Companies Act

If residual assets consist of property other than monies, shareholders have the right to demand distribution of monies (meaning the rights to demand that the liquidating stock company deliver monies in lieu of relevant residual assets; hereinafter the same applies in this Article). In these cases, the liquidating stock company must prescribe the following matters by a resolution of liquidators (or, for a company with board of liquidators, by a resolution of board of liquidators):

the period during which rights to demand distribution of monies can be exercised; and

if there is any arrangement that no residual assets are to be allotted to shareholders who hold less than certain number of shares, a statement to that effect and that number.

In the cases provided for in the preceding paragraph, the liquidating stock company must notify the shareholders of the matters set forth in item (i) of that paragraph no later than 20 days prior to the last day of the period referred to that item.

A liquidating stock company must pay to shareholders who exercised rights to demand distribution of monies, in lieu of the residual assets allotted to relevant shareholders, monies equivalent to the value of relevant residual assets. In these cases, the amount provided for in each of the following items for the case categories set forth in each the item is the value of relevant residual assets:

if relevant residual assets consist of property with a market price:the amount calculated in a manner prescribed by Ministry of Justice Order as the market price of relevant residual assets;

in cases other than those set forth in the preceding item:the amount determined by the court in response to the petition by the liquidating stock company.

If the number in paragraph (1), item (ii) of the preceding Article (hereinafter in this Article referred to as "minimum number of shares") is prescribed, a liquidating stock company must pay to the shareholders who hold shares in a number less than the minimum number of shares (hereinafter in this Article referred to as "below minimum shareholding") the monies equivalent to the amount which is obtained by multiplying the amount prescribed as the value of the residual assets allotted to the shareholders who hold shares in the minimum number of shares in accordance with the applicable provisions of the second sentence of paragraph (3) of the preceding Article by the ratio of the number shares in relevant below minimum shareholding to the minimum number of shares.

If the administration of a liquidation has concluded, the liquidating stock company must prepare the settlement of accounts pursuant to the provisions of Ministry of Justice Order without delay.

At a company with board of liquidators, the settlement of accounts must be approved by the board of liquidators.

Liquidators must submit or provide the settlement of accounts (or, if the provisions of the preceding paragraph apply, the settlement of accounts approved under that paragraph) to the shareholders meeting and obtain the approval of the same.

If the approval is given under the preceding paragraph, an exemption is deemed to have been given for the liquidators' liability for failure to perform their duties; provided, however, that this does not apply if there has been misconduct regarding the execution of the liquidators' duties.

A liquidator (or, for a company with board of liquidators, the liquidators set forth in each item of Article 489, paragraph (7)) must retain the books of the liquidating stock company as well as any material data regarding the business and liquidation of the same (hereinafter in this Article referred to as "accounting materials") for a period of ten years from the time of the registration of the completion of the liquidation at the location of head office of the liquidating stock company.

The court may, in response to the petition by the interested parties, appoint a person to act on behalf of the liquidator in the preceding paragraph in retaining the accounting materials. In these cases, the provisions of that paragraph do not apply.

The person appointed pursuant to the provisions of the preceding paragraph must retain the accounting materials for a period of ten years from the time of the registration of the completion of the liquidation at the location of head office of the liquidating stock company.

Expenses regarding the procedures for the appointment under the provisions of paragraph (2) are borne by the liquidating stock company.

The provisions set forth below do not apply to liquidating stock companies:

Article 155;

in Chapter V, Section 2, Subsection 2 (excluding Article 435, paragraph (4), Article 440, paragraph (3), Article 442 and Article 443) and Subsection 3 as well as Section 3 through Section 5; and

in Part V, Chapter IV, Chapter IV-2 and the portion relating to the procedures of share exchange, share transfer and partial share exchange in Chapter V of the same Part.

The provisions of Chapter II, Section 4-2 do not apply to cases where a subject company is a liquidating stock company.

A liquidating stock company may acquire the shares of relevant liquidating stock company, limited to cases where acquisition is effected without consideration or in other cases prescribed by Ministry of Justice Order.

If the court finds that the grounds set forth below exist with respect to a liquidating stock company, it orders relevant liquidating stock company to commence special liquidation in response to the filing under the provisions of Article 514:

the existence of circumstances prejudicial to the implementation of the liquidation; or

the suspicion that the liquidating stock company is insolvent (meaning the status where the assets of the liquidating stock company is not sufficient to fully discharge its debts; the same applies in paragraph (2) of the following Article).

Creditors, liquidators, company auditors or shareholders may file a petition for the commencement of special liquidation.

If it is suspected that a liquidating stock company is insolvent, liquidators must file a petition for the commencement of the special liquidation.

If a petition is filed for the commencement of a special liquidation, if the court finds it necessary, it may, at the petition of the creditors, liquidators, company auditors, or shareholders, or ex officio, order that the following procedures or process be suspended until a decision is reached with respect to the petition for the commencement of special liquidation; provided, however, that, with respect to the bankruptcy procedures set forth in item (i), this is limited to cases where the ruling to commence bankruptcy procedures has not yet been issued, and with respect to the procedures set forth in item (ii) or the disposition set forth in item (iii), this is limited to cases where the creditors petitioning for relevant procedures or the persons carrying out the process are not likely to suffer undue loss:

bankruptcy procedures in respect of the liquidating stock company; or

procedures for a judicial enforcement, provisional attachment or provisional disposition (excluding those based on general liens or other claims that have general priority) that is already being effected in respect of the assets of the liquidating stock company;

a disposition effected in the same way as a disposition to collect national tax arrears, which is based on a claim in respect of foreign taxes subject to mutual assistance (meaning foreign taxes subject to mutual assistance as prescribed in Article 11, paragraph (1) of the Act on Special Provisions of the Income Tax Act, the Corporation Tax Act, and the Local Tax Act Attendant upon the Enforcement of Tax Treaties (Act No. 46 of 1969; in Articles 518-2 and 571, paragraph (4) referred to as the "Act on Special Provisions for the Enforcement of Tax Treaties"); the same applies hereinafter), and which is already being effected against the assets of the liquidating stock company (in Article 515, paragraph (1) referred to as a "disposition to collect foreign tax arrears").

The provisions of the preceding paragraph also apply if an immediate appeal as referred to in Article 890, paragraph (5) is filed against a ruling to dismiss the petition for the commencement of special liquidation.

A person who filed a petition for the commencement of special liquidation may withdraw relevant petition limited to if it is before the order to commence special liquidation. In these cases, the permission of the court must be obtained if it is after an order to suspend has been issued pursuant to the provisions of the preceding paragraph, a provisional order has been issued pursuant to the provisions of Article 540, paragraph (2) or a disposition has been effected pursuant to the provisions of Article 541, paragraph (2).

If a petition for the commencement of special liquidation has been filed, if the court finds that there are grounds that warrant the commencement of special liquidation, the court orders the commencement of special liquidation, except in cases falling under any of the following:

if no advance has been made for the expense for the special liquidation procedures;

if it is clear that there is no expectation of the completion of the liquidation, even by special liquidation;

if it is clear that invoking the special liquidation is contrary to the general interest of creditors; or

if the petition for the commencement of special liquidation has been filed with improper purpose, or the petition was otherwise not filed in good faith.

If an order to commence special liquidation is issued, a petition may not be filed for commencement of bankruptcy procedures, a judicial enforcement, provisional attachment, provisional disposition or disposition to collect foreign tax arrears, against the assets of a liquidating stock company, nor for property disclosure procedures (limited to those in response to a petition under Article 197, paragraph (1) of the Civil Execution Act (Act No. 4 of 1979); hereinafter the same applies in this paragraph) or procedures for acquiring information from a third party (limited to those pursuant to a petition under Article 205, paragraph (1), item (i), Article 206, paragraph (1), or Article 207, paragraph (1); hereinafter the same applies in this paragraph), and any bankruptcy procedures (limited to those in respect of which a ruling to commence bankruptcy procedures has not yet been issued), judicial enforcement, provisional attachment, or provisional disposition procedures, or disposition to collect foreign tax arrears already being effected against the assets of the liquidating stock company, as well as any property disclosure procedures and procedures for acquiring information from a third party, are suspended; provided, however, that this does not apply with respect to a judicial enforcement, provisional attachment, provisional disposition, property disclosure procedures, or procedures for acquiring information from a third party pursuant to general liens or other claims that have general priority.

If an order to commence special liquidation has become final and binding, any procedures or dispositions suspended pursuant to the provisions of the preceding paragraph become ineffective in relation to the proceedings for the special liquidation.

If an order to commence special liquidation is issued, the period of prescription is not completed with respect to the claims of creditors of the liquidating stock company (excluding general liens and other claims that have general priority, claims arising against the liquidating stock company due to special liquidation proceedings, and claims against the liquidating stock company for expenses in connection with special liquidation proceedings; hereinafter in this Section referred to as "agreement claims") until the day on which two months have elapsed since the day of the registration of the rescission of the commencement of special liquidation or since the day of the registration of conclusion of special liquidation provided for in Article 938, paragraph (1), item (ii) or item (iii).