Companies Act

In 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):

if relevant share issue or disposition of treasury shares violates laws and regulations or the articles of incorporation; or

if relevant share issue or disposition of treasury shares is effected by using a method which is extremely unfair.

The provisions of the proviso to Article 93, paragraph (1) 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 referred to in the Article 205, paragraph (1).

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 relevant shares, the subscriber for shares for subscription may not rescind the subscription for shares for subscription on the grounds of mistake, fraud or duress.

In the cases set forth in the following items, subscribers for shares for subscription are liable to a stock company for payment of the amount provided for in relevant items:

if 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 nominating committee, etc.):the amount equivalent to the difference between the amount to be paid in and the fair value of the shares for subscription;

if 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 relevant shortfall.

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 the 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).

In the cases set forth 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 specified in relevant items:

executive directors who carried out duties regarding the solicitation of subscribers for relevant shares for subscription (or, for a company with 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 the executive directors;

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 relevant shareholders meeting;

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 nominating committee, etc., directors or executive officers) who submitted proposals to relevant board of directors meeting.

Notwithstanding the provisions of the preceding paragraph, the directors, etc. are not liable for property contributed in kind under that paragraph in the cases set forth below:

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

relevant directors, etc. have proven that they did not fail to exercise due care with respect to the performance of their duties.

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 if relevant verifying person has proven that the verifying person did not fail to exercise care with respect to the submission of the verification.

If 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 set forth as follows bear obligations provided for in relevant items with respect to relevant property contributed in kind, theses persons will be joint and several obligors:

directors, etc.:the obligations under paragraph (1); and

verifying persons:the obligations under the main clause of the preceding paragraph.

In the cases set forth in the following items, subscribers for shares for subscription are liable to a stock company for performing the acts specified in those items:

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

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 (if 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).

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.

In the cases set forth 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 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.

If 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.