If there are a company to merge (and continue to exist) (“Existing Company”) and a company to be merged (and become legally a part of the existing company) (“Merged Company”), stock options of Merged Company has to be compensated by stock options of Existing Company or by cash.
In case of Stock Swap (where shareholder of a company to become a subsidiary (Company A) will be given shares of a company to become a holding company (Company B)), stock options of company A will be allowed to be forcefully converted to stock options of Company B, because the purpose of Stock Swap is to have Company A as 100% owned subsidiary of Company B. If stock options of Company A remains unchanged, Company A will not be owned 100% by Company B when stock options of Company A are executed.
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I was asked to review an investment contract recently in which foreign investors buy Japanese properties through foreign company as investment vehicle. It is long and complicated! There must be upsides and downsides in terms of tax rate, timing of being taxed, etc. I do not have a whole picture of course, but it seems that Japanese properties in general are still popular to foreign investors so far.