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Problems about business succession

Problems	Content
Problem of tax law	Since a maximum of 50% of the inheritance tax can be imposed if the tax applies, it may be necessary to sell off the stocks on hand in order to pay the inheritance tax and hence it becomes the cause that hinders the business succession.
Problem of civil law	One of the most representative examples is family feud. It is said that among the 250 to 400 commercial litigation cases brought into Tokyo District Court per year, over 80% are disputes between relatives of the same family corporations. In order to avoid this kind of problem, it is necessary to take measures to avoid disputes between relatives such as "making will" and "making donation before death".
Problem of corporation law	When an inappropriate person becomes a stockholder of the company by inheritance and takes part in the planning of the company, many problems may arise to hinder a smooth management of the company. Hence, the legal system required for business succession is not fully secured.

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Perspective of business succession measures

Point to note:
Since this scheme is built upon the assumption of a general case, please note that scrutiny involving lawyers, accountants, licensed tax accountants etc. may be required when further transactions are proceeded.

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Case 1：Correspondence with dividend

It is a general measure for dividend. This is the method of carrying out the surplus of a company by dividend and in turn reducing the transfer price.
※It can also be in the form of a treasury stock.

Point to note:
Since this scheme is built upon the assumption of a general case, please note that scrutiny involving lawyers, accountants, licensed tax accountants etc. may be required when further transactions are proceeded.

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Case 2：Correspondence with borrowing ＋ dividend

It is a measure adopted for dividend when a large amount of surplus is appropriated but there is insufficient cash on hand.

Point to note:
Since this scheme is built upon the assumption of a general case, please note that scrutiny involving lawyers, accountants, licensed tax accountants etc. may be required when further transactions are proceeded.

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Case 3：Correspondence with dividend is unavailable

The following case shows a situation that the above-mentioned Case 1 and 2 cannot be applied.
To be concrete, it is the case that stock price cannot be reduced even though dividend is paid. It is because a large sum of unrealized profit on assets makes liabilities exceed assets.

In this situation, the following measures can be considered.

Point to note:
Since this scheme is built upon the assumption of a general case, please note that scrutiny involving lawyers, accountants, licensed tax accountants etc. may be required when further transactions are proceeded.

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For details, please view the following file.
Introduction of the business sucession FA service（PDF）

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