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Article 56-1
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To issue employee stock warrants that are not subject to the exercise price restriction set out in Article 53, an issuer is required to obtain the consent of at least two-thirds of the voting rights represented at a shareholders meeting attended by shareholders representing a majority of the total issued shares. The issuer is allowed to register multiple issues over a period of 1 year from the date of the shareholders resolution [provided that the combined number of subscribable shares does not exceed the number approved by the shareholders].
To conduct the matter under the preceding paragraph, the issuer shall be required to specify the following information in the notice of reasons for convening the shareholders meeting, and may not raise the matter by means of an extraordinary motion:
- The total number of employee stock warrants to be issued, the number of shares subscribable per stock warrant, and the number of new shares that will have to be issued to cover exercise of the warrants or the number of shares that will have to be repurchased in accordance with the provisions of Article 28-2 of the Act.
- The criteria for determination of the exercise price, and the reasonableness of the price.
- Qualification requirements for warrant subscribers, and the number of shares they are allowed to subscribe for.
- The reasons why it is necessary to issue the employee stock warrants.
- Factors affecting shareholders' equity:
- The expensable amount, and dilution of the company's earnings per share.
- Where previously issued shares will be used to cover the warrants, explain what financial burden this will impose on the company.
Matters required by paragraph 1 to be submitted for resolution at a shareholders meeting shall be set out in the company's articles of incorporation.
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