SCAPIN-408: REGULATIONS AFFECTING RESTRICTED CONCERNS

GENERAL HEADQUARTERS
SUPREME COMMANDER FOR THE ALLIED POWERS

APO500
8 December 1945

AG 300.8 (8 Dec 45) ESS-AC
(SCAPIN-408)

MEMORANDUM FOR

THE IMPERIAL JAPANESE GOVERNMENT.

THROUGH

Central Liaison Office, Tokyo.

Subject

Regulations Affecting Restricted Concerns.

1. Reference is made to Memorandum this Headquarters AG 004 (8 Dec 45) ESS, subject: Establishment of a Schedule of Restricted Concerns.
2. The Imperial Japanese Government will take immediate action to assure that except as otherwise authorized or directed by this Headquarters each concern listed on the “Schedule of Restricted Concerns” will comply with the following directions:
a. All cash on hand other than that customarily required for payroll and petty cash expenditures will be promptly deposited in the accounts of such concerns with banks in Japan.
b. The proceeds of all sales and loans and all other receipts and income from every source will be promptly deposited upon receipt in the bank accounts of such concerns.
c. No payment, transfer, or withdrawal from any account will be made which is not incidental to the normal course of business of the concern.
d. No sale, transfer, or other disposition of any capital assets including lands, buildings, major items of equipment and securities will be made.
e. No other property will be sold, conveyed, distributed or otherwise disposed of except in the normal course of business and for adequate consideration, and no act will be performed for the purpose of or which has the effect of dissipating assets.
f. No new stock or other participating share interest, however described, will be authorized or issued, and the rights and privileges of any existing stock or other participating share interest, however described, will be authorized or issued, and the rights and privileges of any existing stock or other participating share interests will not be reduced or added to or otherwise modified.
g. No bonded indebtedness will be authorized or created and no loans of any other character will be obtained, except in the normal course of business.
h. No dividends will be paid or declared.
i. No salary payments in excess of those paid in June, 1945 will be made to the executive officers, including but not limited to, the president, vice-president, secretary, treasurer, directors, managers, advisors and auditors. No bonuses, retirement pay, severance allowances or other emoluments and benefits, except periodic salary payments, will be paid to such executive officers.
3. The Imperial Japanese Government will promptly obtain and furnish to this Headquarters statements from each firm listed on the “Schedule of Restricted Concerns” specifying all payments other than periodic salary payments made on or since 1 July 1945, to any person who on or since such date was an executive officer of such firm and the basis for such payments.
4. Request for approval of any transaction covered by paragraph 2 of this memorandum will be accompanied by the written recommendations of the Minister of Finance, and by such additional data as may be necessary for a thorough understanding of the transaction concerned.
5. The Imperial Japanese Government will acknowledge receipt of this memorandum and promptly report the action taken by it in compliance therewith.

FOR THE SUPREME COMMANDER:

H.W.Allen
Colonel,A.G.D.
Asst Adjutant General

MEMO FOR RECORD : (SCAPIN - 408)
8 December 1945
1. The reference Memorandum AG 004 (6 Dec 45)ESS-AC was only a step in restricting the activities of holding companies and their subsidiaries. Pending the transfer of Zaibatsu holdings and their disposition we should make certain that the subsidiary and affiliated companies are restricted to normal business operations and that over-all control should be exercised by SCAP. There are no current restrictions on bonuses, separation allowances, extra dividends or large gifts and it is possible to dissipate substantial assets in a quasi legal manner.
2. This memorandum is designed to prohibit such payments and to restrict the actions of those concerns on the restricted list to every day routine activities.
3. Concurrences: Finance Division (Mr Alk and Mr Thomas), Legal Division (Major Abrams). Informal concurrences, C/S (Colonel Bunker)
S. W. W.