According to reports, Japan’s Ministry of Finance is considering revisions to the tax code to go hand in hand with new laws aimed at allowing foreign firms to engage in specific equity swap mergers and acquisitions with domestic companies.
Under a possible revision of the Commercial Code in April 2006, a non-Japanese firm would be able to utilise stock swaps to finance mergers with a Japanese firm provided the Japanese firm is merged with a local subsidiary of the foreign firm – a so-called triangle merger.
A Ministry of Finance official reportedly commented yesterday that any planned changes to the Commercial Code will be reviewed next month.
Separate reports on Tuesday also revealed that the Ministry is mulling a change that will provide a tax exemption to shareholders in domestic firms that have been acquired through a triangle merger - a move some observers fear would have the effect of nullifying the proposed changes to the Commercial Code.
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