Aktuelle Rechtsentwicklung

Forthcoming Legislation

Hiroshi Oda

 

I.     The Bill on the Partial Amendment of the Commercial Code

As has been reported before, the Commercial Code^[1] is to be totally amended next year. The primary focus of the amendment is company law.

The Legislative Advisory Council has been working on this amendment since January 2001. An interim draft^[2] was published in April, and views from various quarters have been invited. In the light of the deepening economic crisis in Japan it was decided that part of the draft which requires urgent attention be submitted to Parliament as a separate Bill this year. This Bill^[3] was submitted to Parliament on 10 October and is expected to come into effect on 1 April 2002, once it is endorsed by Parliament.

The basic issues covered in this bill are as follows:

 

1.    Stock Options

Stock option was introduced in 1997, but there were various restrictions and the system was not necessarily user friendly. The Bill removes the restriction on the scope of those who are entitled to a stock option – at present it is limited to directors and employees of the given company. The ceiling for the number of shares available for the purpose of granting stock option – 10 % of issued shares – is to be removed as well. Matters to be approved by the general shareholders’ meeting will also be simplified.

 

2.    Types of Shares

Companies will be allowed to issue different types of shares in which the right to vote is restricted. At present, shares without a vote has to give the shareholder preference in receiving dividends. It will be possible to issue ordinary shares without a vote by this amendment. The total amount of such shares however, cannot exceed one half of the total number of issued shares.

 

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