Companies Act(Act No. 86 of 2005)
Last Version: Act No. 90 of 2014
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Companies Act (Part I, Part II, Part III and Part IV)
Act No. 86 of July 26, 2005
Part I General Provisions
Chapter I Common Provisions
(Purpose)
Article 1The formation, organization, operation and management of companies are governed by the provisions of this Act, except as otherwise provided by other acts.
(Definitions)
Article 2In this Act, the meanings of the terms listed in the following items are as prescribed respectively in those items:
(i)"Company" means any Stock Company, General Partnership Company, Limited Partnership Company or Limited Liability Company;
(ii)"Foreign Company" means such any corporation incorporated under the law of a foreign country or such other foreign organization that is of the same kind as the Company or is similar to a Company;
(iii)"Subsidiary Company" means any entity which is prescribed by Ministry of Justice Order as the corporation the management of which is controlled by a Company, including, but not limited to, a Stock Company in which a majority of all voting rights are owned by the Company;
(iii)-2"Subsidiary Company, etc." means a person corresponding to any of the following:
(a)Subsidiary Company; or
(b)any entity which is prescribed by Ministry of Justice Order as the corporation for which management is controlled by a person other than a Company;
(iv)"Parent Company" means any entity which is prescribed by Ministry of Justice Order as a corporation who controls the management of a Stock Company, including, but not limited to, a Company which has a Stock Company as its Subsidiary Company;
(iv)-2"Parent Company, etc." means a person corresponding to any of the following:
(a)Parent Company; or
(b)any entity which is prescribed by Ministry of Justice Order as a person who controls the management of a Stock Company (excluding entities who are corporations);
(v)"Public Company" means any Stock Company the articles of incorporation of which do not require, as a feature of all or part of its shares, the approval of the Stock Company for the acquisition of such shares by transfer;
(vi)"Large Company" means any Stock Company which satisfies any of the following requirements:
(a)that the amount of the stated capital in the balance sheet as of the end of its Most Recent Business Year (meaning the balance sheet reported to the annual shareholders meeting under the provisions of Article 439 in cases provided for in the first sentence of such Article, and referring to the balance sheet under Article 435, paragraph (1) in cases where the first annual shareholders meeting after the incorporation of the Stock Company has not yet been held; the same applies in (b)) is 500,000,000 yen or more; or
(b)that the total sum of the amounts in the liabilities section of the balance sheet as of the end of its Most Recent Business Year is 20,000,000,000 yen or more;
(vii)"Company with a Board of Directors" means any Stock Company which has a board of directors, or any Stock Company which is required to have a board of directors under the provisions of this Act;
(viii)"Company with Accounting Advisor(s)" means any Stock Company which has accounting advisor(s);
(ix)"Company with Company Auditor(s)" means any Stock Company which has company auditor(s) (excluding any Stock Company the articles of incorporation of which provide that the scope of the audit by its company auditor(s) is limited to an audit related to accounting), or any Stock Company which is required to have company auditor(s) under the provisions of this Act;
(x)"Company with a Board of Company Auditors" means any Stock Company which has a board of company auditors, or any Stock Company which is required to have a board of company auditors under the provisions of this Act;
(xi)"Company with Financial Auditor(s)" means any Stock Company which has financial auditor(s), or any Stock Company which is required to have financial auditor(s) under the provisions of this Act;
(xi)-2"Company with an Audit and Supervisory Committee" means any Stock Company which has an Audit and Supervisory Committee;
(xii)"Company with a Nominating Committee, etc." means any Stock Company which has a nominating committee, an audit committee and a compensation committee (hereinafter referred to as "Nominating Committees, etc.");
(xiii)"Company with Class Shares" means any Stock Company which issues two or more classes of shares with different features as to the matters listed in the items of Article 108, paragraph (1), including, but not limited to, the Dividend of Surplus;
(xiv)"General Meeting of Class Shareholders" means a meeting of Class Shareholders (meaning shareholders of any class of shares of a Company with Class Shares; the same applies hereinafter);
(xv)"Outside Director" means a director of any Stock Company who satisfies all of the following requirements:
(a)a person who is not an Executive Director (meaning a director as listed in the items of Article 363, paragraph (1) of a Stock Company or other directors who execute the operations of the Stock Company; the same applies hereinafter) or Executive Officer, manager, or other employee (hereinafter collectively referred to as "Executive Director, etc.") of the Stock Company or its Subsidiary Company and has not been an Executive Director, etc. of the Stock Company or its Subsidiary Company for ten years prior to assuming office;
(b)if a person who has been a director, accounting advisor (if the accounting advisor is a corporation, a member who is in charge of the affairs), or company auditor of the Stock Company or its Subsidiary Company (excluding a person who has been an Executive Director, etc.) at the time within ten years prior to assuming office, a person who has not been an Executive Director, etc. of the Stock Company or its Subsidiary Company for ten years prior to assuming office as director, accounting advisor, or company auditor;
(c)a person who is not a Parent Company, etc. of such Stock Company (limited to a natural person) or director or executive officer, manager, or other employee of a Parent Company, etc.;
(d)a person who is not an Executive Director, etc. of a Subsidiary Company, etc. of the Parent Company, etc. of such Stock Company (excluding such Stock Company and its Subsidiary Company); and
(e)a person who is not a spouse or relative within the second degree of kinship of a director or executive officer, manager, or other important employee of such Stock Company, or its Parent Company, etc. (limited to a natural person);
(xvi)"Outside Company Auditor" means a company auditor of any Stock Company who satisfies all of the following requirements:
(a)a person who has not been a director, accounting advisor (if the accounting advisor is a corporation, a member who is in charge of the affairs; the same applies in (b)), or executive officer, manager, or other employee of such Stock Company or its Subsidiary Company for ten years prior to assuming office;
(b)in cases where a person who has been a company auditor of such Stock Company or its Subsidiary Company at the time within ten years prior to assuming office, the person who has not been a director, accounting advisor, or executive officer, manager, or other employee of such Stock Company or its Subsidiary Company for ten years prior to assuming office as company auditor;
(c)a person who is not a Parent Company, etc. of such Stock Company (limited to a natural person) or director or executive officer, manager, or other employee of a Parent Company, etc.;
(d)a person who is not an Executive Director, etc. of a Subsidiary Company, etc. of Parent Company, etc. of such Stock Company (excluding such Stock Company and its Subsidiary Company); and
(e)a person who is not a spouse or relative within the second degree of kinship of a director, manager, or other important employee of such Stock Company, or its Parent Company, etc. (limited to a natural person);
(xvii)"Shares with Restriction on Transfer" means the shares in cases where a Stock Company provides, as a feature of all or part of its shares, that the approval of the Stock Company is required for the acquisition of such shares by transfer;
(xviii)"Shares with a Put Option" means the shares in cases where a Stock Company provides, as a feature of all or part of its shares, that a shareholder may demand the Stock Company to redeem such shares;
(xix)"Shares Subject to Call" means the shares in cases where a Stock Company provides, as a feature of all or part of its shares, that such Stock Company may redeem such shares upon the occurrence of specified event;
(xx)"Share Unit" means such certain number in cases where a Stock Company provides in its articles of incorporation that certain number of shares it issues constitute one unit of shares which entitles a shareholder to cast one vote in a shareholders meeting or General Meeting of Class Shareholders;
(xxi)"Share Option" means any right which entitles the holder to acquire shares in a Stock Company by exercising the right against such Stock Company;
(xxii)"Bond with Share Options" means any Bond with attached Share Options;
(xxiii)"Bond" means any monetary claim owed by a Company by allotment under the provisions of this Act and which will be redeemed in accordance with the provisions on the matters listed in the items of Article 676;
(xxiv)"Most Recent Business Year" means the latest of business years for which approval under Article 438, paragraph (2) (or any approval under Article 436, paragraph (3) in cases provided for in the first sentence of Article 439) is obtained with respect to the financial statements provided in Article 435, paragraph (2) relating to each business year;
(xxv)"Dividend Property" means the property to be distributed in cases where a Stock Company pays the Dividend of Surplus;
(xxvi)"Entity Conversion" means any change, through conversion, from a Company listed in (a) or (b) below, respectively, to another form of Company prescribed immediately thereafter in the following (a) or (b):
(a)from a Stock Company to a General Partnership Company, Limited Partnership Company or Limited Liability Company;
(b)from a General Partnership Company, Limited Partnership Company or Limited Liability Company to a Stock Company;
(xxvii)"Absorption-type Merger" means a merger that a Company effects with another Company which causes the Company surviving the merger to succeed to all of the rights and obligations of the Company that disappears in the merger;
(xxviii)"Consolidation-type Merger" means a merger effected by two or more Companies which causes the Company incorporated in the merger to succeed to all of the rights and obligations of the Companies that disappear in the merger;
(xxix)"Absorption-type Company Split" means the action of causing another Company to succeed to all or part of the rights and obligations that a Stock Company or Limited Liability Company holds in connection with its business undertakings;
(xxx)"Incorporation-type Company Split" means the action of causing the Company incorporated in a company split to succeed to all or part of the rights and obligations that one or multiple Stock Companies or Limited Liability Companies hold in connection with their business undertakings;
(xxxi)"Share Exchange" means any exchange of shares whereby Stock Company(s) cause all of its Issued Shares (meaning shares issued by a Stock Company; the same applies hereinafter) to be acquired by another Stock Company or Limited Liability Company;
(xxxii)"Share Transfer" means any transfer whereby one or multiple Stock Companies cause all of its Issued Shares to be acquired by a newly incorporated Stock Company;
(xxxiii)"Method of Public Notice" means the method which a Company (including a Foreign Company) adopts to give public notice (excluding those which are required to be effected by publishing the notice in the Official Gazette pursuant to the provisions of this Act or any other acts);
(xxxiv)"Electronic Public Notice" means a Method of Public Notice prescribed by Ministry of Justice Order which enables the general public to access such public notice by electronic or magnetic means (meaning that it enables the general public to access that public notice through the use of an electronic data processing system or through any other application of information and communications technology which is specified by Ministry of Justice Order; the same applies hereinafter).
(Legal Personality)
Article 3A Company is a corporation.
(Address)
Article 4The address of a Company is to be the location of its head office.
(Commercial Transaction)
Article 5Any act which a Company (including a Foreign Company; the same applies in paragraph (1) of the following Article, Article 8 and Article 9) carries out as its business and any act which it carries out for its business constitute a commercial transaction.
Chapter II Trade Name of Company
(Trade Name)
Article 6(1)The name of a Company is its trade name.
(2)A Company must use in its trade name the words "Kabushiki-Kaisha", "Gomei-Kaisha", "Goushi-Kaisha" or "Goudou-Kaisha" respectively for Stock Company, General Partnership Company, Limited Partnership Company or Limited Liability Company.
(3)A Company may not use in its trade name any word which makes it likely that the Company may be mistaken for a different form of Company.
(No Use of Name Which Is Likely to Be Mistaken for a Company)
Article 7No person who is not a Company may use in its name or trade name any word which makes it likely that the person may be mistaken as a Company.
Article 8(1)No person may use, with a wrongful purpose, any name or trade name which makes it likely that the person may be mistaken for the other Company.
(2)Any Company the enterprise interests of which have been, or are likely to be, infringed by the use of any name or trade name in violation of the provisions of the preceding paragraph may seek an injunction suspending or preventing the infringement against the person who infringes, or is likely to infringe, those enterprise interests.
(Liability of Company Permitting Others to Use Its Trade Name)
Article 9Any Company who has permitted others to carry out a business or engage in any enterprise by using the Company's own trade name is jointly and severally liable together with such others, vis-a-vis any person who has transacted with such others based on misunderstanding that such Company carries out such business, for the performance of any obligations which may arise from such transaction.
Chapter III Employees of a Company
Section 1 Employees of a Company
(Manager)
Article 10A Company (including a Foreign Company; hereinafter the same applies in this Part) may appoint managers and have them carry out its business at its head office or branch office.
(Manager's Authority of Representation)
Article 11(1)A manager has authority to do any and all judicial and non-judicial acts on behalf of a Company in connection with its business.
(2)A manager may appoint or dismiss other employee(s).
(3)No limitation on a manager's authority of representation may be asserted against a third party in good faith.
(Non-Competition by Manager)
Article 12(1)A manager may not commit any of the following acts without the permission of the Company:
(i)engage in the manager's own enterprise;
(ii)carry out, for themselves or for a third party, any transaction which is in the line of business of the Company;
(iii)become an employee of any other Company or merchant (excluding any Company; the same applies in Article 24);
(iv)become a director, executive officer or any member who executes the operation of any other Company.
(2)If a manager commits any act listed in item (ii) of the preceding paragraph in violation of the provisions of that paragraph, the amount of the profit obtained by the manager or any third party as a result of such act is presumed to be amount of the damage suffered by the Company.
(Apparent Manager)
Article 13Employees with a title which holds them out as the chief of the business of the head office or any branch office of a Company are deemed to have the authority to do any and all non-judicial acts in connection with the business of such head office or branch office; provided, however, that this does not apply to the cases where the counterparty acts with knowledge of the counterparty's actual authority.
(Employees to Whom the Authority of a Certain Kind of Matter or a Specific Matter Is Delegated)
Article 14(1)Any employee to whom the authority of a certain kind of matter or a specific matter in connection with the business is delegated has the authority to do any and all non-judicial acts in connection with such matter.
(2)No limitation on the authority of representation of the employee provided in the preceding paragraph may be asserted against a third party in good faith.
(Employees of Stores for the Purpose of Selling Goods)
Article 15Any employee of a store the purpose of which is the sale, etc. (meaning sale, lease or any other act similar to the foregoing; hereinafter the same applies in this Article) of goods is deemed to have authority to conduct the sale, etc. of the goods located in such store; provided, however, that this does not apply to the cases where the counterparty acts with knowledge of the counterparty's actual authority.
Section 2 Commercial Agents of the Companies
(Obligation to Give Notice)
Article 16When any Commercial Agent (meaning a person who acts on behalf of a Company as an agent or intermediary in any transaction in the ordinary line of business of the Company, and is not an employee of the Company; hereinafter the same applies in this Section) undertakes any transaction as an agent or intermediary, the Commercial Agent must give notice of that fact to the Company without delay.
(Non-Competition by Commercial Agent)
Article 17(1)A Commercial Agent may not carry out any of the following acts without the permission of the Company:
(i)carry out, for themselves or for a third party, any transaction which is in the line of business of the Company;
(ii)become a director, executive officer or any member who executes operation of any other Company which carries out the same kind of business as the Company.
(2)If a Commercial Agent commits any act listed in item (i) of the preceding paragraph in violation of provisions of that paragraph, the amount of the profit obtained by the Commercial Agent or any third party as a result of such act is presumed to be amount of the damage suffered by the Company.
(Authority to Receive Notice)
Article 18A Commercial Agent to whom the authority of the sale of goods or the role of intermediary in the same is delegated has authority to receive the notice regarding the sale and purchase including, but not limited to, the notice under Article 526, paragraph (2) of the Commercial Code (Act No. 48 of 1899).
(Cancellation of Commercial Agency Contract)
Article 19(1)A Company or the Commercial Agent may, when they did not define the period of the commercial agency contract, cancel the contract by giving an advance notice more than two months in advance.
(2)Notwithstanding the provisions of the preceding paragraph, if there is any compelling reason, the Company or its Commercial Agent may cancel the commercial agency contract at any time.
(Right of Retention of Commercial Agent)
Article 20If any claim arising from acting as an agent or intermediary in any transaction is due, the Commercial Agent can retain any property or negotiable instruments of value which it possesses on behalf of the Company until the satisfaction of such claim; provided, however, that this does not apply to the cases where the parties otherwise manifest their intention.
Chapter IV Non-Competition after Business Transfers
(Non-Competition by Transferor Company)
Article 21(1)Unless the parties otherwise manifest their intention, a Company which transferred its business (hereinafter in this Chapter referred to as "Transferor Company") may not carry out the same line of business within the area of the same city, town or village (including special wards, and ward or administratively consolidated ward of the cities designated under Article 252-19 paragraph (1) of the Local Autonomy Act (Act No. 67 of 1947); hereinafter the same applies in this paragraph), or within the area of any of its neighboring cities, towns or villages for twenty years from the day of the transfer of the business.
(2)In cases where the Transferor Company agreed to a special provision to the effect that it will not carry out the same line of the business, the effectiveness of the special provision is limited to the period of thirty years from the day of the transfer of the business.
(3)Notwithstanding the provisions of the preceding two paragraphs, the Transferor Company may not carry out the same line of business with the purpose of unfair competition.
(Liabilities of Transferee Company Using the Trade Name of the Transferor Company)
Article 22(1)In cases where any Company to which any business is transferred (hereinafter in this Chapter referred to as "Transferee Company") continues to use the trade name of the Transferor Company, the Transferee Company is also liable for the performance of any obligations having arisen from the business of the Transferor Company.
(2)The provisions of the preceding paragraph do not apply in cases where the Transferee Company registers, at the location of its head office, without delay after it has accepted the transfer of the business, a statement to the effect that it will not be liable for the performance of the obligations of the Transferor Company. In cases where the Transferee Company and Transferor Company give notice to the above effect to any third party without delay after the transfer of the business, the same applies to the third party who receives such notice.
(3)In cases where the Transferee Company is liable for the performance of the obligations of the Transferor Company pursuant to the provisions of paragraph (1), the liability of the Transferor Company is extinguished upon lapse of two years after the day of the transfer of the business vis-a-vis any obligee who does not demand the performance, or does not give an advance notice of the demand, within that period.
(4)In cases provided for in paragraph (1), any performance made vis-a-vis the Transferee Company with respect to any claim arising from the business of the Transferor Company remains effective if the performing party has acted in good faith and without gross negligence.
(Assumption of Obligations by Transferee Company)
Article 23(1)Even in cases where a Transferee Company does not continue to use the trade name of the Transferor Company, if it advertises to the effect that it will assume the obligations that have arisen from the business of the Transferor Company, the obligees of the Transferor Company may demand the performance against the Transferee Company.
(2)In cases where the Transferee Company is liable for the performance of the obligations of the Transferor Company pursuant to the provisions of the preceding paragraph, the liability of the Transferor Company is extinguished upon lapse of two years after the day of the advertisement under that paragraph vis-a-vis any obligee who does not demand the performance, or does not give an advance notice of the demand, within that period.
(Request for Performance of Obligations from a Transferee Company Related to Fraudulent Transfer of Business)
Article 23-2(1)In cases where a Transferor Company transfers business, with the knowledge that it harms creditors of the obligations that are not succeeded by the Transferee Company (hereinafter the creditors are referred to as "Remaining Creditors" in this Article), the Remaining Creditors may demand from the Transferee Company the performance of obligations up to the value of the succeeding properties; provided, however, that this does not apply to cases where the Transferee Company has no knowledge of the fact that it harms Remaining Creditors when the business transfer becomes effective.
(2)In cases where a Transferor Company is liable to performance of obligations set forth in the preceding paragraph pursuant to that paragraph, such liability for a Remaining Creditor, who does not demand or give an advance notice of the demand within two years from when the Transferee Company transferred business with the knowledge that it harms the Remaining Creditors, extinguishes when such period elapses. The same applies when twenty years have elapsed from the day when the business transfer comes into effect.
(3)When an order of commencement of bankruptcy proceedings, order of commencement of rehabilitation proceedings, or order of commencement of reorganization proceedings is made against the Transferor Company, the Remaining Creditor may not exercise the right to demand pursuant to the provisions of paragraph (1) from the Transferee Company.
(Business Transfers to or from a Merchant)
Article 24(1)In cases where a Company transfers its business to a merchant, such Company is deemed to be the transferee provided for in Article 16, paragraph (1) of the Commercial Code, and the provisions of Articles 17 through 18-2 of the Code apply.In this case, "or an order of commencement of rehabilitation proceedings" in paragraph (3) of the same Article is deemed to be replaced with "an order of commencement of rehabilitation proceedings or order of commencement of reorganization proceedings".
(2)In cases where a Company accepts transfer of the enterprise of any merchant, such merchant is deemed to be the Transferor Company, and the provisions of the preceding three articles apply.In this case, ", order of commencement of rehabilitation proceedings or order of commencement of reorganization proceedings" in paragraph (3) of the preceding Article is deemed to be replaced with "or an order of commencement of rehabilitation proceedings".
Part II Stock Company
Chapter I Incorporation
Section 1 General Provisions
Article 25(1)A Stock Company may be incorporated by either of the following methods:
(i)the method by which incorporator(s) subscribe(s) for all Shares Issued at Incorporation (meaning the shares which are issued at incorporation of a Stock Company; the same applies hereinafter) pursuant to the provisions of the following Section to Section 8; or
(ii)the method by which, in addition to the subscription by incorporator(s) for the Shares Issued at Incorporation, person(s) who will subscribe for the Shares Issued at Incorporation is/are solicited pursuant to the provisions of the following Section, Section 3, Article 39 and Section 6 to Section 9.
(2)Each incorporator must subscribe for one or more Shares Issued at Incorporation in the incorporation of a Stock Company.
Section 2 Preparation of Articles of Incorporation
(Preparation of Articles of Incorporation)
Article 26(1)In order to incorporate a Stock Company, incorporator(s) must prepare articles of incorporation, and all incorporators must sign or affix the name(s) and seal(s) to it.
(2)Articles of incorporation set forth in the preceding paragraph may be prepared in the form of an electronic or magnetic record (meaning a record that Ministry of Justice Order prescribes as being used in computerized information processing and created in electronic form, magnetic form, or any other form that cannot be perceived by the human senses; the same applies hereinafter). In such cases, actions prescribed by Ministry of Justice Order must be taken in lieu of the signing or the affixing of the names and seals, with respect to the data recorded in such an electronic or magnetic record.
(Matters Required to Be Specified or Recorded in the Articles of Incorporation)
Article 27Articles of incorporation of a Stock Company must specify or record the following matters:
(i)purpose(s);
(ii)trade name;
(iii)location of the head office;
(iv)value of property to be contributed at the incorporation or the lower limit thereof;
(v)name(s) and address(es) of the incorporator(s).
Article 28In cases where a Stock Company is to be incorporated, the following matters do not become effective unless they are specified or recorded in the articles of incorporation referred to in Article 26, paragraph (1):
(i)name(s) of person(s) who contribute(s) by any property other than money, the description of such property and the value thereof, and the number of the Shares Issued at Incorporation that are to be allotted to such person(s) (in cases where the Stock Company to be incorporated is a Company with Class Shares, referring to the class(es) and the number of each class of the Shares Issued at Incorporation; the same applies in Article 32, paragraph (1), item (i));
(ii)property that is agreed to be transferred to the Stock Company after the formation thereof, the value thereof, and the name of the transferor;
(iii)compensation or other special benefit which the incorporator(s) is to obtain by the formation of the Stock Company, and the name(s) of such incorporator(s); and
(iv)expenses regarding the incorporation that are borne by the Stock Company (excluding the fees for the certification of the articles of incorporation, and other expenses which are prescribed by Ministry of Justice Order as expenses that are unlikely to cause harm to the Stock Company).
Article 29Beyond the matters listed in each item of Article 27 and each item of the preceding Article, articles of incorporation of a Stock Company may specify or record the matters which, pursuant to the provisions of this Act, may not become effective unless provided for in the articles of incorporation, or other matters which do not violate any provisions of this Act.
(Certification of Articles of Incorporation)
Article 30(1)Articles of incorporation set forth in Article 26, paragraph (1) do not become effective unless they are certified by a notary public.
(2)Articles of incorporation that are certified by a notary public pursuant to the preceding paragraph may not be amended before the formation of the Stock Company except when they are amended under the provisions of Article 33, paragraph (7) or (9), or Article 37, paragraph (1) or (2).
(Keeping and Inspection of Articles of Incorporation)
Article 31(1)The incorporator(s) (or the Stock Company after the formation of such Stock Company) must keep articles of incorporation at the place designated by the incorporator(s) (or at the head office or branch office of the Stock Company after the formation of such Stock Company).
(2)The incorporator(s) (or, after the formation of such Stock Company, the shareholder(s) and creditor(s) of such Stock Company) may submit the following request at any time during the hours designated by the incorporator(s) (or, after the formation of such Stock Company, during the business hours of such Stock Company); provided, however, that the fees designated by the incorporator(s) (or, after the formation of such Stock Company, such Stock Company) are required to be paid in order to submit the requests listed in item (ii) or item (iv):
(i)if articles of incorporation are prepared in writing, a request to inspect it;
(ii)a request for a transcript or extract of the articles of incorporation referred to in the preceding item;
(iii)if articles of incorporation have been prepared as an electronic or magnetic record, a request to inspect anything that is used in a manner prescribed by Ministry of Justice Order to display the information recorded in that electronic or magnetic record; or
(iv)a request to be provided with the information recorded in the electronic or magnetic record referred to in the preceding item by an electronic or magnetic means that the incorporators have designated (or, after the formation of such Stock Company, such Stock Company), or a request to be issued a document showing that information.
(3)If, after the formation of a Stock Company, it is necessary for the purpose of exercising the rights of a Member of the Parent Company (meaning the shareholders and other members of the Parent Companies; the same applies hereinafter) of such Stock Company, the relevant Member of the Parent Company may, with the permission of the court, make the requests listed in each item of the preceding paragraph with respect to the articles of incorporation of such Stock Company; provided, however, that, in order to make the requests listed in item (ii) or item (iv) of that paragraph, the fees designated by such Stock Company is required to be paid.
(4)In cases where articles of incorporation are prepared as an electronic or magnetic record, for the purpose of the application of the provisions of paragraph (1) with respect to a Stock Company which adopts the measures prescribed by Ministry of Justice Order as the measures that enable its branch offices to respond to the request listed in paragraph (2), item (iii) and item (iv), "head office and branch office" in that paragraph is deemed to be replaced with "head office".
Section 3 Contributions
(Determination of Matters Regarding Shares Issued at Incorporation)
Article 32(1)When incorporator(s) determine the following matters at the incorporation of the Stock Company (excluding matters provided for in the articles of incorporation), the incorporator must obtain the consent of all incorporators:
(i)the number of the Shares Issued at Incorporation that is to be allotted to each incorporator;
(ii)the amount of money to be paid in exchange for the Shares Issued at Incorporation set forth in the preceding item; and
(iii)matters regarding the amount of the stated capital and capital reserves of the Stock Company after the formation.
(2)In cases where the Stock Company to be incorporated is a Company with Class Shares, if the Shares Issued at Incorporation set forth in item (i) of the preceding paragraph are those which are provided for in the articles of incorporation under the provisions of the first sentence of Article 108, paragraph (3), the incorporator(s) must, with the consent of all incorporators, determine the features of such Shares Issued at Incorporation.
(Appointment of Inspector of Information Specified or Recorded in the Articles of Incorporation)
Article 33(1)If articles of incorporation specify or record the matters listed in each item of Article 28, the incorporator(s) must, without delay after the certification by the notary public under Article 30, paragraph (1), file a petition for the appointment of an inspector with the court in order to have the inspector investigate such matters.
(2)In cases where the petition set forth in the preceding paragraph has been filed, the court must appoint the inspector except in case it dismisses such petition as non-conforming.
(3)In cases where the court has appointed the inspector set forth in the preceding paragraph, it may fix the amount of the remuneration that the Stock Company after the formation pays to such inspector.
(4)The inspector set forth in paragraph (2) must conduct the necessary investigation and submit a report to the court by providing it with a document detailing the results of the investigation or with an electronic or magnetic record (limited to one as prescribed by Ministry of Justice Order) in which these have been recorded.
(5)If the court finds it necessary for the purpose of clarification of the contents of the report set forth in the preceding paragraph or of confirmation of the grounds supporting such report, it may request the inspector set forth in paragraph (2) a further report set forth in the preceding paragraph.
(6)When the inspector set forth in paragraph (2) reports pursuant to paragraph (4), the inspector must deliver a copy of the document referred to in that paragraph to the incorporators or use a means prescribed by Ministry of Justice Order to provide them with the information recorded in the electronic or magnetic record referred to in that paragraph.
(7)In cases where the court receives a report under paragraph (4), if it finds the provisions in articles of incorporation relating to matters listed in each item of Article 28 (excluding any matters not subjected to the investigation by the inspector under paragraph (2)) to be improper, it must make a ruling amending the same.
(8)In cases where some or all of the provisions in articles of incorporation relating to matters listed in each item of Article 28 are amended by a ruling set forth in the preceding paragraph, the incorporator(s) may rescind the manifestation of intention relating to subscription for the relevant Shares Issued at Incorporation within one week from the finalization of such ruling.
(9)In the cases prescribed in the preceding paragraph, the incorporator(s) may, with the consent of all incorporators, amend articles of incorporation repealing the provisions which have been amended by such ruling, within one week from the finalization of the ruling set forth in paragraph (7).
(10)The provisions of the preceding nine paragraphs do not apply to the matters prescribed in following items:
(i)in cases where the total value specified or recorded in the articles of incorporation with respect to the property under Article 28, item (i) and item (ii) (hereinafter in this Chapter referred to as "Property Contributed in Kind") does not exceed 5,000,000 yen:Matters listed in item (i) and item (ii) of such Article;
(ii)in cases where the value specified or recorded in the articles of incorporation with respect to Property Contributed in Kind that constitutes Securities (meaning the securities provided for in Article 2, paragraph (1) of the Financial Instruments and Exchange Act (Act No. 25 of 1948), including rights deemed to be securities pursuant to the provisions of paragraph (2) of such Article; the same applies hereinafter) with a market price does not exceed the value calculated by the method prescribed by Ministry of Justice Order as the market price of such Securities:Matters listed in Article 28, item (i) and item (ii) with respect to such Securities;
(iii)in cases where the verification of an attorney, a legal professional Company, a Certified Public Accountant (including a foreign certified public accountant as defined in Article 16-2, paragraph (5) of the Certified Public Accountant Act (Act No. 103 of 1948); the same applies hereinafter), an auditing firm, a tax accountant or a tax accountant corporation (in cases where the Property Contributed in Kind consist of any real estate, referring to such verification and appraisal by a real property appraiser; hereinafter the same applies in this item) is obtained with respect to the reasonableness of the value specified or recorded in the articles of incorporation with respect to the Property Contributed in Kind:Matters listed in Article 28, item (i) or item (ii) (limited to those relating to the Property Contributed in Kind so verified).
(11)None of the following persons may provide the verification prescribed in item (iii) of the preceding paragraph:
(i)an incorporator;
(ii)a transferor of property under Article 28, item (ii);
(iii)a Director at Incorporation (referring to a Director at Incorporation prescribed in Article 38, paragraph (1)) or a Company Auditor at Incorporation (referring to a Company Auditor at Incorporation prescribed for in paragraph (3), item (ii) of such Article);
(iv)a person who is subject to the disciplinary action ordering a suspension of operations and for whom the period of such suspension has not yet elapsed; or
(v)a legal professional Company, an auditing Company or a tax accountant Company more than half of whose members are any of the persons who fall under items (i) to (iii) above.
(Performance of Contributions)
Article 34(1)An Incorporator must, without delay after subscription for Shares Issued at Incorporation, pay in the entire sum of monies relating to the incorporator's contribution, or deliver all properties other than monies relating to the incorporator's contribution fully in money or in kind, with respect to the Shares Issued at Incorporation for which the incorporator has subscribed; provided, however, that, if the consent of all incorporators is obtained, the foregoing provisions do not preclude an incorporator from performing registration, recording or other acts necessary to assert the creation or transfer of rights against third parties after the formation of the Stock Company.
(2)The contribution in money pursuant to the provisions of the preceding paragraph must be paid at the Bank, Etc. (meaning a Bank (meaning a bank as defined in Article 2, paragraph (1) of the Bank Act (Act No. 59 of 1981); the same applies in Article 703, item (i)), a Trust Company (meaning a trust company as defined in Article 2, paragraph (2) of the Trust Business Act (Act No. 154 of 2004); the same applies hereinafter) and other entities prescribed by Ministry of Justice Order as entities equivalent to the same; the same applies hereinafter) designated for payment by the incorporator.
(Transferring of a Right to Become a Shareholder of Shares Issued at Incorporation)
Article 35The transferring of a right to become a shareholder of the Shares Issued at Incorporation by contribution pursuant to the provisions of paragraph (1) of the preceding Article (hereinafter in this Chapter referred to as "Performance of Contributions") may not be asserted against the Stock Company after the formation.
(Forfeiture of Right to Become a Shareholder of Shares Issued at Incorporation)
Article 36(1)In cases where not all of the incorporators fulfill the Performance of Contributions, the incorporators must set a date and notify any incorporator who does not fulfill the Performance of Contributions that such incorporator must fulfill the Performance of Contributions by such date.
(2)The notice set forth in the provisions of the preceding paragraph must be given no later than two weeks prior to the date provided for in such paragraph.
(3)Incorporator(s) who is notified pursuant to the provisions of paragraph (1) will forfeit the right to become the shareholder of Shares Issued at Incorporation by fulfilling the Performance of Contributions if the same fail to fulfill the Performance of Contributions by the date provided for in such paragraph.
(Provisions on Total Number of Authorized Shares)
Article 37(1)In cases where the total number of shares that may be issued by a Stock Company (hereinafter referred to as "Total Number of Authorized Shares") is not provided for in the articles of incorporation, the incorporators must, with the consent of all incorporators, amend the articles of incorporation and create a provision on the Total Number of Authorized Shares prior to the formation of the Stock Company.
(2)In cases where the Total Number of Authorized Shares is provided for in the articles of incorporation, the incorporators may, with the consent of all incorporators, amend the articles of incorporation with respect to the Total Number of Authorized Shares at any time prior to the formation of the Stock Company.
(3)The total number of Shares Issued at Incorporation may not be less than one quarter of the Total Number of Authorized Shares; provided, however, that this does not apply in cases where the Stock Company to be incorporated is not a Public Company.
Section 4 Election and Dismissal of Officers at Incorporation
(Election of Officers at Incorporation)
Article 38(1)The incorporator(s) must elect the Director(s) at Incorporation (meaning person(s) who becomes director(s) at the incorporation; the same applies hereinafter) without delay after the fulfillment of the Performance of Contributions.
(2)In cases where the Stock Company to be incorporated is a Company with an Audit and Supervisory Committee, the election of Directors at Incorporation pursuant to the provisions of the preceding paragraph must be implemented by distinguishing the election of a Director at Incorporation who is an Audit and Supervisory Committee Member at Incorporation (meaning a person who becomes an Audit and Supervisory Committee Member (meaning an member of the Audit and Supervisory Committee; the same applies hereinafter) at incorporation of a Stock Company; the same applies hereinafter) from among other Directors at Incorporation.
(3)In the cases listed in the following items, the incorporator(s) must elect the persons provided for respectively in those items without delay after the fulfillment of the Performance of Contributions:
(i)in cases where the Stock Company to be incorporated is a Company with Accounting Advisor(s):Accounting Advisor at Incorporation (meaning a person who becomes an accounting advisor at the incorporation; the same applies hereinafter);
(ii)in cases where the Stock Company to be incorporated is a Company with Company Auditor(s) (including any Stock Company the articles of incorporation of which provide that the scope of the audit by its company auditor(s) is limited to an audit related to accounting):Company Auditor at Incorporation (meaning a person who becomes a company auditor at the incorporation; the same applies hereinafter);
(iii)in cases where the Stock Company to be incorporated is a Company with Financial Auditor(s):Financial Auditor at Incorporation (meaning a person who becomes a financial auditor at the incorporation; the same applies hereinafter).
(4)Persons who are prescribed in articles of incorporation as Directors at Incorporation (in cases where the Stock Company to be incorporated is a Company with an Audit and Supervisory Committee, Directors at Incorporation who are Audit and Supervisory Committee Members at Incorporation or other Directors at Incorporation; hereinafter the same applies in this paragraph), Accounting Advisors at Incorporation, Company Auditors at Incorporation, and Financial Auditors at Incorporation are deemed to be elected as Directors at Incorporation, Accounting Advisors at Incorporation, Company Auditors at Incorporation, and Financial Auditors at Incorporation, respectively, upon the fulfillment of the Performance of Contributions.
Article 39(1)In cases where a Stock Company to be incorporated is a Company with a Board of Directors, there must be three or more Directors at Incorporation.
(2)In cases where a Stock Company to be incorporated is a Company with a Board of Company Auditors, there must be three or more Company Auditors at Incorporation.
(3)In cases where the Stock Company to be incorporated is a Company with an Audit and Supervisory Committee, Directors at Incorporation who are Audit and Supervisory Committee Members at Incorporation must be three persons or more.
(4)A person who may not be a director (in cases of a Company with an Audit and Supervisory Committee, a director who is an Audit and Supervisory Committee Member or other director), accounting advisor, company auditor or financial auditor of a Stock Company after formation pursuant to the provisions of Article 331, paragraph (1) (including the case where it is applied mutatis mutandis pursuant to Article 335, paragraph (1)), Article 333, paragraph (1) or (3), or Article 337, paragraph (1) or (3) may not become a Director at Incorporation (in cases where a Stock Company after incorporation is a Company with an Audit and Supervisory Committee, a Director at Incorporation who is an Audit and Supervisory Committee Member at Incorporation or other Director at Incorporation), an Accounting Advisor at Incorporation, a Company Auditor at Incorporation, or a Financial Auditor at Incorporation (hereinafter in this Section referred to as "Officers, etc. at Incorporation"), respectively.
(Method of Election of Officers at Incorporation)
Article 40(1)The election of the Officers, etc. at Incorporation is determined by a majority of the votes of the incorporators.
(2)In the cases provided for in the preceding paragraph, an incorporator is entitled to one vote for each one Share Issued at Incorporation for which the Performance of Contributions has been fulfilled; provided, however, that, in cases where the Share Unit is provided for in the articles of incorporation, an incorporator is entitled to one vote for each one unit of the Shares Issued at Incorporation.
(3)Notwithstanding the provisions of the preceding paragraph, in cases where the Stock Company to be incorporated is a Company with Class Shares, if it issues Shares Issued at Incorporation of a class for which it is provided that the voting rights may not be exercised in connection with the election of some or all of the directors, with respect to such class of the Shares Issued at Incorporation, the incorporators may not exercise voting rights in connection with the election of the Directors at Incorporation who are to become such directors.
(4)For the purpose of the application of the provisions of the preceding paragraph in cases where the Stock Company to be incorporated is a Company with an Audit and Supervisory Committee, ", director" in the same paragraph is deem to be replaced with ", director who is an Audit and Supervisory Committee Member or other director", and "such director" is deemed to be replaced with "these directors".
(5)The provisions of paragraph (3) apply mutatis mutandis to the election of Accounting Advisors at Incorporation, Company Auditors at Incorporation and Financial Auditors at Incorporation.
(Special Provisions on the Method of Election of Officers at Incorporation)
Article 41(1)Notwithstanding the provisions of paragraph (1) of the preceding Article, in cases where, at the incorporation of a Stock Company, it issues shares of a class for which the matters listed in Article 108, paragraph (1), item (ix) (limited to those relating to directors (in cases of a Company with an Audit and Supervisory Committee, a director who is an Audit and Supervisory Committee Member or other director)) are provided, the election of the Directors at Incorporation (in cases where the Stock Company to be incorporated is a Company with an Audit and Supervisory Committee, a Director at Incorporation who is an Audit and Supervisory Committee Member at Incorporation or other Director at Incorporation) is determined by a majority of the votes (limited to the votes with respect to such class of the Shares Issued at Incorporation) of the incorporators who subscribed for such class of the Shares Issued at Incorporation, consistently with the provisions of articles of incorporation with respect to the matters provided for in paragraph (2), item (ix) of such Article.
(2)In the cases provided for in the preceding paragraph, an incorporator is entitled to one vote for each one Share Issued at Incorporation of such class for which the Performance of Contributions is fulfilled; provided, however, that, in cases where the Share Unit is provided for in the articles of incorporation, an incorporator is entitled to one vote for each one unit of the Shares Issued at Incorporation of such class.
(3)The provisions of the preceding two paragraphs apply mutatis mutandis to the cases where the shares of a class for which matters listed in Article 108, paragraph (1), item (ix) (limited to those relating to company auditors) are provided are issued at incorporation of the Stock Company.
(Dismissal of Officers at Incorporation)
Article 42The incorporators may dismiss the Officers, etc. at Incorporation elected by the incorporators (including those deemed to be elected as the Officers, etc. at Incorporation pursuant to the provisions of Article 38, paragraph (4)) at any time prior to the formation of the Stock Company.
(Method of Dismissal of Officers at Incorporation)
Article 43(1)Dismissal of the Officers, etc. at Incorporation is determined by a majority of the votes of the incorporators (or by a majority of two thirds or more in case of dismissal of a Director at Incorporation who is an Audit and Supervisory Committee Member at Incorporation or a Company Auditor at Incorporation).
(2)In the cases provided for in the preceding paragraph, an incorporator is entitled to one vote for each one Share Issued at Incorporation for which the Performance of Contributions has been fulfilled; provided, however, that, in cases where the Share Unit is provided for in the articles of incorporation, an incorporator is entitled to one vote for each one unit of the Shares Issued at Incorporation.
(3)Notwithstanding the provisions of the preceding paragraph, in cases where the Stock Company to be incorporated is a Company with Class Shares, if it issues Shares Issued at Incorporation of a class for which it is provided that the voting rights may not be exercised in connection with the dismissal of some or all of the directors, with respect to such class of the Shares Issued at Incorporation, the incorporators may not exercise voting rights in connection with the dismissal of the Directors at Incorporation who are to become such directors.
(4)For the purpose of the application of the provisions of the preceding paragraph in cases where the Stock Company to be incorporated is a Company with an Audit and Supervisory Committee, ", director" in the same paragraph is deem to be replaced with ", director who is an Audit and Supervisory Committee Member or other director", and "such director" is deemed to be replaced with "these directors".
(5)The provisions of paragraph (3) apply mutatis mutandis to the dismissal of Accounting Advisors at Incorporation, Company Auditors at Incorporation and Financial Auditors at Incorporation.
(Special Provisions on Method of Dismissal of Directors at Incorporation)
Article 44(1)Notwithstanding the provisions of paragraph (1) of the preceding Article, the dismissal of Director(s) at Incorporation (excluding a Director at Incorporation who is an Audit and Supervisory Committee Member at Incorporation; the same applies in the following paragraph and paragraph (4)) who is elected pursuant to the provisions of Article 41, paragraph (1) is determined by a majority of the votes of the incorporators relating to such election.
(2)Notwithstanding the provisions of the preceding paragraph, in cases where there is a provision in the articles of incorporation to the effect that a director (excluding a director who is an Audit and Supervisory Committee Member; the same applies in paragraph (4)) who is elected pursuant to the provisions of Article 41, paragraph (1), or is elected at an Organizational Meeting of Class Shareholders (referring to Organizational Meeting of Class Shareholders provided for in Article 84) or at a General Meeting of Class Shareholders may be dismissed by a resolution at the shareholders meeting, the dismissal of the Director at Incorporation who is elected pursuant to Article 41, paragraph (1) is determined by a majority of the votes of the incorporators.
(3)In the cases provided for in the preceding paragraph, an incorporator is entitled to one vote for each one Share Issued at Incorporation of such class for which the Performance of Contributions is fulfilled; provided, however, that, in cases where the Share Unit is provided for in the articles of incorporation, an incorporator is entitled to one vote for each one unit of the Shares Issued at Incorporation of such class.
(4)Notwithstanding the provisions of the preceding paragraph, in cases where a Director at Incorporation is to be dismissed pursuant to the provisions of paragraph (2) above, if Shares Issued at Incorporation of a class for which it is provided that the voting rights may not be exercised in connection with the dismissal of some or all of the directors are to be issued, with respect to such class of the Shares Issued at Incorporation, the incorporators may not exercise voting rights in connection with the dismissal of the Directors at Incorporation who are to become such directors.
(5)The provisions of the preceding four paragraphs apply mutatis mutandis to the dismissal of Directors at Incorporation who are Audit and Supervisory Committee Members at Incorporation elected pursuant to the provisions of Article 41, paragraph (1) and Company Auditors at Incorporation who are elected pursuant to the provisions of paragraph (3) of that Article which are applied mutatis mutandis under paragraph (3) of such Article. In such case, the term "majority" in paragraph (1) and paragraph (2) is deemed to be replaced with "majority of two thirds or more".
(Special Provisions on Effect of Election or Dismissal of Officers at Incorporation)
Article 45(1)In cases where, at the incorporation of a Stock Company, it issues shares of a class for which the matters listed in Article 108, paragraph (1), item (viii) are provided, if there are provisions in the articles of incorporation to the effect that a resolution at the General Meeting of Class Shareholders is required with respect to the matters listed in the following items as the features of the shares of such class, the matters provided for in each of such items do not become effective unless, in addition to the determination pursuant to the provisions of Article 40, paragraph (1) or Article 43, paragraph (1), there is a determination by a majority of the votes (limited to the votes with respect to the Shares Issued at Incorporation of such class) of the incorporators who subscribe for the Shares Issued at Incorporation of such class in accordance with the applicable provisions of the articles of incorporation:
(i)election or dismissal of some or all of the directors (excluding director of a Company with an Audit and Supervisory Committee):Election or dismissal of Directors at Incorporation who are to become such directors;
(ii)election or dismissal of some or all of directors who are Audit and Supervisory Committee Members or other directors:Election or dismissal of Directors at Incorporation who are to become these directors;
(iii)election or dismissal of some or all of the accounting advisors:Election or dismissal of Accounting Advisors at Incorporation who are to become such accounting advisors;
(iv)election or dismissal of some or all of the company auditors:Election or dismissal of Company Auditors at Incorporation who are to become such company auditors; and
(v)election or dismissal of some or all of the financial auditors:Election or dismissal of Financial Auditors at Incorporation who are to become such financial auditors.
(2)In the cases provided for in the preceding paragraph, an incorporator is entitled to one vote for each one Share Issued at Incorporation of such class for which the Performance of Contributions is fulfilled; provided, however, that, in cases where the Share Unit is provided for in the articles of incorporation, an incorporator is entitled to one vote for each one unit of the Shares Issued at Incorporation of such class.
Section 5 Investigation by Directors at Incorporation
Article 46(1)The Directors at Incorporation (referring to the Directors at Incorporation and Company Auditor at Incorporation in cases where the Stock Company to be incorporated is a Company with Company Auditor(s); hereinafter the same applies in this Article) must investigate the following matters without delay after their election:
(i)that, with respect to the Property Contributed in Kind in the cases listed in Article 33, paragraph (10), item (i) or item (ii) (if listed in such item, limited to the securities under such item), the value specified or recorded in the articles of incorporation is reasonable;
(ii)that the verification provided for in Article 33, paragraph (10), item (iii) is appropriate;
(iii)that the Performance of Contributions has been fulfilled; and
(iv)that, beyond the matters listed in the preceding three items, the procedures for the incorporation of the Stock Company do not violate laws and regulations or articles of incorporation.
(2)If, as a result of the investigation pursuant to the preceding paragraph, the Directors at Incorporation find that there is any violation of laws and regulations or articles of incorporation or there is any inappropriate matter in a matter listed in any item of such paragraph, directors must give notice to such effect to the incorporator;
(3)In cases where the Stock Company to be incorporated is a Company with a Nominating Committee, etc., the Director at Incorporation must give the Representative Executive Officer at Incorporation (referring to the Representative Executive Officer at Incorporation provided for in Article 48, paragraph (1), item (iii)) notice to the effect that the investigation under paragraph (1) has been completed, or, if the notice under the preceding paragraph has been given, notice that such notice was given and a description of the contents thereof.
Section 6 Appointment of Representative Directors at Incorporation
(Appointment of Representative Directors at Incorporation)
Article 47(1)In cases where the Stock Company to be incorporated is a Company with a Board of Directors (excluding a Company with a Nominating Committees, etc.), the Directors at Incorporation must appoint among the Directors at Incorporation (in cases where the Stock Company to be incorporated is a Company with an Audit and Supervisory Committee, excluding a Director at Incorporation who is an Audit and Supervisory Committee Member at Incorporation) a person who is to be the Representative Director (meaning the director who represents the Stock Company; the same applies hereinafter) as at incorporation of the Stock Company (hereinafter referred to as "Representative Director at Incorporation").
(2)The Directors at Incorporation may remove the Representative Director at Incorporation at any time prior to the formation of the Stock Company.
(3)The appointment and removal of the Representative Director at Incorporation pursuant to the provisions of the preceding two paragraphs are determined by a majority of the Directors at Incorporation.
(Appointment of Committee Members at Incorporation)
Article 48(1)In cases where the Stock Company to be incorporated is a Company with a Nominating Committee, etc., the Director at Incorporation must take the following measures:
(i)appoint the following persons (in the following paragraph referred to as "Committee Members at Incorporation") among the Directors at Incorporation:
(a)persons who are to be members of the nominating committee at incorporation of the Stock Company;
(b)persons who are to be committee members of the audit committee at incorporation of the Stock Company;
(c)persons who are to be committee members of the compensation committee at incorporation of the Stock Company;
(ii)elect persons who are to be the executive officers at incorporation of the Stock Company (hereinafter referred to as "Executive Officers at Incorporation"); and
(iii)appoint among the Executive Officers at Incorporation the persons who are to be the representative executive officers at incorporation of the Stock Company (hereinafter referred to as "Representative Executive Officers at Incorporation"); provided, however, that, if there is only one Executive Officer at Incorporation, such person is deemed to have been appointed as the Representative Executive Officer at Incorporation.
(2)At any time prior to the formation of the Stock Company, the Directors at Incorporation may remove the Committee Members at Incorporation or the Representative Executive Officers at Incorporation, or dismiss the Executive Officers at Incorporation.
(3)The decision pursuant to the provisions of the preceding two paragraphs is made by a majority of the Directors at Incorporation.
Section 7 Formation of Stock Companies
(Formation of Stock Companies)
Article 49A Stock Company is formed by the registration of the incorporation at the location of its head office.
(Right of Subscribers of Shares)
Article 50(1)As at formation of a Stock Company, the incorporator becomes a shareholder for the Shares Issued at Incorporation for which the Performance of Contributions has been fulfilled.
(2)The transferring of a right to become a shareholder pursuant to the provisions of the preceding paragraph may not be asserted against the Stock Company after the formation.
(Restrictions on Invalidation or Rescission of Subscription)
Article 51(1)The provisions of the proviso to Article 93 and the provisions of Article 94, paragraph (1) of the Civil Code (Act No. 89 of 1896) do not apply to the manifestation of intention relating to the subscription for Shares Issued at Incorporation.
(2)After the formation of the Stock Company, the incorporator(s) may not assert the invalidity of the subscription for Shares Issued at Incorporation on the grounds of mistake, nor rescind the subscription for Shares Issued at Incorporation on the grounds of fraud or duress.
Section 8 Liability of Incorporators
(Liability for Insufficiency of Value of Properties Contributed)
Article 52(1)If the value of the Property Contributed in Kind at formation of a Stock Company is substantially short of the value specified or recorded in the articles of incorporation with respect to such Property Contributed in Kind (or if there is any amendment of the articles of incorporation, the value so amended), the incorporators and Directors at Incorporation are jointly and severally liable to such Stock Company for the payment of the amount of such shortfall.
(2)Notwithstanding the provisions of the preceding paragraph, the incorporators (excluding those who contributed in kind under Article 28, item (i) or the transferor of the property under item (ii) of the same Article; the same applies in item (ii)) and Directors at Incorporation are not held liable in accordance with such paragraph with respect to the Property Contributed in Kind in the following cases:
(i)where the investigation by the inspector under Article 33, paragraph (2) has been carried out with respect to the matters listed in Article 28, item (i) or item (ii); or
(ii)where such incorporators or Directors at Incorporation prove that they did not fail to exercise due care with respect to the performance of their duties.
(3)In the cases set forth in paragraph (1), the person who carried out the verification provided for in Article 33, paragraph (10), item (iii) (hereinafter in this paragraph referred to as "Verifying Person") is jointly and severally liable with the person who assumes the liability under paragraph (1) for the payment of the amount of the shortfall under such paragraph; provided, however, that this does not apply in cases where such Verifying Person prove that the Verifying Person did not fail to exercise due care with respect to the carrying out such verification.
(Responsibility in Cases of Falsifying Performance of Contributions)
Article 52-2(1)In the cases listed in the following items, incorporators are liable to perform the act specified in those items for a Stock Company:
(i)in cases of falsifying payment pursuant to the provisions of Article 34, paragraph (1):Payment of all monies related to the contributions for which the payment is falsified; or
(ii)in cases of falsifying the delivery pursuant to the provisions of Article 34, paragraph (1):Delivery of all properties other than monies related to the contributions for which the delivery is falsified (in cases where a Stock Company demands payment of monies equivalent to the value of the properties in lieu of the payment, the payment of the entire amount of the monies).
(2)In the cases listed in items of the preceding paragraph, incorporators who are involved in falsifying the performance of the contributions or persons who are prescribed by Ministry of Justice Order as a Director at Incorporation are liable to make the payments prescribed in those items to the Stock Company; provided, however, that this does not apply in cases where the persons (excluding the person who falsified the performance of the contributions) prove that they did not fail to exercise due care with respect to the performance of their duties.
(3)In cases where incorporators are liable to make the payments prescribed in the items of paragraph (1), when the persons prescribed in the preceding paragraph assume the obligation set forth in such paragraph, such persons will be joint and several obligors.
(4)In the cases listed in each item of paragraph (1), incorporators may exercise the rights of Shareholders at Incorporation (meaning Shareholders at Incorporation as prescribed in Article 65, paragraph (1); the same applies in the following paragraph) and Shareholders of the Shares Issued at Incorporation falsified the performance of contribution only after the payment or delivery specified in such items or the payment prescribed in paragraph (2) is made.
(5)A person who accepts transfer of Shares Issued at Incorporation as set forth in the preceding paragraph or a right to become their shareholders may exercise the right of Shareholders at Incorporation and shareholders pertaining to such Shares Issued at Incorporation; provided, however, that this does not apply to cases where the person has acted in bad faith or with gross negligence.
(Liability for Damages of Incorporators)
Article 53(1)If an incorporator, Director at Incorporation or Company Auditor at Incorporation neglects their duties with respect to the incorporation of a Stock Company, they are liable to such Stock Company for damages arising as a result thereof.
(2)If an incorporator, Director at Incorporation or Company Auditor at Incorporation has acted in bad faith or with gross negligence in performing their duties, such incorporator, Director at Incorporation or Auditor at Incorporation is liable to a third party for damages arising as a result thereof.
(Joint and Several Liabilities of Incorporators)
Article 54In cases where an incorporator, a Director at Incorporation or a Company Auditor at Incorporation is liable for damages arising in the Stock Company or a third party, if other incorporators, Directors at Incorporation or Company Auditors at Incorporation are also liable, such persons will be joint and several obligors.
(Exemption from Liability)
Article 55An exemption from the obligations assumed by an incorporator or Director at Incorporation pursuant to the provisions of Article 52, paragraph (1), obligations assumed by an incorporator pursuant to the provisions of Article 52-2, paragraph (1), obligations assumed by an incorporator or Director at Incorporation pursuant to the provisions of paragraph (2) of that Article, and the liability assumed by an incorporator, Director at Incorporation or Company Auditor at Incorporation pursuant to the provisions of Article 53, paragraph (1) may not be given without the consent of all shareholders.
(Liability in Cases of Failure to Form a Stock Company)
Article 56If the formation of a Stock Company fails, the incorporator(s) is jointly and severally liable for any act committed in connection with the incorporation of the Stock Company, and bears the costs expended in connection with the incorporation of the Stock Company.
Section 9 Incorporation by Solicitation
Subsection 1 Solicitation to Subscribe for Shares Issued at Incorporation
(Solicitation to Subscribe for Shares Issued at Incorporation)
Article 57(1)Pursuant to the provisions of this Subsection, the incorporators may provide to the effect that persons will be solicited to subscribe for the Shares Issued at Incorporation.
(2)Incorporators intending to provide to the effect that the solicitation under the preceding paragraph be carried out must obtain the consent of all incorporators.
(Determination of Matters Regarding Shares Solicited at Incorporation)
Article 58(1)Whenever the incorporator intends to carry out the solicitation under paragraph (1) of the preceding Article, the incorporator must decide the following matters with respect to the Shares Solicited at Incorporation (meaning the Shares Issued at Incorporation that are allotted to the persons who accept the solicitation under such paragraph and apply to subscribe for the Shares Issued at Incorporation; hereinafter the same applies in this Section):
(i)the number of the Shares Solicited at Incorporation (in cases where the Stock Company to be incorporated is a Company with Class Shares, referring to the class(es) and the number of each class of Shares Solicited at Incorporation; hereinafter the same applies in this Subsection);
(ii)the Amount to be Paid in for Shares Solicited at Incorporation (meaning the amount of money which is to be paid in in exchange for one Share Solicited at Incorporation; hereinafter the same applies in this Subsection);
(iii)the date by or period during which payment is to be made of the money to be paid in in exchange for the Shares Solicited at Incorporation;
(iv)if there is any arrangement that subscriptions for Shares Solicited at Incorporation may be rescinded in cases where the registration of incorporation is not effected by a certain date, a statement of such arrangement and such date.
(2)If the incorporator intends to determine the matters listed in any item of the preceding paragraph, the incorporator must obtain the consent of all incorporators.
(3)The conditions for the solicitation under paragraph (1) of the preceding Article, such as the Amount to be Paid in for Shares Solicited at Incorporation, must be decided uniformly for each such solicitation (or, in cases where the Stock Company to be incorporated is a Company with Class Shares, for each such class and solicitation).
(Subscription for Shares Solicited at Incorporation)
Article 59(1)The incorporator must notify the person who, in response to the solicitation under Article 57, paragraph (1), intends to apply to subscribe for the Shares Solicited at Incorporation of the following matters:
(i)the date of the certification of the articles of incorporation and the name of the notary public who effected such certification;
(ii)the matters listed in each item of Article 27, each item of Article 28, each item of Article 32, paragraph (1) and each item of paragraph (1) of the preceding Article;
(iii)the value of the property contributed by the incorporator(s);
(iv)the place designated for payment pursuant to the provisions of Article 63, paragraph (1);
(v)beyond what is set forth in the preceding items, any other matters provided by Ministry of Justice Order.
(2)In cases where not all of the incorporators fulfill the Performance of Contributions, the incorporators may not give the notice pursuant to the provisions of the preceding paragraph until after the date provided for in Article 36, paragraph (1).
(3)A person who intends to apply to subscribe for Shares Solicited at Incorporation in response to a solicitation under Article 57, paragraph (1) must deliver a document giving the following information to the incorporators:
(i)the name and address of the person who intends to apply; and
(ii)the number of Shares Solicited at Incorporation that the person intends to subscribe for.
(4)A person who submits the application referred to in the preceding paragraph may, in lieu of delivering a document as referred to in that paragraph, provide the information that is required to be detailed in the document referred to in that paragraph by electronic or magnetic means, with the approval of the incorporators and pursuant to the provisions of Cabinet Order. In such cases, the person who submitted the application is deemed to have given a document under such paragraph.
(5)If there are changes in the matters listed in any item of paragraph (1), the incorporators must immediately notify persons who submitted applications under paragraph (3) (hereinafter in this Subsection referred to as "Applicants") thereof and of the matters so changed.
(6)It would be sufficient for a notice or demand to an Applicant by the incorporators to be sent to the address under paragraph (3), item (i) (or, in cases where such Applicant notifies the incorporators of a different place or contact address for the receipt of notices or demand, to such place or contact address).
(7)The notice or demand referred to in the preceding paragraph is deemed to have arrived at the time when such notice or demand should normally have arrived.
(Allotment of Shares Solicited at Incorporation)
Article 60(1)The incorporators must specify from among the Applicants the persons to whom the Shares Solicited at Incorporation are allotted, and specify the number of the Shares Solicited at Incorporation that are allotted to such persons. In such cases, the incorporators may reduce the number of the Shares Solicited at Incorporation to be allotted to such Applicants to less than the number referred to in paragraph (3), item (ii) of the preceding Article.
(2)The incorporator must notify the Applicant, no later than the day immediately preceding the date referred to in Article 58, paragraph (1), item (iii) (or, in case a period is specified under that item, no later than the day immediately preceding the first day of that period), of the number of the Shares Solicited at Incorporation that are allotted to such Applicant.
(Special Provisions on the Subscription for and Allotment of Shares Solicited at Incorporation)
Article 61The provisions of the preceding two Articles do not apply in cases where persons who intend to subscribe for Shares Solicited at Incorporation execute contracts for subscriptions for the total number of those shares.
(Subscriptions for Shares Solicited at Incorporation)
Article 62The persons listed in the following items will be the subscribers for the number of the Shares Solicited at Incorporation provided for in each such item with respect to the Shares Solicited at Incorporation:
(i)applicants:The number of the Shares Solicited at Incorporation as allotted by the incorporators; or
(ii)persons who subscribed for the total number of the Shares Solicited at Incorporation under the contracts referred to in the preceding Article:The number of the Shares Solicited at Incorporation for which such persons have subscribed.
(Payment of Amount to Be Paid in for Shares Solicited at Incorporation)
Article 63(1)The subscribers for the Shares Solicited at Incorporation must pay fully the Amount to be Paid in for Shares Solicited at Incorporation for which the subscribers subscribed, at the Bank, Etc. designated for payment by the incorporator(s), no later than the date set forth in Article 58, paragraph (1), item (iii) or within the period under that item.
(2)Transferring of the right to become a shareholder of the Shares Issued at Incorporation by effecting payment pursuant to the preceding paragraph may not be asserted against the Stock Company after formation.
(3)If a subscriber for the Shares Solicited at Incorporation fails to make payment pursuant to the provisions of paragraph (1), the subscriber will forfeit the right to become the shareholder of the Shares Solicited at Incorporation by making such payment.
(Certificate of Deposit of Paid Money)
Article 64(1)In cases where solicitation under Article 57, paragraph (1) has been carried out, the incorporators may request the Bank, Etc. that handled the payment pursuant to the provisions of Article 34, paragraph (1) and paragraph (1) of the preceding Article to issue a certificate of deposit of a money amount paid in pursuant to such provisions.
(2)The Bank, Etc. that issued the certificate referred to in the preceding paragraph may not assert against the Stock Company after formation any misstatement in such certificate or the existence of restrictions regarding the return of money paid in pursuant to the provisions of Article 34, paragraph (1) or paragraph (1) of the preceding Article.
Subsection 2 Organizational Meetings
(Calling of Organizational Meetings)
Article 65(1)In cases where solicitation under Article 57, paragraph (1) is to be carried out, the incorporator must call a meeting of the Shareholders at Incorporation (meaning shareholders who are to be the shareholders of the Stock Company pursuant to the provisions of Article 50, paragraph (1) or Article 102, paragraph (2); the same applies hereinafter) without delay on and after either the date under Article 58, paragraph (1), item (iii) or the last day of the period under such item, whichever comes later (such meeting is referred to as an "Organizational Meeting" hereinafter).
(2)In the cases referred to in the preceding paragraph, the incorporators may call an Organizational Meeting at any time when the incorporators find it necessary.
(Authority of Organizational Meetings)
Article 66At an Organizational Meeting, only the matters provided for in this Section and matters regarding the incorporation of a Stock Company, such as the discontinuation of the incorporation of a Stock Company and the conclusion of an Organizational Meeting, may be resolved.
(Determinations to Call Organizational Meetings)
Article 67(1)The incorporators must decide the following matters in cases where the incorporators call an Organizational Meeting:
(i)the date, time and place of the Organizational Meeting;
(ii)the purpose(s) of the Organizational Meeting;
(iii)that Shareholders at Incorporation who do not attend the Organizational Meeting may vote in writing, if so arranged;
(iv)that Shareholders at Incorporation who do not attend the Organizational Meeting may vote by electronic or magnetic means, if so arranged;
(v)beyond what is set forth in the preceding items, any matters prescribed by Ministry of Justice Order.
(2)In cases where the number of the Shareholders at Incorporation (excluding Shareholders at Incorporation who may not exercise votes on all matters which may be resolved at Organizational Meetings; the same applies in the following Article through Article 71) is one thousand or more, the incorporators must decide the matters listed in item (iii) of the preceding paragraph.
(Notices of Calling Organizational Meetings)
Article 68(1)In order to call an Organizational Meeting, incorporators must dispatch notice thereof to the Shareholders at Incorporation no later than two weeks (or one week if the Stock Company to be incorporated is not a Public Company, except in cases where the matters listed in paragraph (1), item (iii) or item (iv) of the preceding Article are decided (or if a shorter period of time is provided for in the articles of incorporation in cases where the Stock Company to be incorporated is a Stock Company other than a Company with a Board of Directors, such shorter period of time)) prior to the day of the Organizational Meeting.
(2)The notice referred to in the preceding paragraph must be in writing in the following cases:
(i)where the matters listed in paragraph (1), item (iii) or item (iv) of the preceding Article are decided; or
(ii)where the Stock Company to be incorporated is a Company with a Board of Directors.
(3)In lieu of the dispatch of the written notice referred to in the preceding paragraph, the incorporators may dispatch the notice by electronic or magnetic means, with the consent of the Shareholders at Incorporation, in accordance with the provisions of Cabinet Order. In such cases, such incorporators are deemed to have dispatched the written notice under such paragraph.
(4)The notice under the preceding two paragraphs must specify or record the matters listed in each item of paragraph (1) of the preceding Article.
(5)It would be sufficient for a notice or demand to a Shareholder at Incorporation by the incorporators to be sent to the address under Article 27, item (v), or Article 59, paragraph (3), item (i) (or, in cases where such Shareholder at Incorporation notifies the incorporator of a different place or contact address for the receipt of notices or letters of demand, to such place or contact address).
(6)The notice or demand referred to in the preceding paragraph is deemed to have arrived at the time when such notice or demand should normally have arrived.
(7)The provisions of the preceding two paragraphs apply mutatis mutandis to cases where a writing is given to the Shareholders at Incorporation when giving the notice referred to in paragraph (1), or to cases where the information to be detailed in such writing is provided by electronic or magnetic means. In such case, the term "to have arrived" in the preceding paragraph is deemed to be replaced with "to have been given in such writing or to have been provided by electronic or magnetic means with such information".
(Omission of Calling Procedures)
Article 69Notwithstanding the provisions of the preceding Article, Organizational Meetings may be held without the procedures of calling if the consent of all Shareholders at Incorporation is obtained; provided, however, that this does not apply in cases where the matters listed in Article 67, paragraph (1), item (iii) or item (iv) are decided.
(Giving of Reference Documents for Organizational Meetings and Voting Forms)
Article 70(1)In cases where the matters listed in Article 67, paragraph (1), item (iii) are decided, the incorporators must, when dispatching a notice under Article 68, paragraph (1), give the Shareholders at Incorporation documents stating matters of reference for voting (hereinafter in this Subsection referred to as " Reference Documents for an Organizational Meeting") and documents to be used by the Shareholders at Incorporation to exercise votes (hereinafter in this Subsection referred to as "Voting Form"), as prescribed by Ministry of Justice Order.
(2)If the incorporators dispatch notices by electronic or magnetic means as referred to in Article 68, paragraph (3) to Shareholders at Incorporation who have given consent under the same paragraph, the incorporators may provide, in lieu of the giving of Reference Documents for an Organizational Meeting and Voting Form pursuant to the provisions of the preceding paragraph, the information to be detailed in such documents by electronic or magnetic means; provided, however, that, if requested by any Shareholder at Incorporation, the incorporators must give these documents to such Shareholder at Incorporation.
Article 71(1)In cases where the matters listed in Article 67, paragraph (1), item (iv) are decided, the incorporators must, when dispatching notice under Article 68, paragraph (1), give the Shareholders at Incorporation the Reference Documents for an Organizational Meeting as prescribed by Ministry of Justice Order.
(2)If the incorporators dispatch notices by electronic or magnetic means as referred to in Article 68, paragraph (3) to Shareholders at Incorporation who have given consent under the same paragraph, the incorporators may provide, in lieu of the giving of Reference Documents for an Organizational Meeting pursuant to the provisions of the preceding paragraph, the information to be detailed in such documents by electronic or magnetic means; provided, however, that, if requested by any Shareholder at Incorporation, the incorporators must give the Reference Documents for an Organizational Meeting to such Shareholders at Incorporation.
(3)In the cases provided for in paragraph (1), when using electronic or magnetic means as referred to in Article 68, paragraph (3) to notify Shareholders at Incorporation that have given the consent referred to in that paragraph, the incorporators must use those electronic or magnetic means to provide the Shareholders at Incorporation with the information that is required to be detailed in the Voting Form, as prescribed by Ministry of Justice Order.
(4)In the cases provided for in paragraph (1), if any Shareholder at Incorporation who has not given consent under Article 68, paragraph (3) requests, no later than one week prior to the day of the Organizational Meeting, to be provided with the information that is required to be detailed in the Voting Form by electronic or magnetic means, the incorporators must use electronic or magnetic means to immediately provide the Shareholder at Incorporation with that information, as prescribed by Ministry of Justice Order.
(Number of Votes)
Article 72(1)Shareholders at Incorporation (excluding Shareholders at Incorporation prescribed by Ministry of Justice Order as entities in a relationship that may allow the Stock Company after the formation to have substantial control of such entity through the holding of one quarter or more of the votes of all shareholders of such entity or other reasons) are entitled to one vote for each one Share Issued at Incorporation for which they subscribed at Organizational Meetings; provided, however, that, in cases where a Share Unit is provided for in the articles of incorporation, they are entitled to one vote for each one unit of the Shares Issued at Incorporation.
(2)In cases where the Stock Company to be incorporated is a Company with Class Shares, if it issues Shares Issued at Incorporation of a class that has restrictions on matters for which votes may be exercised at the shareholders meeting, the Shareholders at Incorporation may exercise, at the Organizational Meeting, votes with respect to such Shares Issued at Incorporation only in relation to matters that are equivalent to the matters for which they may vote at the shareholders meeting.
(3)Notwithstanding the provisions of the preceding paragraph, Shareholders at Incorporation may exercise votes with respect to the Shares Issued at Incorporation for which they subscribed in relation to the discontinuation of the incorporation of the Stock Company.
(Resolutions at Organizational Meetings)
Article 73(1)Resolutions at an Organizational Meeting will be passed by a majority of the votes of the Shareholders at Incorporation entitled to vote at such Organizational Meeting, being a majority of two thirds or more of the votes of such Shareholders at Incorporation who are present at the meeting.
(2)Notwithstanding the provisions of the preceding paragraph, in cases where the articles of incorporation are amended creating a provision to the effect that, as a feature of all shares issued by a Stock Company, the approval of such Stock Company is required for the acquisition of such shares by transfer (excluding cases where the Stock Company to be incorporated is a Company with Class Shares), the resolution at the Organizational Meeting with respect to such amendment in the articles of incorporation must be passed by a majority of the Shareholders at Incorporation entitled to vote at such Organizational Meeting, being a majority of two thirds or more of the votes of such Shareholders at Incorporation.
(3)In cases where it is intended to create, as a feature of all shares issued by a Stock Company, any provisions in articles of incorporation with respect to the matters listed in Article 107, paragraph (1), item (iii) by amending the articles of incorporation, or to effect any amendment (excluding that which repeals provisions of the articles of incorporation with respect to such matters) in the articles of incorporation with respect to such matters (excluding cases where the Stock Company to be incorporated is a Company with Class Shares), the consent of all Shareholders at Incorporation must be obtained.
(4)At an Organizational Meeting, matters other than the matters listed in Article 67, paragraph (1), item (ii) may not be resolved; provided, however, that this does not apply to amendment in the articles of incorporation or discontinuation of the incorporation of a Stock Company.
(Proxy Voting)
Article 74(1)Shareholders at Incorporation may vote by proxy. In such cases, such Shareholders at Incorporation or proxies must submit to the incorporators a document evidencing the authority of proxy.
(2)The grant of the authority of proxy under the preceding paragraph must be made for each Organizational Meeting.
(3)The Shareholders at Incorporation or proxies referred to in paragraph (1) may, in lieu of submitting a document evidencing the authority of proxy, use electronic or magnetic means to provide the incorporators with the information that is required to be detailed in such a document, with the approval of the incorporators and pursuant to the provisions of Cabinet Order. In such cases, such Shareholders at Incorporation or proxies are deemed to have submitted such document.
(4)In cases where the Shareholders at Incorporation are persons who gave consent under Article 68, paragraph (3), the incorporators may not refuse to grant the approval under the preceding paragraph without justifiable reasons.
(5)The incorporators may restrict the number of proxies who may attend the Organizational Meeting.
(6)The incorporators (or the Stock Company after the formation of such Stock Company; the same applies in paragraph (3) of the following Article and Article 76, paragraph (4)) must keep the documents evidencing the authority of proxy and any electronic or magnetic record in which the information with which it has been provided by electronic or magnetic means as referred to in paragraph (3) has been recorded at a place designated by the incorporators (or at the head office of the Stock Company after the formation of such Stock Company; the same applies in paragraph (3) of the following Article and Article 76, paragraph (4)) for the period of three months from the day of the Organizational Meeting.
(7)The Shareholders at Incorporation (or the shareholders of the Stock Company after the formation of such Stock Company; the same applies in paragraph (4) of the following Article and Article 76, paragraph (5)) may submit the following request at any time during the hours designated by the incorporators (or during the business hours of the Stock Company after the formation of such Stock Company; the same applies in paragraph (4) of the following Article and Article 76, paragraph (5)):
(i)requests for the inspection or copying of the documents evidencing the authority of proxy; and
(ii)requests to inspect or copy anything that is used in a manner prescribed by Ministry of Justice Order to display the information recorded in the electronic or magnetic record referred to in the preceding paragraph.
(Voting in Writing)
Article 75(1)The exercise of voting rights in writing is effected by entering the Voting Form with the necessary matters and submitting it to the incorporators no later than the time prescribed by Ministry of Justice Order.
(2)The number of the votes exercised in writing pursuant to the provisions of the preceding paragraph is included in the number of the votes of the Shareholders at Incorporation who are present at the meeting.
(3)The incorporators must keep the Voting Forms submitted pursuant to the provisions of paragraph (1) at a place designated by the incorporators for the period of three months from the day of the Organizational Meeting.
(4)The Shareholders at Incorporation may make requests for the inspection or copying of the Voting Forms submitted pursuant to the provisions of paragraph (1) at any time during the hours designated by the incorporators.
(Voting by Electronic or Magnetic Means)
Article 76(1)The exercise of voting rights by electronic or magnetic means is effected by using electronic or magnetic means to provide the incorporators with the information that is required to be entered in the Voting Form no later than the time prescribed by Ministry of Justice Order, with the approval of the incorporators and pursuant to the provisions of Cabinet Order.
(2)In cases where the Shareholders at Incorporation are persons who have given consent under Article 68, paragraph (3), the incorporators may not refuse to give the approval under the preceding paragraph without justifiable reasons.
(3)The number of the votes exercised by electronic or magnetic means pursuant to the provisions of paragraph (1) is included in the number of the votes of the Shareholders at Incorporation who are present at the meeting.
(4)The incorporators must keep any electronic or magnetic record in which the information with which they have been provided pursuant to the provisions of paragraph (1) is recorded at a place designated by the incorporators for the period of three months from the day of the Organizational Meeting.
(5)The Shareholders at Incorporation may, at any time during the hours designated by the incorporators, request to inspect or copy anything that is used in a manner prescribed by Ministry of Justice Order to display the data recorded in the electronic or magnetic record referred to in the preceding paragraph.
(Diverse Exercise of Voting Rights)
Article 77(1)Shareholders at Incorporation may diversely exercise the voting rights they hold. In such cases, the shareholders must notify the incorporators to such effect and of the reasons for the same no later than three days prior to the day of the Organizational Meeting.
(2)If the Shareholders at Incorporation referred to in the preceding paragraph are not persons who subscribed for the Shares Issued at Incorporation on behalf of others, the incorporators may refuse the diverse exercise of voting rights held by such Shareholders at Incorporation pursuant to the provisions of the preceding paragraph.
(Accountability of Incorporators)
Article 78In cases where incorporators are requested by the Shareholders at Incorporation to provide explanations on certain matters at an Organizational Meeting, the incorporators must provide necessary explanations with respect to such matters; provided, however, that this does not apply in cases where such matters are not relevant to the matters that are the purpose of the Organizational Meeting, or in cases where such explanations are to the serious detriment of the common interest of the Shareholders at Incorporation, or in other cases prescribed by Ministry of Justice Order as cases where there are justifiable grounds.
(Authority of Chairperson)
Article 79(1)The chairperson of an Organizational Meeting maintains the order of such Organizational Meeting and organize the business of the meeting.
(2)The chairperson of an Organizational Meeting may require anyone who does not comply with the orders of the chairperson or who otherwise disturbs the order of such Organizational Meeting to leave the room.
(Resolution for Postponement or Adjournment)
Article 80In cases where a resolution for the postponement or adjournment is passed at an Organizational Meeting, the provisions of Article 67 and Article 68 do not apply.
(Minutes)
Article 81(1)Minutes must be prepared with respect to the business of Organizational Meetings pursuant to the provisions of Ministry of Justice Order.
(2)The incorporators (or the Stock Company after the formation of such Stock Company; the same applies in paragraph (2) of the following Article) must keep the minutes referred to in the preceding paragraph at a place designated by the incorporators (or at the head office of the Stock Company if after the incorporation of such Stock Company; the same applies in paragraph (2) of the same Article) for the period of ten years from the day of the Organizational Meeting.
(3)The Shareholders at Incorporation (or the shareholders and creditors of the Stock Company after the formation of such Stock Company; the same applies in paragraph (3) of the following Article) may submit the following requests at any time during the hours designated by the incorporators (or during the business hours of such Stock Company if after the incorporation of such Stock Company; the same applies in the same paragraph):
(i)if the minutes under paragraph (1) are prepared in writing, requests for inspection or copying of such documents; and
(ii)if the minutes under paragraph (1) have been prepared as an electronic or magnetic record, a request to inspect or copy anything that is used in a manner prescribed by Ministry of Justice Order to display the information recorded in that electronic or magnetic record.
(4)If, after the formation of a Stock Company, it is necessary for the purpose of exercising the rights of a Member of the Parent Company of such Stock Company, the relevant Member of the Parent Company may, with the permission of the court, make the requests listed in each item of the preceding paragraph with respect to the minutes referred to in paragraph (1).
(Omission of Resolutions at Organizational Meetings)
Article 82(1)In cases where incorporators submit a proposal with respect to any matter that is the purpose of an Organizational Meeting, if all Shareholders at Incorporation (limited to those who may vote with respect to such matter) manifest their intention to agree to such proposal in writing or using an electronic or magnetic record, it is deemed that a resolution to approve such proposal has been passed at an Organizational Meeting.
(2)The incorporators must keep the documents or an electronic or magnetic record as referred to in the provisions of the preceding paragraph at a place designated by the incorporators for the period of ten years from the day when the resolution at the Organizational Meeting is deemed to have been passed pursuant to the provisions of the preceding paragraph.
(3)The Shareholders at Incorporation may submit the following requests at any time during the hours designated by the incorporators:
(i)requests for inspection or copying of the documents under the preceding paragraph; and
(ii)requests to inspect or copy anything that is used in a manner prescribed by Ministry of Justice Order to display the information recorded in the electronic or magnetic record referred to in the preceding paragraph.
(4)If, after the formation of a Stock Company, it is necessary for the purpose of exercising the rights of a Member of the Parent Company of such Stock Company, the relevant Member of the Parent Company may, with the permission of the court, make the requests listed in each item of the preceding paragraph with respect to the documents or an electronic or magnetic record as referred to in paragraph (2).
(Omission of Reports to Organizational Meetings)
Article 83In cases where the incorporators notify all Shareholders at Incorporation of any matter that is to be reported to an Organizational Meeting, if all Shareholders at Incorporation manifest in writing or using an electronic or magnetic record their intention to agree that it is not necessary to report such matter to the Organizational Meeting, it is deemed that such matter has been reported to the Organizational Meeting.
(Cases of Provisions Requiring Resolutions at General Meetings of Class Shareholders)
Article 84In cases where the Stock Company to be incorporated is a Company with Class Shares, if there is a provision, as a feature of a certain class of shares to be issued as at the incorporation, to the effect that, with respect to the matter that is subject to the resolution at a shareholders meeting, in addition to such resolution, the resolution at a General Meeting of Class Shareholders constituted by the Class Shareholders of such class of shares is required, such matter does not become effective unless the resolution is passed at an Organizational Meeting of Class Shareholders (meaning a meeting of Class Shareholders at Incorporation of a certain class of the Shares Issued at Incorporation; the same applies hereinafter) constituted by the Class Shareholders at Incorporation of the Shares Issued at Incorporation of such class (meaning the Shareholders at Incorporation of a certain class of Shares Issued at Incorporation; hereinafter the same applies in this Section) in addition to the resolution at the Organizational Meeting, consistently with the provisions of articles of incorporation; provided, however, that this does not apply to the case where there exists no Class Shareholder at Incorporation who may vote at such Organizational Meeting of Class Shareholders.
(Calling of and Resolutions at Organizational Meetings of Class Shareholders)
Article 85(1)In cases where a resolution is to be passed at an Organizational Meeting of Class Shareholders pursuant to the provisions of the preceding Article, Article 90, paragraph (1) (including the case where it is applied mutatis mutandis under paragraph (2) of the same Article), Article 92, paragraph (1) (including the case where it is applied mutatis mutandis under paragraph (4) of the same Article), Article 100, paragraph (1) or Article 101, paragraph (1), the incorporators must call an Organizational Meeting of Class Shareholders.
(2)Resolutions at an Organizational Meeting of Class Shareholders will be passed by a majority of the votes of the Class Shareholders at Incorporation who are entitled to vote at such Organizational Meeting of Class Shareholders, being a majority of two thirds or more of the votes of such Class Shareholders at Incorporation who are present at the meeting.
(3)Notwithstanding the provisions of the preceding paragraph, resolutions under Article 100, paragraph (1) must be passed by a majority of the Class Shareholders at Incorporation who are entitled to vote at such Organizational Meeting of Class Shareholders, being a majority of two thirds or more of the votes of such Class Shareholders at Incorporation.
(Mutatis Mutandis Application of Provisions Regarding Organizational Meetings)
Article 86The provisions of Article 67 through Article 71, Article 72, paragraph (1), and Article 74 through Article 82 apply mutatis mutandis to Organizational Meetings of Class Shareholders. In such cases, the term "Shareholders at Incorporation" in Article 67, paragraph (1), item (iii) and item (iv) and paragraph (2) of the same Article, Article 68, paragraph (1) and paragraph (3), Article 69 through Article 71, Article 72, paragraph (1), Article 74, paragraph (1), paragraph (3) and paragraph (4), Article 75, paragraph (2), Article 76, paragraph (2) and paragraph (3), Article 77, the main clause of Article 78 and Article 82, paragraph (1) is deemed to be replaced with as "Class Shareholders at Incorporation (meaning Shareholders at Incorporation for a certain class of Shares Issued at Incorporation)".
Subsection 3 Reporting of Matters Regarding Incorporation
Article 87(1)The incorporators must report matters regarding the incorporation of a Stock Company to an Organizational Meeting.
(2)In the cases listed in the following items, the incorporators must submit or provide to an Organizational Meeting a document or an electronic or magnetic record in which the information provided for in such items has been detailed or recorded:
(i)in cases where articles of incorporation provide for the matters listed in each item of Article 28 (excluding the matters provided for in each item of Article 33, paragraph (10) in cases listed in such items):The content of the report referred to in Article 33, paragraph (4) of the inspector under paragraph (2) of the same Article; and
(ii)in the case listed in Article 33, paragraph (10), item (iii):The content of the verification provided in such item.
Subsection 4 Election and Dismissal of Directors at Incorporation
(Election of Directors at Incorporation)
Article 88(1)In cases where the solicitation under Article 57, paragraph (1) is carried out, the election of the Directors at Incorporation, Accounting Advisors at Incorporation, Company Auditors at Incorporation and Financial Auditors at Incorporation must be made by the resolution at an Organizational Meeting.
(2)In cases where the Stock Company to be incorporated is a Company with an Audit and Supervisory Committee, election of a Director at Incorporation pursuant to the provisions of the preceding paragraph must be implemented by distinguishing a Director at Incorporation who is an Audit and Supervisory Committee Member at Incorporation and other directors.
(Election of Directors at Incorporation by Cumulative Vote)
Article 89(1)In cases where the purpose of an Organizational Meeting is the election of two or more Directors at Incorporation (in cases where the Stock Company to be incorporated is a Company with an Audit and Supervisory Committee, a Director at Incorporation who is an Audit and Supervisory Committee Member at Incorporation or other Director at Incorporation; hereinafter the same applies in this Article), the Shareholders at Incorporation (limited to the Shareholders at Incorporation entitled to vote with respect to the election of the Directors at Incorporation; hereinafter the same applies in this Article) may request the incorporators that the Directors at Incorporation be elected pursuant to the provisions of paragraph (3) through paragraph (5), except as otherwise provided in the articles of incorporation.
(2)The request under the provisions of the preceding paragraph must be made no later than five days prior to the day of the Organizational Meeting referred to in the same paragraph.
(3)Notwithstanding the provisions of Article 72, paragraph (1), in cases where a request is made pursuant to the provisions of paragraph (1), a Shareholder at Incorporation is entitled to such number of votes as is equal to the number of the Directors at Incorporation to be elected in such Organizational Meeting, for each one Share Issued at Incorporation for which the Shareholder at Incorporation subscribed (or, in cases where the Share Unit is provided for in the articles of incorporation, for each one unit of the Shares Issued at Incorporation) with respect to the resolution of the election of the Directors at Incorporation. In such cases, the Shareholder at Incorporation may exercise the votes of the Shareholder at Incorporation by casting votes for only one candidate or for two or more candidates.
(4)In the cases set forth in the preceding paragraph, the Directors at Incorporation are to be elected in the order of the votes obtained by respective candidates.
(5)Beyond what is specified in the preceding two paragraphs, necessary matters regarding the election of Directors at Incorporation in cases where a request has been made pursuant to the provisions of paragraph (1) are prescribed by Ministry of Justice Order.
(Election of Directors at Incorporation by Resolutions at Organizational Meetings of Class Shareholders)
Article 90(1)Notwithstanding the provisions of Article 88, in cases where, at incorporation of the Stock Company, it issues shares of a class for which the matters listed in Article 108, paragraph (1), item (ix) (limited to those relating to directors (in cases where the Stock Company to be incorporated is a Company with an Audit and Supervisory Committee, directors who are Audit and Supervisory Committee Members or other directors)) are provided, the Directors at Incorporation (in cases where the Stock Company to be incorporated is a Company with an Audit and Supervisory Committee, Directors at Incorporation who are Audit and Supervisory Committee Members at Incorporation or other Directors at Incorporation) must be elected by a resolution at an Organizational Meeting of Class Shareholders constituted by the Class Shareholders at Incorporation of such class of Shares Issued at Incorporation, consistently with the provisions of articles of incorporation with respect to the matters provided for in paragraph (2), item (ix) of such Article.
(2)The provisions of the preceding paragraph apply mutatis mutandis to the cases where the shares of a class for which matters listed in Article 108, paragraph (1), item (ix) (limited to those relating to company auditors) are provided are issued at incorporation of the Stock Company.
(Dismissal of Directors at Incorporation)
Article 91Directors at Incorporation, Accounting Advisors at Incorporation, Company Auditors at Incorporation or Financial Auditors at Incorporation who are elected pursuant to the provisions of Article 88 may be dismissed by a resolution at an Organizational Meeting at any time prior to the formation of the Stock Company.
Article 92(1)Directors at Incorporation who are elected pursuant to the provisions of Article 90, paragraph (1) may be dismissed by a resolution at a General Meeting of Class Shareholders constituted by the Class Shareholders at Incorporation of such class of Shares Issued at Incorporation relating to such election at any time prior to the formation of the Stock Company.
(2)Notwithstanding the provisions of the preceding paragraph, in cases where there is a provision in articles of incorporation to the effect that a director who is elected pursuant to the provisions of Article 41, paragraph (1), or at an Organizational Meeting of Class Shareholders or at a General Meeting of Class Shareholders may be dismissed by a resolution at the shareholders meeting, a Director at Incorporation who is elected pursuant to the provisions of Article 90, paragraph (1) may be dismissed by a resolution at an Organizational Meeting at any time prior to the formation of the Stock Company.
(3)When applying provisions of the preceding paragraph in cases where the Stock Company to be incorporated is a Company with an Audit and Supervisory Committee, "a director" in the same paragraph is deemed to be replaced with "a director who is an Audit and Supervisory Committee Member or other directors", and "a Director at Incorporation" is deemed to be replaced with "a Director at Incorporation who is an Audit and Supervisory Committee Member at Incorporation or other Directors at Incorporation" respectively
(4)The provisions of paragraphs (1) and (2) apply mutatis mutandis to a Company Auditor at Incorporation who is elected pursuant to the provisions of Article 90, paragraph (1) applied mutatis mutandis under paragraph (2) of such Article.
Subsection 5 Investigation by Directors at Incorporation
(Investigation by Directors at Incorporation)
Article 93(1)The Directors at Incorporation (referring to the Directors at Incorporation and Company Auditors at Incorporation in cases where the Stock Company to be incorporated is a Company with Company Auditor(s); hereinafter the same applies in this Article) must investigate the following matters without delay after their election:
(i)that, with respect to the Property Contributed in Kind in the cases listed in Article 33, paragraph (10), item (i) or item (ii) (if listed in such item, limited to the securities under such item), the value specified or recorded in the articles of incorporation is reasonable;
(ii)that the verification provided for in Article 33, paragraph (10), item (iii) is appropriate;
(iii)that the Performance of Contributions by the incorporators and the payments pursuant to the provisions of Article 63, paragraph (1) have been fulfilled; and
(iv)that, beyond the matters listed in the preceding three items, the procedures for the incorporation of the Stock Company do not violate laws and regulations or the articles of incorporation.
(2)The Directors at Incorporation must report the outcome of the investigations pursuant to the provisions of the preceding paragraph to an Organizational Meeting.
(3)In cases where incorporators are asked by the Shareholders at Incorporation to provide explanations on the matters regarding the investigation pursuant to the provisions of the paragraph (1) at an Organizational Meeting, the incorporators must provide necessary explanations with respect to such matters.
(Special Provisions in Case Directors at Incorporation Are Incorporators)
Article 94(1)In cases where some or all of the Directors at Incorporation (or the Directors at Incorporation and Company Auditors at Incorporation in cases where the Stock Company to be incorporated is a Company with Company Auditor(s)) are incorporators, a person to investigate the matters listed in each item of paragraph (1) of the preceding Article may be elected by a resolution at the Organizational Meeting.
(2)A person who is elected pursuant to the provisions of the preceding paragraph must conduct the necessary investigation and report the outcome of such investigation to an Organizational Meeting.
Subsection 6 Amendment in Articles of Incorporation
(No Amendment in Articles of Incorporation by Incorporators)
Article 95In cases where the solicitation under Article 57, paragraph (1) is carried out, the incorporators may not effect any amendment in the articles of incorporation on and after either the date referred to in Article 58, paragraph (1), item (iii) or the first day of the period referred to in the same item, whichever comes earlier, notwithstanding the provisions of Article 33, paragraph (9) and Article 37, paragraphs (1) and (2).
(Amendment in Articles of Incorporation at Organizational Meetings)
Article 96Notwithstanding the provisions of Article 30, paragraph (2), articles of incorporation may be amended by a resolution at an Organizational Meeting.
(Rescission of Subscription for Shares Issued at Incorporation)
Article 97In cases where it is resolved at the Organizational Meeting to effect an amendment in the articles of incorporation to change the matters listed in each item of Article 28, the Shareholders at Incorporation who dissented from such amendment at such Organizational Meeting may rescind the manifestation of their intention relating to the subscription for such Shares Issued at Incorporation only within two weeks after such resolution.
(Provisions for the Total Number of Authorized Shares by Resolutions at Organizational Meetings)
Article 98If, in cases where the solicitation under Article 57, paragraph (1) is carried out, the Total Number of Authorized Shares is not provided for in the articles of incorporation, the provisions on the Total Number of Authorized Shares must be created by amending the articles of incorporation prior to the formation of the Stock Company by a resolution at an Organizational Meeting.
(Special Provisions on Procedures for Amendment in Articles of Incorporation)
Article 99In cases where the Stock Company to be incorporated is a Company with Classes Shares, if the cases listed in any of the following items apply, the consent of all Class Shareholders at Incorporation of such classes of the Shares Issued at Incorporation in each of such items must be obtained:
(i)if it is intended to create, as a feature of a certain class of shares, any provisions in the articles of incorporation with respect to the matters listed in Article 108, paragraph (1), item (vi), or to effect any amendment in the articles of incorporation with respect to such matters (excluding any amendment which repeals the provisions of the articles of incorporation with respect to such matters);
(ii)if it is intended to create any provisions in the articles of incorporation pursuant to the provisions of Article 322, paragraph (2) with respect to a certain class of shares.
Article 100(1)In cases where the Stock Company to be incorporated is a Company with Class Shares, if it is intended to create, as a feature of a certain class of shares, any provisions in the articles of incorporation with respect to the matters listed in Article 108, paragraph (1), item (iv) or item (vii) by amending the articles of incorporation, such amendment in the articles of incorporation does not become effective unless a resolution is passed at an Organizational Meeting of Class Shareholders constituted by the following Class Shareholders at Incorporation (in cases where there are two or more classes of Shares Issued at Incorporation relating to such Class Shareholders at Incorporation, referring to the respective Organizational Meetings of Class Shareholders constituted by Class Shareholders at Incorporation categorized by the class of such two or more classes of Shares Issued at Incorporation; hereinafter the same applies in this Article); provided, however, that this does not apply to cases where there is no Class Shareholder at Incorporation who may exercise votes at such Organizational Meeting of Class Shareholders:
(i)the Class Shareholders at Incorporation of such class of Shares Issued at Incorporation;
(ii)the Class Shareholders at Incorporation of Shares with a Put Option for which there is a provision that the relevant other shares referred to in Article 108, paragraph (2), item (v), (b) are to be such class of share; or
(iii)the Class Shareholders at Incorporation of Shares Subject to Call Option for which there is a provision that the relevant other shares referred to in Article 108, paragraph (2), item (vi), (b) are to be such class of shares.
(2)The Class Shareholders at Incorporation who, at the Organizational Meeting of Class Shareholders referred to in the preceding paragraph, dissented from such amendment in the articles of incorporation may rescind the manifestation of their intention relating to the subscription for such Shares Issued at Incorporation only within two weeks after the resolution passed at such Organizational Meeting of Class Shareholders.
Article 101(1)In cases where the Stock Company to be incorporated is a Company with Class Shares, if effecting any amendment in articles of incorporation with respect to any of the following matters is likely to cause detriment to the Class Shareholders at Incorporation of any class of Shares Issued at Incorporation, such amendment in the articles of incorporation does not become effective unless a resolution is passed at an Organizational Meeting of Class Shareholders constituted by the Class Shareholders at Incorporation of the Shares Issued at Incorporation of such class (in cases where there are two or more classes of Shares Issued at Incorporation relating to such Class Shareholders at Incorporation, referring to the respective Class Organizational Meetings of Class Shareholders constituted by the Class Shareholders at Incorporation categorized by the class of such two or more classes of Shares Issued at Incorporation); provided, however, that this does not apply to cases where there is no Class Shareholder at Incorporation who may exercise votes at such Organizational Meeting of Class Shareholders:
(i)creation of a new class of shares;
(ii)changes in the features of shares;
(iii)increase of the Total Number of Authorized Shares, or the Total Number of Authorized Shares in a Class (meaning the total number of shares in one class that the Stock Company is authorized to issue; the same applies hereinafter).
(2)In cases where any amendment in the articles of incorporation with respect to the Share Unit is to be effected and there is a provision in the articles of incorporation pursuant to the provisions of Article 322, paragraph (2) with respect to such amendment in the articles of incorporation, the provisions of the preceding paragraph do not apply to the Organizational Meeting of Class Shareholders constituted by the Class Shareholders at Incorporation of such class of the Shares Issued at Incorporation.
Subsection 7 Special Provisions on Incorporation Procedures
(Special Provisions on Incorporation Procedures)
Article 102(1)A subscriber for the Shares Solicited at Incorporation may submit the requests listed in each item of Article 31, paragraph (2) at any time during the hours designated by the incorporators; provided, however, that the fees designated by the incorporators are required to be paid in order to submit the requests listed in item (ii) or item (iv) of such paragraph.
(2)As at formation of a Stock Company, the subscriber for the Shares Solicited at Incorporation becomes a shareholder of the Shares Issued at Incorporation for which the relevant subscriber has made payment pursuant to the provisions of Article 63, paragraph (1).
(3)In cases where a subscriber for the Shares Solicited at Incorporation falsified the payment pursuant to the provisions of Article 63, paragraph (1), the subscriber may exercise the right of Shareholders at Incorporation and shareholders pertaining to Shares Issued at Incorporation for which the payment is falsified, only after the payment pursuant to the provisions of paragraph (1) of the following Article or Article 103, paragraph (2) is made.
(4)A person who accepts transfer of Shares Issued at Incorporation as set forth in the preceding paragraph or the right to become their shareholder may exercise the right of Shareholders at Incorporation and shareholders pertaining to such Shares Issued at Incorporation; provided, however, that this does not apply to cases where the person has acted in bad faith or with gross negligence.
(5)The provisions of the proviso to Article 93 and the provisions of Article 94, paragraph (1) of the Civil Code do not apply to the manifestation of intention relating to an offer of subscription for and allotment of the Shares Solicited at Incorporation, and relating to contracts under Article 61.
(6)The subscriber for the Shares Solicited at Incorporation may neither assert the invalidity of the subscription for Shares Issued at Incorporation on the ground of mistake, nor rescind the subscription for Shares Issued at Incorporation on the ground of fraud or duress after the formation of a Stock Company, or after exercising the subscriber's votes at an Organizational Meeting or Organizational Meeting of Class Shareholders.
(Responsibilities of Subscribers for the Shares Solicited at Incorporation for Which Payment Is Falsified)
Article 102-2(1)In the case prescribed in paragraph (3) of the preceding Article, a subscriber for the Shares Solicited at Incorporation is liable to pay the entire amount of payment for which the payment was falsified, to the Stock Company.
(2)The obligation assumed by a subscriber for the Shares Solicited at Incorporation pursuant to the provisions of the preceding paragraph may not be exempted without the consent of all shareholders.
(Liabilities of Incorporators)
Article 103(1)In cases where the solicitation under Article 57, paragraph (1) is carried out, for the purpose of the application of the provisions of Article 52, paragraph (2), "in the following cases" in such paragraph is read as "in the cases of item (i)".
(2)In the case prescribed in Article 102, paragraph (3), a person prescribed by Ministry of Justice Order as an incorporator or Director at Incorporation involved in falsifying payment is jointly and severally liable with subscribers set forth in paragraph (1) of the preceding Article to make payment prescribed in that paragraph; provided, however, that this does not apply to cases where the person (excluding those persons who falsified the payment) proves that the person did not fail to exercise due care with respect to the performance of the person's duties.
(3)The obligations assumed by an incorporator or Director at Incorporation pursuant to the provisions of the preceding paragraph may not be exempted without the consent of all shareholders.
(4)In cases where the solicitation under Article 57, paragraph (1) is carried out, any person (excluding the incorporators) who consents to specifying or recording the person's name and a statement to the effect that the person supports the incorporation of the Stock Company in a document or an electronic or magnetic record regarding such solicitation, including an advertisement for such solicitation, is deemed to be an incorporator and the provisions of the preceding Section and the preceding three paragraphs apply.
Chapter II Shares
Section 1 General Provisions
(Shareholders' Liabilities)
Article 104A shareholder's liability is limited to the amount of the subscription price of the shares the shareholder holds.
(Rights of Shareholders)
Article 105(1)A shareholder has the following rights and other rights recognized pursuant to the provisions of this Act with respect to the shares the shareholder holds:
(i)the right to receive dividends of surplus;
(ii)the right to receive distribution of residual assets;
(iii)the right to cast a vote at shareholders meeting.
(2)Provisions of articles of incorporation that do not give the entirety of the rights listed in item (i) and item (ii) of the preceding paragraph to shareholders are not effective.
(Exercise of Rights by Co-owners)
Article 106If any share is co-owned by two or more persons, the co-owners may not exercise their rights in relation to such share unless they specify one person who exercises the rights in relation to such share, and notify the Stock Company of the name of that person; provided, however, that this does not apply in cases where the Stock Company agrees to the exercise of such rights.
(Special Provisions on Features of Shares)
Article 107(1)A Stock Company may determine the matters listed in the following items as the features of all shares it issues:
(i)that the approval of such Stock Company is required for the acquisition of such shares by transfer;
(ii)that shareholders may demand, that such Stock Company acquire such shares held by such shareholders;
(iii)that such Stock Company may acquire such shares on condition of certain grounds arising.
(2)If a Stock Company determines the matters listed in the following items as the features of all shares it issues, it must provide for the matters prescribed in each such item in the articles of incorporation:
(i)regarding the fact that the approval of such Stock Company is required for the acquisition of such shares by transfer: The matters listed below:
(a)a statement to the effect that the acquisition of such shares by transfer requires the approval of such Stock Company;
(b)if the Stock Company is deemed to have effected the approval under Article 136 or Article 137, paragraph (1) under certain circumstances, a statement to such effect and a description of such circumstances;
(ii)regarding the fact that shareholders may demand that such Stock Company acquire such shares held by such shareholders: The matters listed below:
(a)a statement to the effect that shareholders may demand that such Stock Company acquire the shares held by such shareholders;
(b)if Bonds of such Stock Company (other than those in relation to Bonds with Share Option) are delivered to such shareholders in exchange for the acquisition of one of the shares referred to in (a), the description of the classes of such Bonds (meaning the classes defined in Article 681, item (i); hereinafter the same applies in this Part) and the total amount for each class of Bonds, or the method for calculating such total amount;
(c)if Share Options of such Stock Company (other than those attached to Bonds with Share Option) are delivered to such shareholders in exchange for the acquisition of one of the shares referred to in (a), the features and number of such Share Options, or the method for calculating such number;
(d)if Bonds with Share Option of such Stock Company are delivered to such shareholders in exchange for the acquisition of one of the shares referred to in (a), the matters prescribed in (b) with respect to such Bonds with Share Option, and the matters prescribed in (c) with respect to the Share Options attached to such Bonds with Share Option;
(e)if any property other than shares, etc. (meaning shares, Bonds and Share Options; the same applies hereinafter) of such Stock Company is delivered to such shareholders in exchange for the acquisition of one of the shares referred to in (a), the description of the features and number or amount of such property, or the method for calculating such number or amount;
(f)the period during which the shareholders may demand that such Stock Company acquire such shares held by such shareholders;
(iii)regarding the fact that such Stock Company may acquire such shares on condition of certain grounds arising: The matters listed below:
(a)a statement to the effect that such Stock Company will acquire its shares on the day when certain grounds arise, and of such grounds;
(b)if the grounds referred to in (a) will arise with the arrival of a day to be separately specified by such Stock Company, a statement to that effect;
(c)if a portion of the shares referred to in (a) will be acquired on the day the grounds referred to in (a) arise, a statement to that effect and of the method for determining the portion of shares to be acquired;
(d)if Bonds of such Stock Company (other than those of Bonds with Share Option) are delivered to such shareholders in exchange for the acquisition of one of the shares referred to in (a), the classes of such Bonds and the total amount for each class of Bonds, or the method for calculating such total amounts;
(e)if Share Options of such Stock Company (other than those attached to Bonds with Share Option) are delivered to such shareholders in exchange for the acquisition of one of the shares referred to in (a), the features and number of such Share Options, or the method for calculating such number;
(f)if Bonds with Share Option of such Stock Company are delivered to such shareholders in exchange for the acquisition of one share of the shares referred to in (a), the matters prescribed in (d) with respect to such Bonds with Share Option, and the matters prescribed in (e) with respect to the Share Options attached to such Bonds with Share Option;
(g)if any property other than shares, etc. of such Stock Company is delivered to such shareholders in exchange for the acquisition of one of the shares referred to in (a), the features and number or amount of such property, or the method for calculating such number or amount.
(Shares of Different Classes)
Article 108(1)A Stock Company may issue two or more classes of shares with different features which have different provisions on the following matters; provided, however, that a Company with a Nominating Committee, etc. and a Public Company may not issue shares of a class that has provisions in relation to the matters listed in item (ix):
(i)dividends of surplus;
(ii)distribution of residual assets;
(iii)capacity to exercise the right to vote at a shareholders meeting;
(iv)that the approval of such Stock Company is required for the acquisition of such class shares by transfer;
(v)that shareholders may demand that such Stock Company acquire such class shares held by such shareholders;
(vi)that such Stock Company may acquire such class shares on condition of certain grounds arising;
(vii)that such Stock Company acquires all of such class shares by a resolution at the shareholders meeting;
(viii)such of the matters to be resolved at a shareholders meeting (or at a shareholders meeting or board of directors meeting for a Company with a Board of Directors, or at a shareholders meeting or board of liquidators meeting for a Company with Board of Liquidators (meaning the Company with Board of Liquidators as provided for Article 478, paragraph (8); hereinafter the same applies in this Article)), that require, in addition to such resolution, a resolution at a General Meeting of Class Shareholders constituted by the Class Shareholders of such class shares;
(ix)that directors (in cases of a Company with an Audit and Supervisory Committee, a director who is an Audit and Supervisory Committee Member or other directors; the same applies in item (ix) of the following paragraph and Article 112, paragraph (1)) or company auditors are elected at a General Meeting of Class Shareholders constituted by the Class Shareholders of such class shares.
(2)In cases where a Stock Company issues two or more classes of shares with different features that have different provisions on the following matters, it must provide for the matters prescribed in each of such items and the Total Number of Authorized Shares in a Class in the articles of incorporation:
(i)regarding dividends of surplus:The method for determining the Dividend Property to be delivered to the shareholders of such classes, the conditions for dividends of surplus, and other features relating to dividends of surplus;
(ii)regarding the distribution of residual assets:The method for determining the value of the residual assets to be delivered to the shareholders of such classes, the kinds of such residual assets, and other features of treatment relating to the distribution of residual assets;
(iii)regarding the matter of capacity to exercise the right to vote at shareholders meetings: The following matters:
(a)the matters in relation to which the voting right may be exercised at a shareholders meeting; and
(b)if any condition on the exercise of the voting right is to be prescribed for such class shares, such condition;
(iv)regarding the fact that the approval of such Stock Company is required for the acquisition of such class shares by transfer:The matters prescribed in paragraph (2), item (i) of the preceding Article with respect to such class shares;
(v)regarding the fact that shareholders may demand that such Stock Company acquire such class shares held by such shareholders: The following matters:
(a)the matters prescribed in paragraph (2), item (ii) of the preceding Article with respect to such class shares;
(b)if, in exchange for the acquisition of one share of such class shares, other shares of such Stock Company are delivered to such shareholders, the class of such other shares and the total number of each class, or the method for calculating such number;
(vi)regarding the fact that such Stock Company may acquire such class shares on condition of certain grounds arising: The following matters:
(a)the matters prescribed in paragraph (2), item (iii) of the preceding Article with respect to such class shares;
(b)if, in exchange for the acquisition of one share of such class shares, other shares of such Stock Company are delivered to such shareholders, the class of such other shares and the total number of each class, or the method for calculating such number;
(vii)regarding the fact that such Stock Company acquires all of such class of shares by a resolution at a shareholders meeting: The following matters:
(a)the method for determining the value of the acquisition price prescribed in Article 171, paragraph (1), item (i);
(b)if any condition is to be prescribed on whether or not the resolution at such shareholders meeting may be effected, such condition;
(viii)regarding the matters to be resolved at a shareholders meeting (or at a shareholders meeting or board of directors meeting for a Company with a Board of Directors, or at a shareholders meeting or board of liquidators meeting for a Company with Board of Liquidators), that require, in addition to such resolution, a resolution at a General Meeting of Class Shareholders constituted by the Class Shareholders of such class shares: The following matters:
(a)the matters for which the resolution at such General Meeting of Class Shareholders is required; and
(b)if any condition for which the resolution at such General Meeting of Class Shareholders is required is to be prescribed, such condition;
(ix)regarding the fact that directors or company auditors are elected at a General Meeting of Class Shareholders constituted by the Class Shareholders of such class shares: The following matters:
(a)the election of directors or company auditors at a General Meeting of Class Shareholders constituted by such Class Shareholders and the number of directors or company auditors to be elected;
(b)if some or all of the directors or company auditors who may be elected pursuant to the provisions of (a) are elected jointly with other Class Shareholders, the class of the shares held by such other Class Shareholders, and the number of directors or company auditors to be elected jointly;
(c)if there is any condition that alters the matters listed in (a) or (b), such condition, and the matters listed in (a) or (b) after such alternation in cases where such condition is fulfilled; and
(d)beyond what is set forth in (a) to (c), any matter prescribed by Ministry of Justice Order.
(3)Notwithstanding the provisions of the preceding paragraph, with respect to some or all of the matters prescribed in each item of the same paragraph (limited to the amount of dividends which may be received by Class Shareholders of classes with different features with respect to dividends of surplus, and other matters prescribed by Ministry of Justice Order), it may be provided in the articles of incorporation to the effect that such matters are determined by a resolution at a shareholders meeting (or at a shareholders meeting or board of directors meeting for a Company with a Board of Directors, or at a shareholders meeting or board of liquidators meeting for a Company with Board of Liquidators) by the time of the first issue of such class shares. In such cases, an outline of the features thereof must be provided for in the articles of incorporation.
(Equality of Shareholders)
Article 109(1)A Stock Company must treat its shareholders equally in accordance with the features and number of the shares they hold.
(2)Notwithstanding the provisions of the preceding paragraph, a Stock Company that is not a Public Company may provide in its articles of incorporation to the effect that each shareholder is treated differently with respect to the matters regarding the rights listed in each item of Article 105, paragraph (1).
(3)In cases where there is a provision in the articles of incorporation that is provided for in the preceding paragraph, the shares held by the shareholders under that paragraph are deemed to be class shares with different features with respect to the matters regarding the rights under that paragraph, and the provisions of this Part and Part V apply.
(Special Provisions on Procedures for Amendments in Articles of Incorporation)
Article 110In cases where it is intended to create, as a feature of all shares to be issued by a Stock Company, a provision in the articles of incorporation with respect to the matters listed in Article 107, paragraph (1), item (iii) by amending the articles of incorporation, or to effect any amendment (excluding that which abolishes the provisions of the articles of incorporation with respect to such matters) in the articles of incorporation with respect to such matters (excluding the case where the Stock Company is a Company with Class Shares), the consent of all shareholders must be obtained.
Article 111(1)If a Company with Class Shares intends, after it has issued a certain class of shares, to create, as a feature of such class shares, a provision in the articles of incorporation with respect to the matters listed in Article 108, paragraph (1), item (vi) by amending the articles of incorporation, or to effect any amendment to the articles of incorporation with respect to such matters (excluding any amendment which abolishes the provisions of the articles of incorporation with respect to such matters), the consent of all Class Shareholders who hold such class shares must be obtained.
(2)In cases where a Company with Class Shares intends to create, as a feature of a certain class of shares, a provision in the articles of incorporation with respect to the matters listed in Article 108, paragraph (1), item (iv) or (vii), such amendment to the articles of incorporation does not become effective unless a resolution is passed at a General Meeting of Class Shareholders constituted by the following Class Shareholders (in cases where there are two or more classes of shares relating to such Class Shareholders, referring to the respective General Meetings of Class Shareholders constituted by Class Shareholders categorized by the class of such two or more classes of shares; hereinafter the same applies in this Article); provided, however, that this does not apply to cases where there is no Class Shareholder who can exercise voting right at such General Meeting of Class Shareholder:
(i)the Class Shareholders of shares of such class;
(ii)the Class Shareholders of Shares with a Put Option for which there is a provision that the relevant other shares referred to in Article 108, paragraph (2), item (v), (b) are to be the shares of such class; or
(iii)the Class Shareholders of Shares Subject to Call for which there is a provision that the relevant other shares referred to in Article 108, paragraph (2), item (vi), (b) are to be the shares of such class.
(Special Provisions on Abolition of Provisions in Articles of Incorporation on Class Shares in Relation to Election of Directors)
Article 112(1)The provisions in the articles of incorporation on the matters listed in Article 108, paragraph (2), item (ix) (limited to those on directors) are deemed to have been abolished if, in cases where the number of directors is less than the number prescribed in this Act or the articles of incorporation, hence it is not possible to elect directors in a number sufficient to satisfy such requirement.
(2)The provisions of the preceding paragraph apply mutatis mutandis to the provisions of the articles of incorporation on the matters listed in Article 108, paragraph (2), item (ix) (limited to those on company auditors).
(Total Number of Authorized Shares)
Article 113(1)A Stock Company may not abolish the provisions on the Total Number of Authorized Shares by amending its articles of incorporation.
(2)If it is intended to reduce the Total Number of Authorized Shares by amending the articles of incorporation, the Total Number of Authorized Shares after the amendment may not be less than the total number of the Issued Shares at the time when such amendment to the articles of incorporation becomes effective.
(3)In the following cases, the Total Number of Authorized Shares after such amendment in the articles of incorporations may not exceed the number four times the total number of the Issued Shares at the time when such amendment to the articles of incorporation becomes effective:
(i)in cases where a Public Company amends the articles of incorporation and increases the Total Number of Authorized Shares; or
(ii)in cases where a Stock Company that is not a Public Company amends the articles of incorporation and becomes a Public Company.
(4)The number of the shares which a holder of Share Options (excluding Share Options for which the first day of the period prescribed in Article 236, paragraph (1), item (iv) has not yet arrived) acquire pursuant to the provisions of Article 282, paragraph (1) may not exceed the number obtained by subtracting the total number of the Issued Shares (excluding Treasury Shares (meaning shares in a Stock Company owned by that Stock Company itself; the same applies hereinafter)) from the Total Number of Authorized Shares.
(Total Number of Authorized Share in a Class)
Article 114(1)If it is intended to reduce the Total Number of Authorized Shares in a Class of a certain class of shares by amending the articles of incorporation, the Total Number of Authorized Shares in a Class of such class of shares after the amendment may not be less than the total number of the Issued Shares of such class at the time when such amendment to the articles of incorporation becomes effective.
(2)The total sum of the numbers set forth below for a certain class of shares may not exceed the number obtained by subtracting the total number of the Issued Shares of such class (excluding Treasury Shares) from the Total Number of Authorized Shares in a Class of such class of shares:
(i)the number of the relevant other shares prescribed in Article 167, paragraph (2), item (iv) which is to be acquired pursuant to the provisions of Article 167, paragraph (2) by the shareholders (excluding the relevant Stock Company) of Shares with a Put Option (excluding those for which the first day of the period prescribed in Article 107, paragraph (2), item (ii), (f) has not yet arrived);
(ii)the number of the relevant other shares prescribed in Article 170, paragraph (2), item (iv) which is to be acquired pursuant to the provisions of Article 170, paragraph (2) by the shareholders (excluding the relevant Stock Company) of Shares Subject to Call; and
(iii)the number of the shares which holders of Share Options (excluding those for which the first day of the period prescribed in Article 236, paragraph (1), item (iv) has not yet arrived) acquire pursuant to the provisions of Article 282, paragraph (1).
(Number of Issued Shares with Restricted Voting Right)
Article 115In cases where a Company with Class Shares is a Public Company, if the number of the shares of a certain class with restriction in relation to matters on which voting right can be exercised at a shareholders meeting (hereinafter in this Article referred to as "Shares with Restricted Voting Right") has exceeded one half of the total number of the Issued Shares, the Stock Company must immediately take measures necessary to reduce the number of the Shares with Restricted Voting Right below one half of the total number of the Issued Shares.
(Dissenting Shareholders' Appraisal Rights)
Article 116(1)In the cases listed in the following items, dissenting shareholders may demand that the Stock Company purchase, at a fair price, the shares prescribed in such items that they hold:
(i)in cases where it is intended to effect an amendment to the articles of incorporation to create a provision on matters listed in Article 107, paragraph (1), item (i) as a feature of all shares issued by a Stock Company:All shares;
(ii)in cases where it is intended to effect an amendment to the articles of incorporation to create a provision on matters listed in Article 108, paragraph (1), item (iv) or (vii) as the feature of a certain class of shares:The shares prescribed in each item of Article 111, paragraph (2);
(iii)in cases where any act listed below is to be performed, if any detriment is likely to be suffered by Class Shareholders who hold a certain class of shares (limited to those provided for in the articles of incorporation under the provisions of Article 322, paragraph (2)): The shares of such class:
(a)consolidation of shares or splitting of shares;
(b)allotment of Shares without Contribution provided for in Article 185;
(c)amendment to the articles of incorporation on the Share Unit;
(d)solicitation of persons to subscribe for the shares of such Stock Company (limited to solicitation for which the Stock Company provides for the matters listed in each item of Article 202, paragraph (1));
(e)solicitation of persons to subscribe for the Share Options of such Stock Company (limited to solicitation for which the Stock Company provides for the matters listed in each item of Article 241, paragraph (1));
(f)allotment of Share Options without Contribution provided for in Article 277.
(2)The "dissenting shareholders" provided for in the preceding paragraph means the shareholders provided for in the following items in the cases listed in the same items:
(i)in cases where a resolution at a shareholders meeting (including a General Meeting of Class Shareholders) is required to perform an act in any item of the preceding paragraph: The following shareholders:
(a)shareholders who gave notice to such Stock Company to the effect that they dissented from such act prior to such shareholders meeting and who dissented from such act at such shareholders meeting (limited to those who can exercise voting right at such shareholders meetings);
(b)shareholders who cannot exercise voting right at such shareholders meetings;
(ii)in cases other than those prescribed in the preceding item:All shareholders.
(3)A Stock Company that intends to perform an act in any item of paragraph (1) must give notice to the shareholders of the shares provided for in each item of that paragraph to the effect that it intends to perform such act, no later than twenty days prior to the day when such act becomes effective (hereinafter in this Article and in the following Article referred to as "Effective Day").
(4)A public notice may be substituted for the notice pursuant to the provisions of the preceding paragraph.
(5)To make a demand under the provisions of paragraph (1) (hereinafter in this Section referred to as the "Exercise of Appraisal Rights"), a dissenting shareholder must indicate the number of shares with regard to which the shareholder is Exercising Appraisal Rights (or, for a Company with Class Shares, the classes of the shares and the number of shares for each class), between twenty days prior to the Effective Day and the day immediately preceding the Effective Day.
(6)When intending to Exercise Appraisal Rights pertaining to shares for which share certificates have been issued, a shareholder of such shares must submit the share certificates representing those shares to the Stock Company; provided, however, that this does not apply to a person who makes a request pursuant to the provisions of Article 223 pertaining to such shares.
(7)Shareholders Exercising Appraisal Rights may withdraw their demands for appraisal only with the approval of the Stock Company.
(8)The demands of the shareholders Exercising Appraisal Rights lose effect if the Stock Company cancels the action referred to in the items of paragraph (1).
(9)The provisions of Article 133 do not apply to shares pertaining to the Exercise of Appraisal Rights.
(Determination of the Price of Shares)
Article 117(1)If a shareholder Exercises Appraisal Rights and an agreement determining the price of the shares is reached between the shareholder and the Stock Company, the Stock Company must pay that price within sixty days from the Effective Day.
(2)If no agreement is reached within thirty days from the Effective Day on the determination of the price of the shares, the shareholders or the Stock Company may file a petition for the court to determine the price within thirty days after the expiration of that period.
(3)Notwithstanding the provisions of paragraph (7) of the preceding Article, in the cases provided for in the preceding paragraph, if the petition under that paragraph is not made within sixty days after the Effective Day, shareholders Exercising Appraisal Rights may withdraw their demands for appraisal at any time after the expiration of that period.
(4)The Stock Company must also pay interest on the price determined by the court which is calculated at the rate of 6% per annum from and including the day of the expiration of the period referred to in paragraph (1).
(5)A Stock Company may pay the amount that the Stock Company considers to be a fair price to shareholders until the determination of the price of shares.
(6)A share purchase connected with the Exercise of Appraisal Rights becomes effective on the Effective Day.
(7)If a shareholder Exercises Appraisal Rights with respect to shares for which share certificates are issued, the Share Certificate-Issuing Company (meaning a Stock Company the articles of incorporation of which have provisions to the effect that share certificate representing its shares (or, in case of a Company with Class Shares, shares of all classes) are issued; the same applies hereinafter) must pay the price of the shares relating to the Exercise of the Appraisal Rights in exchange for the share certificates.
(Exercise of Appraisal Rights on Share Options)
Article 118(1)In cases where it is intended to effect any amendment to articles of incorporation listed in the following items, the holders of Share Options provided for in any such item may demand that the Stock Company purchase, at a fair price, the Share Options that they hold:
(i)in cases where it is intended to effect an amendment to the articles of incorporation to create a provision on matters listed in Article 107, paragraph (1), item (i) as a feature of all shares issued by a Stock Company:All Share Options;
(ii)in cases where it is intended to effect an amendment to the articles of incorporation to create a provision on matters listed in Article 108, paragraph (1), item (iv) or (vii) as a feature of a certain class of shares:The Share Options for which shares of such class are the underlying shares.
(2)If holders of the Share Options attached to Bonds with Share Option intend to make the demand under the preceding paragraph (hereinafter in this Section referred to as the "Exercise of Appraisal Rights on Share Options"), they must also demand that the Stock Company purchase the Bonds with respect to Bonds with Share Option; provided, however, that this does not apply in cases where it is otherwise provided for with respect to the Share Options attached to Bonds with Share Option.
(3)A Stock Company which intends to effect an amendment to the articles of incorporation listed in each item of paragraph (1) must give notice to the holders of Share Options provided for in each item of that paragraph, no later than twenty days prior to the day when such amendment to the articles of incorporation becomes effective (hereinafter in this Article and in the following Article referred to as "Day of Amendment to Articles of Incorporation"), to the effect that such amendment to the articles of incorporation is to be effected.
(4)A public notice may be substituted for the notice pursuant to the provisions of the preceding paragraph.
(5)To Exercise Appraisal Rights on Share Options, the Share Option holder must indicate the features and number of the Share Options with regard to which the holder is Exercising the Appraisal Rights, between twenty days prior to the Day of Amendment to Articles of Incorporation and the day immediately preceding the Day of Amendment to Articles of Incorporation.
(6)When intending to Exercise Appraisal Rights on Share Options for which Share Option certificates are issued, the holder of those Share Options must submit the Share Option certificates to the Stock Company; provided, however, that this does not apply to a person who files a petition for public notification as prescribed in Article 114 of the Non-Contentious Cases Procedure Act (Act No. 51 of 2011).
(7)When intending to Exercise Appraisal Rights on Share Options in respect of a Share Option that is attached to any Bond with Share Options for which a Bond certificate has been issued (meaning a Bond certificate representing the Bond with Share Options as prescribed in Article 249, item (ii); hereinafter the same applies in this paragraph and paragraph (8) of the following Article), the holder of the Share Options must submit the Bond certificate representing the Bond with those Share Options to the Stock Company; provided, however, that this does not apply to a person who files a petition for public notification as prescribed in Article 114 of the Non-Contentious Cases Procedure Act.
(8)Share Option holders Exercising Appraisal Rights on Share Options may withdraw their demands for appraisal of the Share Options only with the approval of the Stock Company.
(9)The demands of the Share Option holders Exercising Appraisal Rights on Share Options lose effect if the Stock Company cancels the amendment to articles of incorporation provided for in the items of paragraph (1).
(10)The provisions of Article 260 do not apply to Share Options pertaining to the Exercise of Appraisal Rights on Share Options.
(Determination of the Price of Share Options)
Article 119(1)In cases where a Share Option holder Exercises Appraisal Rights on the Share Options, if an agreement on the determination of the price of the Share Options is reached between the Share Option holder (in cases where such Share Options are attached to Bonds with Share Option, if a holder thereof demands that the Stock Company purchase the Bonds constituting those Bonds with Share Options, including such Bonds; hereinafter the same applies in this Article) and the Stock Company, the Stock Company must make payment within sixty days from the Day of the Amendment to the Articles of Incorporation.
(2)If no agreement on the determination of the price of the Share Options is reached within thirty days from the Day of Amendment to Articles of Incorporation, the Share Option holders or the Stock Company may file a petition for the court to determine the price within thirty days after the expiration of that period.
(3)Notwithstanding the provisions of paragraph (8) of the preceding Article, in the cases provided for in the preceding paragraph, if the petition under that paragraph is not filed within sixty days after the Day of Amendment to Articles of Incorporation, Share Option holders Exercising Appraisal Rights on the Share Options may withdraw their demands for appraisal of the Share Options at any time after the expiration of that period.
(4)The Stock Company must also pay interest on the price determined by the court which is calculated at the rate of 6% per annum from and including the day of the expiration of the period referred to in paragraph (1).
(5)A Stock Company may pay the amount that such Stock Company considers to be a fair price to a Share Option holder until the determination of the price of Share Options.
(6)The purchase relating to the Exercise of Appraisal Rights on Share Options becomes effective on the Day of Amendment to Articles of Incorporation.
(7)If a Share Option holder Exercises Appraisal Rights on Share Options with respect to Share Options for which Share Option certificates are issued, the Stock Company must pay the price of the Share Options relating to the Exercise of Appraisal Rights on the Share Options in exchange for the Share Option certificates.
(8)If a Share Option holder Exercises Appraisal Rights on Share Options in respect of a Share Option attached to any Bond with Share Options for which a Bond certificate has been issued, the Stock Company must pay the price of the Share Options in respect of which the holder is Exercising Appraisal Rights in exchange for the certificate representing the Bond with Share Options.
(Giving Benefits on Exercise of Rights of Shareholders)
Article 120(1)A Stock Company may not give property benefits (limited to benefits given for the accounts of such Stock Company or its Subsidiary Company; hereinafter the same applies in this Article) to any person in connection with the person's exercise of shareholders' rights, rights as Qualified Former Shareholders (meaning Qualified Former Shareholders as prescribed in Article 847-2, paragraph (9)), or rights as shareholders in the Ultimate, Wholly Owning Parent Company, etc. of the Stock Company (meaning an Ultimate, Wholly Owning Parent Company, etc. prescribed in Article 847-3, paragraph (1)).
(2)If a Stock Company gives property benefits to a specific shareholder without charge, it is presumed that such Stock Company has given property benefits regarding the exercise of shareholders' rights. The same applies in cases where a Stock Company gives property benefits to a specific shareholder for value if the benefit received by such Stock Company or its Subsidiary Company is insignificant in comparison to such property benefits.
(3)If a Stock Company gives property benefits in violation of the provisions of paragraph (1), the recipient of such benefit must return the same to such Stock Company or its Subsidiary Company. In such cases, if the recipient has tendered anything to such Stock Company or its Subsidiary Company in exchange for such benefit, that person may receive the return of the same.
(4)If a Stock Company gives property benefits in violation of the provisions of paragraph (1), persons prescribed by Ministry of Justice Order as directors (including executive officers for Companies with Nominating Committee, etc.; hereinafter the same applies in this paragraph.) who are involved in giving such benefits are jointly and severally liable to such Stock Company for payment of an amount equivalent to the value of the benefit so given; provided, however, that this does not apply if such persons (excluding the directors who gave such benefit) prove that they did not fail to exercise due care with respect to the performance of their duties.
(5)Exemptions from the obligations set forth in the preceding paragraph may not be given without the consent of all shareholders.
Section 2 Shareholder Registers
(Shareholder Registers)
Article 121A Stock Company must prepare a shareholder register and enter or record the following information (hereinafter referred to as "Information Required to Be Entered in the Shareholder Register") in the same:
(i)the names and addresses of shareholders;
(ii)the number of shares held by the shareholders referred to in the preceding item (or the classes of shares and number for each class for a Company with Class Shares);
(iii)the days when the shareholders referred to in item (i) acquired the shares; and
(iv)in cases where the Stock Company is a Share Certificate-Issuing Company, the serial numbers of share certificates representing the shares (limited to those for which share certificates are issued) under item (ii).
(Delivery of Documents Showing Information Required to Be Entered in the Shareholder Register)
Article 122(1)A shareholder as referred to in item (i) of the preceding Article may file a request with the Stock Company to be issued a document showing the Information Required to Be Entered in the Shareholder Register which has been entered or recorded in the shareholder register with respect to that shareholder, or to be provided with the electronic or magnetic record in which the Information Required to Be Entered in the Shareholder Register has been recorded.
(2)The documents referred to in the preceding paragraph must be affixed with the signature, or name and seal, of the Representative Director of the Stock Company (referring to the representative executive officer for a Company with a Nominating Committee, etc.; the same applies in the following paragraph).
(3)With respect to an electronic or magnetic record referred to in paragraph (1), the Representative Director of the Stock Company must implement measures in lieu of the affixing of the signature, or name and seal that is prescribed by Ministry of Justice Order.
(4)The provisions of the preceding three paragraphs do not apply to a Share Certificate-Issuing Company.
(Shareholder Register Administrator)
Article 123A Stock Company, in its articles of incorporation, may provide for the hiring of a shareholder register administrator (meaning a person to prepare, keep, and otherwise administer the shareholder register on behalf of the Stock Company; the same applies hereinafter), and may entrust that administrator with administering the same.
(Record Date)
Article 124(1)A Stock Company may, by prescribing a certain date (hereinafter in this Chapter referred to as a "Record Date"), prescribe the shareholders that have been entered or recorded in the shareholder register as of the Record Date (hereinafter in this Article referred to as "Shareholders as of the Record Date") as the persons that may exercise their rights.
(2)In cases where a Record Date is to be established, the Stock Company must prescribe the content of the rights which the Shareholders on the Record Date may exercise (limited to those which are exercised within three months from the Record Date).
(3)If a Stock Company has prescribed a Record Date, it must give public notice of such Record Date and the matters prescribed pursuant to the provisions of the preceding paragraph no later than two weeks prior to such Record Date; provided, however, that this does not apply if the articles of incorporation provide for such Record Date and such matters.
(4)In cases where the rights that the Shareholders on the Record Date may exercise are voting right at a shareholders meeting or General Meeting of Class Shareholders, the Stock Company may prescribe some or all persons who acquire shares on or after such Record Date as persons who may exercise such right; provided, however, that this provision may not prejudice the rights of the Shareholders on the Record Date of such shares.
(5)The provisions of paragraph (1) to paragraph (3) apply mutatis mutandis to the Registered Pledgees of Shares provided for in Article 149, paragraph (1).
(Keeping and Making Available for Inspection of Shareholder Register)
Article 125(1)A Stock Company must keep the shareholder register at its head office (or, if it has a shareholder register administrator, at its business office).
(2)Shareholders and creditors may make the following requests at any time during the business hours of the Stock Company. In such cases, the reasons for such requests must be disclosed:
(i)if the shareholder register is prepared in writing, a request for the inspection or copying of such document;
(ii)if the shareholder register has been prepared as an electronic or magnetic record, a request to inspect or copy anything that is used in a manner prescribed by Ministry of Justice Order to display the information recorded in that electronic or magnetic record.
(3)If a request in the preceding paragraph is made, a Stock Company may not refuse such request, except cases it falls under any of the following:
(i)the shareholder or creditor who made such request (hereinafter in this paragraph referred to as the "Requestor") made the request for other purposes than research on securing or exercising the Requestor's rights;
(ii)the Requestor made the request with the purpose of interfering with the execution of the operations of such Stock Company or prejudicing the common benefit of the shareholders;
(iii)the Requestor made the request in order to notify the facts learned by inspecting or copying the shareholder register to third parties for profit; or
(iv)the Requestor is a person who has notified the facts learned by inspecting or copying the shareholder register to third parties for profit in the immediately preceding two years.
(4)If it is necessary for the purpose of exercising the rights of a Member of the Parent Company of a Stock Company, the relevant Member of the Parent Company may, with the permission of the court, make the requests in each item of paragraph (2) with respect to the shareholder register of such Stock Company. In such cases, the reasons for such requests must be disclosed.
(5)The court may not grant the permission in the preceding paragraph if grounds provided for in any item of paragraph (3) apply to the Member of the Parent Company in the preceding paragraph.
(Notices to Shareholders)
Article 126(1)It is sufficient for a notice or demand to shareholders to be sent by a Stock Company to the addresses of such shareholders stated or recorded in the shareholder register (or, in cases where such shareholders notify such Stock Company of a different place or contact address for the receipt of notices or demands, to such place or contact address).
(2)The notices or demand in the preceding paragraph are deemed to have arrived at the time when such notice or demand should normally have arrived.
(3)If a share is co-owned by two or more persons, the co-owners must specify one person to receive the notices or demand sent by the Stock Company to shareholders and notify such Stock Company of the name of that person. In such cases, that person is deemed to be the shareholder and the provisions of the preceding two paragraphs apply.
(4)In cases where there is no notice by co-owners under the provisions of the preceding paragraph, it is sufficient for a notice or demand sent by a Stock Company to the co-owners of the shareholders if it is sent to one of them.
(5)The provisions of each of the preceding two paragraphs apply mutatis mutandis to cases where, when the notice referred to in Article 299, paragraph (1) (including the case where it is applied mutatis mutandis in Article 325) is given, a document is delivered to shareholders or matters to be stated in such document are provided to shareholders by electronic or magnetic means. In such cases, the phrase "to have arrived" in paragraph (2) is read as "to have been effected by delivery of such documents or the provision of such matters by electronic or magnetic means".
Section 3 Transferring Shares
Subsection 1 Transferring Shares
(Transferring Shares)
Article 127Shareholders may transfer the shares held by the same.
(Transferring Shares in a Share Certificate-Issuing Company)
Article 128(1)Transferring shares in a Share Certificate-Issuing Company does not become effective unless the share certificates representing those shares are delivered; provided, however, that this does not apply to transferring shares that arise out of the disposition of Treasury Shares.
(2)Transfers effected prior to the issuance of the share certificate do not be effective vis-a-vis the Share Certificate-Issuing Company.
(Special Provisions on the Disposition of Treasury Shares)
Article 129(1)A Share Certificate-Issuing Company must deliver the share certificates to persons who acquire Treasury Shares without delay after the day of the disposition of such Treasury Shares.
(2)Notwithstanding the provisions of the preceding paragraph, a Share Certificate-Issuing Company that is not a Public Company may choose to not deliver the share certificates under that paragraph until the persons under that paragraph so request.
(Perfection of Transferring Shares)
Article 130(1)Transferring shares may not be perfected against the Stock Company and other third parties unless the name and address of the person who acquires those shares is stated or recorded in the shareholder register.
(2)For the purpose of the application of the provisions of the preceding paragraph with respect to a Share Certificate-Issuing Company, "the Stock Company and other third parties" in that paragraph is read as "the Stock Company".
(Presumption of Rights)
Article 131(1)A possessor of share certificates is presumed to be the lawful owner of the rights in relation to the shares representing such share certificates.
(2)A person who receives delivery of the share certificates acquires the rights in relation to the shares represented by such share certificates; provided, however, that this does not apply if that person has acted in bad faith or with gross negligence as to the fact of defective title of the transferor.
(Entry or Recording of Information Required to Be Entered in the Shareholder Register Not Requested by Shareholders)
Article 132(1)In a case as set forth in one the following items, a Stock Company must enter or record in the shareholder register the Information That Is Required to Be Entered in the Shareholder Register in respect of any shareholder holding shares as referred to in that item:
(i)in cases where it has Issued Shares;
(ii)in cases where it has acquired shares in such Stock Company;
(iii)in cases where it has disposed of Treasury Shares.
(2)In cases of consolidating shares, a Stock Company must state or record the matters to be specified in the shareholder register pertaining to the shareholders of such shares on the shareholder register, with regard to the consolidated shares.
(3)If a Stock Company splits its shares, it must enter or record in the shareholder register the Information That Is Required to Be Entered in the Shareholder Register in respect of any shareholder holding a share that has been split.
(Entering or Recording Information Required to Be Entered in the Shareholder Register at the Request of Shareholders)
Article 133(1)A person acquiring shares (other than the Stock Company itself, hereinafter in this Section referred to as "Acquirer of Shares") from any person other than the Stock Company that issued those shares may request the Stock Company to enter or record in the shareholder register the Information That Is Required to Be Entered in the Shareholder Register in connection with those shares.
(2)Except for the cases prescribed by Ministry of Justice Order as cases of no likelihood of detriment to interested parties, requests pursuant to the provisions of the preceding paragraph must be made jointly with the person stated or recorded in the shareholder register as the shareholder of the shares so acquired, or general successors including the person's heirs.
Article 134The provisions of the preceding paragraph do not apply in cases where the shares acquired by the Acquirer of Shares are Shares with Restriction on Transfer; provided, however, that this does not apply in cases where it falls under any of the following:
(i)such Acquirer of Shares has obtained approval under Article 136 as to an intended acquisition of such Shares with Restriction on Transfer;
(ii)such Acquirer of Shares has obtained approval under Article 137, paragraph (1) as to a completed acquisition of such Shares with Restriction on Transfer;
(iii)such Acquirer of Shares is a Designated Purchaser provided for in Article 140, paragraph (4);
(iv)such Acquirer of Shares is a person who has acquired the Shares with Restriction on Transfer by general succession including inheritance.
(Acquisition of Shares of Parent Companies Prohibited)
Article 135(1)A Subsidiary Company may not acquire the shares of a Stock Company that is its Parent Company (hereinafter in this Article referred to as "Parent Company's Shares").
(2)The provisions of the preceding paragraph do not apply to the following cases:
(i)cases where the Subsidiary Company accepts the transfer of the Parent Company's Shares held by another Company in cases where the Subsidiary Company accepts the transfer of the entire business of such other Company (including Foreign Companies);
(ii)cases where the Subsidiary Company succeeds to the Parent Company's Shares from a Company disappearing due to merger;
(iii)cases where the Subsidiary Company succeeds to the Parent Company's Shares from another Company by Absorption-type Company Split;
(iv)cases where the Subsidiary Company succeeds to the Parent Company's Shares from another Company by Incorporation-type Company Split; or
(v)beyond what is set forth in the preceding items, cases prescribed by Ministry of Justice Order.
(3)The Subsidiary Company must dispose of the Parent Company's Shares held by the same at an appropriate time.
Subsection 2 Approval Procedures Relating to Transferring Shares
(Requests for Approval by Shareholders)
Article 136If shareholders of Shares with Restriction on Transfer intend to transfer the Shares with Restriction on Transfer held by the same to others (excluding the Stock Company which issued such Shares with Restriction on Transfer), they may request that such Stock Company make a determination as to whether or not to approve the acquisition by such others of such Shares with Restriction on Transfer.
(Request for Approval by Acquirers of Shares)
Article 137(1)Acquirers of Shares who have acquired Shares with Restriction on Transfer may request that the Stock Company make a determination as to whether or not to approve the acquisition of such Shares with Restriction on Transfer.
(2)Except for the cases prescribed by Ministry of Justice Order as cases of no likelihood of detriment to interested parties, requests pursuant to the provisions of the preceding paragraph must be made jointly with the person stated or recorded in the shareholder register as the shareholder of the shares so acquired, or general successors including the person's heirs.
(Method for Requests for Approval of Transfer)
Article 138The requests listed in the following items (hereinafter in this Subsection referred to as "Requests for Approval of Transfer") must be made by disclosing the matters provided for in such items:
(i)requests pursuant to the provisions of Article 136: The following matters:
(a)the number of Shares with Restriction on Transfer that the shareholders making such request intend to transfer to others (or, for a Company with Class Shares, the classes of the shares and the number of shares for each class);
(b)the name of the person accepting the transfer of the Shares with Restriction on Transfer referred to in (a);
(c)in cases where a Stock Company determines not to give approval under Article 136, if it is requested that such Stock Company or Designated Purchaser provided for in Article 140, paragraph (4) purchase the Shares with Restriction on Transfer referred to in (a), the statement to such effect;
(ii)the request pursuant to the provisions of paragraph (1) of the preceding Article: The following matters:
(a)the number of Shares with Restriction on Transfer which the Acquirer of Shares making such request has acquired (or, for a Company with Class Shares, the classes of the shares and the number of shares for each class);
(b)the name of the Acquirer of Shares referred to in (a);
(c)in cases where a Stock Company determines not to effect the approval under paragraph (1) of the preceding Article, if it is requested that such Stock Company or the Designated Purchaser provided for in Article 140, paragraph (4) purchase the Shares with Restrictions on their Transfer referred to in (a), a statement to such effect.
(Determination of Approval of Transfer)
Article 139(1)The determination by a Stock Company as to whether or not to grant approval under Article 136 or Article 137, paragraph (1) must be made by a resolution at a shareholders meeting (or at a board of directors meeting for a Company with a Board of Directors); provided, however, that this does not apply in cases where it is otherwise provided for in the articles of incorporation.
(2)If a Stock Company has made a determination under the preceding paragraph, it must notify the person who made the Requests for Approval of Transfer (hereinafter in this Subsection referred to as "Requester for Approval of Transfer") of the content of such determination.
(Purchase by Stock Company or Designated Purchaser)
Article 140(1)In cases where a Stock Company receives a request under Article 138, item (i), (c) or item (ii), (c), if it makes a determination to not give approval under Article 136 or Article 137, paragraph (1), it must purchase the Shares with Restriction on Transfer relating to such Requests for Approval of Transfer (hereinafter in this Subsection referred to as "Subject Shares"). In such cases, the following matters must be prescribed:
(i)a statement to the effect that the Stock Company will purchase the Subject Shares;
(ii)the number of the Subject Shares that will be purchased by the Stock Company (or, for a Company with Class Shares, the classes of the Subject Shares and the number of shares for each class).
(2)The determination of the matters listed in the items of the preceding paragraph must be made by a resolution at a shareholders meeting.
(3)Requesters for Approval of Transfer may not exercise voting right at the shareholders meeting referred to in the preceding paragraph; provided, however, that this does not apply in cases where all shareholders other than such Requesters for Approval of Transfer may not exercise voting right at the shareholders meeting referred to in that paragraph.
(4)Notwithstanding the provisions of paragraph (1), in the cases provided for in that paragraph, a Stock Company may designate a person to purchase some or all of the Subject Shares (hereinafter in this Subsection referred to as "Designated Purchaser").
(5)The designation pursuant to the provisions of the preceding paragraph must be made by a resolution at the shareholders meeting (or at a board of directors meeting for a Company with a Board of Directors); provided, however, that this does not apply in cases where it is otherwise provided for in the articles of incorporation.
(Notice of Purchases by Stock Company)
Article 141(1)If a Stock Company has determined the matters listed in any item of paragraph (1) of the preceding Article, it must notify the Requester for Approval of Transfer of such matters.
(2)If a Stock Company intends to give notice pursuant to the provisions of the preceding paragraph, it must deposit the amount obtained by multiplying the amount of the net assets per share (meaning the amount prescribed by Ministry of Justice Order as the amount of net assets per share; the same applies hereinafter) by the number of the Subject Shares under paragraph (1), item (ii) of the preceding Article, with a depository located in the area where its head office is located, and deliver a document certifying such deposit to the Requester for Approval of Transfer.
(3)In cases where the Subject Shares are the shares of a Share Certificate-Issuing Company, the Requester for Approval of Transfer who received delivery of the document referred to in the preceding paragraph must deposit the share certificates representing the Subject Shares referred to in paragraph (1), item (ii) of the preceding Article with a depository located in the area where the head office of such Share Certificate-Issuing Company is located within one week from the day of receipt of such delivery. In such cases, such Requester for Approval of Transfer must give notice of such deposit to such Share Certificate-Issuing Company without delay.
(4)If the Requester for Approval of a Transfer under the preceding paragraph does not effect the deposit pursuant to the provisions of that paragraph within the period under that paragraph, the Share Certificate-Issuing Company may cancel the contract for the sale and purchase of the Subject Shares provided for in paragraph (1), item (ii) of the preceding Article.
(Designated Purchaser's Notice to Purchase)
Article 142(1)If a Designated Purchaser is designated pursuant to the provisions of Article 140, paragraph (4), the Designated Purchaser must notify the Requester for Approval of Transfer of the following matters:
(i)a statement to the effect that the Designated Purchaser has been designated as a Designated Purchaser; and
(ii)the number of the Subject Shares that the Designated Purchaser will purchase (or, for a Company with Class Shares, the classes of the Subject Shares and the number of shares for each class).
(2)If a Designated Purchaser intends to give notice pursuant to the provisions of the preceding paragraph, the Designated Purchaser must deposit the amount obtained by multiplying the amount of the net assets per share by the number of the Subject Shares under item (ii) of that paragraph with a depository located in the area where the head office of the Stock Company is located, and deliver a document certifying such deposit to the Requester for Approval of Transfer.
(3)In cases where the Subject Shares are the shares of a Share Certificate-Issuing Company, the Requester for Approval of Transfers who received delivery of the document referred to in the preceding paragraph must deposit the share certificates representing the Subject Shares referred to in paragraph (1), item (ii) with a depository located in the area where the head office of such Share Certificate-Issuing Company is located within one week from the day of receipt of such delivery. In such cases, such Requester for Approval of Transfer must give notice of such deposit to the Designated Purchaser without delay.
(4)If the Requester for Approval of a Transfer under the preceding paragraph does not effect the deposit pursuant to the provisions of that paragraph within the period under that paragraph, the Designated Purchaser may cancel the contract for the sale and purchase of the Subject Shares provided for in paragraph (1), item (ii).
(Withdrawal of Requests for Approval of Transfer)
Article 143(1)A Requester for Approval of Transfer who made a request under Article 138, item (i), (c) or item (ii), (c) may, after having received notice pursuant to the provisions of Article 141, paragraph (1), withdraw the request only in cases where the Requester for Approval of Transfer obtains the approval of the Stock Company.
(2)A Requester of Approval of Transfer who made a request under Article 138, item (i), (c) or item (ii), (c) may, after having received notice pursuant to the provisions of paragraph (1) of the preceding Article, withdraw the request only in cases where the Requester for Approval of Transfer obtains the approval of the Designated Purchaser.
(Determination of Sale Prices)
Article 144(1)In cases where notice is given pursuant to the provisions of Article 141, paragraph (1), the sale price of the Subject Shares under Article 140, paragraph (1), item (ii) is prescribed through discussion between the Stock Company and the Requester for Approval of Transfer.
(2)The Stock Company or Requester for Approval of Transfers may file a petition for the court to determine the sale price within twenty days from the day when notice is given pursuant to the provisions of Article 141, paragraph (1).
(3)In order to make the determination under the preceding paragraph, the court must consider the financial conditions of the Stock Company at the time of the Requests for Approval of Transfer and all other circumstances.
(4)Notwithstanding the provisions of paragraph (1), if a petition under paragraph (2) is made within the period provided for in that paragraph, the amount determined by the court in response to such petition is to be the sale price of the Subject Shares under Article 140, paragraph (1), item (ii).
(5)Notwithstanding the provisions of paragraph (1), if no petition under paragraph (2) is made within the period provided for in that paragraph (except in cases where the discussions under paragraph (1) are successfully concluded within such period), the amount obtained by multiplying the amount of the net assets per share by the number of the Subject Shares under Article 140, paragraph (1), item (ii) is to be the sale price of the Subject Shares.
(6)In cases where a deposit is effected pursuant to the provisions of Article 141, paragraph (2), if the sale price of the Subject Shares under Article 140, paragraph (1), item (ii) has been finalized, the Stock Company is deemed to have paid the sale price, in whole or in part, up to an amount equivalent to the value of the money so deposited.
(7)The provisions of the preceding paragraphs apply mutatis mutandis in cases where notice is given pursuant to the provisions of Article 142, paragraph (1). In such cases, in paragraph (1), the term "Article 140, paragraph (1), item (ii)" is read as "Article 142, paragraph (1), item (ii)" and the term "Stock Company" is read as "Designated Purchaser"; in paragraph (2), the term "Stock Company" is read as "Designated Purchaser"; in paragraph (4) and paragraph (5), the term "Article 140, paragraph (1), item (ii)" is read as "Article 142, paragraph (1), item (ii)"; and in the preceding paragraph, the term "Article 141, paragraph (2)" is read as "Article 142, paragraph (2)", the term "Article 140, paragraph (1), item (ii)" is read as "paragraph (1), item (ii) of that Article", and the term "Stock Company" is read as "Designated Purchaser".
(Cases Where Stock Company Is Deemed to Have Approved)
Article 145In the cases listed below, the Stock Company is deemed to have given the approval under Article 136 or Article 137, paragraph (1); provided, however, that this does not apply if otherwise provided for by the agreement between the Stock Company and the Requester for Approval of Transfer:
(i)in cases where the Stock Company has failed to give notice pursuant to the provisions of Article 139, paragraph (2) within two weeks (or if any shorter period of time is provided for in the articles of incorporation, such shorter period of time) from the day of the request pursuant to the provisions of Article 136 or Article 137, paragraph (1);
(ii)in cases where the Stock Company has failed to give notice pursuant to the provisions of Article 141, paragraph (1) within forty days (or if any shorter period of time is provided for in the articles of incorporation, such shorter period of time) from the day of the notice pursuant to the provisions of Article 139, paragraph (2) (except the cases where the Designated Purchaser gives notice pursuant to the provisions of Article 142, paragraph (1) within ten days (or if any shorter period of time is provided in the articles of incorporation, such shorter period of time) from the day of the notice pursuant to the provisions of Article 139, paragraph (2));
(iii)beyond the cases set forth in the preceding two items, the cases prescribed by Ministry of Justice Order.
Subsection 3 Pledging of Shares
(Pledging of Shares)
Article 146(1)Shareholders may pledge the shares which they hold.
(2)Pledging shares in a Share Certificate-Issuing Company does not become effective unless the share certificates representing those shares are delivered.
(Perfection of Pledging Shares)
Article 147(1)Pledging shares may not be perfected against the Stock Company and other third parties unless the names and addresses of the pledgees are stated or recorded in the shareholder register.
(2)Notwithstanding the provisions of the preceding paragraph, a pledgee of shares in a Share Certificate-Issuing Company may not assert the pledge against the Stock Company and other third parties unless the pledgee is in continuous possession of the share certificates representing those shares.
(3)The provisions of Article 364 of the Civil Code do not apply to shares.
(Entries in Shareholder Register)
Article 148A person who pledges shares may request that the Stock Company enter or record the following matters in the shareholder register:
(i)the name and address of the pledgee;
(ii)the shares underlying the pledge.
(Delivery of Documents Showing the Information Entered in the Shareholder Register)
Article 149(1)A pledgee whose information as set forth in the items of the preceding Article has been entered or recorded in the shareholder register (hereinafter referred to as a "Registered Pledgee of Shares") may file a request with the Stock Company to be issued a document showing the information set forth in the items of that Article which has been entered or recorded in the shareholder register with respect to that Registered Pledgee of Shares, or to be provided with the electronic or magnetic record in which that information has been recorded.
(2)The documents in the preceding paragraph must be affixed with the signature, or name and seal, of the Representative Director of the Stock Company (the representative executive officer for a Company with a Nominating Committee, etc.; the same applies in the following paragraph).
(3)With respect to an electronic or magnetic record referred to in paragraph (1), the Representative Director of the Stock Company must implement measures in lieu of the affixation of signature, or name and seal prescribed by Ministry of Justice Order.
(4)The provisions of the preceding three paragraphs do not apply to a Share Certificate-Issuing Company.
(Notices to Registered Pledgees of Shares)
Article 150(1)It is sufficient for a notice or demand to a Registered Pledgee of Shares to be sent by a Stock Company to the addresses of such Registered Pledgee of Shares which have been entered or recorded in the shareholder register (or, in cases where such Registered Pledgee of Shares notifies the Stock Company of any different place or contact address for the receipt of notices or demands, to such place or contact address).
(2)The notices or demands referred to in the preceding paragraph are deemed to have arrived at the time when such notice or demand should normally have arrived.
(Effect of Pledging Shares)
Article 151(1)In cases where a Stock Company carries out any of the acts listed below, the pledge for shares is effective with respect to the Monies, etc. (meaning monies and other properties; the same applies hereinafter) which the shareholders of such shares are entitled to receive as a result of such act:
(i)the acquisition of Shares with a Put Option pursuant to the provisions Article 167, paragraph (1);
(ii)the acquisition of Shares Subject to Call pursuant to the provisions of Article 170, paragraph (1);
(iii)the acquisition of Shares Subject to Class-Wide Call provided for in Article 171, paragraph (1) pursuant to the provisions of Article 173, paragraph (1);
(iv)consolidation of shares;
(v)Share Split;
(vi)Allotment of Shares without Contribution provided for in Article 185;
(vii)Allotment of Share Options without Contribution provided for in Article 277;
(viii)dividends of surplus;
(ix)distribution of residual assets;
(x)Entity Conversion;
(xi)merger (but only if the Stock Company disappears in the merger);
(xii)Share Exchange;
(xiii)Share Transfer; or
(xiv)acquisition of shares (excluding the acts listed in item (i) to item (iii)).
(2)In cases where a Special Controlling Shareholder (meaning a Special Controlling Shareholder as prescribed in Article 179, paragraph (1); the same applies in Article 154, paragraph (3)) acquires Shares Subject to Cash-Out (meaning Shares Subject to Cash-Out prescribed in Article 179-2, paragraph (1), item (ii); hereinafter the same applies in this paragraph) by Demand for Cash-Out (meaning Demand for Cash-Out as prescribed in Article 179, paragraph (2)), the pledge for Shares Subject to Cash-Out is effective for monies that shareholders of such Shares Subject to the Cash-Out can receive by such acquisition.
Article 152(1)In cases where a Stock Company (excluding a Share Certificate-Issuing Company; hereinafter the same applies in this Article) carries out the acts listed in paragraph (1), item (i) to item (iii) of the preceding Article (limited to the cases where such Stock Company delivers the shares when carrying out such acts), or carries out the act listed in item (vi) of that paragraph, if the pledgees of the pledges under that paragraph are Registered Pledgees of Shares (excluding those for whom the information set forth in each item of Article 148 has been entered or recorded in the shareholder register because of a request pursuant to the provisions of Article 218, paragraph (5); hereinafter the same applies in this Subsection), the names and addresses of such pledgees must be entered or recorded in the shareholder register with respect to the shares under paragraph (1) of the preceding Article that the shareholders are entitled to receive.
(2)In cases where the consolidation of shares has been effected, if the pledgees of the pledge under paragraph (1) of the preceding Article are Registered Pledgees of Shares, the Stock Company must state or record the names and addresses of such pledgees with respect to the shares that have been consolidated.
(3)In cases where the Share Split has been effected, if the pledgees of the pledge under paragraph (1) of the preceding Article are Registered Pledgees of Shares, the Stock Company must state or record the names and addresses of such pledgees with respect to the shares that have been split.
Article 153(1)In the cases provided for in paragraph (1) of the preceding Article, the Share Certificate-Issuing Company must deliver the share certificates representing the shares that the shareholders under Article 151, paragraph (1) receive to the Registered Pledgees of Shares.
(2)In the cases provided for in paragraph (2) of the preceding Article, the Share Certificate-Issuing Company must deliver the share certificates representing the shares that have been consolidated to the Registered Pledgees of Shares.
(3)In the cases provided for in paragraph (3) of the preceding Article, the Share Certificate-Issuing Company must deliver the share certificates that will be newly issued with respect to the shares that have been split to the Registered Pledgees of Shares.
Article 154(1)Registered Pledgees of Shares may receive the Monies, etc. (limited to monies) under Article 151, paragraph (1), or monies under paragraph (2) of that Article, and appropriate them as payment to satisfy their own claims in priority to other creditors.
(2)In cases where a Stock Company performs the acts listed in the following items, if the claims under the preceding paragraph have not yet become due and payable, the Registered Pledgees of Shares may have the person specified in those items deposit an amount equivalent to the value of the Monies, etc. provided for in that paragraph. In such cases, the pledge is effective with respect to the monies so deposited:
(i)acts listed in Article 151, paragraph (1), items (i) through (vi), item (viii), item (ix), or item (xiv):that Stock Company;
(ii)Entity Conversion:Membership Company after Entity Conversion as prescribed in Article 744, paragraph (1), item (i);
(iii)merger (but only if the Stock Company disappears in the merger):The Company Surviving the Absorption-type Merger as prescribed in Article 749, paragraph (1) or the Company Incorporated in the Consolidation-type Merger as prescribed in Article 753, paragraph (1);
(iv)Share Exchange:The Wholly Owning Parent Company Resulting from the Share Exchange prescribed in Article 767; or
(v)Share Transfer:The Wholly Owning Parent Company Incorporated in a Share Transfer as prescribed in Article 773, paragraph (1), item (i).
(3)In the case prescribed in Article 151, paragraph (2), if the claim under paragraph (1) has not yet come due and payable, a Registered Pledgee of Shares may have the Special Controlling Shareholders deposit an amount equivalent to the value of the monies under paragraph (2) of that Article.In this case, the pledge is effective with respect to the monies so deposited
Subsection 4 Perfection of Shares That Belong to the Trust Property
Article 154-2(1)With regard to shares, it may not be perfected that such shares belong to the trust property against the Stock Company and other third parties unless the fact that such shares belong to the trust property is entered or recorded in the shareholder register
(2)When shares held by shareholders under Article 121, item (i) belong to the trust property, it may request the Stock Company to enter or record to that effect in the shareholder register.
(3)For the purpose of the application of the provisions of Article 122, paragraph (1) and Article 132 in cases where the entry or record is made pursuant to the provisions of the preceding paragraph in the shareholder register, "Information Required to Be Entered in the Shareholder Register which has been entered or recorded in the shareholder register with respect to that shareholder" in Article 122, paragraph (1) is deemed to be replaced with "Information Required to Be Entered in the Shareholder Register which has been entered or recorded in the shareholder register with respect to that shareholder (including the fact that shares held by that shareholder belong to the trust property)" and "Information That Is Required to Be Entered in the Shareholder Register in respect of any shareholder holding shares as referred to in that item" in Article 132 is deemed to be replaced with "Information Required to Be Entered in the Shareholder Register in respect of any shareholder holding shares as referred to in that item (including the fact that shares held by that shareholder belongs to the trust property)".
(4)The provisions of the preceding three paragraphs do not apply to a Share Certificate-Issuing Company.
Section 4 Acquisition of Own Shares by Stock Company
Subsection 1 General Provisions
Article 155A Stock Company may acquire shares issued by such Stock Company only in the following cases:
(i)where the grounds under Article 107, paragraph (2), item (iii), (a) have arisen;
(ii)where a request has been made under Article 138, item (i), (c) or item (ii), (c);
(iii)where a resolution has been passed under paragraph (1) of the following Article;
(iv)where a request has been made pursuant to the provisions of Article 166, paragraph (1);
(v)where a resolution has been passed under Article 171, paragraph (1);
(vi)where the Stock Company has made a request under the provisions of Article 176, paragraph (1);
(vii)where a request has been made pursuant to the provisions of Article 192, paragraph (1);
(viii)where the Stock Company has prescribed the matters listed in each item of Article 197, paragraph (3);
(ix)where the Stock Company has prescribed the matters listed in each item of Article 234, paragraph (4) (including the cases where applied mutatis mutandis pursuant to Article 235, paragraph (2));
(x)where the Stock Company accepts the transfer of the entire business of another Company (including Foreign Companies) in cases where such Stock Company accepts the transfer of own shares held by such other Company;
(xi)where the Stock Company succeeds to its own shares from a Company disappearing due to merger;
(xii)where the Stock Company succeeds to own shares held by a Company that is effecting an Absorption-type Company Split; or
(xiii)beyond the cases set forth in the preceding items, in any case prescribed by Ministry of Justice Order.
Subsection 2 Acquisition by Agreement with Shareholders
Division 1 General Provisions
(Determination of Matters Regarding Acquisition of Shares)
Article 156(1)A Stock Company must prescribe the following matters by a resolution at a shareholders meeting in advance in order to acquire for value own shares by agreement with its shareholders; provided, however, that the period under item (iii) cannot exceed one year:
(i)the number of shares to be acquired (or, for a Company with Class Shares, the classes of the shares and the number of shares for each class); and
(ii)the description and total amount of the Monies, etc. (excluding the shares, etc. of such Stock Company; hereinafter the same applies in this Subsection) that will be delivered in exchange for the acquisition of the shares; and
(iii)the period during which the shares can be acquired.
(2)The provisions of the preceding paragraph do not apply to the cases listed in item (i) and item (ii), and in item (iv) to item (xiii) of the preceding Article.
(Determination of Acquisition Price)
Article 157(1)Whenever a Stock Company intends to acquire its shares in accordance with a determination pursuant to the provisions of paragraph (1) of the preceding Article, it must prescribe the following matters:
(i)the number of shares to be acquired (or, for a Company with Class Shares, the class of the shares and the number of the shares);
(ii)the description, and the number or amount, or the method for the calculation thereof, of the Monies, etc. that will be delivered in exchange for the acquisition of one share;
(iii)the total amount of the Monies, etc. that will be delivered in exchange for the acquisition of the shares; and
(iv)the date on which the offer to transfer the shares will be made.
(2)A Company with a Board of Directors must determine the matters listed in each item of the preceding paragraph by a resolution of the board of directors.
(3)The conditions prescribed for the acquisition of shares under paragraph (1) must be uniform for each determination made under the provisions of that paragraph.
(Notice to Shareholders)
Article 158(1)A Stock Company must notify its shareholders (or, for a Company with Class Shares, the Class Shareholders of the classes of the shares it intends to acquire) of the matters listed in each item of paragraph (1) of the preceding Article.
(2)A Public Company may substitute a public notice for the notice under the provisions of the preceding paragraph.
(Offers to Transfer)
Article 159(1)If a shareholder who receives a notice pursuant to the provisions of paragraph (1) of the preceding Article intends to make an offer to transfer the shares the shareholder holds, the shareholder must disclose to the Stock Company the number of shares (or, for a Company with Class Shares, the classes of the shares and the number of the shares for each class) relating to such offer.
(2)A Stock Company is deemed to have accepted, on the date provided for in Article 157, paragraph (1), item (iv), the transfer of shares that the shareholders under the preceding paragraph offered; provided, however, that if the total number of shares that the shareholders under that paragraph offered (hereinafter in this paragraph referred to as "Total Number of Shares Offered") exceed the number provided for in paragraph (1), item (i) of that Article (hereinafter in this paragraph referred to as "Total Number of Shares to be Acquired"), it is deemed that the Stock Company has accepted the transfer of the shares in the number obtained by first dividing the Total Number of Shares to be Acquired by the Total Number of Shares Offered, and then multiplying such product by the number of the shares offered by the shareholders under the preceding paragraph (in cases where the number so obtained includes a fractional share, such fractional share is to be rounded off).
Division 2 Acquisition from Specific Shareholders
(Acquisition from Specific Shareholders)
Article 160(1)In conjunction with the determination of the matters listed in each item of Article 156, paragraph (1), a Stock Company may, by a resolution at a shareholders meeting under that paragraph, make a determination to the effect that notice under the provisions of Article 158, paragraph (1) may be given to specific shareholders.
(2)If a Stock Company intends to make a determination under the provisions of the preceding paragraph, it must give notice to the shareholders (or, for a Company with Class Shares, the Class Shareholders of the classes of the shares to be acquired), by the time prescribed by Ministry of Justice Order, to the effect that the shareholders may make the requests under the provisions of the following paragraph.
(3)The shareholders under the preceding paragraph may, by the time prescribed by Ministry of Justice Order, request that they be added to the specific shareholders provided for in paragraph (1) for the proposal for the shareholders meeting under that paragraph.
(4)The specific shareholders under paragraph (1) may not exercise voting right at the shareholders meeting provided for in Article 156, paragraph (1); provided, however, that this does not apply in cases where all shareholders other than the specific shareholders under paragraph (1) may not exercise the voting right at such shareholders meeting.
(5)In cases where specific shareholders are prescribed under paragraph (1), for the purpose of the application of the provisions of Article 158, paragraph (1), "shareholders (or, for a Company with Class Shares, the Class Shareholder of the classes of the shares it intends to acquire)" in such paragraph is read as "specific shareholders under Article 160, paragraph (1)".
(Special Provisions on Acquisition of Shares with Market Price)
Article 161The provisions of paragraph (2) and paragraph (3) of the preceding Article do not apply if, in cases where the shares to be acquired are shares with a market price, the amount of the Monies, etc. to be delivered in exchange for the acquisition of one such share does not exceed the amount of the market price of one such share calculated by the method prescribed by Ministry of Justice Order.
(Special Provisions on Acquisition from Heirs)
Article 162The provisions of Article 160, paragraphs (2) and (3) do not apply in cases where a Stock Company acquires, from general successors of the shareholders, including their heirs, the shares of such Stock Company that the same acquired by general succession including inheritance; provided, however, that this does not apply if it falls under any of the following:
(i)the Stock Company is a Public Company; or
(ii)such general successors, including heirs exercised the voting right on such shares at a shareholders meeting or General Meeting of Class Shareholders.
(Acquisition of Shares from Subsidiary Companies)
Article 163In cases where a Stock Company acquires shares in such Stock Company that are held by its Subsidiary Company, for the purpose of the application of the provisions of Article 156, paragraph (1), "shareholders meeting" in such paragraph is read as "shareholders meeting (or board of directors meeting for a Company with a Board of Directors)". In such cases, the provisions of Article 157 to Article 160 do not apply.
(Provisions of Articles of Incorporation Regarding Acquisition from Specific Shareholders)
Article 164(1)If a Stock Company intends to make a determination under the provisions of Article 160, paragraph (1) with respect to the acquisition of shares (or, for a Company with Class Shares, shares of a certain class; the same applies in the following paragraph), it may provide in the articles of incorporation to the effect that the provisions of paragraph (2) and paragraph (3) of that Article do not apply.
(2)If, after the shares are issued, it is intended to create a provision in the articles of incorporation under the provisions of the preceding paragraph with respect to such shares by amending the articles of incorporation, or to effect any amendment (excluding that which abolishes the provisions of the articles of incorporation under that paragraph) in the articles of incorporation with respect to such provisions, the consent of all shareholders who hold such shares must be obtained.
Division 3 Acquisition of Shares by Market Transactions
Article 165(1)The provisions of Article 157 to Article 160 do not apply in cases where a Stock Company acquires shares in such Stock Company through transactions undertaken by that Stock Company in the market or through a takeover bid provided for in Article 27-2, paragraph (6) of the Financial Instruments and Exchange Act (hereinafter in this Article referred to as "Market Transactions").
(2)A Company with a Board of Directors may provide in its articles of incorporation to the effect that the acquisition of own shares by Market Transactions may be prescribed by a resolution at a board of directors meeting.
(3)In cases where the provisions of the articles of incorporation under the provisions of the preceding paragraph is created, for the purpose of the application of the provisions of Article 156, paragraph (1), "shareholders meeting" in such paragraph is read as "shareholders meeting (or shareholders meeting or board of director's meeting in the cases provided for in Article 165, paragraph (1))".
Subsection 3 Acquisition of Shares with a Put Option and Shares Subject to Call
Division 1 Demand for Acquisition of Shares with a Put Option
(Demand for Acquisition)
Article 166(1)Shareholders of Shares with a Put Option may demand that the Stock Company acquire the Shares with a Put Option held by such shareholders; provided, however, that this does not apply if, in cases where the properties provided for in Article 107, paragraph (2), item (ii), (b) to (e) are delivered in exchange for the acquisition of such Shares with a Put Option, the book value of such properties exceeds the Distributable Amount under Article 461, paragraph (2) on the day when such demand is made.
(2)The demand pursuant to the provisions of the preceding paragraph must be submitted by disclosing the number of Shares with a Put Option relating to such demand (or, for a Company with Class Shares, the classes of the Shares with a Put Option and the number of shares for each class).
(3)If shareholders of a Share Certificate-Issuing Company intend to submit demand pursuant to the provisions of paragraph (1) with respect to the Shares with a Put Option held by the same, they must submit the share certificates representing the Shares with a Put Option to the Share Certificate-Issuing Company; provided, however, that this does not apply in cases where no share certificate representing such Shares with a Put Option is issued.
(Effectuation)
Article 167(1)A Stock Company acquires the Shares with a Put Option relating to a demand pursuant to the provisions of paragraph (1) of the preceding Article on the day of such demand.
(2)In the cases listed in the following items, a shareholder who submits a demand pursuant to the provisions of paragraph (1) of the preceding Article becomes a shareholder provided for in each of such items in accordance with the provisions with respect to the matters provided for in Article 107, paragraph (2), item (ii) (or, for a Company with Class Shares, Article 108, paragraph (2), item (v)) on the day of the demand:
(i)in cases where there is a provision on the matters listed in Article 107, paragraph (2), item (ii), (b):Bondholders of the Bonds under (b) of that item;
(ii)in cases where there is a provision on the matters listed in Article 107, paragraph (2), item (ii), (c):Share Option holders under (c) of that item;
(iii)in cases where there is a provision on the matters listed in Article 107, paragraph (2), item (ii), (d):Bondholders of the Bonds with respect to Bonds with Share Option under (d) of that item, and Share Option holders attached to such Bonds with Share Option;
(iv)in cases where there is a provision on the matters listed in Article 108, paragraph (2), item (v), (b):Shareholders of the relevant other shares under (b) of that item.
(3)In the cases provided for in item (iv) of the preceding paragraph, if the number of the relevant other shares provided for in such item includes a fractional share, it is to be rounded off. In such cases, unless otherwise provided in the articles of incorporation, the Stock Company must, in accordance with the categories of the cases listed in the following items, deliver to the shareholders who submitted demands pursuant to the provisions of paragraph (1) of the preceding Article the monies in the amount equivalent to the amount obtained by multiplying the amount provided for in each of such items by such fractional share:
(i)in cases where such shares are shares with a market price:The amount calculated by the method prescribed by Ministry of Justice Order as the amount of the market price of one such share;
(ii)in cases other than the cases listed in the preceding item:The amount of net assets per share.
(4)The provisions of the preceding paragraph apply mutatis mutandis to cases where there is a fractional share with respect to the Bonds and Share Options of such Stock Company. In such cases, the term "amount of net assets per share" in item (ii) of that paragraph is read as "the amount prescribed by Ministry of Justice Order".
Division 2 Acquisition of Shares Subject to Call
(Determination of the Day of Acquisition)
Article 168(1)In cases where there is a provision with respect to the matters listed in Article 107, paragraph (2), item (iii), (b), the Stock Company must prescribe the day under (b) of that item by a resolution at a shareholders meeting (or at a board of directors meeting for a Company with a Board of Directors); provided, however, that this does not apply in cases where it is otherwise provided for in the articles of incorporation.
(2)If a Stock Company prescribes the day under Article 107, paragraph (2), item (iii), (b), the Stock Company must notify the shareholders of the Shares Subject to Call (or, in cases where there is a provision with respect to the matters listed in (c) of that item, the shareholders of Shares Subject to Call who are determined under the provisions of paragraph (1) of the following Article) and the Registered Pledgees of Shares thereof of such date no later than two weeks prior to such day.
(3)A public notice may be substituted for the notice under the provisions of the preceding paragraph.
(Determination of Shares to Be Acquired)
Article 169(1)In cases where there is a provision with respect to the matters listed in Article 107, paragraph (2), item (iii), (c), if a Stock Company intends to acquire Shares Subject to Call, it must determine the Shares Subject to Call that it intends to acquire.
(2)The Shares Subject to Call under the preceding paragraph must be determined by a resolution at a shareholders meeting (or at a board of directors meeting for a Company with a Board of Directors); provided, however, that this does not apply in cases where it is otherwise provided for in the articles of incorporation.
(3)If a Stock Company makes the determination pursuant to the provisions of paragraph (1), the Stock Company must immediately notify the shareholders of the Shares Subject to Call who are identified pursuant to the provisions of that paragraph and the Registered Pledgees of Shares thereof to the effect that the Stock Company will acquire such Shares Subject to Call.
(4)A public notice may be substituted for the notice pursuant to the provisions of the preceding paragraph.
(Effectuation)
Article 170(1)A Stock Company acquires, on the day when the grounds under Article 107, paragraph (2), item (iii), (a) have arisen (or, in cases where there is a provision with respect to the matters listed in (c) of that item, on the day listed in item (i) or the day listed in item (ii) below, whichever comes later; the same applies in the following paragraph and paragraph (5)), the Shares Subject to Call (or, in cases where there is a provision with respect to the matters listed in paragraph (2), item (iii), (c) of that Article, those determined pursuant to the provisions of paragraph (1) of the preceding Article; the same applies in the following paragraph):
(i)the day when grounds under Article 107, paragraph (2), item (iii), (a) have arisen; or
(ii)the day of notice pursuant to the provisions of paragraph (3) of the preceding Article, or the day when two weeks have lapsed from the day of the public notice under paragraph (4) of that Article.
(2)In the cases listed in the following items, the shareholders of the Shares Subject to Call (excluding the relevant Stock Company) become the persons provided for in each of such items in accordance with the provisions with respect to the matters provided for in Article 107, paragraph (2), item (iii), (a) (or, for a Company with Class Shares, Article 108, paragraph (2), item (vi)) on the day when the grounds under Article 107, paragraph (2), item (iii), (a) arise:
(i)in cases where there is a provision on the matters listed in Article 107, paragraph (2), item (iii), (d):Bondholders of the Bonds under (d) of that item;
(ii)in cases where there is a provision on the matters listed in Article 107, paragraph (2), item (iii), (e):Share Option holder under (e) of that item;
(iii)in cases where there is a provision on the matters listed in Article 107, paragraph (2), item (iii), (f):Bondholders of the Bonds with respect to Bonds with Share Option under (f) of that item, and Share Option holders attached to such Bonds with Share Option;
(iv)in cases where there is a provision on the matters listed in Article 108, paragraph (2), item (vi), (b):Shareholders of the relevant other shares under (b) of that item.
(3)A Stock Company must notify the shareholders of Shares Subject to Call and Registered Pledgees of Shares thereof without delay after grounds have arisen under Article 107, paragraph (2), item (iii), (a) (in cases where there is a provision with respect to the matters listed in (c) of that item, the shareholders of Shares Subject to Call determined pursuant to the provisions of paragraph (1) of the preceding Article, and Registered Pledgees of Shares thereof) to the effect that such grounds have arisen; provided, however, that this does not apply if the Stock Company has given notice under the provisions of Article 168, paragraph (2) or has given public notice under the provisions of paragraph (3) of that Article.
(4)A public notice may be substituted for the notice under the provisions of the preceding paragraph.
(5)The provisions of the preceding paragraphs do not apply if, in cases where the properties provided for in Article 107, paragraph (2), item (iii), (d) to (g) is delivered in exchange for the acquisition of the Shares Subject to Call, the book value of such properties exceeds the Distributable Amount under Article 461, paragraph (2) on the day when the grounds under Article 107, paragraph (2), item (iii), (a) arose.
Subsection 4 Acquisition of Shares Subject to Class-Wide Call
(Determinations Regarding Acquisition of Shares Subject to Class-Wide Call)
Article 171(1)A Company with Class Shares which has issued Shares Subject to Class-Wide Call (meaning the Class Shares that have provisions with respect to the matters listed in Article 108, paragraph (1), item (vii) hereof; hereinafter the same applies in this Subsection) may acquire all of the Shares Subject to Class-Wide Call by a resolution by a shareholders meeting. In such cases, the following matters must be prescribed by a resolution at such shareholders meeting:
(i)if Monies, etc. will be delivered in exchange for the acquisition of the Shares Subject to Class-Wide Call, the following matters with respect to such Monies, etc. (hereinafter in this Article referred to as "Consideration for Acquisition"):
(a)if such Consideration for Acquisition consists of the shares in the Stock Company, the classes of such shares and the number of shares for each class, or the method for calculating such numbers;
(b)if such Consideration for Acquisition consists of the Bonds of the Stock Company (excluding those with respect to the Bonds with Share Option), the classes of such Bonds and the total amount of Bonds for each class, or the method for calculating such total amounts;
(c)if such Consideration for Acquisition consists of the Share Options of the Stock Company (excluding those attached to Bonds with Share Option), the features and number of such Share Options, or the method for calculating such number;
(d)if such Consideration for Acquisition consists of the Bonds with Share Option of the Stock Company, the matters prescribed in (b) above with respect to such Bonds with Share Option, and the matters prescribed in (c) above with respect to the Share Options attached to such Bonds with Share Option; and
(e)if such Consideration for Acquisition consists of properties other than the shares, etc. of the Stock Company, the description and number or value of such properties, or the method for calculating such number or value;
(ii)in the cases provided for in the preceding item, the matters regarding the allotment of the Consideration for Acquisition to the shareholders of the Shares Subject to Class-Wide Call;
(iii)the day on which the Stock Company will acquire the Shares Subject to Class-Wide Call (hereinafter in this Subsection referred to as "Acquisition Day").
(2)The provisions regarding the matters listed in item (ii) of the preceding paragraph must stipulate that the Consideration for Acquisition will be allotted in proportion to the number of the Shares Subject to Class-Wide Call held by the shareholders (excluding the relevant Stock Company).
(3)The directors, at the shareholders meeting under paragraph (1) above, must explain the reasons for the need to acquire all of the Shares Subject to Class-Wide Call.
(Keeping and Inspection of Documents Related to Consideration for Acquisition of Share Subject to Class-Wide Call)
Article 171-2(1)A Stock Company acquiring Shares Subject to Class-Wide Call must keep documents detailing the information set forth in the items of paragraph (1) of the preceding Article or other information prescribed by Ministry of Justice Order, and electronic or magnetic records in which such information has been recorded, at its head office for the period from the earliest of the following days until the day when six months elapse after the Acquisition Day:
(i)the day two weeks before the day of the shareholders meeting under paragraph (1) of the preceding Article (in the case under Article 319, paragraph (1), the day the proposal under that paragraph is made); or
(ii)the day of notice pursuant to the provisions of Article 172, paragraph (2) or the day of the public notice under paragraph (3) of that Article, whichever comes first.
(2)Shareholders of a Stock Company acquiring Share Subject to Class-Wide Call may make the following request to such Stock Company at any time during the business hours; provided, however, that the shareholders must pay the cost specified by such Stock Company in order to make a request listed in items (ii) or (iv):
(i)a request to inspect documents under the preceding paragraph;
(ii)a request for a transcript or extract of documents under the preceding paragraph;
(iii)a request to inspect anything that is used in the manner prescribed by Ministry of Justice Order to display the information recorded in an electronic or magnetic record as referred to in the preceding paragraph; and
(iv)a request to be provided with the information recorded in an electronic or magnetic record as referred to in the preceding paragraph by an electronic or magnetic means that the Stock Company has designated, or a request to be issued a document showing that information.
(Demand to Cease Acquisition of Shares Subject to Class-Wide Call)
Article 171-3In cases where acquisition of Shares Subject to Class-Wide Call pursuant to the provisions of Article 171, paragraph (1) violates laws and regulations or the articles of incorporation, when shareholders are likely to suffer a disadvantage, shareholders may demand to cease the acquisition of the Shares Subject to Class-Wide Call from the Stock Company.
(Petition for the Court to Determine the Price)
Article 172(1)In cases where the matters listed in each item of Article 171, paragraph (1) are prescribed, the following shareholders may file a petition for the court to determine the price of the Shares Subject to Class-Wide Call for the acquisition by the Stock Company, between twenty days prior the Acquisition Day and the day immediately preceding the Acquisition Day:
(i)shareholders who give notice to such Stock Company to the effect that they dissent from the acquisition by the Stock Company of the Shares Subject to Class-Wide Call act prior to such shareholders meeting and do dissent from such acquisition at such shareholders meeting (limited to those who can exercise voting right at such shareholders meeting);
(ii)shareholders who cannot exercise voting right at such shareholders meeting.
(2)A Stock Company must notify shareholders of Shares Subject to Class-Wide Call that the Stock Company acquires all of the Shares Subject to Class-Wide Call by twenty days before the Acquisition Day.
(3)The notice under the provisions of the preceding paragraph may be substituted with a public notice.
(4)The Stock Company must also pay the interest on the price determined by the court which must be calculated at the rate of 6% per annum from and including the Acquisition Day.
(5)A Stock Company may pay to shareholders the amount that such Stock Company considers to be a fair price until the determination of the price of Shares Subject to Class-Wide Call for acquisition.
(Effectuation)
Article 173(1)A Stock Company acquires Shares Subject to Class-Wide Call on the Acquisition Day.
(2)In the cases listed in the following items, shareholders of the Shares Subject to Class-Wide Call other than the Stock Company (excluding shareholders who file a petition under paragraph (1) of the preceding Article) become the person provided for in each of such items in accordance with provisions made by a resolution at the shareholders meeting under Article 171, paragraph (1) on the Acquisition Day:
(i)in cases where there is a provision on the matters listed in Article 171, paragraph (1), item (i), (a):Shareholders of shares under (a) of that item;
(ii)in cases where there is a provision on the matters listed in Article 171, paragraph (1), item (i), (b):Bondholders of Bonds under (b) of that item;
(iii)in cases where there is a provision on the matters listed in Article 171, paragraph (1), item (i), (c):Share Option holders under (c) of that item;
(iv)in cases where there is a provision on the matters listed in Article 171, paragraph (1), item (i), (d):Bondholders of the Bonds with respect to Bonds with Share Option under (d) of that item, and Share Option holders attached to such Bonds with Share Option.
(Keeping and Inspection of Documents Related to Acquisition of Shares Subject to Class-Wide Call)
Article 173-2(1)A Stock Company must prepare a document or electronic or magnetic record in which it details or records the number of Shares Subject to Class-Wide Call that the Stock Company acquired and other information prescribed by Ministry of Justice Order as information related to the acquisition of Shares Subject to Class-Wide Call, after the Acquisition Day without delay.
(2)A Stock Company must keep the document or electronic or magnetic record referred to in the preceding paragraph at its head office for six months from the Acquisition Day.
(3)Shareholders of a Stock Company that acquired Shares Subject to Class-Wide Call or persons who were shareholders of Shares Subject to Class-Wide Call on the Acquisition Day may make the following requests of the Stock Company at any time during its business hours; provided, however, that the cost specified by such Stock Company must be paid in order to make a request listed in items (ii) or (iv):
(i)a request to inspect documents under the preceding paragraph;
(ii)a request for a transcript or extract of documents under the preceding paragraph;
(iii)a request to inspect anything that is used in a manner prescribed by Ministry of Justice Order to display the information recorded in an electronic or magnetic record as referred to in the preceding paragraph; and
(iv)a request to be provided with the information recorded in an electronic or magnetic record as referred to in the preceding paragraph by an electronic or magnetic means that the Stock Company has designated, or a request to be issued a document showing that information.
Subsection 5 Demand for Sale to Heirs
(Provisions of Articles of Incorporation Regarding Demand for Sale to Heirs)
Article 174A Stock Company may provide in the articles of incorporation to the effect that it may demand that a person who has acquired shares (limited to Shares with Restriction on Transfer) in such Stock Company by general succession, including inheritance, sell such shares to such Stock Company.
(Determinations Regarding Demand for Sale)
Article 175(1)In cases where there is a provision of the articles of incorporation under the provisions of the preceding Article, whenever a Stock Company intends to effect a demand pursuant to the provisions of paragraph (1) of the following Article, it must prescribe the following matters by a resolution at a shareholders meeting:
(i)the number of shares for which the Stock Company intends to effect the demand pursuant to the provisions of paragraph (1) of the following Article (or, for a Company with Class Shares, the classes of the shares and the number of shares for each class); and
(ii)the names of the persons who hold the shares under the preceding item.
(2)The persons under item (ii) of the preceding paragraph may not exercise voting right at the shareholders meeting under that paragraph; provided, however, that this does not apply in cases where all shareholders other than the persons under that paragraph may not exercise the voting right at such shareholders meeting.
(Demand for Sale)
Article 176(1)If a Stock Company determines the matters listed in each item of paragraph (1) of the preceding Article, it may demand that the persons under item (ii) of that paragraph sell the shares under item (i) of that paragraph to such Stock Company; provided, however, that this does not apply when one year has lapsed from the day when such Stock Company acquires knowledge of the general succession, including inheritances.
(2)Demands pursuant to the provisions of paragraph (1) must be made by disclosing the number of shares relating to such demand (or, for a Company with Class Shares, the classes of the shares and the number of shares for each class).
(3)A Stock Company may withdraw a demand under the provisions of paragraph (1) at any time.
(Determination of Sale Price)
Article 177(1)In cases where notice is given under the provisions of paragraph (1) of the preceding Article, the sale price of the shares under Article 175, paragraph (1), item (i) is prescribed through discussion between the Stock Company and the persons under item (ii) of that paragraph.
(2)The Stock Company or persons under Article 175, paragraph (1), item (ii) may file a petition for the court to determine the sale price within twenty days from the day when a demand is made under the provisions of paragraph (1) of the preceding Article.
(3)In order to make the determination under the preceding paragraph, the court must consider the financial conditions of the Stock Company at the time of the demand pursuant to the provisions of paragraph (1) of the preceding Article and all other circumstances.
(4)Notwithstanding the provisions of paragraph (1), if a petition is made under paragraph (2) within the period provided for in that paragraph, the amount determined by the court in response to such petition is to be the sale price of the shares under Article 175, paragraph (1), item (i).
(5)If no petition is made under paragraph (2) within the period provided for in that paragraph (except in cases where the discussions under paragraph (1) are successfully concluded within such period), a demand under the provisions of paragraph (1) of the preceding Article becomes ineffective.
Subsection 6 Cancellation of Shares
Article 178(1)A Stock Company may cancel its Treasury Shares. In such cases, the Stock Company must determine the number of the Treasury Shares it intends to cancel (or, for a Company with Class Shares, the classes of the shares and the number of Treasury Shares for each class).
(2)For a Company with a Board of Directors, the determination under the provisions of the second sentence of the preceding paragraph must be made by a resolution at a board of directors meeting.
Section 4-2 Demand for Share Cash-Out of Special Controlling Shareholders
(Demand for Share Cash-Out)
Article 179(1)Special Controlling Shareholders of a Stock Company (in cases where a person in cases where not less than nine-tenths (9/10) of the votes of all shareholders of the Stock Company (in cases where a higher proportion is provided for in the articles of incorporation of such Stock Company, such proportion) are held by such person other than such Stock Company and in cases where a corporation prescribed by Ministry of Justice Order as a Stock Company all of the Issued Shares of which are held by such person or one equivalent thereto (hereinafter referred to as "Wholly Owned Subsidiary Corporation of the Special Controlling Shareholder" in this Article and paragraph (1) of the following Article), meaning such person; the same applies hereinafter) may demand from all shareholders of such Stock Company (excluding such Stock Company and the Special Controlling Shareholders) to sell all of the shares of such Stock Company that they hold to such Special Controlling Shareholder; provided, however, that such Special Controlling Shareholders may choose not to make a demand to a Wholly Owned Subsidiary Corporation of the Special Controlling Shareholder.
(2)When making a demand pursuant to the provisions of the preceding paragraph (hereinafter referred to as "Demand for Cash-Out" in this Chapter and Article 846-2, paragraph (2), item (i)), a Special Controlling Shareholders may also request from all of the Share Option holders (excluding Subject Company and the Special Controlling Shareholders) of a Stock Company issuing shares pertaining to the Demand for Cash-Out (hereinafter referred to as "Subject Company") to sell all of the Share Options of the Subject Company that they have to such Special Controlling Shareholders; provided, however, that such Special Controlling Shareholders may choose not to make a demand to a Wholly Owned Subsidiary Corporation of the Special Controlling Shareholder.
(3)When making a demand pursuant to the provisions of the preceding paragraph with regard to Share Options (hereinafter referred to as "Demand for Share Option Cash-Out") attached to Bonds with Share Option, Special Controlling Shareholders must also demand to sell all Bonds pertaining to Bonds with Share Option to the Special Controlling Shareholders; provided, however, that this does not apply to cases where it is otherwise provided for with respect to the Share Options attached to such Bonds with Share Option.
(Method of Demand for Share Cash-Out)
Article 179-2(1)The Demand for Share, etc. Cash-Out must be made by specifying the matters listed below:
(i)when choosing not to make a Demand for Share, etc. Cash-Out to a Wholly Owned Subsidiary Corporation of the Special Controlling Shareholder, to that effect and the name of such Wholly Owned Subsidiary Corporation of the Special Controlling Shareholder;
(ii)the amount of money to be delivered to shareholders who sell shares of the Subject Company that they hold by Demand for Cash-Out (hereinafter the shareholders are referred to as "Shareholders Subject to the Cash-Out") as the value for such shares (hereinafter referred to as "Shares Subject to the Cash-Out" in this Chapter) or the calculation method;
(iii)matters related to allotment of money under the preceding item to Shareholders Subject to the Cash-Out;
(iv)when making a Demand for Share Option Cash-Out (including the demand pursuant to the provisions of paragraph (3) of the preceding Article in cases where Share Options related to the Demand for Share Option Cash-Out is attached to Bonds with Share Option; the same applies hereinafter) along with the Demand for Cash-Out, to that effect and the following matters:
(a)when choosing not to make a Demand for Share Option Cash-Out to a Wholly Owned Subsidiary Corporation of the Special Controlling Shareholder, to that effect and the name of such Wholly Owned Subsidiary Corporation of the Special Controlling Shareholder;
(b)the amount of money to be delivered to a Share Option holder who sells Share Options of the Subject Company that the Share Option holder holds by the Demand for Share Option Cash-Out (hereinafter the person is referred to as "Share Option Holder Subject to the Cash-Out") as the value of the Share Options (in cases where such Share Option is the one attached to Bonds with Share Option, when making a demand pursuant to the provisions of paragraph (3) of the preceding Article, including Bonds for such Bonds with Share Option; hereinafter referred to as "Share Options Subject to the Cash-Out" in this Part) or the calculation method; and
(c)matters related to the allotment of money under (b) to a Share Option Holder Subject to the Cash-Out;
(v)the day when a Special Controlling Shareholder acquires Shares Subject to the Cash-Out (in cases where making a Demand for Share Option Cash-Out along with the Demand for Cash-Out, Shares Subject to the Cash-Out and Share Options Subject to the Cash-Out; hereinafter referred to as "Shares, etc. Subject to the Cash-Out") (hereinafter such day is referred to as "Acquisition Day" in this Section); and
(vi)beyond what is set forth in the preceding items, matters prescribed by Ministry of Justice Order.
(2)In cases where a Subject Company is a Company with Class Shares, a Special Controlling Shareholder may stipulate that the allotment of money under item (ii) of the preceding paragraph will be treated differently for each class of Shares Subject to the Cash-Out as matters listed in item (iii) of that paragraph depending on the content of Class of Shares issued by the Subject Company, and the content of such different treatment.
(3)The provisions on matters listed in paragraph (1), item (iii) must stipulate that money is delivered depending on the number of Shares Subject to the Cash-Out (in cases where there are provisions prescribed in the preceding paragraph, the number of Shares Subject to the Cash-Out in each class) held by Shareholders Subject to the Cash-Out.
(Approval of Subject Company)
Article 179-3(1)When a Special Controlling Shareholder intends to make a Demand for Cash-Out (in cases of making a Demand for Share Option Cash-Out along with the Demand for Cash-Out, the Demand for Cash-Out and Demand for Share Option Cash-Out; hereinafter collectively referred to as "Demand for Share, etc. Cash-Out"), the Special Controlling Shareholder must notify the Subject Company to that effect and matters listed in the items of paragraph (1) of the preceding Article, and must obtain its approval.
(2)When a Special Controlling Shareholder intends to make a Demand for Share Option Cash-Out along with the Demand for Cash-Out, the Subject Company may not approve only the Demand for Share Option Cash-Out.
(3)A Company with a Board of Directors must make a determination as to whether or not to approve by a resolution of the board of directors.
(4)When a Subject Company makes a determination as to whether or not to approve under paragraph (1), it must notify the Special Controlling Shareholder of the content of such determination.
(Notice to Shareholders Subject to the Cash-Out)
Article 179-4(1)When a Subject Company approves under paragraph (1) of the preceding Article, it must notify the persons listed in the following items of the matters specified in such items by twenty days before the Acquisition Day:
(i)Shareholders Subject to the Cash-Out (in cases where a Special Controlling Shareholder makes a Demand for Share Option Cash-Out along with the Demand for Cash-Out, Shareholders Subject to the Cash-Out and Share Option Holders Subject to the Cash-Out; hereinafter collectively referred to as "Shareholders, etc. Subject to the Cash-Out" in this Section):the fact that the approval is granted, name and address of the Special Controlling Shareholder, matters listed in Article 179-2, paragraph (1), items (i) through (v), and other matters prescribed by Ministry of Justice Order; and
(ii)Registered Pledgee of Shares Subject to the Cash-Out (in cases where a Special Controlling Shareholder makes a Demand for Share Option Cash-Out along with the Demand for Cash-Out, Registered Pledgees of Shares of Shares Subject to the Cash-Out and Registered Pledgees of Share Options of Share Option Subject to the Cash-Out (such Registered Pledgee of Share Options means a Registered Pledgee of Share Options prescribed in Article 270, paragraph (1))):the fact that such approval is granted.
(2)Notice under the provisions of the preceding paragraph (excluding those for Shareholders Subject to the Cash-Out) may be substituted with a public notice.
(3)When a Subject Company makes notice pursuant to the provisions of paragraph (1) or public notice under the preceding paragraph, it is deemed that a Special Controlling Shareholder has made a Demand for Share, etc. Cash-Out to Shareholders, etc. Subject to the Cash-Out.
(4)The cost for notice pursuant to the provisions of paragraph (1) or public notice under paragraph (2) is paid by the Special Controlling Shareholder.
(Keeping and Inspection of Documents Related to the Demand for Share Cash-Out)
Article 179-5(1)A Subject Company must keep documents detailing the following information, and electronic or magnetic records in which such information has been recorded, at its head office for the period from the day of notice pursuant to the provisions of paragraph (1), item (i) of the preceding Article or the day of public notice under paragraph (2) of the same Article, whichever comes first, until the day when six months elapse after the Acquisition Day (in cases where the Subject Company is not a Public Company, one year after the Acquisition Day):
(i)name and address of the Special Controlling Shareholder;
(ii)matters listed in the items of Article 179-2, paragraph (1);
(iii)the fact that approval under Article 179-3, paragraph (1) is granted; and
(iv)beyond what is set forth in the preceding three items, matters prescribed by Ministry of Justice Order.
(2)Shareholders, etc. Subject to the Cash-Out may make the following requests to the Subject Company at any time during its business hours; provided, however, that the cost specified by such Subject Company must be paid for making a request listed in items (ii) or (iv):
(i)a request to inspect documents under the preceding paragraph;
(ii)a request for a transcript or extract of documents under the preceding paragraph;
(iii)a request to inspect anything that is used in a manner prescribed by Ministry of Justice Order to display the information recorded in an electronic or magnetic record as referred to in the preceding paragraph; and
(iv)a request to be provided with the information recorded in an electronic or magnetic record as referred to in the preceding paragraph by an electronic or magnetic means that the Subject Company has designated, or a request to be issued a document showing that information.
(Withdrawal of Demand for Share Cash-Out)
Article 179-6(1)After obtaining the approval under Article 179-3, paragraph (1), a Special Controlling Shareholder may withdraw the Demand for Share, etc. Cash-Out for all Shares, etc. Subject to the Cash-Out only in cases where the approval of the Subject Company is obtained by the day before the Acquisition Day.
(2)A Company with a Board of Directors must make a determination as to whether or not to approve under the preceding paragraph by a resolution of the board of directors.
(3)When a Subject Company makes a determination as to whether or not to approve under paragraph (1), it must notify the Special Controlling Shareholder content of such determination.
(4)When the Subject Company grants approval under paragraph (1), it must notify Shareholders, etc. Subject to the Cash-Out of the fact that such approval is granted without delay.
(5)The notice pursuant to the provisions of the preceding paragraph may be substituted by a public notice.
(6)When a Subject Company makes a notice pursuant to the provisions of paragraph (4) or a notice under the preceding paragraph, the Demand for Share, etc. Cash-Out is deemed to be withdrawn for all of Shares, etc. Subject to the Cash-Out.
(7)The cost of the notice pursuant to the provisions of paragraph (4) or the public notice under paragraph (5) is paid by the Special Controlling Shareholder.
(8)The provisions of the preceding paragraphs apply mutatis mutandis to cases of withdrawing only the Demand for Share Option Cash-Out.In this case, "Shareholders, etc. Subject to the Cash-Out" in paragraph (4) is deemed to be replaced with "Share Option Holders Subject to the Cash-Out".
(Demand to Cease Acquisition of Shares Subject to the Cash-Out)
Article 179-7(1)In the following cases, if a Shareholder Subject to the Cash-Out is likely to suffer any disadvantages, the Shareholder Subject to the Cash-Out may demand to a Special Controlling Shareholder to cease acquisition of all Shares, etc. Subject to the Cash-Out pertaining to the Demand for Share, etc. Cash-Out:
(i)in cases where the Demand for Share, etc. Cash-Out violates the laws and regulations;
(ii)in cases where a Subject Company violates the provisions of Article 179-4, paragraph (1), item (i) (limited to the portion relating to the notice to Shareholders Subject to the Cash-Out) or Article 179-5; and
(iii)in cases where the matters listed in Article 179-2, paragraph (1), item (ii) or (iii) are extremely unfair according to financial status of the Subject Company or other circumstances.
(2)In the following cases, if a Share Option Holder Subject to the Cash-Out is likely to suffer any disadvantages, the Share Option Holder Subject to the Cash-Out may demand that the Special Controlling Shareholder cease acquisition of all of Shares, etc. Subject to the Cash-Out pertaining to the Demand for Share, etc. Cash-Out:
(i)in cases where the Demand for Share Option Cash-Out violates the laws and regulations;
(ii)in cases where a Subject Company violates the provisions of Article 179-4, paragraph (1), item (i) (limited to the portion relating to the notice to Share Option Holder Subject to the Cash-Out) or Article 179-5; and
(iii)in cases where the matters listed in Article 179-2, paragraph (1), item (iv), (b) or (c) are extremely unfair according to the financial status of the Subject Company or other circumstances.
(Petition to Determine the Sale Price)
Article 179-8(1)If a Demand for Shares, etc. Cash-Out is made, Shareholders, etc. Subject to the Cash-Out may file a petition for the court to determine the sale price of their Shares, etc. Subject to the Cash-Out, between twenty days prior to the Acquisition Day and the day immediately preceding the Acquisition Day.
(2)A Special Controlling Shareholder must also pay interest on the sale price determined by the court which is calculated at the rate of 6% per annum from and including the Acquisition Day.
(3)A Special Controlling Shareholder may pay to Shareholders, etc. Subject to the Cash-Out the amount that such Special Controlling Shareholder considers to be a fair sale price until the determination of the sale price of the Shares, etc. Subject to the Cash-Out is made.
(Acquisition of Shares Subject to the Cash-Out)
Article 179-9(1)A Special Controlling Shareholder who has made a Demand for Share, etc. Cash-Out acquires all of the Shares, etc. Subject to the Cash-Out on the Acquisition Day.
(2)If Shares, etc. Subject to the Cash-Out that a Special Controlling Shareholder acquired pursuant to the provisions of the preceding paragraph are Shares with Restriction on Transfer or Share Options with Restriction on Transfer (meaning the Share Options with Restriction on Transfer prescribed in Article 243, paragraph (2), item (ii)), it is deemed that the Subject Company determined to grant an approval under Article 137, paragraph (1) or Article 263, paragraph (1) with respect to the fact that the Special Controlling Shareholder acquires the Shares, etc. Subject to the Cash-Out.
(Keeping and Inspection of Documents Related to Acquisition of Shares Subject to the Cash-Out)
Article 179-10(1)A Subject Company must prepare a document or an electronic or magnetic record in which it details or records the number of Shares, etc. Subject to the Cash-Out that a Special Controlling Shareholder acquired by the Demand for Shares, etc. Cash-Out and other information prescribed by Ministry of Justice Order as information related to the acquisition of Shares, etc. Subject to Cash Out pertaining to the Demand for Shares, etc. Cash-Out, after the Acquisition Day without delay.
(2)A Subject Company must keep the document or electronic or magnetic record referred to in the preceding paragraph at its head office for six months from the Acquisition Day (in cases where the Subject Company is not a Public Company, one year after the Acquisition Day).
(3)A person who is a Shareholder, etc. Subject to the Cash-Out on the Acquisition Day may make the following requests to a Subject Company at any time during its business hours; provided, however, that the cost specified by the Subject Company must be paid for making a request listed in items (ii) or (iv):
(i)a request to inspect documents under the preceding paragraph;
(ii)a request for a transcript or extract of documents under the preceding paragraph;
(iii)a request to inspect anything that is used in a manner prescribed by Ministry of Justice Order to display the information recorded in an electronic or magnetic record as referred to in the preceding paragraph; and
(iv)a request to be provided with the information recorded in an electronic or magnetic record as referred to in the preceding paragraph by an electronic or magnetic means that the Subject Company has designated, or a request to be issued a document showing that information.
Section 5 Consolidation of Shares
Subsection 1 Consolidation of Shares
(Consolidation of Shares)
Article 180(1)A Stock Company may consolidate its shares.
(2)Whenever a Stock Company intends to consolidate its shares, it must determine the following matters by a resolution at a shareholders meeting:
(i)the ratio of the consolidation;
(ii)the day when the consolidation of shares will become effective (hereinafter referred to as "Effective Day" in this Subsection);
(iii)in cases where the Stock Company is a Company with Class Shares, the classes of the shares it will consolidate; and
(iv)the Total Number of Authorized Shares on the Effective Day.
(3)The Total Number of Authorized Shares under item (iv) of the preceding paragraph may not exceed the number four times the number of total Issued Shares on the Effective Day; provided, however, that this does not apply in cases where the Stock Company is not a Public Company.
(4)The directors must, at the shareholders meeting referred to in paragraph (2), explain the reasons for the need to consolidate the shares.
(Notices to Shareholders)
Article 181(1)No later than two weeks prior to the Effective Day, the Stock Company must notify the shareholders (or, for a Company with Class Shares, referring to the Class Shareholders of the classes of shares under paragraph (2), item (iii) of the preceding Article; hereinafter the same applies in this Subsection) and the Registered Pledgees of the Shares thereof of the matters listed in each item of that paragraph.
(2)A public notice may be substituted for the notice under the provisions of the preceding paragraph.
(Effectuation)
Article 182(1)On the Effective Day, the shareholders become shareholders of shares in the number obtained by multiplying the number of shares (or, for a Company with Class Shares, shares of the classes provided for in Article 180, paragraph (2), item (iii); hereinafter the same applies in this paragraph) they held on the day immediately preceding that day, by the ratio provided for in paragraph (2), item (i) of that Article.
(2)A Stock Company consolidating shares is deemed to have changed the articles of incorporation pertaining to the matters listed in Article 180, paragraph (2), item (iv) on the Effective Day in accordance with provisions on those matters.
(Keeping and Inspection of Documents Related to the Consolidation of Shares)
Article 182-2(1)A Stock Company consolidating shares (in cases where Share Units (in cases of a Company with Class Shares, Share Units of shares of classes under Article 180, paragraph (2), item (iii); hereinafter the same applies in this paragraph) is stipulated in the articles of incorporation, limited to those generating fractional shares with the number obtained by multiplying the rate under paragraph (2), item (i) of the same Article; hereinafter the same applies in this Subsection) must keep documents detailing the information set forth in the items of the same paragraph and other information prescribed by Ministry of Justice Order, and electronic or magnetic records in which such information has been recorded, at its head office for the period from the earliest of the following days until the day when six months elapse after the Effective Day:
(i)the day two weeks before the day of the shareholders meeting under Article 180, paragraph (2) (in cases where a resolution at a General Meeting of Class Shareholders is required for consolidation of shares, including the General Meeting of Class Shareholders; the same applies in Article 182-4, paragraph (2)) (in cases under Article 319, paragraph (1), the day when the proposal under the same paragraph is made); or
(ii)the day of notice made to shareholders pursuant to the provisions of Article 181, paragraph (1) as applied following the deemed replacement of terms pursuant to the provisions of Article 182-4, paragraph (3), or the day of public notice under Article 181, paragraph (2), whichever comes first.
(2)Shareholders of Stock Company consolidating shares may make the following request to the Stock Company at any time during its business hours; provided, however, that the cost specified by the Stock Company must be paid for making a request listed in items (ii) or (iv):
(i)a request to inspect documents under the preceding paragraph;
(ii)a request for a transcript or extract of documents under the preceding paragraph;
(iii)a request to inspect anything that is used in a manner prescribed by Ministry of Justice Order to display the information recorded in an electronic or magnetic record as referred to in the preceding paragraph; and
(iv)a request to be provided with the information recorded in an electronic or magnetic record as referred to in the preceding paragraph by an electronic or magnetic means that the Stock Company has designated, or a request to be issued a document showing that information.
(Demand to Cease Consolidation of Shares)
Article 182-3In cases where the consolidation of shares violates laws and regulations or the articles of incorporation, when shareholders are likely to suffer disadvantage, shareholders may demand to cease the consolidation of shares from the Stock Company.
(Dissenting Shareholders' Appraisal Rights)
Article 182-4(1)In cases where fractional shares are included in the number of shares when a Stock Company consolidates shares, Dissenting Shareholders may demand that the Stock Company purchase, at a fair price, all of the fractional shares from among shares that they hold.
(2)"Dissenting Shareholders" prescribed in the preceding paragraph means the following shareholders:
(i)a shareholder who gives notice to the Stock Company that the shareholder is against the consolidation of shares prior to the shareholders meeting under Article 180, paragraph (2) and is against the consolidation of shares at the shareholders meeting (limited to persons who can exercise voting rights at the shareholders meeting); and
(ii)a shareholder who cannot exercise voting rights at the shareholders meeting.
(3)When applying the provisions of Article 181, paragraph (1) to the notice to shareholders in cases where a Stock Company consolidates shares, "two weeks" in the same paragraph is deemed to be replaced with "twenty days".
(4)To make a demand under the provisions of paragraph (1) (hereinafter in this Section referred to as the "Exercise of Appraisal Rights"), a dissenting shareholder must indicate the number of shares with regard to which the shareholder is Exercising Appraisal Rights (or, for a Company with Class Shares, the classes of the shares and the number of shares for each class), between twenty days prior to the Effective Day and the day immediately preceding the Effective Day.
(5)When intending to Exercise Appraisal Rights for shares for which share certificates have been issued, shareholders of those shares must submit to the Stock Company the share certificates representing those shares; provided, however, that this does not apply to a person who made a request under the provisions of Article 223 with respect to the shares.
(6)Shareholders Exercising Appraisal Rights may withdraw their demands for appraisal only with the approval of the Stock Company.
(7)The provisions of Article 133 do not apply to shares pertaining to the Exercise of Appraisal Rights.
(Determination of the Price of Shares)
Article 182-5(1)If a shareholder Exercises Appraisal Rights and an agreement determining the price of the shares is reached between the shareholder and the Stock Company, the Stock Company must pay that price within sixty days from the Effective Day.
(2)If no agreement deciding the price of shares is reached within thirty days from the Effective Day, the shareholders or the Stock Company may file a petition for the court to determine the price within thirty days after the expiration of that period.
(3)Notwithstanding the provisions of paragraph (6) of the preceding Article, in the cases provided for in the preceding paragraph, if the petition under the same paragraph is not made within sixty days after the Effective Day, shareholders Exercising Appraisal Rights may withdraw their demands for appraisal at any time after the expiration of that period.
(4)The Stock Company must also pay interest on the price determined by the court which is calculated at the rate of 6% per annum from and including the day of the expiration of the period set forth in paragraph (1).
(5)The Stock Company may pay to shareholders the amount the Stock Company considers as a fair price until the determination of the price of shares.
(6)A share purchase connected with the Exercise of Appraisal Rights becomes effective on the Effective Day.
(7)If a shareholder Exercises Appraisal Rights with respect to shares for which share certificates are issued, the Share Certificate-Issuing Company must pay the price of the shares relating to the Exercise of the Appraisal Rights in exchange for the share certificates.
(Keeping and Inspection of Documents Related to Consolidation of Shares)
Article 182-6(1)A Stock Company having consolidated shares must prepare a document or an electronic or magnetic record in which it details or records the total number of Issued Shares at the time when consolidation of shares comes into effect (in cases of a Company with Class Shares, total number of the Issued Shares of class under Article 180, paragraph (2), item (iii)) and other information prescribed by Ministry of Justice Order as related to the consolidation of shares after the Effective Day without delay.
(2)A Stock Company must keep the document or electronic or magnetic record referred to in the preceding paragraph at its head office for six months from the Effective Day.
(3)Shareholders of a Stock Company that consolidated shares or persons who were shareholders of the Stock Company on the Effective Day may make the following requests from the Stock Company at any time during its business hours; provided, however, that the cost specified by the Stock Company must be paid for making a request listed in items (ii) or (iv):
(i)a request to inspect documents under the preceding paragraph;
(ii)a request for a transcript or extract of documents under the preceding paragraph;
(iii)a request to inspect anything that is used in a manner prescribed by Ministry of Justice Order to display the information recorded in an electronic or magnetic record as referred to in the preceding paragraph; and
(iv)a request to be provided with the information recorded in an electronic or magnetic record as referred to in the preceding paragraph by an electronic or magnetic means that the Stock Company has designated, or a request to be issued a document showing that information.
Subsection 2 Share Splits
(Share Splits)
Article 183(1)A Stock Company may split its shares.
(2)Whenever a Stock Company intends to split its shares, it must prescribe the following matters by a resolution at a shareholders meeting (or at a board of directors meeting for a Company with a Board of Directors):
(i)the ratio of the total number of shares after the increase as a result of the Share Split to the total number of Issued Shares (or, for a Company with Class Shares, Issued Shares of the classes under item (iii)) immediately before the Share Split, and the Record Date relating to such Share Split;
(ii)the day when the Share Split will become effective;
(iii)in cases where the Stock Company is a Company with Class Shares, the classes of the shares it splits.
(Effectuation)
Article 184(1)Shareholders that have been entered or recorded in the shareholder register on the Record Date (or, for a Company with Class Shares, Class Shareholders of the classes provided for in paragraph (2), item (iii) of the preceding Article that have been entered or recorded in the shareholder register on the Record Date) acquire, on the day provided for in item (ii) of that paragraph, shares in the number obtained by multiplying the number of shares (or, for a Company with Class Shares, shares of the classes provided for in item (iii) of that paragraph; hereinafter the same applies in this paragraph) they hold on the Record Date, by the ratio provided for in paragraph (2), item (i) of that Article.
(2)Notwithstanding the provisions of Article 466, a Stock Company (excluding a Stock Company that in fact issues two or more classes of shares) may, without a resolution at a shareholders meeting, effect an amendment to the articles of incorporation that is intended to increase the Total Number of Authorized Shares on the day provided for in paragraph (2), item (ii) of the preceding Article to the extent of the number obtained by multiplying the Total Number of Authorized Shares as of the day immediately preceding such day, by the ratio provided for in item (i) of that paragraph.
Subsection 3 Allotment of Shares without Contribution
(Allotment of Shares without Contribution)
Article 185A Stock Company may allot the shares of such Stock Company to shareholders (or, for a Company with Class Shares, shareholders of certain classes) without requiring them to make additional contribution (hereinafter in this Subsection referred to as "Allotment of Shares without Contribution").
(Determination of Matters Concerning Allotment of Shares without Contribution)
Article 186(1)Whenever a Stock Company intends to effect the Allotment of Shares without Contribution, it must prescribe the following matters:
(i)the number of shares the Stock Company will allot to shareholders (or, for a Company with Class Shares, the classes of shares and the number of shares for each class), or the method for calculating such number;
(ii)the day when such Allotment of Shares without Contribution becomes effective; and
(iii)in cases where the Stock Company is a Company with Class Shares, the classes of shares held by the shareholders entitled to such Allotment of Shares without Contribution.
(2)The provisions regarding the matters listed in item (i) of the preceding paragraph must stipulate that the shares under item (i) of that paragraph will be allotted in proportion to the number of shares (or, for a Company with Class Shares, shares of the classes under item (iii) of that paragraph) held by shareholders (or, for a Company with Class Shares, Class Shareholders of shares of the classes under item (iii) of that paragraph) other than such Stock Company.
(3)The determination of the matters listed in each item of paragraph (1) must be made by a resolution at a shareholders meeting (or of a board of directors meeting for a Company with a Board of Directors); provided, however, that this does not apply in cases where it is otherwise provided in the articles of incorporation.
(Effectuation of Allotment of Shares without Contribution)
Article 187(1)Shareholders to whom the shares under paragraph (1), item (i) of the preceding Article have been allotted become shareholders of the shares provided for in item (i) of that paragraph on the day provided for in item (ii) of that paragraph.
(2)Without delay after the day provided for in item (ii) of that paragraph, a Stock Company must notify shareholders (or, for a Company with Class Shares, Class Shareholders of the classes under item (iii) of that paragraph) and the Registered Pledgees of the Shares thereof of the number of the shares (or, for a Company with Class Shares, the classes of the shares and the number of shares for each class) that have been allotted to such shareholders.
Section 6 Share Units
Subsection 1 General Provisions
(Share Units)
Article 188(1)A Stock Company may provide in the articles of incorporation, with respect to the shares it issues, to the effect that a fixed number of shares constitutes one unit of shares, which entitles a shareholder to cast one vote at a shareholders meeting or General Meeting of Class Shareholders.
(2)The fixed number in the preceding paragraph may not exceed the number prescribed by Ministry of Justice Order.
(3)A Company with Class Shares must provide for the Share Unit for each class of its shares.
(Restriction on Rights in Relation to Shareholdings Less than One Unit)
Article 189(1)Shareholders who hold shares in a number less than one Share Unit (hereinafter referred to respectively as "Holder of Shares Less than One Unit" and "Shares Less than One Unit") may not exercise voting right at a shareholders meeting or General Meeting of Class Shareholders with respect to their Shares Less than One Unit.
(2)A Stock Company may provide in the articles of incorporation to the effect that Holders of Shares Less than One Unit may not exercise some or all rights, other than the following rights, with respect to the relevant Shares Less than One Unit:
(i)the right to take delivery of the Consideration for Acquisition provided for in Article 171, paragraph (1), item (i);
(ii)the right to take delivery of Monies, etc. in exchange for the acquisition by the Stock Company of Shares Subject to Call;
(iii)the right to receive the Allotment of Shares without Contribution provided for in Article 185;
(iv)the right to demand the purchase of the Shares Less than One Unit pursuant to the provisions of Article 192, paragraph (1);
(v)the right to receive the distribution of residual assets;
(vi)beyond what is set forth in the preceding items, any matters prescribed by Ministry of Justice Order.
(3)A Share Certificate-Issuing Company may provide in the articles of incorporation to the effect that it may elect to not issue share certificates representing Shares Less than One Unit.
(Disclosure of Reasons)
Article 190In cases where the Share Unit is to be prescribed, the directors must explain the reasons for the need to prescribe such Share Unit at the shareholders meeting at which it is intended to amend the articles of incorporation to prescribe such Share Unit.
(Special Provisions on Procedures)
Article 191Notwithstanding the provisions of Article 466, a Stock Company may effect an amendment to the articles of incorporation that will increase the size of the Share Unit (or, for a Company with Class Shares, the size of the Share Unit for the shares of each class; hereinafter the same applies in this Article) or create a provision in the articles of incorporation with respect to the Share Unit without a resolution at a shareholders meeting, in cases that fall under both of the following items:
(i)that the amendment will increase the size of the Share Unit simultaneously with a Share Split, or create a provision in the articles of incorporation with respect to the Share Unit; and
(ii)that the number provided for in (a) below is not less than the number provided for in (b) below:
(a)the number obtained by dividing the number of the shares held by each shareholder after such amendment to the articles of incorporation by the Share Unit;
(b)the number of the shares held by each shareholder before such amendment to the articles of incorporation (or, in cases where the Share Unit is prescribed, the number obtained by dividing the number of such shares by the Share Unit).
Subsection 2 Demand for Purchase from Holder of Shares Less than One Unit
(Demand for Purchase of Holder of Shares Less than One Unit)
Article 192(1)Holders of Shares Less than One Unit may demand that the Stock Company purchase the Shares Less than One Unit that they hold.
(2)A demand under the provisions of the preceding paragraph must be made by disclosing the number of the Shares Less than One Unit relating to that demand (or, for a Company with Class Shares, the classes of the Shares Less than One Unit and the number of shares for each class).
(3)A Holder of Shares Less than One Unit who makes a demand pursuant to the provisions of paragraph (1) may withdraw such demand only if the approval of the Stock Company is obtained.
(Determination of Price of Shares Less than One Unit)
Article 193(1)In cases where the demand pursuant to the provisions of paragraph (1) of the preceding Article is made, the amount provided for in each of the following items in accordance with the categories of the cases listed in such items is to be the price of the Shares Less than One Unit relating to such demand:
(i)in cases where the Shares Less than One Unit are shares with a market price, the amount calculated by the method prescribed by Ministry of Justice Order as the market price of such Shares Less than One Unit;
(ii)in cases other than the cases listed in the preceding item, the amount prescribed through discussions between the Stock Company and the Holder of Shares Less than One Unit who made the demand under the provisions of paragraph (1) of the preceding Article.
(2)In the cases listed in item (ii) of the preceding paragraph, the Holder of Shares Less than One Unit who made the demand pursuant to the provisions of paragraph (1) of the preceding Article, or the Stock Company, may file a petition for the court to determine the price within twenty days from the day when such demand is made.
(3)In order to make the determination under the preceding paragraph, the court must consider the financial condition of the Stock Company at the time of the demand pursuant to the provisions of paragraph (1) of the preceding Article and all other circumstances.
(4)Notwithstanding the provisions of paragraph (1), if petition is filed under paragraph (2) within the period provided for in that paragraph, the amount determined by the court in response to such petition is to be the price of such Shares Less than One Unit.
(5)Notwithstanding the provisions of paragraph (1), in the cases listed in item (ii) of that paragraph, if no petition is filed under paragraph (2) within the period provided for in that paragraph (except in cases where the discussions under paragraph (1), item (ii) are successfully concluded within such period), the sale price of the Shares Less than One Unit is to be the amount obtained by multiplying the amount of the net assets per share by the number of the Shares Less than One Unit related to the demand pursuant to the provisions of paragraph (1) of the preceding Article.
(6)The purchase of the shares related to the demand pursuant to the provisions of paragraph (1) of the preceding Article becomes effective as at payment for such shares.
(7)If a Holder of Shares Less than One Unit makes a demand pursuant to the provisions of paragraph (1) of the preceding Article with respect to shares for which share certificates are issued, the Share Certificate-Issuing Company must pay the price of the shares related to the demand in exchange for the share certificates.
Subsection 3 Demand for Sale to Holder of Shares Less than One Unit
Article 194(1)A Stock Company may provide in the articles of incorporation to the effect that a Holder of Shares Less than One Unit may submit to such Stock Company a Demand for the Sale of Shares Less than One Unit (meaning a demand that the Stock Company sell to a Holder of Shares Less than One Unit such number of shares which, together with the number of Shares Less than One Unit held by such Holder of Shares Less than One Unit, will constitute one Share Unit; hereinafter the same applies in this Article).
(2)Demand for the Sale of Shares Less than One Unit must be made by disclosing the number of the Shares Less than One Unit to be sold to such Holder of Shares Less than One Unit (or, for a Company with Class Shares, the classes of the Shares Less than One Unit and the number of shares for each class).
(3)A Stock Company that is subject to a Demand for the Sale of Shares Less than One Unit must sell its Treasury Shares to such Holders of Shares Less than One Unit, unless the Stock Company does not hold, at the time of reception of such Demand for the Sale of Shares Less than One Unit, Treasury Shares in a number corresponding to the number of the Shares Less than One Unit provided for in the preceding paragraph.
(4)The provisions of Article 192, paragraph (3), and paragraph (1) to paragraph (6) of the preceding Article apply mutatis mutandis to Demand for the Sale of Shares Less than One Unit.
Subsection 4 Changes in Share Unit
Article 195(1)Notwithstanding the provisions of Article 466, a Stock Company may decrease the size of the Share Unit or abolish the provisions of the articles of incorporation with respect to the Share Unit by effecting an amendment to the articles of incorporation by decision of the directors (or a resolution at a board of directors meeting for a Company with a Board of Directors).
(2)In cases where an amendment is made in the articles of incorporation pursuant to the provisions of the preceding paragraph, the Stock Company must, without delay after the day of the effectuation of such amendment to the articles of incorporation, notify its shareholders (or, for a Company with Class Shares, its Class Shareholders of the classes for which the Share Unit has been changed pursuant to the provisions of that paragraph) to the effect that such amendment to the articles of incorporation has been made.
(3)A public notice may be substituted for the notice under the provisions of the preceding paragraph.
Section 7 Omission of Notices to Shareholders
(Omission of Notices to Shareholders)
Article 196(1)In cases where notices or demands from a Stock Company do not reach a shareholder for five consecutive years or more, the Stock Company is no longer required to give notices or issue demands to such shareholder.
(2)In the cases provided for in the preceding paragraph, the address of the Stock Company is to be the place where the obligation of the Stock Company with regard to the shareholder under that paragraph is performed.
(3)The provisions of the preceding two paragraphs apply mutatis mutandis to Registered Pledgees of Shares.
(Auction of Shares)
Article 197(1)A Stock Company may sell shares that fall under both of the following items by auction and tender the proceeds thereof to the shareholders of such shares:
(i)that there is no requirement to give notice or issue a demand to the shareholder of such shares pursuant to the provisions of paragraph (1) of the preceding Article, or Article 294, paragraph (2); and
(ii)that the shareholders of such shares have not received dividends of surplus for consecutive five years.
(2)In lieu of sale by auction under the provisions of the preceding paragraph, a Stock Company may sell shares under that paragraph with a market price in an amount calculated by the method prescribed by Ministry of Justice Order as the market price thereof, and shares under that paragraph without a market price using a method other than auction with the permission of the court. In such cases, if there are two or more directors, the petition for such permission must be filed with the consent of all directors.
(3)The Stock Company may purchase some or all of the shares sold under the provisions of the preceding paragraph. In such cases, the Stock Company must prescribe the following matters:
(i)the number of shares to be purchased (or, for a Company with Class Shares, the classes of shares and the number of shares for each class);
(ii)the total amount of the monies to be delivered in exchange for the purchase of the shares in the preceding item.
(4)A Company with a Board of Directors must determine the matters listed in each item of the preceding paragraph by a resolution at a board of directors meeting.
(5)Notwithstanding the provisions of paragraph (1) and paragraph (2), in cases where there are Registered Pledgees of Shares, the Stock Company may effect the auction under the provisions of paragraph (1), or the sale pursuant to the provisions of paragraph (2), only if such Registered Pledgees of Shares are the persons who fall under both of the following items:
(i)that there is no requirement to give notice or issue a demand to such persons under the provisions paragraph (1) of the preceding Article applied mutatis mutandis under paragraph (3) of that paragraph; and
(ii)that the persons have not received the dividends of surplus to which they are entitled under the provisions of Article 154, paragraph (1) for consecutive five years.
(Objections of Interested Parties)
Article 198(1)In cases where a Stock Company effects an auction under the provisions of paragraph (1) of the preceding Article, or a sale under the provisions of paragraph (2) of that Article, the Stock Company must give public notice to the effect that interested parties, including the shareholders of the shares provided for in paragraph (1) of that Article, may state their objections during a certain period of time, and other matters prescribed by Ministry of Justice Order, and must issue separate demands seeking such objections, if any, to each shareholder of such shares and each Registered Pledgee of Shares thereof; provided, however, that such period cannot be less than three months.
(2)Notwithstanding the provisions of Article 126, paragraph (1) and Article 150, paragraph (1), the demands under the provisions of the preceding paragraph must be sent to the addresses of such shareholders and Registered Pledgees of Shares which have been entered or recorded in the shareholder register (or, in cases where such shareholders or Registered Pledgees of Shares notify such Stock Company of a different place or contact address for the receipt of notices or demands, to such place or contact address).
(3)Notwithstanding the provisions of Article 126, paragraphs (3) and (4), if a share is co-owned by two or more persons, the demand pursuant to the provisions of paragraph (1) must be sent to the address of the co-owners which has been entered or recorded in the shareholder register (or, in cases where such co-owners notify such Stock Company of a different place or contact address for the receipt of notices or demands, to such place or contact address).
(4)The provisions of Article 196, paragraph (1) (including cases where it is applied mutatis mutandis under paragraph (3) of that paragraph) do not apply to demands under the provisions of paragraph (1).
(5)In cases where public notice is given under the provisions of paragraph (1) (limited to cases where share certificates representing the shares under paragraph (1) of the preceding Article have been issued), if no interested party raises any objection within the period under paragraph (1), the share certificates representing those shares become invalid on the last day of such period.
Section 8 Issuing Shares for Subscription
Subsection 1 Determination of Subscription Requirements
(Determination of Subscription Requirements)
Article 199(1)Whenever a Stock Company intends to solicit persons to subscribe for shares it issues or for Treasury Shares it disposes of, the Stock Company must prescribe the following matters with respect to the Shares for Subscription (meaning shares the Stock Company allots to persons who subscribed for those shares in response to such solicitation; hereinafter the same applies in this Section):
(i)the number of Shares for Subscription (or, for a Company with Class Shares, the classes and the number of the Shares for Subscription; hereinafter the same applies in this Section);
(ii)the Amount to Be Paid in (meaning the amount of the monies to be paid in in exchange for one of the Shares for Subscription, or the amount of any property other than monies to be contributed; hereinafter the same applies in this Section) for the Shares for Subscription or the method for calculating such amount;
(iii)if property other than monies will be the subject of the contribution, a statement to such effect and the description and value of such property;
(iv)the day or period for the payment of the monies in exchange for the Shares for Subscription, or the contribution of the property under the preceding item;
(v)if shares are issued, matters regarding the capital and capital reserves that is to be increased.
(2)The determination of the matters listed in each item of the preceding paragraph (hereinafter in this Section referred to as "Subscription Requirements") must be made by a resolution at a shareholders meeting.
(3)In cases where the Amount to Be Paid in under paragraph (1), item (ii) is particularly favorable to subscribers for the Shares for Subscription, the directors must, at the shareholders meeting under the preceding paragraph, explain the reasons for the need to solicit such persons with such an offer of the Amount to Be Paid in.
(4)For a Company with Class Shares, if the class of the Shares for Subscription under paragraph (1), item (i) is that of Shares with Restriction on Transfer, the determination of the Subscription Requirements regarding such class of shares does not become effective without a resolution at the relevant General Meeting of Class Shareholders, except in cases where there is a provision in the articles of incorporation to the effect that, with respect to the solicitation of subscribers for such class shares, a resolution at the General Meeting of Class Shareholders constituted by the Class Shareholders of such class shares is not required; provided, however, that this does not apply to cases where there is no Class Shareholder who can exercise voting right at such General Meeting of Class Shareholders.
(5)The Subscription Requirements must be uniform for each solicitation under paragraph (1).
(Delegation of Determination of Subscription Requirements)
Article 200(1)Notwithstanding the provisions of paragraphs (2) and (4) of the preceding Article, at a shareholders meeting, the determination of the Subscription Requirements may be delegated to the directors by a resolution at the relevant shareholders meeting (or, for a Company with a Board of Directors, of the board of directors). In such cases, the shareholders meeting must prescribe the maximum number of the Shares for Subscription for which the Subscription Requirements may be determined under such delegation, and the minimum Amount to Be Paid in.
(2)In cases where the minimum Amount to Be Paid in in the preceding paragraph is particularly favorable to subscribers for the Shares for Subscription, the directors must, at the shareholders meeting under that paragraph, explain the reason for the need to solicit such persons with such an offer of the Amount to Be Paid in.
(3)The resolution under paragraph (1) is effective with respect only to solicitations under paragraph (1) of the preceding Article under which the date in item (iv) of that paragraph (in cases where a period is determined under that item, the last day of such period) falls within one year from the day of such resolution.
(4)For a Company with Class Shares, if the class of the Shares for Subscription under paragraph (1) is that of Shares with Restriction on Transfer, the delegation of the determination of the Subscription Requirements regarding such class shares does not become effective without a resolution at the General Meeting of Class Shareholders constituted by the Class Shareholders of such class shares, except in cases where there is a provision in the articles of incorporation under paragraph (4) of the preceding Article with respect to such class shares; provided, however, that this does not apply to cases where there is no Class Shareholder who can exercise voting right at such General Meeting of Class Shareholders.
(Special Provisions on Determination of Subscription Requirements for Public Company)
Article 201(1)Except for cases provided for in Article 199, paragraph (3), for the purpose of the application of the provisions of paragraph (2) of that Article to a Public Company, "shareholders meeting" in that paragraph is read as "board of directors meeting". In such cases, the provisions of the preceding Article do not apply.
(2)In cases where Subscription Requirements are determined by a resolution at the board of directors meeting provided for in Article 199, paragraph (2) applied following the deemed replacement of terms pursuant to the provisions of the preceding paragraph, if a Public Company solicits subscribers for shares with a market price, it may prescribe, in lieu of the matters listed in paragraph (1), item (ii) of that Article, the method for determining the Amount to Be Paid in that is appropriate to realize payment in at a fair value.
(3)If a Public Company has determined Subscription Requirements by a resolution at the board of directors meeting provided for in Article 199, paragraph (2) applied following the deemed replacement of terms pursuant to the provisions of paragraph (1), that Public Company must notify the shareholders of such Subscription Requirements (in cases where the method for determining the Amount to Be Paid in has been prescribed, including that method; hereinafter the same applies in this Section) no later than two weeks prior to the day referred to in paragraph (1), item (iv) of that Article (or, in cases where a period has been prescribed under that item, no later than two weeks prior to the first day of that period).
(4)A public notice may be substituted for the notice under the provisions of the preceding paragraph.
(5)The provisions of paragraph (3) do not apply in cases prescribed by Ministry of Justice Order as cases where it is unlikely that the protection of shareholders is compromised, including cases where, with respect to Subscription Requirements, the Stock Company has submitted, no later than two weeks prior to the date provided for in that paragraph, a notice under Article 4, paragraphs (1) through (3) of the Financial Instruments and Exchange Act.
(Cases Where Entitlement to Allotment of Shares Is Granted to Shareholders)
Article 202(1)In carrying out solicitation under Article 199, paragraph (1), the Stock Company may grant entitlement to the allotment of shares to its shareholders. In such cases, the Stock Company must prescribe the following matters in addition to the Subscription Requirements:
(i)a statement to the effect that the Stock Company will grant entitlement to the allotment of the Shares for Subscription of that Stock Company (or, for a Company with Class Shares, class shares identical to the class shares held by such shareholders) to shareholders, subject to the application provided for in paragraph (2) of the following Article;
(ii)the day for the application for subscription for the Shares for Subscription referred to in the preceding item.
(2)In the cases provided for in the preceding paragraph, the shareholders under item (i) of that paragraph (excluding the Stock Company) are entitled to the allotment of the Shares for Subscription in accordance with the number of shares they hold; provided, however, that if the number of the Shares for Subscription to be allotted to such shareholders includes a fractional share, it is to be rounded off.
(3)In cases where the Stock Company prescribes the matters listed in each item of paragraph (1), the Subscription Requirements and the matters listed in each item of that paragraph must be prescribed in accordance with the categories of the cases listed in the following items, by the methods provided for in each of such items:
(i)in cases where there is a provision in the articles of incorporation to the effect that such Subscription Requirements and the matters listed in each item of paragraph (1) may be prescribed by decision of the directors (excluding the cases where the Stock Company is a Company with a Board of Directors):A decision of the directors;
(ii)in cases where there is a provision in the articles of incorporation to the effect that such Subscription Requirements and the matters listed in each item of paragraph (1) may be prescribed by a resolution of the board of directors (excluding the cases listed in the following item):A resolution of the board of directors;
(iii)in cases where the Stock Company is a Public Company:A resolution of the board of directors;
(iv)in cases other than those listed in the preceding three items:A resolution at a shareholders meeting.
(4)In cases where a Stock Company prescribes the matters listed in each item of paragraph (1), the Stock Company must notify the shareholders under item (i) of that paragraph (excluding such Stock Company) of the following matters no later than two weeks prior to the date provided for in item (ii) of that paragraph:
(i)the Subscription Requirements;
(ii)the number of Shares for Subscription to be allotted to such shareholders; and
(iii)the date provided for in paragraph (1), item (ii).
(5)The provisions of Article 199, paragraphs (2) to (4) and the preceding two Articles do not apply in cases where entitlement to the allotment of shares is granted to shareholders under the provisions of paragraphs (1) to (3) hereof.
Subsection 2 Allotment of Shares for Subscription
(Applications for Shares for Subscription)
Article 203(1)A Stock Company must notify persons who intend to subscribe for Shares for Subscription in response to solicitation in Article 199, paragraph (1) of the matters listed in the following items:
(i)the trade name of the Stock Company;
(ii)the Subscription Requirements;
(iii)if any money payment is to be made, the place where payments are handled;
(iv)beyond what is set forth in the preceding three items, matters prescribed by Ministry of Justice Order.
(2)A person who submits an application to subscribe for Shares for Subscription in response to solicitation in Article 199, paragraph (1) must deliver a document giving the following information:
(i)the name and address of the person applying;
(ii)the number of Shares for Subscription for which the person intends to subscribe.
(3)A person who submits an application under the preceding paragraph may, in lieu of delivering a document as referred to in that paragraph, provide the information that is required to be detailed in the document referred to in that paragraph by electronic or magnetic means, with the approval of the Stock Company and pursuant to the provisions of Cabinet Order. In such cases, the person who submitted the application is deemed to have delivered the document under that paragraph.
(4)The provisions of paragraph (3) do not apply in cases where the Stock Company has issued a prospectus provided for in Article 2, paragraph (10) of the Financial Instruments and Exchange Act that states the matters listed in each item of that paragraph to a person who intends to submit the application in paragraph (1), and in other cases prescribed by Ministry of Justice Order as cases where it is unlikely that the protection of persons who intend to submit applications for subscription for Shares for Subscription is compromised.
(5)If there are changes in the matters listed in each item of paragraph (1), the Stock Company must immediately notify persons who have submitted applications in paragraph (2) (hereinafter in this Subsection referred to as "Applicants") thereof and of the matters so changed.
(6)It is sufficient for a notice or demand to an Applicant to be sent by the Stock Company to the address under paragraph (2), item (i) (or, in cases where such Applicant notifies the Stock Company of a different place or contact address for the receipt of notices or demands, to such place or contact address).
(7)The notices or demands referred to in the preceding paragraph are deemed to have arrived at the time when such notice or demand should normally have arrived.
(Allotment of Shares for Subscription)
Article 204(1)A Stock Company must specify the persons to whom Shares for Subscription will be allotted from among the Applicants and the number of Shares for Subscription to be allotted to those persons. In such cases, the Stock Company may reduce the number of Shares for Subscription the Stock Company allots to such Applicants below the number under paragraph (2), item (ii) of the preceding Article.
(2)In cases where Shares for Subscription are Shares with Restriction on Transfer, the determination under the provisions of the preceding paragraph must be made by a resolution at a shareholders meeting (or at a board of directors meeting for a Company with a Board of Directors); provided, however, that this does not apply in cases where it is otherwise prescribed in the articles of incorporation.
(3)The Stock Company must notify the Applicants, no later than the day immediately preceding the date referred to in Article 199, paragraph (1), item (iv) (or, in cases where a period is prescribed under that item, no later than the day immediately preceding the first day of that period), of the number of Shares for Subscription that will be allotted to such Applicants.
(4)In cases where the Stock Company has granted entitlement to the allotment of shares to its shareholders pursuant to the provisions of Article 202, if the shareholders do not submit, no later than the date under item (ii), paragraph (1) of that Article, applications under paragraph (2) of the preceding Article, such shareholders will lose the entitlement to the allotment of Shares for Subscription.
(Special Provisions on Subscription and Allotment of Shares for Subscription)
Article 205(1)The provisions of the preceding two Articles do not apply in cases where a person who intends to subscribe for Shares for Subscription executes a contract for subscription for the total number of those shares.
(2)In the case prescribed in the preceding paragraph, if Shares for Subscription are Shares with Restriction on Transfer, the Stock Company must obtain approval of the contract set forth in the same paragraph by the resolution at shareholders meeting (in cases of a Company with a Board of Directors, of the board of directors); provided, however, that this does not apply in cases where it is otherwise prescribed in the articles of incorporation.
(Subscription for Shares for Subscription)
Article 206The persons listed in the following items will be the subscribers for Shares for Subscription with respect to the number of Shares for Subscription prescribed in each of such items:
(i)applicants:The number of the Shares for Subscription allotted by the Stock Company; or
(ii)a person who subscribed for all of the Shares for Subscription under a contract in paragraph (1) of the preceding Article:The number of Shares for Subscription for which that person has subscribed.
(Special Provisions on Allotment of Shares for Subscription of a Public Company)
Article 206-2(1)In cases where the rate of the number listed in item (i) to the number listed in item (ii) exceeds 50% with regard to a subscriber for Shares for Subscription, a Public Company must notify shareholders of the name or address of the subscriber (hereinafter referred to as "Special Subscriber" in this paragraph and paragraph (4)), the number listed in item (i) with respect to the Special Subscriber, and other matters prescribed by Ministry of Justice Order by two weeks before the day set forth in Article 199, paragraph (1), item (iv) (in cases where the period set forth in the same item is specified, the first day of the period); provided however that this does not apply to cases where the Special Subscriber is a Parent Company, etc. of the Public Company or where the right to obtain the allotment of shares is granted to shareholders pursuant to the provisions of Article 202:
(i)the number of votes that the subscriber (including its Subsidiary Companies, etc.) will hold when the subscriber becomes a shareholder of Shares for Subscription that the subscriber subscribed; and
(ii)the number of votes of all shareholders in cases where all subscribers of the Shares for Subscription become shareholders of Shares for Subscription that they subscribed.
(2)The notice pursuant to the provisions of the preceding paragraph may be substituted with a public notice.
(3)Notwithstanding the provisions of paragraph (1), in cases where a Stock Company has made a notification under Article 4, paragraphs (1) through (3) of the Financial Instruments and Exchange Act with respect to the matters set forth in paragraph (1) of this Article by two weeks before the day prescribed in the same paragraph, or where it is prescribed by Ministry of Justice Order as cases where it is unlikely that the protection of shareholders is compromised, the notice pursuant to the provisions of paragraph (1) is not required.
(4)When a shareholder(s) holding one-tenth (1/10) or more (in cases where lesser proportion is prescribed in the articles of incorporation, such proportion) of the votes of all shareholders (excluding shareholders who cannot exercise voting rights in the shareholders meeting set forth in this paragraph) makes a notice to a Public Company that the shareholder is against subscription for Shares for Subscription by a Special Subscriber (including its Subsidiary Companies, etc.; hereinafter the same applies in this paragraph) within two weeks from the day of notice pursuant to the provisions of paragraph (1) or the day of public notice set forth in paragraph (2) (in the case set forth in the preceding paragraph, the day specified by Ministry of Justice Order), the Public Company must obtain approval for the allotment of Shares for Subscription to the Special Subscriber or for the contract set forth in Article 205, paragraph (1) with the Special Subscriber by the resolution at the shareholders meeting by the day before the day specified in paragraph (1); provided, however, that this does not apply if the Public Company's financial condition has deteriorated greatly and there is an urgent necessity in order for the Public Company to continue in business.
(5)Notwithstanding the provisions of Article 309, paragraph (1), the resolution at the shareholders meeting set forth in the preceding paragraph must be passed by attendance of the shareholders holding a majority of votes out of the shareholders who can exercise voting rights (in cases where one third (1/3) or more of the proportion is stipulated by the articles of incorporation, such proportion or more) and by a majority of voting rights of the shareholders presents (in cases where any proportion higher than that is provided for in the articles of incorporation, such proportion or more).
Subsection 3 Contribution of Property Other than Monies
Article 207(1)If a Stock Company has prescribed the matters listed in Article 199, paragraph (1), item (iii), the Stock Company must file a petition to the court, without delay after the determination of the Subscription Requirements, for the appointment of an inspector in order to have the inspector investigate the value of the property provided for in that item (hereinafter in this Section referred to as "Property Contributed in Kind").
(2)In cases where the petition referred to in the preceding paragraph has been filed, the court must appoint an inspector, except in cases where it dismisses such petition as unlawful.
(3)In cases where the court has appointed the inspector under the preceding paragraph, it may fix the amount of the remuneration that the Stock Company pays to such inspector.
(4)The inspector referred to in paragraph (2) must conduct the necessary investigation and submit a report to the court by providing it with a document detailing the results of the investigation or with an electronic or magnetic record (limited to one as prescribed by Ministry of Justice Order) in which these have been recorded.
(5)If the court finds it necessary to clarify the contents of the report under the preceding paragraph or to confirm the grounds supporting such report, it may request that the inspector under paragraph (2) submit a further report under the preceding paragraph.
(6)If the inspector under paragraph (2) has submitted the report referred to in paragraph (4), the inspector must deliver a copy of the document referred to in that paragraph to the Stock Company or use a means prescribed by Ministry of Justice Order to provide it with the information recorded in the electronic or magnetic record referred to in that paragraph.
(7)In cases where the court receives a report under paragraph (4), if it finds the value provided for in Article 199, paragraph (1), item (iii) with respect to Property Contributed in Kind (excluding a value not subjected to investigation by the inspector under paragraph (2)) to be improper, it must issue a ruling changing such value.
(8)In cases where the value of Property Contributed in Kind has been changed, in whole or in part, because of a ruling under the preceding paragraph, the subscriber for Shares for Subscription (limited to a person who tenders Property Contributed in Kind; hereinafter the same applies in this Article) may rescind the manifestation of intention relating to applications for subscription for Shares for Subscription or relating to the contract provided for in Article 205, paragraph (1), limited to within one week from the finalization of such ruling.
(9)The provisions of the preceding paragraphs do not apply in the cases in each of the following items with respect to the matters prescribed respectively in those items:
(i)in cases where the total number of the shares to be allotted to the subscribers for the Shares for Subscription does not exceed one tenth (1/10) of the total number of Issued Shares:The value of the Property Contributed in Kind tendered by the subscribers for such Shares for Subscription;
(ii)in cases where the total sum of the value provided for under Article 199, paragraph (1), item (iii) with respect to the Property Contributed in Kind does not exceed 5,000,000 yen:The value of such Property Contributed in Kind;
(iii)in cases where the value of the securities with market price provided for under Article 199, paragraph (1), item (iii) with respect to Property Contributed in Kind does not exceed the value calculated by the method prescribed by Ministry of Justice Order as the market price of such securities:The value of the Property Contributed in Kind with respect to such securities;
(iv)in cases where the verification of an attorney, a legal professional corporation, a certified public accountant, an auditing firm, a tax accountant or a tax accountant corporation (or in cases where the Property Contributed in Kind consist of real estate, such verification and an appraisal by a real property appraiser; hereinafter the same applies in this item) is obtained with respect to the reasonableness of the value provided for under Article 199, paragraph (1), item (iii) with respect to Property Contributed in Kind:The value of the Property Contributed in Kind so verified;
(v)in cases where the Property Contributed in Kind consist of a money claim (limited to claims that have already fallen due) to the Stock Company, and the value provided for under Article 199, paragraph (1), item (iii) with respect to such money claim does not exceed the book value of the debt representing such monetary claim:The value of the Property Contributed in Kind with respect to such monetary claim.
(10)None of the following persons can provide the verification provided in item (iv) of the preceding paragraph:
(i)a director, an accounting advisor, a company auditor or executive officer, or an employee including a manager;
(ii)a subscriber for Shares for Subscription;
(iii)a person who is subject to a suspension of operations for whom the period of such suspension has not elapsed yet; or
(iv)a legal profession corporation, an auditing firm or a tax accountant corporation with respect to which more than half of its members are persons who fall under either item (i) or item (ii) above.
Subsection 4 Performance of Contributions
(Performance of Contributions)
Article 208(1)Subscribers for Shares for Subscription (excluding persons who tender Property Contributed in Kind) must, on the date or within the period provided for in Article 199, paragraph (1), item (iv), pay in the entire Amount to Be Paid in for the Shares for Subscription for which the subscribers respectively subscribed, at the bank, etc. designated by the Stock Company as the place for the handling of payments.
(2)Subscribers for Shares for Subscription (limited to persons who tender Property Contributed in Kind) must, on the date or within the period provided for in Article 199, paragraph (1), item (iv), deliver the Property Contributed in Kind equivalent in value to the entire Amount to Be Paid in of the Shares for Subscription for which the subscribers respectively subscribed.
(3)Subscribers for Shares for Subscription may not set off their obligations to effect payment under the provisions of paragraph (1) or delivery under the provisions of the preceding paragraph (hereinafter in this Subsection referred to as "Performance of Contribution") against claims they have against the Stock Company.
(4)Transferring of the right to become a shareholder of Shares for Subscription by effecting the Performance of Contribution cannot be asserted against the Stock Company.
(5)A subscriber for Shares for Subscription will lose a right to become the shareholder of Shares for Subscription by effecting the Performance of Contribution if the subscriber fails to effect the Performance of Contribution.
(Timing of Shareholder Status)
Article 209(1)In the cases listed in the following items, a subscriber for Shares for Subscription becomes the shareholder of the Shares for Subscription for which the subscriber effects the Performance of Contribution on the day prescribed in each of such items:
(i)in cases where a date under Article 199, paragraph (1), item (iv) is prescribed:Such date; and
(ii)in cases where a period under Article 199, paragraph (1), item (iv) is prescribed:The day on which the Performance of Contribution is effected.
(2)In the cases listed in the items of Article 213-2, paragraph (1), a subscriber of Shares for Subscription may not exercise the rights of shareholders with respect to Shares for Subscription for which the performance of contribution is falsified, only after the payment prescribed in those items or the payment pursuant to the provisions of Article 213-3, paragraph (1) is made.
(3)A person who accepts transfer of Shares for Subscription as set forth in the preceding paragraph may exercise the right of shareholders with respect to the Shares for Subscription; provided, however, that this does not apply when the person has acted in bad faith or with gross negligence.
Subsection 5 Demanding Cessation of Issuing Shares for Subscription
Article 210In the following cases, if shareholders are likely to suffer disadvantage, shareholders may demand that the Stock Company cease a share issue or disposition of Treasury Shares relating to solicitations under Article 199, paragraph (1):
(i)in cases where such share issue or disposition of Treasury Shares violates laws and regulations or the articles of incorporation; or
(ii)in cases where such share issue or disposition of Treasury Shares is effected by using a method which is extremely unfair.
Subsection 6 Liabilities Relating to Solicitation
(Restrictions on Invalidation or Rescission of Subscription)
Article 211(1)The provisions of the proviso to Article 93 and the provisions of Article 94, paragraph (1) of the Civil Code do not apply to manifestation of intention relating to applications for subscription for and the allotment of Shares for Subscription, and relating to the contract under Article 205, paragraph (1).
(2)If one year has elapsed from the day on which a subscriber for Shares for Subscription became a shareholder pursuant to the provisions of Article 209, paragraph (1), or if the subscriber has exercised the rights in relation to such shares, the subscriber for Shares for Subscription may not thereafter assert the invalidity of the subscription for the Shares for Subscription on the grounds of mistake, or rescind the subscription for Shares for Subscription on the grounds of fraud or duress.
(Liabilities of Persons Who Subscribed for Shares with Unfair Amount to Be Paid in)
Article 212(1)In the cases listed in the following items, subscribers for Shares for Subscription are liable to a Stock Company for payment of the amount provided for in such items:
(i)in cases where the subscriber subscribed for the Shares for Subscription at an Amount to Be Paid in that is extremely unfair, in collusion with directors (or directors or executive officers for a Company with a Nominating Committee, etc.):The amount equivalent to the difference between such Amount to Be Paid in and the fair value of such Shares for Subscription;
(ii)in cases where the value of the Property Contributed in Kind that the subscriber tendered when the subscriber became a shareholder of the Shares for Subscription pursuant to the provisions of Article 209, paragraph (1) is extremely short of the value provided for under Article 199, paragraph (1), item (iii) with respect to the Property Contributed in Kind:The amount of such shortfall.
(2)In the cases provided for in item (ii) of the preceding paragraph, if the subscriber for Shares for Subscription who tendered the Property Contributed in Kind has acted in good faith and without gross negligence as to the fact that the value of such Property Contributed in Kind is extremely short of the value prescribed under Article 199, paragraph (1), item (iii) with respect to the Property Contributed in Kind, the relevant subscriber may rescind the manifestation of intention relating to applications for subscription for Shares for Subscription or relating to the contract provided for in Article 205, paragraph (1).
(Liabilities of Directors in Case of Shortfall in Value of Property Contributed)
Article 213(1)In the cases listed in paragraph (1), item (ii) of the preceding Article, the following persons (hereinafter in this Article referred to as "Directors, etc.") are liable to the Stock Company for payment of the amounts listed in such items:
(i)executive directors who carried out duties regarding the solicitation of subscribers for such Shares for Subscription (or, for a Company with a Nominating Committee, etc., executive officers; hereinafter the same applies in this item) and other persons prescribed by Ministry of Justice Order as persons who were involved, in the performance of their duties, in the execution of the business of such executive directors;
(ii)if a resolution regarding the determination of the value of Property Contributed in Kind is passed at a shareholders meeting, the persons prescribed by Ministry of Justice Order as the directors who submitted proposals to such shareholders meeting;
(iii)if a resolution regarding the determination of the value of Property Contributed in Kind is passed at a board of directors meeting, the persons prescribed by Ministry of Justice Order as the directors (or, for a Company with a Nominating Committee, etc., directors or executive officers) who submitted proposals to such board of directors meeting.
(2)Notwithstanding the provisions of the preceding paragraph, the Directors, etc. are not liable for Property Contributed in Kind under that paragraph in the cases listed below:
(i)an investigation has been carried out by an inspector under Article 207, paragraph (2) with respect to the value of the Property Contributed in Kind; or
(ii)such Directors, etc. have proven that they did not fail to exercise due care with respect to the performance of their duties.
(3)In the cases provided for in paragraph (1), the person who submitted the verification provided for in Article 207, paragraph (9), item (iv) (hereinafter in this Article referred to as "Verifying Person") is liable for payment of the amount provided for in paragraph (1), item (ii) of the preceding Article to the Stock Company; provided, however, that this does not apply in cases where such Verifying Person has proven that the Verifying Person did not fail to exercise care with respect to the submission of such verification.
(4)In cases where a subscriber for Shares for Subscription bears an obligation to pay an amount provided for in paragraph (1), item (ii) of the preceding Article with respect to Property Contributed in Kind tendered by the subscriber, if the persons listed as follows bear obligations provided for in such items with respect to such Property Contributed in Kind, such persons will be joint and several obligors:
(i)Directors, etc.:The obligations under paragraph (1); and
(ii)Verifying Persons:The obligations under the main clause of the preceding paragraph.
(Liabilities of Subscribers of Shares for Subscription for Which the Performance of Contribution Is Falsified)
Article 213-2(1)In the cases listed in the following items, subscribers for Shares for Subscription are liable to a Stock Company for performing the acts specified in those items:
(i)in cases of falsifying the payment pursuant to the provisions of Article 208, paragraph (1):Payment of the entire payment amount for which the payment is falsified; and
(ii)in cases of falsifying the delivery pursuant to the provisions of Article 208, paragraph (2):Payment of Property Contributed in Kind for which the delivery is falsified (in cases where a Stock Company requests to pay money equivalent to the value of the Property Contributed in Kind in lieu of the delivery, payment of the entire amount of the money).
(2)The liabilities of the subscriber of Shares for Subscription pursuant to the provisions of the preceding paragraph may not be exempted without the consent of all shareholders.
(Liabilities of Directors in the Case of Falsifying the Performance of Contribution)
Article 213-3(1)In the cases listed in the items of paragraph (1) of the preceding Article, a person prescribed by Ministry of Justice Order as a director (in cases of a Company with a Nominating Committee, etc., including executive officers) involved in the falsifying of the performance of contribution by a subscriber of Shares for Subscription is liable to make the payment prescribed in those items to the Stock Company; provided, however, that this does not apply to cases where the person (excluding the person who falsified the performance of contribution) proves that the person did not fail to exercise due care with respect to the performance of the person's duties.
(2)In cases where a subscriber of Shares for Subscription is liable to make the payment prescribed in the items of paragraph (1) of the preceding Article, if the person prescribed in the preceding paragraph is liable as set forth in the same paragraph, these persons will be joint and several obligors.
Section 9 Share Certificate
Subsection 1 General Provisions
(Provisions of Articles of Incorporation to the Effect That Share Certificates Be Issued)
Article 214A Stock Company may provide in the articles of incorporation to the effect that it issues share certificates relating to its shares (or, for a Company with Class Shares, the shares of all classes).
(Issuing of Share Certificate)
Article 215(1)A Share Certificate-Issuing Company must, without delay after the day of a share issue, issue share certificates representing those shares.
(2)If a Share Certificate-Issuing Company consolidates shares, it must issue share certificates representing those consolidated shares without delay after the day provided for in Article 180, paragraph (2), item (ii).
(3)If a Share Certificate-Issuing Company splits shares, it must issue share certificates representing those split shares (excluding those which have been already issued) without delay after the day provided for in Article 183, paragraph (2), item (ii).
(4)Notwithstanding the provisions of the preceding three paragraphs, a Share Certificate-Issuing Company that is not a Public Company may elect to not deliver share certificates under those paragraphs until shareholders so request.
(Matters to Be Specified on Share Certificates)
Article 216A Stock Company must state the following matters and the serial number on a share certificate, and the Representative Director of the Share Certificate-Issuing Company (or the representative executive officer for a Company with a Nominating Committee, etc.) must affix the Representative Director's signature, or name and seal:
(i)the trade name of the Share Certificate-Issuing Company;
(ii)the number of shares represented by such share certificates;
(iii)if it is provided that the approval of the Stock Company is required for the acquisition of shares which are represented by such share certificates by transfer, a statement to such effect; and
(iv)for a Company with Class Shares, the class and features of the shares represented by such share certificates.
(Offer Not to Possess Share Certificates)
Article 217(1)Shareholders of a Share Certificate-Issuing Company may make an offer to such Share Certificate-Issuing Company to the effect that they do not wish to hold share certificates representing the shares that they hold.
(2)The offer pursuant to the provisions of the preceding paragraph must be made by disclosing the number of shares relating to the offer (or, for a Company with Class Shares, the classes of shares and the number of shares for each class). In such cases, if share certificates representing those shares have been issued, such shareholders must submit such share certificates to the Share Certificate-Issuing Company.
(3)A Share Certificate-Issuing Company that has received an offer under the provisions of paragraph (1) must enter or record in the shareholder register, without delay, a statement that it will not issue share certificates representing the shares referred to in the first sentence of the preceding paragraph.
(4)If a Share Certificate-Issuing Company has stated or recorded the statement pursuant to the provisions of the preceding paragraph, it may not issue share certificates representing the shares referred to in the first sentence of paragraph (2).
(5)Share certificates submitted pursuant to the provisions of the second sentence of paragraph (2) become ineffective when a statement is stated or recorded pursuant to the provisions of paragraph (3).
(6)A shareholder who has made an offer pursuant to the provisions of paragraph (1) may at any time demand that the Share Certificate-Issuing Company issue share certificates for the shares referred to in the first sentence of paragraph (2). In such cases, if there are any share certificates that have been submitted pursuant to the provisions of the second sentence of paragraph (2), the cost for the issuing of the share certificates is borne by such shareholder.
(Abolition of Provisions of Articles of Incorporation That Share Certificates Be Issued)
Article 218(1)If a Share Certificate-Issuing Company intends to effect an amendment to the articles of incorporation to abolish provisions of the articles of incorporation to the effect that it issues share certificates for its shares (or, for a Company with Class Shares, shares of all classes), it must give public notice of the following matters, and give separate notice thereof to each shareholder and each Registered Pledgee of Shares no later than two weeks prior to the day on which such amendment to the articles of incorporation takes effect:
(i)a statement to the effect that the Stock Company abolishes the provisions of the articles of incorporation to the effect that it issues share certificates for its shares (or, for a Company with Class Shares, shares of all classes);
(ii)the day on which the amendment to the articles of incorporation will take effect; and
(iii)a statement to the effect that the share certificates of such Stock Company become invalid on the day provided for in the preceding item.
(2)Share certificates representing the shares of a Share Certificate-Issuing Company become invalid on the day provided for in item (ii) of the preceding paragraph.
(3)Notwithstanding the provisions of paragraph (1), in cases where a Share Certificate-Issuing Company that does not issue share certificates for any of its shares intends to effect an amendment to the articles of incorporation to abolish provisions of the articles of incorporation to the effect that it issues share certificates for its shares (or, for a Company with Class Shares, shares of all classes), it is sufficient to notify the shareholders and Registered Pledgees of Shares of the matters listed in item (i) and item (ii) of that paragraph no later than two weeks prior to the day provided for in item (ii) of that paragraph.
(4)A public notice may be substituted for the notice under the provisions of the preceding paragraph.
(5)In the cases provided for in paragraph (1), pledgees of shares (excluding Registered Pledgees of Shares) may, no later than the day immediately preceding the day provided for in item (ii) of that paragraph, demand that the Share Certificate-Issuing Company state or record the matters listed in each item of Article 148 in the shareholder register.
Subsection 2 Submission of Share Certificate
(Public Notice in Relation to Submission of Share Certificate)
Article 219(1)In cases where a Share Certificate-Issuing Company carries out an act listed in the following items, it must, more than one month prior to the day when such act takes effect (in cases of performing the act listed in item (iv)-2, the Acquisition Day prescribed in Article 179-2, paragraph (1), item (v); hereinafter the day is referred to as the "Share Certificate Submission Day"), give public notice to the effect that share certificates representing the shares provided for in each of such items be submitted to such Share Certificate-Issuing Company before the Share Certificate Submission Day, and a separate notice to such effect to each shareholder and each Registered Pledgee of Shares thereof; provided, however, that this does not apply in cases where the Share Certificate-Issuing Company does not issue share certificates for any of its shares:
(i)amendments to the articles of incorporation to create provisions of the articles of incorporation with respect to the matters listed in Article 107, paragraph (1), item (i):All shares (or, for a Company with Class Shares, the class shares that have provisions with respect to such matters);
(ii)consolidation of shares:All shares (or, for a Company with Class Shares, the class shares under Article 180, paragraph (2), item (iii));
(iii)acquisitions of Shares Subject to Class-Wide Call provided for in Article 171, paragraph (1):Such Shares Subject to Class-Wide Call;
(iv)acquisitions of Shares Subject to Call:Such Shares Subject to Call;
(iv)-2approval set forth in Article 179-3, paragraph (1):Shares Subject to the Cash-Out;
(v)Entity Conversion:All shares;
(vi)Merger (but only if the Stock Company disappears in the merger):All shares;
(vii)Share Exchanges:All shares;
(viii)Share Transfers:All shares.
(2)In cases where a Share Certificate-Issuing Company performs the acts listed in the following items, if a person fails to submit the share certificates to the Share Certificate-Issuing Company by the Share Certificate Submission Day the person specified in each of those items may refuse to deliver Monies, etc. to the shareholders of the shares pertaining to the share certificates by that act (in cases of performing acts listed in item (ii), acquisition of Shares Subject to Cash-Out pertaining to Demand for Cash-Out) until the share certificates are submitted:
(i)acts listed in the items (i) through (iv) of the preceding paragraph:the Share Certificate-Issuing Company;
(ii)approval set forth in Article 179-3, paragraph (1):Special Controlling Shareholders;
(iii)Entity Conversion:Membership Company after Entity Conversion prescribed in Article 744, paragraph (1), item (i);
(iv)merger (but only if the Stock Company disappears in the merger):the Company Surviving the Absorption-type Merger as prescribed in Article 749, paragraph (1) or the Company Incorporated in the Consolidation-type Merger as prescribed in Article 753, paragraph (1);
(v)Share Exchange:The Wholly Owning Parent Company Resulting from the Share Exchange as prescribed in Article 767; and
(vi)share transfer:The Wholly Owning Parent Company Incorporated in a Share Transfer as prescribed in Article 773, paragraph (1), item (i).
(3)Share certificates representing the shares provided for in each item of paragraph (1) become invalid on the Share Certificate Submission Day.
(4)The cost of public notice and notice pursuant to the provisions of paragraph (1), item (iv)-2 is paid by the Special Controlling Shareholder.
(Cases Where Share Certificates Cannot Be Submitted)
Article 220(1)In cases where the acts listed in each item of paragraph (1) of the preceding Article are carried out, if a person cannot submit share certificates, the Share Certificate-Issuing Company may, at the request of that person, give public notice to interested parties to the effect that they can state their objections, if any, during a certain period of time; provided, however, that such period cannot be less than three months.
(2)In cases where a Share Certificate-Issuing Company makes public notice pursuant to the provisions of the preceding paragraph, if no interested party states an objection during the period of time under that paragraph, the person specified in the items of paragraph (2) of the preceding Article may deliver Monies, etc. under paragraph (2) of the same Article to the person who made the request under the preceding paragraph.
(3)The costs of the public notice under the provisions of paragraph (1) are borne by the person who makes the request under that paragraph.
Subsection 3 Registration of Lost Share Certificate
(Register of Lost Share Certificates)
Article 221A Share Certificate-Issuing Company (including a Stock Company, if one year has not elapsed from the day immediately following the day on which the Stock Company has effected an amendment to the articles of incorporation to abolish provisions of the articles of incorporation to the effect that it issues share certificates for its shares (or, for a Company with Class Shares, shares of all classes); hereinafter the same applies in this Subsection (excluding Article 223, Article 227 and Article 228, paragraph (2))) must prepare a register of lost share certificates and enter or record the following information (hereinafter in this Subsection referred to as "Information Required to Be Entered in the Lost Share Certificates Register") in the same:
(i)the serial numbers of the share certificates relating to the request under the provisions of Article 223 (including share certificates that have become invalid under the provisions of Article 218, paragraph (2) or Article 219, paragraph (3), and share certificates representing shares in cases where a judgment upholding a claim seeking invalidation of the share issue or the disposition of such shares has become final and binding; hereinafter the same applies in this Subsection (excluding Article 228));
(ii)the names and addresses of persons who have lost share certificates under the preceding item;
(iii)the names and addresses of persons entered or recorded in the shareholder register as the shareholders or Registered Pledgees of Shares of the shares represented by the share certificates (hereinafter in this Subsection, referring to as "Registered Holder") under paragraph (1); and
(iv)the day on which the matters listed in the preceding three paragraphs are stated or recorded for the share certificates provided for in paragraph (1) (hereinafter in this Subsection referred to as "Day of Registration of Loss of Share Certificate").
(Entrusting a Person with Administering the Lost Share Certificates Register)
Article 222For the purpose of the application of the provisions of Article 123 to a Share Certificate-Issuing Company, in that Article, "of the shareholder register" is read as "of the shareholder register and the lost share certificates register", and "keeping the shareholder register" is read as "keeping the shareholder register and the lost share certificates register".
(Requests for Registration of Lost Share Certificate)
Article 223A person that loses a share certificate may request the Share Certificate-Issuing Company, pursuant to the provisions of Ministry of Justice Order, to enter or record the Information Required to Be Entered in the Lost Share Certificates Register in the Lost Share Certificates Register with respect to that share certificate (hereinafter referred to as the "Registration of a Lost Share Certificate").
(Notices to Registered Holders)
Article 224(1)In cases where a Share Certificate-Issuing Company has effected the Registration of Lost Share Certificate in response to a request under the provisions of the preceding Article, if the person entered or recorded in the lost share certificates register as the person that lost the share certificates relating to such request (hereinafter in this Subsection referred to as "Registrant of Lost Share Certificate") is not the Registered Holder of the shares represented by such share certificates, the Share Certificate-Issuing Company must, without delay, notify such Registered Holder to the effect that the Share Certificate-Issuing Company has effected the Registration of Lost Share Certificates for such share certificates, and of the matters listed in Article 221, items (i), (ii) and (iv).
(2)In cases where share certificates have been submitted to the Share Certificate-Issuing Company in order to exercise rights with respect to the shares, if the Registration of Lost Share Certificate has been effected for such share certificates, the Share Certificate-Issuing Company must, without delay, notify the person who submitted such share certificates to the effect that the Registration of Lost Share Certificate has been effected for such share certificates.
(Filing of Application to Cancel by Holders of Share Certificate)
Article 225(1)A person who holds share certificates subject to the Registration of Lost Share Certificate (excluding the Registrant of Lost Share Certificate for such share certificates) may file an application with the Share Certificate-Issuing Company for the cancellation of such Registration of Lost Share Certificate, as prescribed by Ministry of Justice Order; provided, however, that this does not apply if one year has elapsed from the day immediately following the Day of Registration of the Loss of Share Certificate.
(2)A person who intends to make an application under the provisions of the preceding paragraph must submit the share certificates referred to in that paragraph to the Share Certificate-Issuing Company.
(3)A Share Certificate-Issuing Company that has received an application under the provisions of paragraph (1) must, without delay, notify the Registrant of Lost Share Certificate referred to in that paragraph of the name and address of the person who made the application under the provisions of that paragraph, and of the serial numbers of the share certificates referred to in that paragraph.
(4)On the day on which two weeks have elapsed from the day of the notice under the provisions of the preceding paragraph, the Share Certificate-Issuing Company must cancel the Registration of Lost Share Certificate relating to share certificates submitted pursuant to the provisions of paragraph (2). In such cases, the Share Certificate-Issuing Company must return such share certificates to the person who filed the application under the provisions of paragraph (1).
(Filing of Application to Cancel by Registrant of Lost Share Certificates)
Article 226(1)A Registrant of Lost Share Certificate may file an application with the Share Certificate-Issuing Company, as prescribed by Ministry of Justice Order, to cancel the Registration of Lost Share Certificate (excluding the Registration of Lost Share Certificate for share certificates submitted under the provisions of paragraph (2) of the preceding Article in cases where an amendment is effected to the articles of incorporation to abolish provisions of the articles of incorporation to the effect that the Share Certificate-Issuing Company issues share certificates for its shares (or, for a Company with Class Shares, shares of all classes)).
(2)A Share Certificate-Issuing Company that has received an application under the provisions of the preceding paragraph must cancel the Registration of Lost Share Certificate relating to such application on the day of the receipt of such application.
(Cancellation of Registration of Lost Share Certificate Where Provisions of Articles of Incorporation to Issue Share Certificates Are Abolished)
Article 227In cases where a Share Certificate-Issuing Company amends the articles of incorporation to abolish provisions of the articles of incorporation to the effect that the Share Certificate-Issuing Company issues share certificates for its shares (or, for a Company with Class Shares, shares of all classes), the Share Certificate-Issuing Company must cancel the Registration of Lost Share Certificate (excluding registrations for share certificates submitted under the provisions of Article 225, paragraph (2) only if the Registrant of Lost Share Certificate is the Registered Holder of the shares relating to the share certificates subject to such Registration of Lost Share Certificate) on the day of the effectuation of such amendment to the articles of incorporation.
(Invalidation of Share Certificate)
Article 228(1)Share certificates subject to the Registration of Lost Share Certificate (excluding registrations that have been cancelled) become invalid on the day on which one year has elapsed from the day immediately following the Day of Registration of Lost Share Certificate.
(2)In cases where share certificates become invalid under the provisions of the preceding paragraph, the Share Certificate-Issuing Company must reissue share certificates to the Registrant of Lost Share Certificate for such share certificates.
(Relationship with Procedures for Notices Seeking Objections)
Article 229(1)In cases where a Registrant of Lost Share Certificate submits a request under Article 220, paragraph (1), the Share Certificate-Issuing Company may give public notice pursuant to the provisions of that paragraph only if the last day of the period under that paragraph arrives before the day on which one year has elapsed from the day immediately following the Day of Registration of Lost Share Certificate.
(2)If a Share Certificate-Issuing Company gives public notice under the provisions of Article 220, paragraph (1), such Share Certificate-Issuing Company must cancel the Registration of Lost Share Certificate for the share certificates relating to such public notice on the day of such public notice.
(Effect of Registration of Lost Share Certificate)
Article 230(1)A Share Certificate-Issuing Company may not state or record the names and addresses of the persons who acquired shares represented by share certificates subject to the Registration of Lost Share Certificate until the earliest of the following days (hereinafter in this Article referred to as the "Day of Cancellation of Registration"):
(i)the day on which such Registration of Lost Share Certificate is cancelled; or
(ii)the day on which one year has elapsed from the day immediately following the Day of Registration of Lost Share Certificate.
(2)A Share Certificate-Issuing Company may reissue share certificates subject to the Registration of Lost Share Certificate only after the Day of Cancellation of Registration.
(3)If a Registrant of Lost Share Certificate is not the Registered Holder of the shares represented by the share certificates subject to the Registration of Lost Share Certificate, the shareholders of such shares may not exercise voting right at a shareholders meeting or General Meeting of Class Shareholders until the Day of Cancellation of Registration.
(4)An auction pursuant to the provisions of Article 197, paragraph (1) or a sale pursuant to the provisions of paragraph (2) of that Article may not be effected with respect to shares represented by share certificates subject to the Registration of Lost Share Certificate.
(Keeping and Making Available for Inspection of the Lost Share Certificates Register)
Article 231(1)A Share Certificate-Issuing Company must keep the lost share certificates register at its head office (or, if it has a shareholder register administrator, at its business office).
(2)Any person may submit the following requests at any time during the business hours of a Share Certificate-Issuing Company with respect to the lost share certificates register (limited to the portion in which such person has an interest). In such cases, the reasons for such request must be disclosed:
(i)if the lost share certificates register has been prepared in writing, a request for the review or copying of such document;
(ii)if the lost share certificates register has been prepared as an electronic or magnetic record, a request to inspect or copy anything that is used in a manner prescribed by Ministry of Justice Order to display the information recorded in that electronic or magnetic record.
(Notices to Registrants of Lost Share Certificate)
Article 232(1)It is sufficient for a notice or demand to a Registrant of Lost Share Certificate to be sent by a Share Certificate-Issuing Company to the address of such Registrant of Lost Share Certificate stated or recorded in the lost share certificates register (or, in cases where such Registrant of Lost Share Certificate notifies the Share Certificate-Issuing Company of a different place or contact address for the receipt of notices or demands, to such place or contact address).
(2)The notices or demands referred to in the preceding paragraph are deemed to have arrived at the time when such notice or demand should normally have arrived.
(Exception to Application)
Article 233The provisions of Part IV of the Non-Contentious Cases Procedures Act do not apply to share certificates.
Section 10 Miscellaneous Provisions
(Treatment of Fractional Shares)
Article 234(1)In cases where a Stock Company delivers shares in such Stock Company to the persons listed in the following items when any act listed in such items is carried out, if the number of the shares of such Stock Company that must be delivered to such persons includes a fractional share, the Stock Company must sell the number of shares equivalent to the total sum of the fractional shares by auction (in cases where the total sum includes a fractional share, such fractional share is to be rounded off) and must deliver the proceeds of that auction to such persons in proportion to the fractional shares attributed to them:
(i)the acquisition of shares under the provisions of Article 170, paragraph (1):The shareholders of such Stock Company;
(ii)the acquisition of shares under the provisions of Article 173, paragraph (1):The shareholders of such Stock Company;
(iii)the Allotment of Shares without Contribution provided for in the provisions of Article 185:The shareholders of such Stock Company;
(iv)the acquisition of Share Options pursuant to the provisions of Article 275, paragraph (1):The holders of the Share Options provided for in Article 236, paragraph (1), item (vii), (a);
(v)merger (but only if the Stock Company survives the merger):The shareholders or members of the Company disappearing due to the merger;
(vi)the issuing of shares to be issued at the time of incorporation under merger contracts:The shareholders or members of the Company disappearing due to the merger;
(vii)the acquisition of all Issued Shares of another Stock Company by Share Exchange:The shareholders of the Stock Company that effects the Share Exchange;
(viii)the issuing of shares to be issued at the time of incorporation under Share Transfer plan:The shareholders of the Stock Company that effects the Share Transfer plan.
(2)In lieu of sale by auction under the provisions of the preceding paragraph, a Stock Company may sell shares under that paragraph with a market price in an amount calculated by the method prescribed by Ministry of Justice Order as the market price thereof, and shares under that paragraph without a market price using a method other than auction with the permission of the court. In such cases, if there are two or more directors, the petition for such permission must be filed with the consent of all directors.
(3)For the purpose of the application of the provisions of the preceding paragraph in cases where the shares under paragraph (1) are sold, "of that auction" in paragraph (1) is read as "of that sale".
(4)A Stock Company may purchase some or all of the shares sold pursuant to the provisions of paragraph (2). In such cases, the following matters must be prescribed:
(i)the number of shares to be purchased (or, for a Company with Class Shares, the classes of the shares and the number of shares for each class); and
(ii)the total amount of the monies to be delivered in exchange for the purchase of the shares under the preceding item.
(5)A Company with a Board of Directors must determine the matters listed in each item of the preceding paragraph by a resolution of the board of directors.
(6)The provisions of paragraphs (1) to (4) apply mutatis mutandis to cases where Bonds or Share Options of such Stock Company are delivered to the persons provided for in each item of paragraph (1) when any act listed in such items is carried out.
Article 235(1)If a Share Split or consolidation of shares effected by a Stock Company produces any fractional share in the number of the shares, the Stock Company must sell the number of shares equivalent to the total sum of the fractional shares by auction (in cases where the total sum includes a fractional share, such fractional share is to be rounded off) and must deliver the proceeds of that