SCAPIN-403/1: DISPOSAL AND ACQUISITION OF SECURITIES OF RESTRICTED CONCERNS
GENERAL HEADQUARTERS
SUPREME COMMANDER FOR THE ALLIED POWERS
APO 500
9 November 1948
AG 004
(8 Dec 45)
ESS/AC
(SCAPIN-403/1)
| MEMORANDUM FOR | IMPERIAL JAPANESE GOVERNMENT. |
|---|---|
| THROUGH | Central Liaison Office, Tokyo. |
| Subject | Disposal and Acquisition of Securities of Restricted Concerns. |
1. Reference the following memoranda for the Japanese Government from General Headquarters, Supreme Commander for the Allied Powers:
a. AG 004 (31 Oct. 45) ESS, SCAPIN 215, 31 October 1945, subject: Sale or Transfer of Securities of Certain Business Concerns.
b. AG 004 (8 Dec. 45) E3S/AC, SCAPIN 403, 8 December 1945, subject: Establishment of a Schedule of Restricted Concerns.
c. AG 095 (20 May 47) ESS/AC, SCAPIN 1690, 20 May 1947, subject: Amendments to Regulations Affecting Restricted Concerns.
2. Paragraph 3a of reference memorandum 1b, above, is hereby amended to read as follows:
“3. a. Sales, trades, pledges or other forms of transfer of securities of restricted concerns whose share capital is less than ¥ 5,000,000. are hereby exempted from the requirements of reference memorandum 1, above. Also, sales, trades, pledges or other forms of transfer of securities of restricted concerns whose share capital is ¥5,000,000 or more will be exempted from the requirements of reference memorandum 1, above, if the following exist:
“(1) Neither the beneficial owner nor the record owner of the securities desired to be transferred or otherwise dealt in owns or controls directly or indirectly more than one (1) percent of the ontstanding securities of the issue of which his securities are a part.
“(2) The person by whom or on whose behalf the securities are to be acquired does not by such acquisition, own or control directly or indirectly more than one (1) percent of the securities of the issue proposed to be acquired.
“(3) The sale, trade, or other form of transfer of the securities herein mentioned is not in conflict with the provisions of Imperial Ordinance 567.”
3. In addition to the foregoing amendments of paragraph 3a of reference memorandum 1b, above, the following shall also be permitted:
a. The sale of securities of restricted concerns under reference 1a, b and c, above, whose share capital is ¥ 5,000,000. or more by banks, trust companies and insurance companies, whether restricted concerns or not, if the total amount of such security holdings does not exceed ten(10) percent of the share capital of the issuing company, provided, however, no such sale shall be made to any one individual in excess of one (1) percent of the securities of the issue being sold; and provided, further, that the foregoing shall not in any manner be construed as affecting existing limitations on the acquisition of such securities in excess of one(l) percent of the securities of the issue to be acquired nor apply to securities subject to the provisions of Imperial Ordinance 567 of 1946.
b. The purchase, sale or use as collateral of securities of restricted concerns whose share capital is ¥5,000,000 or more, under references 1a, b and c, above, by registered security dealers and brokers, provided, however, no sale shall be made to any one individual in excess of one (1) percent of the securities of the issue being sold and provided, further, that the foregoing shall be subject to the provisions of Article 11 of Law No. 54 of 1947. It is further provided that the foregoing shall exclude disposal of any securities held by any such security dealers and brokers which are subject to the provisions of Imperial Ordinance 567 of 1946.
c. The exercise of pre-emptive rights by shareholders of restricted concerns under references 1a, b and c, above.
FOR THE SUPREME COMMANDER:
R. M. Levy
Colonel, AGD,
Adjutant General.
MEMO FOR RECORD : (SCAPIN - 403/1)
WFM/ECW/LAR/JMJ/gg
27 September 1948
1. References are:
a. Ministry of Finance Memorandum LO 2421(FI/RC), 10 June 1948, subject: "Disposition and Acquisition of Restricted Concerns' Stock by Financial Institutions."
b. SCAP Memorandum AG 004(31 Oct 45)ESS, SCAPIN 215, 31 October 1945, subject: "Sale or Transfer of Securities of Certain Business Concerns."
c. SCAP Memorandum AG 004(8 Dec 45)ESS/AC, SCAPIN 403, 8 December 1945, subject: "Establishment of a Schedule of Restricted Concerns."
d. SCAP Memorandum AG 095(20 May 47)ESS/AC, SCAPIN 1690, 20 May 1947, subject: "Amendments of Regulations Affecting Restricted Concerns."
e. SCAP Memorandum AG 004(5 Oct 46)ESS/FI, SCAPIN 1253, 5 October 1946, subject: "Closed Institutions vs. Emergency Measures."
f. Imperial Ordinance No. 657 of 1945: "Restrictions for the Dissolution of Companies Based upon Imperial Ordinance No. 542 of 1945 or Ordinances or Orders to be Issued as the Result of Acceptance of the Potsdam Declaration," as amended.
g. Ministry of Finance Ordinance No. 13 of 1948: "Enforcement of Regulations of Imperial Ordinance No. 657."
h. Law No. 54 of 1947: "Prohibition of Private Monopoly and Methods of Preserving Fair Trade."
i. Imperial Ordinance No. 567 of 1946: "On Restrictions of Securities Holdings, etc., by Companies, Based on Imperial Ordinance No. 542 of 1945 on Ordinances or Orders to be issued as the result of Acceptance of the Potsdam Declaration," as amended.
j. Imperial Ordinance No. 233: "Establishment of Holding Company Liquidation Commission."
k. Imperial Ordinance No. 74: "Closed Institutions Ordinance."
l. Law No. 8 1947: "Adjustment and Coordination of Disposal of Securities."
2. Request has been made by the Ministry of Finance and the Securities Coordinating Liquidation Committee to permit the following:
a. By the Ministry of Finance - the sale of securities of restricted concerns by financial institutions and the acquisition of such securities without regard to the one (1) percent limitation as specified in reference memorandum 1c, above, but subject to the provisions of Law No. 54, reference 1h above, and Imperial Ordinance No. 567, reference 1i, above.
b. By the Securities Coordinating Liquidation Committee - to eliminate the existing requirement of approval by SCAP and the Ministry of Finance of Acquisition of securities in excess of one (1) percent of the outstanding securities of the issue being acquired included in any plan for the disposal thereof by the Bank of Japan, the State, and the constituent agencies of said Securities Coordinating Liquidation Committee which plan has been approved by such Committee provided however the acquisition of such securities shall be subject to the provisions of Law No. 54 (reference 1h) and Imperial Ordinance No. 567 (reference 1i).
3. There are existing limitations on the sale and acquisition of securities of restricted concerns under references 1c, above. The existing limitations are included in reference 1b, c, and d, above. Reference 1d, above, provides in part that no restricted concern may dispose of any capital asset, including securities, without SCAP approval. Reference 1c, above, permits the sale by others of securities of restricted concerns if the seller does not own more than one (1) percent of the outstanding securities of the issue of which his securities are a part and providing the purchaser will not thereby acquire more than one (1) percent of the securities of the issue proposed to be acquired.
4. Without damage to the program for the democratization of Japan, the above request in the matter of sale of such securities is favorably considered but the request for acquisition in excess of one (1) percent limitation is unfavorably considered, except by security dealers and brokers, as hereinafter provided, and except as to securities of restricted concerns whose share capital is less than ¥5,000,000. (See SCAPIN for details). It is considered necessary that SCAP continue requiring that applications be made for approval of acquisition in excess of the one (1) percent limitation. As to security dealers and brokers, Article 11 of Law No. 54 (the Anti-Monopoly Law) shall remain applicable. The foregoing amendment to paragraph 3a of reference 1c, above, is likewise favorably considered since these companies are relatively small in size and because the elimination of the sale and acquisition limitations now applicable to such companies will aid in the program for disposal of their securities.
5. The attached SCAPIN reflects the action taken.
6. This is an administrative matter and no surveillance by the Eighth Army is required.
7. Concurrence: ESS/FIN.
J. M. Jarboe - 26-6582
E. C. W.
