SCAPIN-1806: APPROVAL TO ABROGATE IMPERIAL ORDINANCE NO. 243 CONCERNING PROHIBITION OF AND RESTRICTIONS ON DIVIDEND PAYMENTS
GENERAL HEADQUARTERS
SUPREME COMMANDER FOR THE ALLIED POWERS
APO 500
22 October 1947
AG 386.7
(22 Oct 47)
ESS/FI
(SCAPIN-1806)
| MEMORANDUM FOR | JAPANESE GOVERNMENT. |
|---|---|
| THROUGH | Central Liaison Office, Tokyo. |
| Subject | Approval to Abrogate Imperial Ordinance No. 243 Concerning Prohibition of and Restriction on Dividend Payments. |
1 Reference are the following:
a. C. L. O. Memorandum No. 6557 (LO 2547), dated 20 August 1947, subject: Application for Permission to Abrogate Imperial Ordinance No. 243 concerning Prohibition of and Restriction on Dividend Payments.
b. Memorandum for the Japanese Government AG 123 (15 Jan 46) ESS/FI, dated 15 January 1946, subject: Restriction on Dividend Payments.
2. Memorandum referred to in paragraph 1b above is hereby resignded.
3. Corporations will be permitted to pay dividends only if the follwing conditions exist:
a. Corporations do not borrow money for the purpose of paying such dividend.
b. Restricted Concerns receive prior approval from the Supreme Commander for the Allied Powers for the declaration and payment of dividends.
c. If reorganization is required under controlling legislation, such reorganization has been completed or prior approval has been obtained from the Supreme Commander for the Allied Powers for the declaration and payment of dividends.
d. Dividend is to be paid from earned surplus or current earnings.
e. Dividend paying company has no past due obligations.
f. Corporations shall be required to file a report of dividends paid as well as current financial statement after each dividend is paid with the Ministry of Finance.
4. Earned surplus as used in 3d above shall mean surplus created through either current or past earnings from operations of corporation.
5. Direct communication between the Ministry of Finance and the Economic and Scientific Section of General Headquarters of the Supreme Commander for the Allied Powers is authorized to implement this memorandum.
FOR THE SUPREME COMMANDER:
R. M. LEVY,
Colonel, AGD,
Adjutant General.
MEMO FOR RECORD: (SCAPIN - 1806)
WKL/TEB/IJB/fmm
17 October 1947
1. C. L. O. M. No. 6557 (LO 2547), dated 20 August 1947, subject: Application for Permission to Abrogate Imperial Ordinance No. 243 concerning Prohibition of and Restriction on Dividend Payment requests permission to abolish said ordinance. Imperial Ordinance 243, dated 20 Apr 1946 restricts the payment of dividends to 5% per annum.
2. Memorandum ^for JG from GHQ, SCAP, AG 123 (15 Jan 46) ESS/FI, dated 15 January 1946, subject: Restrictions on Dividend Payments, prohibits the JG from authorizing corporations to pay dividends in excess of 5% per annum if the dividend paying company has any claims against the JG for war insurance or Government indemnity, or is a restricted concern.
3. Memorandum referred to in paragraph 2 above was dispatched to the JG in order to prevent corporations from dissipating their assets through the payment of dividends pending determination of the disposition of Government war insurance and indemnities, as well as to allow for time to institute certain controls over restricted concerns. The passage of the Enterprise Reconstruction and Reorganization Law by the Japanese Diet disposes of the war insurance and indemnity claims of corporations and as restricted concerns emerge from their reorganizations, the need for such restrictions of dividends will disappear.
4. Corporations in Japan are currently paying 6% and 7% on corporate debenture financing. Therefore if ownership of voting stock is to be sufficiently attractive so that widespread distribution of corporate ownership will be accomplished, it is desirable to remove the restriction limiting the paying of dividends in excess of 5% per annum.
5. This is an administrative matter and does not require the surveillance of the Eighth Army.
6. The interests of Korea are not concerned.
7. Concurrences: ESS/AC (See c/n attached).
8. No Cabinet Order required per Legal Section.
W. K. L.
