I hereby promulgate the Law concerning the Temporary Measures for Dividend of Profits of Corporations and others.
Signed:HIROHITO, Seal of the Emperor
This sixteenth day of the twelfth month of the twenty-second year of Showa (December 16, 1947)
Prime Minister KATAYAMA Tetsu
Law concerning the Temporary Measures for Dividend of Profits of Corporations and others
Article 1. The object of the present Law shall be to make necessary adjustments with respect to dividends and others of profits of corporations in order to make appropriate the distribution of profits of corporations, thereby, to make sound the accounting of corporations and to contribute to a healthy improvement of industries.
Article 2. Corporations shall not pay dividend of profits or surplus in excess of the amount obtained by subtracting the aggregate of sums as prescribed by the following items from the agrregate of the total profits of the business year concerned, (amount transferred from reserves for the business year concerned and profits carried over from the previous business year shall be excluded) and an amount transferred from liability reserve for dividend as provided for by the provisions of Paragraph 3.(hereinafter referred to as liability reserve for dividend):
(1) Total losses of the business year concerned and losses carried over from the previous business year;
(2) In case of issue of stock at above par, the sums in excess of the par value less expenses necessary for such issue, which is profits for the business year concerned;
(3) In case where the price of assets transferred from corporations which is no more existed after merger exceeds the amount of liabilities transferred from such coporation and the amount of payment for stocks which have been given to stockholders of such corporations (including such amount appraised as subscription by personal of such corporation) and cash, such excess which is profit for the business year concerned;
(4) In case where the amount of stocks or the amount of subscription which has been reduce through decrease in capital exceeds the aggregate of the amount used for redemption or repayment of stocks or subscription and the amount of losses to be covered through such decrease in capital, such excess which is profits for the business year concerned;
(5) Of the profits for the business year concerned, the profits resulted from revaluation of assets;
(6) Besides those provided for by the foregoing four items, of profits of corporations for the business year concerned, profits other than those arising form operation of such corporations;
(7) Sums corresponding to the Corporate Tax for the business year concerned.
Sums corresponding to the Corporate Tax referred to in Item 7 of the foregoing paragraph shall be the amount equivalent to the aggregate of the amount of tax obtained by computing the amount of income under the Corporate Tax for the business year concerned less the total of sums as provided for by Item 2 to Item 6 inclusive of the foregoing paragraph according to the provisions of said Law and the amount of tax with respect to capital of such corporations for the business year concerned under said Law computed according to the provisions of said Law.
Corporations may set a saide as a liability reserve for dividend the amount from the liability reserve for dividend which was not used for dividend payment for the business year concerned.
Article 3. Corporations shall not borrow funds for the purpose of paying dividend of profits or surplus, nor shall pay dividend of profits or surplus with any borrowings.
Corporations shall not pay dividend of profits or surplus before they have fulfiled monetary obligations (excluding monetary obligations which companies are not liable to payment in arrear) due on and before the end of the business year concerned.
Article 4. Special accounting companies under the Law concerning the Emergency Measures for the Account of Companies (hereinafter referred to as "special accounting companies" ) which have submitted reorganization plan under the Enterprise Reconstruction and Reorganization Law shall not pay dividend of profits beofore execution of the approved reorganization plan under the Enterprise Reconstruction and Reorganization Law has been completed even when they do not violate the provisions of the foregoing two Articles;provided, however, the above shall not apply to such cases where permission of Minister of Finance is obtained.
Article 5. In case the corporations pay dividend of profits or surplus, they shall prepare a report on settlement and a report on distribution of reserves or profits and file the same with Minister of Finance within 30 days from the determination on the settlement for the business year concerned.
Minister of Finance may designate the form of report as prescribed by the foregoing paragraph and may order to follow such form.
Article 6. Minister of Finance may collect a report on condition of business or property of corporations or may cause competent officials to carry out search inspection in necessary places or may cause the same to audit books, documents and other necessary articles.
In case where competent officials are to carry out search inspection pursuant to the foregoing paragraph, they shall carry identification card with them.
Article 7. In the case of any of the following items, representatives, proxies, servants or other employees of corporation who committed such offences shall be subject to an imprisonment of five (5) years or less or a fine of fifty thousand yen (\50,000.00) or less:
1. When, in violation of the provisions of Paragraph 1 of Article 2, Article 3 or Article 4, they paid dividend.
2. When, in violation of the provisions of Paragraph 1 of Article 3, they borrowed funds.
Under a certain circumstance, both an imprisonment and a fine may be imposed upon persons who committed such offences as provided for by the foregoing paragraph.
Article 8. Persons who failed to make a report as prescribed by Article 6 or made a false report or refused, obstructed or evaded the search inspection of competent officials within any reasoning shall be subject to an imprisonment of one (1) year or less or a fine of ten thousand yen (10,000) or less.
Article 9. In case the representatives, proxies, servents or other employees commit such offences as prescribed by Article 7 or the foregoing Article with respect to the business of thier corporations, no only shall the actual offenders, but also such corporations themselves be subject to a fine as prescribed by the respective foregoing Articles.
Article 10. Directors of corporations or persons similer thereto shall, if they failed to submit a report as prescribed by Article 5 or made a false reprt, be subject to a fine of five thousand (\5,000) or less.
Supplementary Provisions:
The present Law sahll come into force as from the day of its promulgation.
As regards dividend of profits or surplus to be made immediately after the enforcement of the present Law upon approval of stockholder's general meeting or through any other legitimate procedures, an amount as may be approved by Minister of Finance from among profits carried over from the previous business year and amount transferred from reserves for the business year concerned with respect to dividend of profits or surplus concerned may be included in the total profits as provided for by Paragraph 1 of Article 2.
As regards amount of profits which are carried over or of reserves transferred under the foregiong paragraph and which are coming under or are not clear whether not to come under Items 2 to 6 inculsive of Paragraph 1 of Article 2, Minister of Finance may not give approval as provided for by the foregoing paragraph.
The Ordinance concerning Prohibition of or Restriction on Dividend Payment of Companies shall hereby be abrogated.
As regards dividend of profits or surplus determined by the approval of stockholders'general meeting or any other legitimate procedure before the enforcement of the present Law, the old Ordinance shall still be effective even after the enforcement of the present Law.
The old penal provisions shall apply to any conduct which was made before the enforcement of the present Law (as regrads dividend as prescribed by the foregoing paragraph, before the old Ordinance which is valid pursuant to the provisions of said paragraph becomes invalid).
Minister of Finance KURUSU Takeo
Minister of Justice SUZUKI Yoshio
Prime Minister KATAYAMA Tetsu