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DEFINITION OF INDEPENDENT OPERATION IN DEMERGER
According to the definition of demerger con-tained in Article 4 Item 6 of the Corporate Mergers and Acquisitions Law, the subject of a demerger must be a business capable of inde-pendent operation. As for the scope of such a business and the criteria for assessing inde-pendent operation, the MOEA has consistently taken the view that these are matters to be de-termined on a case-by-case basis.
In an interpretation dated 22 August 2002, the MOEA gave some further explanation. It stated that "independent operation" refers to a division that operates independently and forms an eco-nomically integral whole, in a situation where the company makes a contribution of capital to an existing or a newly incorporated company by transferring to it the business (including assets and liabilities) of the independently operating division, in exchange for which the company or its shareholders receive new shares issued by the existing company (demerger with absorption) or shares in the newly incorporated company (demerger with new incorporation), and the ex-isting or newly incorporated company takes over the business of the independently operating di-vision by general assumption.