Companies Act

Notwithstanding the provisions of paragraph (1) of the preceding Article, the dismissal of director 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 the election.

Notwithstanding the provisions of the preceding paragraph, if there are provisions 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.

In the cases provided for in the preceding paragraph, an incorporator is entitled to one vote for each one share issued at incorporation of that class for which the performance of contributions is fulfilled; provided, however, that, if 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 that class.

Notwithstanding the provisions of the preceding paragraph, if a director at incorporation is to be dismissed pursuant to the provisions of paragraph (2) above, and 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 relevant 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 relevant directors.

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 that Article. In these cases, the term "majority" in paragraph (1) and paragraph (2) is deemed to be replaced with "majority of two thirds or more".

If, at the incorporation of a stock company, it issues shares of a class for which the matters set forth in Article 108, paragraph (1), item (viii) are provided, and 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 set forth in the following items as the features of the shares of relevant class, the matters provided for in each of those 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 relevant class) of the incorporators who subscribe for the shares issued at incorporation of relevant class in accordance with the applicable provisions of the articles of incorporation:

election or dismissal of some or all of the directors (excluding director of a company with audit and supervisory committee):election or dismissal of directors at incorporation who are to become relevant directors;

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;

election or dismissal of some or all of the accounting advisors:election or dismissal of accounting advisors at incorporation who are to become relevant accounting advisors;

election or dismissal of some or all of the company auditors:election or dismissal of company auditors at incorporation who are to become relevant company auditors; and

election or dismissal of some or all of the financial auditors:election or dismissal of financial auditors at incorporation who are to become relevant financial auditors.

In the cases provided for in the preceding paragraph, an incorporator is entitled to one vote for each one share issued at incorporation of that class for which the performance of contributions is fulfilled; provided, however, that, if 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 relevant class.

The directors at incorporation (referring to the directors at incorporation and company auditor at incorporation if the stock company to be incorporated is a company with company auditor; hereinafter the same applies in this Article) must investigate the following matters without delay after their election:

that, with respect to the property contributed in kind in the cases set forth in Article 33, paragraph (10), item (i) or item (ii) (if set forth in that item, limited to the securities under that item), the value specified or recorded in the articles of incorporation is reasonable;

that the verification provided for in Article 33, paragraph (10), item (iii) is appropriate;

that the performance of contributions has been fulfilled; and

that, beyond the matters set forth in the preceding three items, the procedures for the incorporation of the stock company do not violate laws and regulations or articles of incorporation.

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 set forth in any item of that paragraph, directors must give notice to that effect to the incorporator;

If the stock company to be incorporated is a company with 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 to that effect and a description of the contents.

If the stock company to be incorporated is a company with board of directors (excluding a company with nominating committees, etc.), the directors at incorporation must appoint among the directors at incorporation (if the stock company to be incorporated is a company with 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").

The directors at incorporation may remove the representative director at incorporation at any time prior to the formation of the stock company.

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.

If the stock company to be incorporated is a company with nominating committee, etc., the director at incorporation must take the following measures:

appoint the following persons (in the following paragraph referred to as "committee members at incorporation") among the directors at incorporation:

persons who are to be members of the nominating committee at incorporation of the stock company;

persons who are to be committee members of the audit committee at incorporation of the stock company;

persons who are to be committee members of the remuneration committee at incorporation of the stock company;

elect persons who are to be the executive officers at incorporation of the stock company (hereinafter referred to as "executive officers at incorporation"); and

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, the person is deemed to have been appointed as the representative executive officer at incorporation.

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.

The decision pursuant to the provisions of the preceding two paragraphs is made by a majority of the directors at incorporation.

A stock company is formed by the registration of the incorporation at the location of its head office.

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.

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.

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

After the formation of the stock company, the incorporator may not rescind the subscription for shares issued at incorporation on the grounds of mistake, fraud or duress.

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 relevant 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 relevant stock company for the payment of the amount of relevant shortfall.

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 that paragraph with respect to the property contributed in kind in the following cases:

where the investigation by the inspector under Article 33, paragraph (2) has been carried out with respect to the matters set forth in Article 28, item (i) or item (ii); or

where relevant incorporators or directors at incorporation prove that they did not fail to exercise due care with respect to the performance of their duties.

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 that paragraph; provided, however, that this does not apply if relevant verifying person prove that the verifying person did not fail to exercise due care with respect to the carrying out relevant verification.

In the cases set forth in the following items, incorporators are liable to perform the act specified in those items for a stock company:

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

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 (if 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).

In the cases set forth 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 if 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.

If 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 that paragraph, the persons will be joint and several obligors.

In the cases set forth 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 holders of the shares issued at incorporation falsified the performance of contribution only after the payment or delivery specified in those items or the payment prescribed in paragraph (2) is made.

A person who accepts transfer of shares issued at incorporation as referred to in the preceding paragraph or a right to become their shareholders may exercise the right of shareholders at incorporation and holders regarding relevant 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.