everything you the m&a · target business after the corporate split, (iv) the principal assets...

EVERYTHING YOU

ALWAYS WANTED TO

KNOW ABOUT

CORPORATE SPLITS IN

JAPAN (BUT WERE

AFRAID TO ASK)

By Stephen D. Bohrer and TatsuyaTanigawa

Stephen D. Bohrer is a Foreign LawPartner at Nishimura & Asahi and aleader of the �rm’s Cross-BorderTransactions Group. Tatsuya Tanigawais a Partner at Nishimura & Asahi. Bothare resident in the �rm’s Tokyo o�ce.Contact: s�[email protected] ort�[email protected].

A corporate split is to Japanese M&Aas dashi is to Japanese cuisine—both areubiquitously used and considered funda-mental elements in their respective spaces,but their precise composition is not wellunderstood. Over the last two years, ap-proximately 220 Japanese publicly-tradedcompanies have announced plans to en-gage in a corporate split, including suchblue chips as Hitachi, Panasonic, Shiseido,Sony, and Takeda Pharmaceutical. A cor-porate split can be an e�cient and e�ec-tive tool to segregate businesses in orderto (i) sell a speci�c business to a thirdparty, (ii) contribute a speci�c business toform a new joint venture company, or (iii)internally transfer a speci�c business toe�ect a corporate reorganization. An un-derlying theme of most corporate splits isthat management can more e�ectivelyguide business operations if their atten-tion is focused on similar (and not diver-

gent) companies. If properly structured, acorporate split even can be completed ona tax-free basis.

Despite their widespread use, a dearthof English language literature exists toprovide deal makers with the requisiteknowledge to successfully conclude acorporate split in Japan. This article aimsto �ll this gap by providing an in-depthanalysis of the mechanics, issues to con-sider and nuances of corporate splits, andconcludes with a sample timetable to helpsequence the various steps that must oc-cur to properly e�ect a corporate splitunder Japanese law.

What Is a Corporate Split?

A corporate split is a divestiture ef-fected by operation of Japanese corporatelaw. A “corporate split,” a “spin-o�” anda “demerger” are all synonymous for thesame process under Japanese corporatelaw—hiving o� a company’s assets andliabilities into a separate and discrete legalentity (either an existing company or anewly established company). A corporatesplit resembles a corporate merger; how-ever, a corporate split allows the transferof assets and liabilities by operation of lawto another entity instead of combining thetwo entities into one. A corporate split canbe structured as tax-free. While corporatesplits typically involve the transfer of atarget business given the time and expenseinvolved to complete such a transaction,there is no threshold amount of assets andliabilities that must be subject to a corpo-rate split (unless tax-free status is desired).

Reprinted with permission from The M&A Lawyer, Volume 20, Issue 7, K

2016 Thomson Reuters. Further reproduction without permission of thepublisher is prohibited. For additional information about this publication,please visit www.legalsolutions.thomsonreuters.com.

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July/August 2016 ▪ Volume 20 ▪ Issue 7

Corporate split variants and tax-free achieve-

ment are each discussed immediately below:

Types of corporate splits. Corporate splits

come in two �avors—an “incorporation type”

corporate split (shinsetsu bunkatsu) and an “ab-

sorption type” corporate split (kyushu bunkatsu).

Under an “incorporation type” corporate split,

the subject assets and liabilities are transferred to

a newly established wholly-owned subsidiary of

the seller that is created by operation of law upon

the closing of the corporate split. This form of

corporate split is often suitable for basic busi-

nesses or when a buyer wants to acquire a newlyformed entity upon the closing of the transaction

to avoid assuming hidden liabilities. Annex A-1(see next page) depicts a basic incorporation typecorporate split. Under an “absorption type”corporate split, a newly established or an existingcompany will be used to house the subject assetsand liabilities and the transfer is completed aftercertain transaction milestones are accomplished.This form of corporate split is most suitable if thebusiness to be transferred requires operating li-censes or permits (since applications for suchauthorizations can be made by the establishedcompany before the target business is transferred,with closing conditioned on the receipt of suchauthorizations). Annex A-2 depicts a basic ab-sorption type corporate split.

The M&A LawyerJuly/August 2016 | Volume 20 | Issue 7

2 K 2016 Thomson Reuters

The M&A Lawyer July/August 2016 | Volume 20 | Issue 7

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The entity to which the subject assets and li-abilities will be transferred under either an incor-poration type corporate split or an absorptiontype corporate split is referred to in this article asthe “receiving company.” If a corporate split willbe used to make a divestiture to an unrelated thirdparty buyer, then the shares of the receivingcompany can be sold to the buyer immediatelyafter the consummation of the corporate split.Practitioners also should note that Annexes A-1and A-2 are not the sole ways in which the �owof consideration can be sequenced in a corporatesplit.

Tax-free corporate splits. A corporate splitcan be structured as a tax-free “quali�ed corpo-rate split” in order for the seller to avoid the rec-ognition of a capital gain on the assets that ittransfers in the transaction. While an ordinary/taxable corporate split can involve just a fewdiscrete assets or liabilities, a “business” must betransferred in a tax-free quali�ed corporate split.A “business” is not de�ned under the correspond-ing provisions of Japanese corporate law that dealwith corporate split mechanics, so practitionersoften rely on judicial precedents that in generalde�ne a “business” as a group of assets and li-abilities that are organized and integrated for thepurpose of conducting a common activity result-ing in goodwill (e.g., customer or supplier rela-tionships, business opportunities or businessknow-how).

In addition to transferring a “business,” vari-ous other factors must be taken into account toearn tax-free quali�ed corporate split status,including (i) if the receiving company opts to useshares as the consideration in exchange for the

target business, only shares of the receivingcompany or its direct parent company can beused and there must be an expectation that theseller will hold such shares for a period of time,(ii) approximately 80% of the target business em-ployees must be expected to be engaged in thetarget business after the corporate split, (iv) theprincipal assets and liabilities related to the targetbusiness must be transferred to the receivingcompany upon the corporate split, (v) a mutualconnection must exist between the target busi-ness and a business of the receiving company,and (vi) the size of the target business must notbe smaller than one-�fth or larger than �ve timesthat of a business housed in the receiving com-pany that has a connection with the target busi-ness (based on speci�ed factors) or at least onesenior director of the target business and at leastone senior director of the receiving companymust be expected to take o�ce as a senior direc-tor at the receiving company after the corporatesplit. Generally speaking, an inverse relationshipexists between the number of factors that must besatis�ed and ownership percentage - as the sel-ler’s ownership percentage increases in the re-ceiving company, the number of factors that mustbe satis�ed to e�ect a tax-free quali�ed corporatesplit decreases. It also goes without saying thatthe foregoing factors are vague and open to inter-pretation, so counsel should be instructed at anearly stage if tax-free status is desired.

If a corporate split will be undertaken as partof an overall plan to sell the target business to anunrelated third party buyer (i.e., Step 3 in each ofAnnexes A-1 and A-2), then e�ecting a tax-freequali�ed corporate split is not possible.



Major Advantages of a Corporate Split

Over Other Transfer Schemes

As an alternative to a corporate split, speci�edassets and liabilities can be transferred and as-sumed by a buyer through an asset sale transac-tion (often referred to in Japan M&A parlance asa “business transfer” or jigyo jyoto). The majoradvantages of a corporate split over a businesstransfer include:

E various assets, liabilities, contracts, andother obligations can be transferred withoutthird-party consent (subject to certain limi-tations, as discussed below in “PossibleThird Party Consents—Anti-assignmentClause Analysis”);

E a seller can transfer all of the employeesprimarily engaged in a target business with-out the need to obtain their individual con-sent (subject to certain limitations, as dis-cussed below in “Potential Hurdles toCompleting a Corporate Split—EmployeeConsultations”);

E if numerous contracts are eligible for trans-fer under a corporate split, then signi�canttime and e�ort can be saved for the dealteam, since consent discussions can beeliminated and contract counter-parties willhave little foundation to renegotiate termsin connection with the transfer;

E the registration tax payable on transferredreal property is generally lower; and

E a court-appointed appraiser to value thetransferred assets can be avoided even ifstock is used as the consideration (which isespecially helpful as the valuation processcan take many months and the economics

of the transaction can be jeopardized if anappraiser returns an unexpected valuation).

While assets, liabilities, contracts, and otherobligations can be transferred by operation of lawunder a corporate split, licenses and permits arenormally not automatically transferable to a thirdparty (ergo, the use of an “absorption type”corporate split, as discussed above in “What is aCorporate Split?—Types of corporate splits”).The receiving company will need to apply forfresh licenses and permits in order to operate thetarget business (unless it already operates in thesame industry as the target business and happensto possess the requisite licenses). This mayrequire negotiating �nesse with local regulatorsif the enabling statute requires the receivingcompany to possess certain assets before a licensecan be granted (so a “chicken or the egg” di-lemma may arise if the requisite assets will notbe transferred until the corporate split isconsummated).

Principal Documentation and Disclosure

Requirements

A corporate split agreement (in an absorptiontype corporate split), a corporate split plan (in anincorporation type corporate split), and a stockpurchase agreement (when the seller will sell thereceiving company housing the transferred assetsand the assumed liabilities to a third party buyeras part of the overall transaction) are the principaldocuments used to complete a transaction involv-ing a corporate split. Of course, various otherancillary agreements may be necessary, such astransition services agreements, secondmentagreements, supply agreements, senior executiveemployment agreements, and intellectual prop-erty licensing agreements.

The main body of a corporate split agreement/



plan normally tracks a standard form and is typi-cally not heavily negotiated since the arrange-ment will be available for public inspection byinterested third parties (so sensitive disclosuresare intentionally omitted and contained in an-other transaction document). However, in acorporate split involving an unrelated third partyas the ultimate buyer, the annexes that list the as-sets, liabilities, contracts, and other obligationsto be transferred under the corporate split areheavily scrutinized by the buyer in order tocon�rm that all of the desired assets will betransferred and no undesired liabilities will be as-sumed by the receiving company. The businessand legal teams often will work closely togetherto make such determination, with legal counselalso assessing whether (i) the description of thetransferred assets and liabilities is su�cientlyexact to avoid subsequent disputes, (ii) any catch-all transfer language, such as the use of “solelyrelates” or “primarily relates” with respect to therelation between the target business and thetransferred assets and the assumed liabilities isnecessary under the circumstances, and (iii) ap-propriate non-compete waiver language is in-cluded to overcome the application of a statutorynon-compete under Japanese corporate law thatmay apply to the seller post-closing.

The stock purchase agreement should containmore detailed representations and warranties re-lating to the corporate split and the assets thatwill be transferred and the liabilities that will beassumed. For example, the seller should repre-sent and warrant that the corporate split will beconducted in accordance with the corporate splitagreement/plan and Japanese law, all assets andliabilities solely related/primarily related to thetarget business will be transferred to and assumedby the receiving company as of the closing date

(assuming the corporate split involves the transferof a target business), and the corporate split willnot harm any creditors. In addition, the stockpurchase agreement should contain corporatesplit-related closing conditions, such as the sellerhas not received any objections from major cred-itors concerning the corporate split and the vari-ous corporate split representations and warran-ties are accurate as of the closing date.

A variety of information stipulated under Jap-anese corporate law must be made publicly avail-able in connection with a corporate split (typi-cally by storing the relevant information in ano�ce room open for public inspection). Forexample, prior to the closing of the corporate splitthe seller must make publicly available the fullcorporate split agreement/plan, the matters thatwere considered to support the reasonableness ofthe valuation of the transferred assets and the as-sumed liabilities, �nancial statements of the sellerand the receiving company, and a description ofany material developments occurring after theexecution date of the corporate split agreement/plan. Disclosure obligations continue for sixmonths after the closing of the corporate split,with the seller and the receiving company re-quired to make available for inspection disclo-sures concerning whether any creditors objectedto the transaction and whether any shareholdersexercised their appraisal rights.

Possible Third-Party Consents

As mentioned above, a principal advantage ofa corporate split is that non-governmental thirdparty consents are normally not required in orderto complete the transaction. To de�nitively deter-mine whether any third party consents are re-quired, the deal team should (i) analyze the anti-assignment provisions in the material contracts



of the target business, and (ii) determine whetherthe shareholders of the seller or the receivingcompany need to approve the corporate split.

Anti-assignment clause analysis. Many Japa-nese commercial contracts contain broadlydrafted clauses prohibiting the assignment of theagreement to a third-party. For example, the anti-assignment clause in a typical Japanese com-mercial contract might simply state that the“agreement and the rights of a party hereundermay not be assigned without the consent of theother party.” While many common law jurisdic-tions adopt the view that an acquisition resultingby operation of law (such as a corporate split) isnot considered an “assignment” or “transfer” and,therefore, the agreement can be assumed withoutthe counter-party’s consent (unless an anti-assignment clause expressly stipulates that thearrangement cannot be assigned or transferred by“operation of law” or otherwise), the same analy-sis does not apply under Japanese law.

Due to the absence of applicable Japaneselegal precedents and the lack of consensus amongnoteworthy Japanese legal scholars on the scopeof anti-assignment clauses, many Japanese legalpractitioners take the view that most Japanese-law governed contracts can be assigned regard-less of any restrictions under an anti-assignmentclause, but an assigning party will be exposed toa damage claim if the contract’s anti-assignmentclause is breached. The foregoing analysis leadsto a focus on the magnitude of an assigningparty’s potential damage exposure rather thanwhether an actual assignment or transfer ofcontractual rights occurred under Japanese law,and results in a de facto prohibition on certain as-signments if the assigning party will be exposedto a large damage claim (as under such circum-

stances it would be prudent for it to obtain thecounter-party’s prior consent to transfer). Ac-cordingly, legal counsel should be brought into acorporate split transaction at an early stage todevelop a position towards third-party consentrequirements, which evaluation will often con-sider the assigning party’s damage exposure byexamining the language of the anti-assignmentclause, the history of the negotiations under thesubject contract, whether the receiving company(or the buyer, if applicable) is a competitor of thecounter-party under the subject contract, the re-newal terms of the subject contract, and thenature of the services to be provided under thesubject contract.

A di�erent analysis applies if the agreement tobe assigned is governed by non-Japanese law.Legal counsel will need to consider whether thelaws of the foreign jurisdiction allow the receiv-ing company to assume the subject agreement byoperation of law under an arrangement similar toa corporate split. If the subject jurisdiction pro-hibits such assumption or does not have a schemesu�ciently similar to a corporate split for com-parative purposes, then the transaction partiescould face a very di�cult decision of whether totransfer the subject agreement to the receivingcompany without obtaining the counter-party’sconsent.

Shareholder approval requirements. The ap-proval of two-thirds or more of the voting rightsof the seller’s shareholders is required if the bookvalue of the transferred assets represents morethan 20% of the book value of the seller’s totalassets. A similar super-majority shareholder ap-proval is required for the receiving companyunder an “absorption type” corporate split if (i)the book value of the consideration to be paid



represents more than 20% of the book value ofthe receiving company’s net worth, or (ii) a suf-�cient number of shareholders inform the receiv-ing company that they object to the transaction(which number can range from shareholdersholding one-ninth to one-sixth of the receivingcompany’s outstanding voting rights, dependingon the quorum requirements speci�ed in thereceiving company’s articles of incorporation).The need to obtain shareholder approval couldmake the proposed corporate split impractical ifthe seller or the receiving company is a publiclytraded company without a large controllingshareholder and undesirable due to the length oftime to obtain it and the potential costs that theseller and the receiving company could incur ifdissenting shareholders exercise their appraisalrights (as discussed below in “Potential Hurdlesto Completing a Corporate Split—AppraisalProceedings”).

Potential Hurdles to Completing a

Corporate Split

While a corporate split can be completedwithout the need to obtain third party consents,the interests of various stakeholders must beaddressed. In particular, the seller will need to (i)consult with employees whose employment rela-tionship will be transferred to the receivingcompany to garner their support for the transac-tion, (ii) deal with objections raised by creditorsto the corporate split, and (iii) partake in appraisalproceedings if shareholders validly object to thecorporate split.

Employee consultations. Under Japaneselabor laws, persons who are “primarily engaged”in a business that is subject to the corporate splitand who are identi�ed in the corporate splitagreement/plan as employees to be transferred

will have their employment relationship trans-ferred by operation of law to the receiving com-pany upon the consummation of the corporatesplit, but such employees may have a claimagainst the receiving company if their employ-ment conditions will be worse after the transfer.Accordingly, the following key employee-relatedmatters require special attention when undertak-ing a corporate split:

Identifying the employees to be transferred. Aseller cannot unilaterally determine who will betransferred under the corporate split. Employeeswho are primarily engaged in the target businesscan object (and demand a transfer) even if thecorporate split agreement/plan stipulates thatthey will not be transferred. Similarly, if thecorporate split agreement/plan provides for thetransfer of employees who are not primarilyengaged in the target business, such persons canobject and demand that their employment rela-tionship remain with the seller. A “business” isnot de�ned under Japanese labor laws, so practi-tioners often rely on the same judicial precedentsused when evaluating whether a corporate splitcan be structured on a tax-free basis (as discussedabove in “What is a Corporate Split?—Tax-freecorporate splits”).

The seller must give employees of the targetbusiness at least 13 days to lodge an objection.Whether employees who do not devote their fullattention to the target business would fall underthe de�nition of persons “primarily engaged” inthe target business depends on a variety of fac-tors set forth in Japanese labor regulations,including an assessment of the time spent on mat-ters relating to the target business by the subjectemployee and the role/responsibility of the sub-ject employee.



The receiving company or buyer (as appli-cable) should be actively involved in determin-ing which employees are transferred with thetarget business, because making such a determi-nation is susceptible to gamesmanship by theseller despite Japanese guidelines that discouragemisconduct. Speci�cally, so long as the sellerobtains the consent of the subject employees, aseller could use the corporate split as an op-portunity to transfer workers unrelated to thetarget business in an e�ort to reduce dead-weight,or could fail to transfer key employees related tothe target business because such persons wouldbe instrumental to the seller’s other operations.

Ensuring that employment conditions remainsubstantially the same. A receiving companyusually o�ers the target business employees ap-proximately the same base salary, bonus pro-gram, perks provided under employee workrules, and pension bene�ts available to them im-mediately prior to the corporate split. A receiv-ing company does not need to completely orentirely replicate the terms of employment be-cause it is permitted under Japanese law to make“reasonable” changes to the terms of employ-ment available to the target business employees.However, such exception does not truly providea receiving company with great �exibility tomake material changes to the terms of employ-ment available to the target business employeesbecause “reasonable” is not de�ned clearly underJapanese law and judges on Japan’s specializedlabor courts are typically pro-employee. A re-ceiving company, therefore, should consult withlegal counsel if it intends to make materialchanges to the base salary, bonus program, perksprovided under employee work rules, or pensionbene�ts available to the target business employ-ees after their transfer to the receiving company.

Continuing the pension bene�ts for the trans-ferred employees can lead to unexpected trapsbecause in many cases pension plans pre- andpost-closing cannot be split within the same plan.A seller, therefore, may need to provide pensiontransition services covering the transferred em-ployees for months after the closing due to thelength of time it may take and the complexity ofcompleting the pension recti�cation exercise (asthe deal team will face great pressure to close ifall other closing conditions have been satis�ed).

A receiving company also should note thatcomplying with the compensation maintenancerequirements of a corporate split can lead tointernal tension if the target business employeeswill receive a greater overall compensation pack-age than the existing employees of the receivingcompany or the buyer (if applicable). Thus, thereceiving company and the buyer may need notonly to comfort the target business employeesbut also may need to dissuade existing employ-ees from demanding equivalent pay or otherwisedisrupting the workplace environment.

Creditor objections. Creditors whose loanswill be assumed by the receiving company andcreditors of the seller may lodge objections to acorporate split, which are each discussed im-mediately below.

Creditors whose loans will be assumed by the

receiving company. Creditors whose loans willbe assumed by the receiving company may objectfor a number of reasons, such as the receivingcompany has a substantial amount of senior debtor pari passu debt, a bad credit history, a poorreputation or uncertain business prospects. Thus,the seller is required to notify those creditorswhose loans will be assumed by the receivingcompany about the proposed corporate split and



allow such creditors a minimum of 30 days toobject to the loan assumption. If a creditor timelyobjects, then the seller must either discharge theobligations owed to the creditor or furnish ade-quate collateral to serve as security for the obliga-tions owed to the creditor, unless the seller candemonstrate that the corporate split will not harmthe creditor.

To satisfy the creditor notice requirementdiscussed immediately above, the seller mustplace a noti�cation in the “o�cial gazette”(kampo) and send individual notices to eachknown applicable creditor. A direct creditornoti�cation requirement could be problematic forthe seller if the pool of creditors is large or thereare strategic concerns about sending noticesdirectly to creditors. Fortunately, a �x exists.Except where the creditor has or could have a tortclaim against the seller, a seller does not need tosend individual notices to creditors if the seller’sarticles of incorporation permit it to satisfy its in-dividual noti�cation requirements either throughpublication in a daily newspaper or placement ofan electronic public notice (denshi kokoku) andnoti�cation is completed in accordance with suchrequirements. Thus, the deal team should reviewthe seller’s articles of incorporation to determinethe required public noti�cation method and adjustthe timetable for the corporate split if an amend-ment to the seller’s articles of incorporation isdesired to permit a di�erent individual noti�ca-tion method.

Creditors of the seller. Creditors of the selleralso may have concerns if a corporate split willresult in the transfer of a substantial portion ofthe assets of the seller while only a small portionof the liabilities of the seller will be transferred,or if the seller does not receive adequate compen-

sation under the corporate split. In addition toinitiating a fraudulent conveyance claim, amend-ments to Japanese corporate law that became ef-fective in 2015 provide creditors with a furtherprotection—if a seller’s creditor is harmed by acorporate split (e.g., the seller is unable to repaythe creditor in full) and the parties to the corporatesplit were aware of this potential harm, then suchcreditor may make a claim directly against thereceiving company since presumably that entitywill have more funds to satisfy the creditor’sclaims since it received various assets from theseller.

Appraisal proceedings. Appraisal rights areavailable to shareholders who are entitled toobject to the corporate split due to the size of thetransaction. Speci�cally, shareholders of theseller are entitled to object if the book value ofthe transferred assets subject to the corporate splitrepresents more than 20% of the book value ofthe seller’s total assets, and shareholders at thereceiving company level are entitled to object ifthe book value of the consideration to be paid inthe corporate split represents more than 20% ofthe book value of the receiving company’s networth.

To exercise appraisal rights, a shareholdermust inform the seller/the receiving companywithin a statutory 20-day window prior to the ef-fective date of the corporate split that it wishes toexercise its appraisal rights, and the shareholdermust vote against the corporate split (if theshareholders are required to approve the corpo-rate split). In this regard, note that shareholderapproval at the receiving company level is notrequired despite the value of the transactionmeeting the applicable net worth threshold ifthere is a 90% or more capital ownership rela-



tionship between the seller and the receivingcompany (i.e., the seller owns 90% or more ofthe outstanding voting rights in the receivingcompany, or a 90% or more controlled subsid-iary, though not technically the receiving com-pany, transfers assets and liabilities under acorporate split to its parent company).

Under Japanese corporate law, objecting share-holders who exercise their appraisal rights areentitled to receive a “fair price” for their repur-chased shares. Japan’s Supreme Court ruled in2011 that if a corporate split does not result in anincrease in corporate value (e.g., a corporate splitinvolving the transfer of a target business to areceiving company that is a wholly-owned sub-sidiary of the seller), then an objecting share-holder should not be entitled to any premium andthe appraisal valuation should be based on thefair value of the subject shares as of the date theobjecting shareholder exercised its appraisalrights. Depending on the circumstances, there-fore, shareholders may have little economicincentive to exercise their appraisal rights.

Piecing It All Together: Corporate Split

Timeline

Undertaking a corporate split in Japan is com-plex and requires a �ne attention to details. Acorporate split normally takes approximately twomonths to complete (and will take even longer ifshareholder approval is required for a transactionparty that is a publicly traded company). Thus,the amount of time required to complete a corpo-rate split can be a disadvantage to using thisstructure, unless other acquisition structures

would require a similar amount of time to com-

plete or require lengthy regulatory consents or li-

censes (so the time incurred to complete the

corporate split mechanics would not cause an ad-

ditional delay).

Determining the closing date for a corporate

split presents a unique challenge. In particular,

the e�ective date for the corporate split must be

stated in the corporate split plan/agreement. If

the stated closing date turns out to be incorrect,

then a notice must be disseminated to third par-

ties in accordance with the method speci�ed in

the seller’s articles of incorporation (as discussed

above in “Potential Hurdles to Completing a

Corporate Split—Creditor Objections”) to inform

them about the new closing date at least one day

prior to the then existing closing date (if the clos-

ing date will be delayed) or one day prior to the

new closing date (if the closing date will be

accelerated). As such, the transaction parties will

face a conundrum if it is di�cult to know inadvance when the closing conditions for a trans-action will be satis�ed.

Annex B provides a short-form indicativetimeline for a seller undertaking an incorporationtype corporate split where the seller is a privatelyheld company and shareholder approval is re-quired to complete the corporate split (and suchshareholder approval will be obtained through awritten consent). The timeline for a correspond-ing absorption type corporate split is similar. Ofcourse, the indicative timeline should be adjustedfor the dynamics of a particular transaction.



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