Companies Act

Except for the cases set forth in each item of Article 238, paragraph (3), for the purpose of the application of the provisions of paragraph (2) of that Article to a public company, the term "shareholders meeting" in that paragraph is deemed to be replaced with "board of directors meeting". In these cases, the provisions of the preceding Article do not apply.

If a public company has determined subscription requirements by a resolution at a board of directors meeting provided for in Article 238, paragraph (2) applied following the deemed replacement of terms pursuant to the provisions of the preceding paragraph, the public company must notify the shareholders of relevant subscription requirements no later than two weeks prior to the day of allotment.

A public notice may be substituted for the notice under the provisions of the preceding paragraph.

The provisions of paragraph (2) 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 day of allotment, a notice under Article 4, paragraphs (1) through (3) of the Financial Instruments and Exchange Act.

In carrying out solicitation under Article 238, paragraph (1), the stock company may grant entitlement to the allotment of share options to its shareholders. In these cases, in addition to the subscription requirements, the stock company must prescribe the following matters:

a statement to the effect that the stock company will grant entitlement to the allotment of the share options for subscription of that stock company (or, for a company with class shares, the share options the shares underlying which have the class identical to the class of the shares held by relevant shareholders) to shareholders subject to the application provided for in paragraph (2) of the following Article;

the day for the application for subscription for the share options for subscription referred to in the preceding item.

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 share options for subscription in accordance with the number of shares they hold; provided, however, that if the number of the share options for subscription to be allotted to relevant shareholders includes a fractional share, it is to be rounded off.

If the stock company prescribes the matters set forth in each item of paragraph (1), the subscription requirements and the matters set forth in each item of that paragraph must be prescribed in accordance with the categories of the cases set forth in the following items, by the methods provided for in each of these items:

if there are provisions in the articles of incorporation to the effect that relevant subscription requirements and the matters set forth 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 board of directors):a decision of the directors;

if there are provisions in the articles of incorporation to the effect that relevant subscription requirements and the matters set forth in each item of paragraph (1) may be prescribed by a resolution of the board of directors meeting (excluding the cases set forth in the following item):a resolution of the board of directors meeting;

if the stock company is a public company:a resolution of the board of directors meeting;

in cases other than those set forth in the preceding three items:a resolution at a shareholders meeting;

if a stock company determines the matters set forth in each item of paragraph (1), the stock company must notify the shareholders under item (i) of that paragraph (excluding relevant stock company) of the following matters no later than two weeks prior to the date provided for in item (ii) of that paragraph:

the subscription requirements;

the features and number of share options for subscription to be allotted to relevant shareholders; and

the date provided for in paragraph (1), item (ii).

The provisions of Article 238, paragraphs (2) through (4) and the preceding two Articles do not apply in cases where entitlement to the allotment of share options is granted to the shareholders under the provisions of paragraph (1) through paragraph (3) hereof.

A stock company must notify persons who intend to subscribe for share options for subscription in response to solicitation in Article 238, paragraph (1) of the matters set forth in the following items:

the trade name of the stock company;

the subscription requirements;

if any payment is to be made when the share options are exercised, the place where payments are handled;

beyond what is set forth in the preceding three items, any matter prescribed by Ministry of Justice Order.

A person who applies to subscribe for the share options for subscription in response to solicitation in Article 238, paragraph (1) must deliver a document giving the following information:

the name and address of the person applying;

the number of share options for subscription for which the person intends to subscribe.

A person who applies 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 stock company and pursuant to the provisions of Cabinet Order. In these cases, the person applying is deemed to have delivered the document under that paragraph.

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 specifies the matters set forth in each item of that paragraph to the person who intends to submit the application under 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 share options for subscription are compromised.

If there are changes in the matters set forth in each item of paragraph (1), the stock company must immediately notify persons who have submitted applications under paragraph (2) (hereinafter in this subsection referred to as "applicants") thereof and of the matter so changed.

If share options for subscription are attached to bonds with share option, applicants (limited to those who submitted applications solely for share options for subscription) are deemed to have applied for subscription for the bonds with share option to which the share options for subscription relating to that applications are attached.

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, if that applicant notifies the stock company of a different place or contact address for the receipt of notices or demands, to the place or contact address).

The notices or demands referred to in the preceding paragraph are deemed to have arrived at the time when that notice or demand should normally have arrived.

A stock company must specify the persons from among the applicants the persons to whom share options for subscription will be allotted, and determine the number of share options for subscription to be allotted to those persons. In these cases, the stock company may reduce the number of share options for subscription the stock company allots to these applicants below the number under paragraph (2), item (ii) of the preceding Article.

In the following cases, 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 board of directors); provided, however, that this does not apply if it is otherwise provided for in the articles of incorporation:

if some or all of the shares underlying the share options for subscription are shares with restriction on transfer; or

if the share options for subscription are share options with restriction on transfer (meaning share options for which it is provided that the acquisition of relevant share options by transfer requires the approval of the stock company; hereinafter the same applies in this Chapter).

The stock company must notify the applicants, no later than the day immediately preceding the day of allotment, of the number of the share options for subscription that will be allotted to relevant applicants (if relevant share options for subscription are attached to bonds with share option, including a description of the classes of bonds with respect to relevant bonds with share option and the total amount of money for each class of bonds).

If the stock company has granted entitlement to the allotment of share options pursuant to the provisions of Article 241 to its shareholders, if the shareholders do not submit, no later than the date under paragraph (1), item (ii) of that Article, applications under paragraph (2) of the preceding Article, relevant shareholders will lose the entitlement to the allotment of share options for subscription.

The provisions of the preceding two Articles do not apply if a person who intends to subscribe for share options for subscription executes a contract for subscription for the total number of those share options.

For the purpose of the application of the preceding paragraph if the share options for subscription are those attached to bonds with share option, the phrase "for subscription for the total number of those share options" in that paragraph is deemed to be replaced with "for subscription for the total number of those share options and the total amount of the bonds to which relevant share options for subscription are attached".

In the case prescribed in paragraph (1), in the following cases, a stock company must obtain approval for the contact set forth in the same paragraph by the resolution at the shareholders meeting (or at a board of directors meeting for a company with board of directors); provided, however, that this does not apply to cases where it is otherwise provided for in the articles of incorporation:

if all or part of shares underlying share options for subscription are shares with restriction on transfer; and

if share options for subscription are share options with restriction on transfer.

If the rate of the number set forth in item (i) to the number set forth in item (ii) exceeds 50% with regard to an applicant who receives allotment of share options for subscription or a subscriber of all of share options for subscription pursuant to the contract set forth in paragraph (1) of the preceding Article (hereinafter collectively referred to as "subscriber" in this paragraph), a public company must notify to shareholders name and address of the subscriber (hereinafter referred to as "special subscriber" in this paragraph and paragraph (5)), the number set forth in item (i) with respect to the special subscriber, and other matters prescribed by Ministry of Justice Order by two weeks before the allotment day; 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 allotment of share options is granted to shareholders pursuant to the provisions of Article 241:

the largest number of voting rights that the subscriber (including its subsidiary company, etc.) will hold when the subscriber becomes a shareholder of shares issued related to shares for subscription that the subscriber subscribed; and

the largest number of voting rights of all shareholders in the case prescribed in the preceding item.

The term "shares issued" as prescribed in item (i) of the preceding paragraph means shares underlying share options for subscription, shares set forth in Article 236, paragraph (1), item (vii), (d) if there are provisions on the matter set forth in (d) of the same item as the content of share options for subscription, and other shares prescribed by Ministry of Justice Order as shares to be issued to a holder of share options for subscription.

The notice pursuant to the provisions of paragraph (1) may be substituted with a public notice.

Notwithstanding the provisions of paragraph (1), if 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 allotment day, 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.

When a shareholder holding one-tenth or more (if any lower proportion is provided for in the articles of incorporation, that proportion) of voting rights 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 options for subscription by a special subscriber (including its subsidiary company, 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 (3) (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 share options for subscription to the special subscriber or for the contract set forth in paragraph (1) of the preceding Article with the special subscriber by the resolution at the shareholders meeting by the day before the allotment day; 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.

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 (if one-third or more of the proportion is stipulated by the articles of incorporation, the proportion or more) and by a majority of the votes of the shareholders present (if any proportion higher than that is provided for in the articles of incorporation, the proportion or more).