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Article 10
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A company which, under the circumstances described in Article 28-2, paragraph 1, subparagraph 1 of the Securities and Exchange Act, repurchases its own shares for the purpose of transferring them to its employees, shall first adopt Rules for Transfer of Shares.
At least the below listed matters shall be recorded in the Rules for Transfer of Shares referred to in the preceding paragraph:
- Type of shares to be transferred, a description of the rights attaching thereto, and any restrictions on such rights.
- Transfer period.
- Eligibility requirements for transferees and transfer review and approval procedures.
- Procedures for transfer of shares.
- Agreed transfer price per share. The price may not be less than the average actual share repurchase price, unless, prior to transfer, the number of the company's issued common shares increases (in which case a price adjustment commensurate with the ratio of the increase in issued shares is allowed), or the company is allowed under the provisions of Article 10-1 to transfer shares to employees at less than the average actual share repurchase price.
- Rights and obligations subsequent to execution of the transfer.
- Other rights and obligations related to the company and its employees.
The qualifications and conditions for transferees under subparagraph 3 of the preceding paragraph shall include at least such matters as individual performance and results; the transfer review and approval procedures shall include at least submission to and approval by the remuneration committee or audit committee, followed by submission to and approval by the board of directors.
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Article 10-1
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To transfer shares to employees at less than the average actual share repurchase price, a company must have obtained the consent of at least two-thirds of the voting rights present at the most recent shareholders meeting attended by shareholders representing a majority of total issued shares, and must have listed the following matters in the notice of reasons for that shareholders meeting; it may not raise the matter by means of an extraordinary motion:
- The exercise price, the valuation percentage, the bases of calculations, and the reasonableness thereof.
- The number of shares to be transferred, the purpose, and the reasonableness thereof.
- Qualification requirements for employees subscribing to shares, and the number of shares they are allowed to subscribe for.
- Factors affecting shareholders' equity:
- The expensable amount, and dilution of the company's earnings per share.
- Explain what financial burden will be imposed on the company by transferring shares to employees at less than the average actual share repurchase price.
For all successive instances where share transfers to employees as provided for in the preceding paragraph have been approved by shareholders meetings and the shares have been transferred, the cumulative number of shares thus transferred may not exceed 5 percent of the total issued shares of the company, and the cumulative number of shares thus subscribed by any single employee may not exceed 0.5 percent of the total issued shares of the company.
Matters that a company is required by paragraph 1 to submit for a shareholders meeting resolution shall be set out in its articles of incorporation.
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