• 2022.11.25
  • Corporate

A case of transferring all shares of a New York company to a third party

Outline of the case

A Japanese company established a subsidiary in Manhattan, New York, and rented a small storefront in the center of Manhattan to operate its business. However, due to the fact that the company could not expect the revenue and synergy it had initially hoped for and the physical burden of managing both the Japanese and American, they decided to sell the subsidiary. Fortunately, a potential buyer interested in the Manhattan store emerged, and discussions were held regarding the terms of the agreement and the conditions of succession. The Japanese company that was the transferee of the New York subsidiary requested our firm to provide legal advice on the disposition of the U.S. subsidiary and to review the stock transfer agreement. We advised on the share transfer procedures and consulted with the U.S. law firm representing the prospective purchaser to discuss and negotiate the terms and conditions of the agreement, including the contents of the Repand Warranty, and finalize the agreement.

Services offered by Kuribayashi Sogo Law Office

When a small or medium-sized Japanese company expands overseas, an important topic is whether or not to establish a local base of operations and, if so, how to establish such a base. One way is to establish a subsidiary, but even if a company establishes a subsidiary on its own, it will take a lot of effort and time to get the local business off the ground. Therefore, one important option is to acquire an already existing company instead of establishing a local subsidiary by yourself. Our firm handles cross-border M&A transactions in which a Japanese company acquires a local company, or in which a Japanese company transfers its shareholding or business in a subsidiary by way of a share transfer or business transfer, including drafting contracts, discussions, and coordination among the parties involved. The structure of an English-language stock transfer agreement should include the following: what preconditions are required for the closing as condition precedent, what confirmations and covenants are required as rep & warranties and covenants, and what covenants are required to ensure that the parties are not in default. It is necessary to put together a contract that prevents default by any of the parties. In addition, every M&A transaction will require different considerations in different circumstances. For example, in the case of the sale of a New York company, the key issue was whether or not to obtain the consent of the real estate owner of the store due to the change of control clause.

Support for Overseas Expansion by Kuribayashi Sogo Law Office

Kuribayashi & Partners provides legal assistance to Japanese companies expanding overseas. Such assistance includes local consulting work such as searching for sales offices, concluding lease agreements, and hiring people, as well as assistance in establishing local corporations, which cannot be performed without a local presence. On the other hand, there are other ways to sell products and provide services overseas while still in Japan, such as exporting products from Japan to other countries or appointing a local sales agent to sell products to local companies through the sales agent. These and other decisions regarding the framework for international transactions can be incorporated into contracts, LOIs, and other documents through discussions with the other party. We have received inquiries from a wide range of companies, from those who are considering starting overseas operations to those who have already conducted many international transactions, regarding the points to keep in mind when conducting international transactions and how to start international transactions. We also provide assistance in putting the details of overseas transaction discussions into documents in the form of LOIs and MOUs to ensure that there are no discrepancies in the understanding of the parties involved. When a basic agreement is reached on the terms and conditions of the transaction, we draft various types of agreements, such as a basic commodity transaction agreement, a movable sales agreement, a service provision agreement, a sales agency agreement, an agent agreement, and a license agreement, according to the client’s actual situation, to support the smooth implementation of overseas transactions. We also prepare various types of contracts, such as service agreements, sales agency agreements, agent agreements, license agreements, etc., according to the client’s actual situation.

Fees

Legal fees for assistance with overseas expansion are charged on a time-charged basis. The hourly rate for partner attorneys is 35,000 yen per hour, and the hourly rate for associate attorneys is 25,000 yen per hour (both excluding consumption tax). On the other hand, for clients who have concluded an advisory contract, a 20% discount is available, so that the hourly rate for partner attorneys is 30,000 yen and 20,000 yen for associate attorneys (both excluding consumption tax). For clients who have concluded an advisory contract, we provide not only services such as drafting and reviewing contracts in Japanese and English, but also daily legal consultations by telephone and e-mail to ensure that we have a good understanding of your business and can continue to provide appropriate services. We would appreciate if you consider entering into an advisory contract with us.

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