption-type split" in this Part);

matters concerning the assets, obligations, employment agreements, and any other rights and obligations that the stock company succeeding in the absorption-type split succeeds to by transfer from the company splitting in the absorption-type split through the absorption-type split (excluding obligations related to shares of the company splitting in the absorption-type split that is a stock company (hereinafter referred to as the "stock company splitting in the absorption-type split" in this Part) and of the stock company succeeding in the absorption-type split and to share options of the stock company splitting in the absorption-type split);

when the stock company succeeding in the absorption-type split succeeds to shares of the stock company splitting in the absorption-type split or of the stock company succeeding in the absorption-type split through the absorption-type company split, matters concerning relevant shares;

if the stock company succeeding in the absorption-type split is to deliver to the company splitting in the absorption-type split monies, etc. in lieu of all or part of the rights and obligations in connection with the business thereof when effecting the absorption-type company split, the following matters concerning relevant monies, etc.:

if relevant monies, etc. are shares of the stock company succeeding in the absorption-type split, the description of the number of relevant shares (or, for a company with class shares, the classes of the shares and the number of the shares for each class) or the method for calculating the numbers, and matters concerning the amount of the stated capital and capital reserves of the stock company succeeding in the absorption-type split;

if relevant monies, etc. are bonds of the stock company succeeding in the absorption-type split (excluding those concerning bonds with share options), the description of the classes of relevant bonds and the total amount for each class of bonds, or the method for calculating that total amount;

if relevant monies, etc. are stock options of the stock company succeeding in the absorption-type split (excluding those attached to bonds with share options), the description of the features and number of relevant share options, or the method for calculating the number;

if relevant monies, etc. are bonds with share options of the stock company succeeding in the absorption-type split, the matters prescribed in (b) concerning relevant bonds with share options and the matters prescribed in (c) concerning the share options attached to relevant bonds with share options; and

if relevant monies, etc. are property other than shares, etc. of the stock company succeeding in the absorption-type split, the description of the features and number or amount of relevant property, or the method for calculating the number or amount;

if the stock company succeeding in the absorption-type split is to deliver to holders of share options of the stock company splitting in the absorption-type split share options of the stock company succeeding in the absorption-type split in lieu of relevant share options at the time of the absorption-type company split, the following matters concerning relevant share options:

the description of the features of the share options (hereinafter referred to as "share options under absorption-type company split agreement" in this Part) held by holders of share options of the stock company splitting in the absorption-type split who receive delivery of share options of the stock company succeeding in the absorption-type split;

the description of the features and number of share options of the stock company succeeding in the absorption-type split to be delivered to holders of share options under absorption-type company split agreement, or the method for calculating the number; and

if share options under absorption-type company split agreement are share options attached to bonds with share options, a statement to the effect that the stock company succeeding in the absorption-type split will succeed to the obligations relating to bonds regarding the bonds with share options and the description of the classes of the bonds subject to relevant succession and the total amount for each class of bonds, or the method for calculating that total amount;

in the case prescribed in the preceding item, matters concerning allotment of the share options of the stock company succeeding in the absorption-type split set forth in that item to holders of share options under absorption-type company split agreement;

the day on which the absorption-type company split becomes effective (hereinafter referred to as the "effective day" in this Section);

if the stock company splitting in the absorption-type split conducts any one of the following acts on the effective day, a statement to that effect:

acquisition of shares under the provisions of Article 171, paragraph (1) (limited to the case where the consideration for acquisition prescribed in item (i) of that paragraph is only the shares of the stock company succeeding in the absorption-type split (excluding shares that had been held by the stock company splitting in the absorption-type split prior to effecting the absorption-type company split, and including shares prescribed by Ministry of Justice Order as those equivalent to shares of the stock company succeeding in the absorption-type split; the same applies in (b))); or

payment of dividends of surplus (limited to the case where the dividend property is only the shares of the stock company succeeding in the absorption-type split).

A stock company succeeding in an absorption-type split succeeds to the rights and obligations of the company splitting in the absorption-type split, in accordance with the provisions of the absorption-type company split agreement, on the effective day.

Notwithstanding the provisions of the preceding paragraph, if a creditor of the company splitting in the absorption-type split who is able to state an objection pursuant to the provisions of Article 789, paragraph (1), item (ii) (including the case where it is applied mutatis mutandis pursuant to Article 793, paragraph (2); the same applies in the following paragraph) and who has not received the separate notice set forth in Article 789, paragraph (2) (excluding item (iii) and including the case where it is applied mutatis mutandis pursuant to Article 793, paragraph (2); the same applies in the following paragraph) (in the cases prescribed in Article 789, paragraph (3) (including the case where it is applied mutatis mutandis pursuant to Article 793, paragraph (2)), limited to one who is a creditor of the obligation caused by a tort; the same applies in the following paragraph), may request the company splitting in the absorption-type split to perform the obligations to the extent of the value of property held by the company splitting in the absorption-type split on the effective day, even if relevant creditor is not allowed, under the absorption-type company split agreement, to request the company splitting in the absorption-type split to perform the obligations after the absorption-type company split.

Notwithstanding the provisions of paragraph (1), if a creditor of the company splitting in the absorption-type split who is able to state an objection pursuant to the provisions of Article 789, paragraph (1), item (ii) of and who has not received the separate notice set forth in paragraph (2) of that Article, may request the stock company succeeding in the absorption-type split to perform the obligations to the extent of the value of property to which it has succeeded, even if relevant creditor is not allowed, under the absorption-type company split agreement, to request the stock company succeeding in the absorption-type split to perform the obligations after the absorption-type company split.

Notwithstanding the provisions of paragraph (1), if a company splitting in the absorption-type split implemented the absorption-type company split with the knowledge that it would harm creditors (hereinafter in this Article referred to as "remaining creditors") of the obligation that would not be succeeded to a stock company succeeding in the absorption-type split, the remaining creditors may request the performance of the obligation from the stock company succeeding in the absorption-type split to the extent of the value of property to which it has succeeded; provided, however, that this does not apply if the stock company succeeding in the absorption-type split did not know that it would harm remaining creditors when the absorption-type split became effective.

The provisions of the preceding paragraph do not apply to cases where there are provisions on the matters set forth in item (viii) of the preceding Article.

If a stock company succeeding in the absorption-type split is liable to perform the obligation set forth in paragraph (4) pursuant to the provisions of the same paragraph, the liabilities are extinguished in relation to a remaining creditor who does not demand the performance or does not give an advance notice of the demand within two years from when the remaining creditor comes to know that the company splitting in the absorption-type split implemented the absorption-type company split with the knowledge that it would harm remaining creditors, when that period elapses. The same applies when ten years elapses from the effective day.

When an order of commencement of bankruptcy proceedings, order of commencement of rehabilitation proceedings, or order of commencement of reorganization proceedings is made with regard to a company splitting in the absorption-type split, remaining creditors may not exercise the right to make a request pursuant to the provisions of paragraph (4) from a stock company succeeding in the absorption-type split.

In the cases set forth in the following items, the company splitting in an absorption-type split becomes the persons specified in each of those items, in accordance with the provisions of the absorption-type company split agreement, on the effective day:

if there are provisions on the matters set forth in item (iv), (a) of the preceding Article:the holders of shares referred to in (a) of that item;

if there are provisions on the matters set forth in item (iv), (b) of the preceding Article:the holders of bonds referred to in (b) of that item;

if there are provisions on the matters set forth in item (iv), (c) of the preceding Article:the holders of share options referred to in (c) of that item; or

if there are provisions on the matters set forth in item (iv), (d) of the preceding Article:the holders of bonds constituting bonds with share options referred to in (d) of that item, and holders of the share options attached to those bonds.

In the case prescribed in item (v) of the preceding Article, the share options under absorption-type company split agreement are extinguished and holders of the share options under absorption-type company split agreement become holders of the share options of the stock company succeeding in the absorption-type split set forth in item (v), (b) of that Article, in accordance with the provisions on the matters set forth in item (vi) of that Article, on the effective day.

The provisions of the preceding paragraphs do not apply if procedures under the provisions of Article 789 (excluding paragraph (1), item (iii) and paragraph (2), item (iii), and including the case where it is applied mutatis mutandis pursuant to Article 793, paragraph (2)) or Article 799 are not completed yet or where the absorption-type company split is cancelled.

If a company effects an absorption-type company split, if the company succeeding in the absorption-type split is a membership company, it must prescribe the following matters in the absorption-type company split agreement:

the trade name and address of the company splitting in the absorption-type split and the membership company that constitutes the company succeeding in the absorption-type split (hereinafter referred to as the "membership company succeeding in the absorption-type split" in this Section);

matters concerning the assets, obligations, employment agreements, and any other rights and obligations that the membership company succeeding in the absorption-type split succeeds to by transfer from the company splitting in the absorption-type split through the absorption-type company split (excluding obligations related to shares of the stock company splitting in the absorption-type split);

when the membership company succeeding in the absorption-type split succeeds to shares of the stock company splitting in the absorption-type split through the absorption-type company split, matters concerning relevant shares;

if the company splitting in the absorption-type split is to become a member of the membership company succeeding in the absorption-type split when effecting the absorption-type company split, the matters provided for in (a) through (c) below for the categories of membership company succeeding in the absorption-type split set forth respectively therein:

general partnership company:the name and address of the member and the value of the contribution by the member;

limited partnership company:the name and address of the member, whether the member is a member with unlimited liability or a member with limited liability, and the value of the contribution by the member; or

limited liability company:the name and address of the member and the value of the contribution by the member;

if the membership company succeeding in the absorption-type split is to deliver to the company splitting in the absorption-type split monies, etc. (excluding the equity interests of the membership company succeeding in the absorption-type split) in lieu of all or part of the rights and obligations in connection with the business thereof when effecting the absorption-type company split, the following matters concerning relevant monies, etc.:

if relevant monies, etc. are bonds of the membership company succeeding in the absorption-type split, the description of the classes of relevant bonds and the total amount for each class of bonds, or the method for calculating that total amount; or

if relevant monies, etc. are property other than bonds of the membership company succeeding in the absorption-type split, the description of the features and number or amount of relevant property, or the method for calculating the number or amount;

the effective day;

if the stock company splitting in the absorption-type split conducts any one of the following acts on the effective day, a statement to that effect:

acquisition of shares under the provisions of Article 171, paragraph (1) (limited to the case where the consideration for acquisition prescribed in item (i) of that paragraph is only equity interests of the membership company succeeding in the absorption-type split (excluding equity interests that had been held by the stock company splitting in the absorption-type split prior to effecting the absorption-type company split, and including shares prescribed by Ministry of Justice Order as those equivalent to equity interests of the membership company succeeding in the absorption-type split; the same applies in (b))); or

payment of dividends of surplus (limited to the case where the dividend property is only equity interests of the membership company succeeding in the absorption-type split).