Download Corporate Actions

The Bank of Tokyo-Mitsubishi, Ltd.
Global Securities Services Division
Corporate Actions
1. Dividend Payment............................................................................................. 2
2. Interest Payment ............................................................................................... 5
3. Redemption ........................................................................................................... 7
4. Bonus Issue ........................................................................................................... 8
5. Stock Split ............................................................................................................10
6. Rights Issue .........................................................................................................11
7. Allotment of New Share Subscription Rights ....................................13
8. Merger/Share Transfer/Share Exchange ..............................................16
9. Tender Offers (Take Over Bid & Buyback Offer) .............................19
10. Proxy Voting......................................................................................................21
11. [Appendix] Simplified Merger / Simplified Share Exchange .........23
October 2004
The outlined herein are our ordinary procedures for corporate action events in
Japan. Please note the actual procedures may differ in each case.
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The Bank of Tokyo-Mitsubishi, Ltd.
Global Securities Services Division
Corporate Actions
1. Dividend Payment
Dividend payment is distribution of cash to the shareholders out of the company’s
current or retained earnings in proportion to their equity holding. Usually paid twice in
a year. Final dividends are paid upon the approval of shareholders’ meeting (please see
the Note) and interim dividends are paid upon the resolution of board meeting (if an
effective date is specified regarding the resolution, that effective date).
Entitlement: Eligibility for the entitlement is fixed on the record date. The owner of the
shares must re-register the securities prior to the record date. For shares held in
JASDEC, the Beneficial Shareholders List will be compiled by the custodian based on
the balance of holdings as of the record date. It is the market practice to process all
entitlements on an actual settlement basis. Accordingly, in case of a settlement failure
over the record date, the claim is to be dealt with between the trade counterparties.
Tax: Tax on dividend is withheld at source.
According to the revision of the tax law that took effect on 1 April 2003, the rates of
income tax on the dividends of listed shares (including the shares traded in JASDAQ
over-the-counter market, Exchange Traded Funds (ETF), Real Estate Investment Trust
(REIT) and Nikkei 300) are scheduled as follows:
(Income Tax)
From 1 April 2003 to 31 December 2003: 10%
From 1 January 2004 to 31 March 2008: 7%
From 1 April 2008: 15%
For “resident individual” beneficiaries, the local tax is also withheld as follows (please
see the explanation below for details). Resident corporations and any type of
non-resident beneficiaries are not subject to the local tax:
(Local Tax)
From 1 April 2003 to 31 December 2003: None
From 1 January 2004 to 31 March 2008: 3%
From 1 April 2008: 5%
The above periods are applicable to the date of the AGM. For interim dividends, date of
the board meeting or the payment date as the case maybe.
The revision of the tax law is not applied to the following shares. Hence, the applicable
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The Bank of Tokyo-Mitsubishi, Ltd.
Global Securities Services Division
Corporate Actions
statutory rate is 20%. The mitigated rate under the double taxation treaty is 15% in
most cases.
-
Non-listed shares
-
Any shares owned by an individual shareholder (both non-resident and
resident) for 5 % or more of the number of the outstanding shares
Procedures for paying Local Tax: The local tax is paid to the prefecture where the
individual shareholder resides by way of withholding the tax at the registrars. In order
to execute such tax payment, the registrars require BTM to report the breakdown of the
number of shares held by resident individuals per residing prefecture, immediately
after record date.
Consequently, unless accounts per residing prefecture of resident individuals or
accounts per beneficial owner have been established, BTM hereby requests our clients
to submit the breakdown of the number of shares held by resident individuals per their
residing prefecture, no later than 3 business days after each record date of dividends.
Unless such breakdowns are submitted, BTM will recognize that the accounts do not
comprise resident individual shareholders.
Procedures for application of double taxation treaties: In accordance with the
applicable double taxation treaty, non-residents are able to enjoy the reduced income
tax rate on dividends. BTM as custodian sends the application form for the reduced
income tax rate to the issuer (via their agent) who in turn submits it to the local tax
office prior to the payment date.
With the implementation of the revised tax law in April 2003, the statutory income tax
rate on dividends of listed shares (7%) is currently lower than the most common treaty
rate (15%). Accordingly, it is normally not necessary to apply the treaty tax rate for
dividends of listed shares (please see below).
New double taxation treaty between Japan and the United States: The new double
taxation treaty between Japan and the United States implemented on 1 July 2004
stipulates mitigated 10% income tax rate on dividends in general and other benefits
such as a tax exemption for pension funds. In order to apply for the application of this
favorable tax treaty, however, applicants are required to submit documents on
eligibility to the tax office, which include a certificate of residency (Form6166).
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The Bank of Tokyo-Mitsubishi, Ltd.
Global Securities Services Division
Corporate Actions
Chronology: Model schedule of Dividend Payment
Key dates
Example
Note
BTM
MT564
(DVCA)
Record Date
31 Mar 2003
Board Meeting/
Dividend Announcement
26 May 2003
Normally around 2 months after
R/D
Annual General Meeting
26 Jun 2003
To be held within 3 months after
R/D
Payment Date
27 Jun 2003
Normally next business day of
AGM
Record Date(interim)
30 Sep 2003
Board Meeting/ Interim
Dividend Announcement
22 Nov 2003
MT564
Payment Date(Interim)
10 Dec 2003
MT566
MT566
(Note)
Companies that have adopted the “Company-with-Committees” system (by changing the
article of incorporation) may pay the dividends before the shareholders meeting. Under this
system, which was introduced on 1st April, 2003 by the revision of the Commercial Code,
proposals for appropriation of earnings have only to be approved by the board of directors
and the approval by the shareholders meeting is not required. Below is the sample of the
dividend payment by a company with the committees system.
Record Date:
Meeting of Board of Directors:
Dividend Payment Date:
Shareholders Meeting Date:
(Dividend Payment (conventional)):
20 February 2004
7 April 2004
19 April 2004
19 May 2004
(20 May 2004)
Payment is made
month earlier
It is expected that the number of the companies with the committees system will increase
which bring forward the dividend payment. Furthermore, the proposals for strengthening
the power of board of directors of all companies, which are included in the working draft of
the corporate law presented by the ministry of Justice in October 2003 may implicate more
flexible dividend payment in future (e.g. quarterly payment instead of semi-annually).
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The Bank of Tokyo-Mitsubishi, Ltd.
Global Securities Services Division
Corporate Actions
2. Interest Payment
Interest payment is payment of income generated by bonds, notes, bills or other fixed
income instruments according to the interest rate.
Entitlement: Eligibility for the entitlement is fixed at the closing of the days below,
which are the last business days before the registration (book transfer) suspension
period:
JGBs(Book-entry)
P/D- 3 business days
JGBs(Registered)
P/D- 8 business days
Corporate bonds(Registered)
P/D-22 calendar days
Municipal bonds(Registered)
P/D-22 calendar days
Convertible bonds(Book-entry)
P/D- 2 business days
For registered bonds, the owner of the bonds must re-register the securities before the
suspension period. Interest on physical bonds are payable upon presentation of the
coupons/certificates at the paying agent by one business day prior to the payment date.
Tax: Income tax is withheld from interest amount at source. The statutory rate is 15%
and the mitigated rate under the tax treaty is 10% in most cases. 5% Local tax is
additionally imposed on residents. Interest on book-entry JGBs owned by non-residents
through a Qualified Foreign Intermediary (QFI) can be exempt from the withholding
tax in proportion to their holding period. (Aggregation of holding period is possible if the
former holder has tax exempt status as well.)
Procedures for application of double taxation treaties: BTM as custodian sends the
application form for the reduced income tax rate to the issuer who in turn submits it to
the local tax office prior to the payment date(please see below).
New double taxation treaty between Japan and the United States: Under the new
double taxation treaty between Japan and the United States implemented on 1 July
2004, the most common tax rate on interest remained unchanged at 10%, whereas new
benefits were added including a tax exemption for pension funds and financial
institutions. It is to be noted that all applicants of the new Japan-US tax treaty (not
only tax exempt investors but also those applying for 10% tax rate) must submit
documents on eligibility to the tax office, which include a certificate of residency
(Form6166).
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The Bank of Tokyo-Mitsubishi, Ltd.
Global Securities Services Division
Corporate Actions
Chronology: Model schedule of Interest Payment
Key dates
Example
Note
BTM
MT564
(INTR)
Pre-advice of interest payment
25 Aug 2003
BTM offers choices of the
timing for sending MT564.
Confirmation of Interest
Payment
30 Sep 2003
On the day when the net
MT566
interest amount is credited.
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The Bank of Tokyo-Mitsubishi, Ltd.
Global Securities Services Division
Corporate Actions
3. Redemption
Redemption is a repayment of principal in such investments as bonds, notes, bills or
other fixed income instruments.
Entitlement: Please refer to the “2. Interest Payment”.
Chronology: Model schedule of Redemption
Key dates
Example
Note
BTM
Pre-advice of interest payment 25 Aug 2003
BTM offers choices of the
timing for sending MT564
MT564
(REDM*)
Confirmation of Interest
Payment
On the day when the
redemption amount is
credited.
MT566
30 Sep 2003
*MCAL to be used for early redemption and DRAW for redemption by drawing
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The Bank of Tokyo-Mitsubishi, Ltd.
Global Securities Services Division
Corporate Actions
4. Bonus Issue
Bonus Issue refers to a free distribution of additional shares by the issuer to the
shareholders in proportion to their holdings. The new shares are issued by
appropriating the excessive amount of capital over the par value* or with the
capitalization by means of transferring the legal reserves. When the capitalization is
conducted by using the earnings available for dividend, the issuance of new shares is
called Stock Dividend, which is rare in Japan. In any of these events there is no change
in the shareholder’s equity.
*Legally, the notion of “par value ” for shares was abolished in 2001.
As the above events are the same in the sense that new shares are issued for free, the
Commercial Code, in its revision in 1991, regarded all the above events as “Stock Split”
focusing on this common aspect of the events. This is the reason the term “Stock Split”
is used for both bonus issues and the simple stock splits. In practice, however, issuing
companies often announce their stock splits as “Stock Split-Bonus(Gratis) Issue”
instead of just indicating the event as “Stock Split”. Bank of Tokyo-Mitsubishi uses the
event code BONU in the MT564 notifying Bonus Issues in order to properly reflect the
difference from Stock Split (SPLF) in the way the shareholder’s holding balance is
affected;
Bonus Issue (BONU): New shares are added to the shareholders assets. (Example: 1
new share is allotted per one share). The new shares are often tradable
in the market with certain conditions as “When Issued Trade”.
Stock Split (SPLF): New shares are given in exchange for the original shares. (Example:
1 original share is exchanged to 5 new shares)
Entitlement: Eligibility for the entitlement is fixed on the record date. The owner of the
shares must re-register the securities prior to the record date. For shares held in
JASDEC, the Beneficial Shareholders List will be compiled by the custodian based on
the balance of holdings as of the record date. It is the market practice to process all
entitlements on an actual settlement basis. Accordingly, in case of a settlement failure
over the record date, the claim is to be dealt with between the trade counterparties.
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The Bank of Tokyo-Mitsubishi, Ltd.
Global Securities Services Division
Corporate Actions
Chronology: Model schedule of Bonus Issue
Key dates
Board Meeting/
Announcement
(When issued trade period)
Record Date
Example
Note
4 March 2003
By 2 weeks before R/D
26 March 2003 –
21 May 2003
(S/D 26 May 2003)
"When issued trade” is
set up for the new shares.
(normally when the ratio
of additional shares per
existing share is 0.5 and
more)
These transactions shall
be made during the
period from the ex-date
until the date designated
by the stock exchange,
occurring on and after
the issuance of stock
certificates.
31 March 2003
Entitlement is fixed
BTM
MT564
(BONU)
MT564
[MT566*]
Effective Date/
Securities Payable Date
Pari Passu Date
(Assimilation)
20 May 2003
27 May 2003
(Shares in JASDEC)
New shares are credited
(Physical shares)
Received 2-3 days later
MT566
New shares become
identical with
the underlying shares.
MT566
[MT508*]
+
MT564
(PARI)
* These MTs are used based on the client’s request. Instead of MT564 (notice of entitlement), MT566 is
sent on the record date as the confirmation of the credit of new shares, which are not available yet.
MT508 follows on the effective dates to notify that the new shares have become available. (Physical
shares become available 2-5 days later).
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The Bank of Tokyo-Mitsubishi, Ltd.
Global Securities Services Division
Corporate Actions
5. Stock Split
Stock Split is an increase in the number of the outstanding shares without the total
capitalization of the company. Please also see “4.Bonus Issue”.
Chronology: Model schedule of Stock Split
Key dates
Example
Note
BTM
Board Meeting/
Announcement
Notification of submission of
the Share Certificates
25 March 2003
By 2 weeks before R/D
MT564
(SPLF)
2 weeks before
Effective Date
Applicable to physical
shares
MT599
Share Certificates Submission
Date
31 July 2003
Applicable to physical
shares
Record Date
31 July 2003
Effective Date/Securities
Payable Date
1 August 2003
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(Shares in JASDEC)
New shares are credited
and old shares are
debited
(Physical shares)
Received 2-3 days later
MT566
The Bank of Tokyo-Mitsubishi, Ltd.
Global Securities Services Division
Corporate Actions
6. Rights Issue
Rights Issue refers to allotment of the rights to the shareholders by the issuer in
proportion to their holdings. With the rights, shareholders are entitled to buy additional
shares of the company at a certain price. The rights and the new shares are often
tradable in the market. The options available for the shareholders are: to exercise the
rights and purchase the additional shares, to sell the rights in the market (subject to the
market condition), or to take no action. The rights become worthless after the exercise
period.
Entitlement: Eligibility for the entitlement is fixed on the record date. The owner of the
shares must re-register the securities prior to the record date. For shares held in
JASDEC, a Beneficial Shareholders List will be compiled by the custodian based on the
balance of holdings as of the record date. It is the market practice to process all
entitlements on an actual settlement basis.
Chronology: Model schedule of rights issue
Key dates
Example
Note
Board Meeting/
Announcement
(When issued trade period
for the subscription rights)
29 May 2003
By 2 weeks before R/D
26 Aug 2003 –
10 Oct 2003
(S/D 16 Oct 2003)
For sale, rights must be
exchanged for the
negotiable certificates
(When issued trade period
for the new shares)
26 Aug 2003 –
10 Nov 2003
(S/D 13 Nov 2003)
"When issued trade” is
set up for the new shares.
These transactions shall
be made during the
period from the ex-date
until the date designated
by the stock exchange.
Record Date
31 Aug 2003
Entitlement is fixed and
Rights are credited
BTM
MT564
(RHTS)
MT564
+
MT566
Subscription Period
9 Oct 2003 –
23 Oct 2003
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The Bank of Tokyo-Mitsubishi, Ltd.
Global Securities Services Division
Corporate Actions
1. Exercise of subscription rights
Exercise of Rights
Subscription money is
debited and the Rights
are debited.
New shares are credited
but not available yet.
MT566
(Shares in JASDEC)
New shares become
available.
(Physical shares)
Delivered 2-5 days later
MT508
New shares become
identical with the
underlying shares.
Pari Passu Date is
commonly the next date
of the S/D of the new
shares’ When Issued
trade.
MT566
2. Sale of subscription rights
Settlement Date of the W/I 16 Oct 2003
trade of rights
Rights are debited and
the proceeds are credited.
MT566
3. No Action
End of the subscription
period
Subscription Rights are
expired.
MT566
Securities Payable Date
Pari Passu Date
(Assimilation)
7 Nov 2003
14 Nov 2003
23 Oct 2003
12
+
MT564
(PARI)
The Bank of Tokyo-Mitsubishi, Ltd.
Global Securities Services Division
Corporate Actions
7. Allotment of New Share Subscription Rights
The New Share Subscription Rights (hereinafter “NSSR”) were brought into the market
with the revision of the Commercial Code in 2001. NSSRs are allotted to the
shareholders by the issuer in proportion to their holdings, either for free or against
payment depending on each case. In either of the case, the shareholders who would like
to take the allotment are required to submit an application form to the issuer or its
agent. The rights entitle the holders to purchase the shares of the company at a certain
price. The length of the exercise period varies and, as have been observed in the market,
ranges from one to three years. Transfer of NSSRs are restricted by the issuer in most
cases and accordingly the rights are not tradable in the market. There are often exercise
conditions set on the NSSRs. For example, the holder is entitled to exercise the rights
just once and no partial exercise is allowed, which may cause a problem with the rights
held in an omnibus account of the nominee. The issuers usually offer a solution to
secure the exercise opportunity for each beneficial owner under the nominal
shareholder, though only after contacted individually by the nominal shareholders/
custodians. BTM proactively obtain the information and notify to the clients.
Note: As illustrated below, the event codes RHDI* and EXRI* are used to indicate the
1st event and the 2nd event respectively. The use of these codes reflects the discussion at
the national market practice group of Japan held through 2003.
*Alternately RHTS and EXWA may also be used, though RHDI should be preferable in order to
discriminate this event from the Rights Issue (please see 6).
1st Event - Allotment of NSSRs from issuer to shareholders - RHDI
2nd Event - Exercise of the NSSRs by the holders- EXRI
Entitlement: Eligibility for the entitlement is fixed on the record date. The owner of the
shares must re-register the securities prior to the record date. For shares held in
JASDEC, the Beneficial Shareholders List will be compiled by the custodian based on
the balance of holdings as of the record date. It is the market practice to process all
entitlements on an actual settlement basis.
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The Bank of Tokyo-Mitsubishi, Ltd.
Global Securities Services Division
Corporate Actions
Chronology (1): Model schedule of NSSR (received for free)
Key dates
Example
Note
BTM
1st Event
Board Meeting/ Announcement
31 Jan 2003
By 2 weeks before R/D
Notification of exercise
conditions
7 Feb 2003
Exercise price of the
subscription rights is
announced
Record Date
28 Feb 2003
Entitlement is fixed
Issuer sends the application
form to the shareholders as of
R/D
Application Period
31 Mar 2003
3 April 2003 –
25 April 2003
30 May 2003
Issuer sends the “notice of
allotment” and the “application
form for exercising the rights” to
the shareholders
MT564
(RHDI)
MT564
MT564
The subscription rights
are free but the
application must be
submitted to the issuer
Upon receipt of the
“notice of allotment” from
the issuer, the new share
subscription rights are
credited
MT566
Notified as the new event
(EXRI)
MT564
(EXRI)
The rights and the
subscription money are
debited
MT566
The new shares are
credited upon receipt
from the issuer
MT566
2nd Event
Exercise Period
2 Jun 2003 –
31 Mar 2006
Exercise of the rights
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The Bank of Tokyo-Mitsubishi, Ltd.
Global Securities Services Division
Corporate Actions
Chronology (2): Model schedule of NSSR (received against payment)
Key dates
Example
Note
BTM
1st Event
Board Meeting/ Announcement
10 Jan 2003
By 2 weeks before R/D
MT564
(RHDI)
Notification of exercise
conditions
23 Jan 2003
Exercise price of the
subscription rights is
announced
MT564
Record Date
31 Jan 2003
Entitlement is fixed
MT564
Issuer sends the application
form to the shareholders as of
R/D
Application Period
5 Mar 2003
The application money is
debited
MT566
Upon receipt of the
“notice of allotment” from
the issuer, the new share
subscription rights are
credited
MT566
Notified as the new
event(EXRI)
MT564
(EXRI)
The rights and the
subscription money are
debited
MT566
The new shares are
credited upon receipt
from the issuer
MT566
7 Mar 2003 –
20 Mar 2003
2 Jun 2003
Issuer sends the “notice of
allotment” and the “application
form for exercising the rights” to
the shareholders
2nd Event
Exercise Period
2 Jul 2003 –
30 Jun 2006
Exercise of the rights
15
The Bank of Tokyo-Mitsubishi, Ltd.
Global Securities Services Division
Corporate Actions
8. Merger/Share Transfer/Share Exchange
Merger: Merger, for which the event code of MRGR is used, is a type of integration of
two or more companies where the shareholders of the dissolving company(ies) are to
receive the shares of the surviving company. The merger requires approval by special
resolution at the shareholders meeting of all the companies involved with the exception
for the surviving company absorbing small company(ies) in accordance with the criteria
provided for in the commercial code. The balance of dissolving company’s shares that
are subject to the merger is fixed one day prior to the effective date(=merger date),
which is notified as the record date. In some cases surviving companies pay a merger
subsidy to the shareholders of the dissolving company(ies) in order to compensate for
the dividend or in relation to the merger ratio. The merger subsidy is paid by the
company mostly in the same way as that for dividends and notified by BTM with the
event code DVCA.
Confirmation of Merger: Confirmation of the new balance (MT566) is sent to the
shareholders of the dissolving company on the effective date, where the ISIN still
remains unchanged. On the following day, another confirmation is sent under the ISIN
of the surviving company. This reflects the timing of notice provided by JASDEC in
consideration that the merger becomes effective after it is actually registered at
sometime on the effective date. The same applies to Share Transfer.
Share Transfer & Share Exchange: These two events, which are other forms of company
integration, are also notified by BTM with the event code MRGR. Approval by special
resolution at the shareholders meeting is required in principle for both acquiring and
acquired companies.
Share Transfer: Shares of the acquired company are transferred to the newly
established parent company. The parent company’s shares are given to the shareholders
of the acquired company.
Share Exchange: Shares of the acquiring company will be given in exchange for the
shares of the acquired company. As the result, the acquiring company becomes the
wholly owning parent company. The special resolution at the shareholders meeting of
the acquiring company is not necessary in acquiring small company(ies) in accordance
with the criteria provided for in the commercial code.
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The Bank of Tokyo-Mitsubishi, Ltd.
Global Securities Services Division
Corporate Actions
Chronology : Model schedule of Merger
Key dates
Example
Board Meeting/ Announcement
30 Apr 2003
Additional Information
Note
MT564
(MRGR)
e.g. merger subsidy
Shareholders Meeting
27 Jun 2003
Record Date
30 Sep 2003
Effective Date
1 Oct 2003
BTM
MT564
Approval by special
resolution
Confirmation of the new
balance is dispatched by
MT566 with the ISIN
unchanged.
The merger becomes
effective after legally
registered (normally on
this day).
MT566
The merger becomes legally
effective after being
registered (normally on
this day).
The day following the effective
date
2 Oct 2003
Completion of the merger is MT566
confirmed by MT566 where
the change of ISIN into
that of the surviving
company is notified.
Chronology : Model schedule of Share Transfer
Key dates
Board Meeting/ Announcement
Example
Note
8 Oct 2003
Additional Information
MT564
(MRGR)
e.g. merger subsidy
Shareholders Meeting
18 Dec 2003
Record Date
31 Mar 2004
17
BTM
Approval by special
resolution
MT564
The Bank of Tokyo-Mitsubishi, Ltd.
Global Securities Services Division
Corporate Actions
Effective Date
1 Apr 200４
Confirmation of the new
balance is dispatched by
MT566 with the ISIN
unchanged.
The merger becomes
effective after legally
registered (normally on
this day).
MT566
The merger becomes legally
effective after being
registered (normally on
this day).
The day following the effective
date
2 Apr 2004
Completion of the merger is MT566
confirmed by MT566 where
the change of ISIN into
that of the parent company
is notified.
Chronology : Model schedule of Share Exchange
Key dates
Example
Board Meeting/ Announcement
27 Oct 2003
Additional Information
Note
MT564
(MRGR)
e.g. merger subsidy
Shareholders Meeting
25 Dec 2003
Record Date
9 Feb 2004
Effective Date
10 Feb 2004
18
BTM
MT564
Approval by special
resolution
Confirmation of the new
MT566
balance is dispatched by
MT566 with the ISIN of the
parent company.
The Bank of Tokyo-Mitsubishi, Ltd.
Global Securities Services Division
Corporate Actions
9. Tender Offers (Take Over Bid & Buyback Offer)
Take Over Bid/Buyback Offer are an offer made by a company (offror) to shareholders,
requesting to sell their shares at a certain price outside the market.
Take Over Bid: The offeor (purchaser) is a third party company whose objective is to
take control of the target company. Offers are mostly friendly ones in relation to
business reorganization but there may also be hostile takeovers.
Buyback Offer: The offeor (purchaser) is the issuing company whose objective is
mainly to reduce the number of outstanding shares. According to the revision of the
commercial code enacted in September 2003, the companies are allowed to buy back
shares only with the resolution at the board meeting and the approval at the
shareholders meeting is not required, provided that their articles of incorporation have
been revised accordingly. This change may lead to an increase in the number of the
buyback offers.
Procedures for Subscription: Subscription is accepted and processed by a securities
company who acts as tender offer agent. It is necessary to open an account with the offer
agent for each of the subscribing client’s custody account with BTM, unless such
accounts are already opened with the agent. This account opening is a part of the
procedures for subscription and BTM clients do not have to send a separate instruction
to open the account in addition to the instruction for the subscription.
Identification Document: Based on the law on customer identification which came into
effect on 6 January 2003, your identification document is required by the tender offer
agent when you open an account with the agent for the first time. This means you do not
have to send us such document if the tender offer agent has already hold an account for
one of your custody account with BTM. Please note that the identification document is
required at global custodians level, not at the underlying beneficiaries level.
The identification document should be an “official” document (e.g. Registration of
Incorporation) where the name and the address of the BTM client are indicated and
should not be older than six months from the date of issuance.
Restrictions: Tender offers often impose restrictions on the subscription in terms of the
US regulations. Details of the restriction announced by the offeror are informed by
MT568 sent by BTM following MT564. BTM clients are requested to confirm in their
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The Bank of Tokyo-Mitsubishi, Ltd.
Global Securities Services Division
Corporate Actions
instruction that the participation is not in violation with the restrictions.
Tax: When a buyback price is higher than the issuer's capital (including the capital
reserve) per share, the difference is regarded as payment of dividend (=deemed
dividend) and the tax is withheld accordingly at the prevailing tax rate (a treaty tax
rate is applicable). The net purchase price is lower than the offer price by the tax
amount.
Example:
Capital per share : JPY60.99799467 -------- (a)
Deemed dividend per share : JPY1,639.00200533 ----(b)
Tax amount per share: (b) x 10% = JPY163.90020053 ---(c)
Offer price announced.: JPY1,700 ---(d)
Actual repurchase price per share : (d) – ( c) = JPY1,536.099799467
Chronology: Model schedule of Take Over Bid/Buyback Offer
Key dates
Board Meeting/
Announcement
Example
19 Aug 2003
Note
TEND - Take Over Bid
BIDS - Buyback Offer
Details are notified by MT568
linked to MT564.
BTM
MT564
+
MT568
(TEND/
BIDS)
Subscription Period
19 Aug 2003 –
8 Sep 2003
Subscription period is 20-60 days
starting on the day of the
announcement.
The following day of the
subscription end date
9 Sep 2003
Notification of the acceptance of
subscription.
In case of over subscription, the
acceptance is on pro-rata base if
the maximum number of
purchase has been set.
MT599
Settlement Date
16 Sep 2003
The settlement amount is
credited normally around 5
business days after the end of
the Subscription Period.
Confirmation for completion of
the TOB/Buyback Offer is sent.
MT566
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The Bank of Tokyo-Mitsubishi, Ltd.
Global Securities Services Division
Corporate Actions
10. Proxy Voting
(Bank of Tokyo-Mitsubishi provides the clients with proxy voting services (including both notification
of the agenda of shareholders’ meetings and voting) on request basis. If you need the proxy
voting services but do not currently receive them, please contact the BTM Marketing &
Customer Relations division.)
Shareholders’ meetings: Japanese companies are legally obliged to hold a general
shareholders’ meeting within three months after the fiscal year end. About eighty
percent of the listed companies have the fiscal closing on the end of March, and most of
them have the annual shareholders’ meeting on a day close to the last business day of
June. Accordingly, the proxy voting activities in Japan have by far the busiest peak
season in June. In addition to the annual general meetings, extraordinary shareholders’
meetings are held as the occasion arises.
Entitlement: Eligibility for voting rights is fixed on the record date. The record date for
the voting rights at the annual general meeting is normally the same as the fiscal year
end. In order to exercise the voting rights, the owner of the shares must re-register the
shares prior to the record date. For shares held in JASDEC, the Beneficial Shareholders
List will be compiled by the custodian based on the balance of holdings as of the record
date.
As regards companies that have adopted the unit share system, one voting right is
allotted per unit of shares. No voting right is given to odd lot shares.
Split Voting: When a registered shareholder is going to vote in split, the shareholder
must submit the prior written notice to the company no later than three days before the
shareholders’ meeting in compliance with the Commercial Code. BTM arranges to send
this prior notice to all companies in order to accommodate the possible split voting by
the clients.
Voting process:
-
The company dispatches the notice of the shareholders’ meeting with the
agenda to each of the registered shareholders (to the local custodian bank,
when the shareholder is non- resident) by two weeks before the
shareholders meeting. The notice is accompanied by one voting card.
-
BTM notifies the agenda items to the clients.
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The Bank of Tokyo-Mitsubishi, Ltd.
Global Securities Services Division
Corporate Actions
-
BTM fills out the voting cards according to the voting instructions received
from the clients.
-
BTM sends out the completed voting cards by mail so that the cards are
delivered to the company by the day before the meeting date.
Notice of Resolutions: The outcome of the votes in the AGMs held in June peak season
is available on BTM Website.
Chronology: Model schedule of proxy voting (in the peak season)
Key dates
Record Date
Example
31 Mar 2004
Early May
2004
Shareholders’ meeting
date
Note
BTM contacts registrars (agents
of issuers) to arrange for the
way to receive AGM notices in
order to save the mail delivery
time.
via
courier
Around the
end of May
2004
BTM sends “Voting Rights
Statement” to Clients.
This is the form the clients can
use for voting instructions.
Around the
end of May
2004
In order to enable the clients to
vote in split, BTM sends in
advance a legally required
pre-notice to each company via
the registrars.
By two weeks
before the
meeting date
BTM receives notices of the
shareholders’ meeting.
BTM notifies the agenda items to
Fax
the clients.
e-mail
After BTM
deadline
BTM fills out voting cards
according to the clients’
instructions and mail the cards
to the registrars.
24 Jun 2004 –
29 Jun 2004
(90% of the companies with March
fiscal year end had AGMs in this
period)
22
The Bank of Tokyo-Mitsubishi, Ltd.
Global Securities Services Division
Corporate Actions
11. [Appendix] Simplified Merger / Simplified Share Exchange
Corporate action notifications on mergers are normally provided only to the clients who
are the shareholders of the dissolving company. The merger notifications are not sent to
the shareholders of the surviving company because the balance of shares held by these
shareholders will not be affected by the event. With regard to “simplified mergers”,
however, BTM provides the notifications to the shareholders of the surviving company
on request basis (by MT599). Below are the explanations on the simplified merger that
aim to help our clients consider if they need such notifications.
(1) Outline of Simplified Merger
“Simplified merger” is a type of merger provided for in the Japanese commercial
code. Defined as a merger where a company acquires a much smaller company (the
number of the newly issued shares of the surviving company is not more than 5% of
the outstanding shares), the simplified merger does not need the approval by the
shareholders meeting of the surviving company. Instead, the law requires the
surviving company to notify the scheduled simplified merger to the shareholders.
This notification is often made by a public announcement in the newspaper where
the surviving company notices that any objection to the merger by the shareholders
should be informed to the company by 2 weeks from the announcement date. Those
shareholders who have notified the opposition have the right (but not the obligation)
to require the company to buyback the shares. Should one-sixth of the shareholders
of the surviving company represent the opposition to the merger, it is not possible to
conduct the merger by means of the simplified merger process.
(2) Points to be noted by the shareholders of a surviving company
(i)
The shareholders of a surviving company are not requested to take any
(ii)
action by law or by the company.
In this respect, the shareholders should be careful about the notification of
simplified mergers because there are information providers who notify the
simplified mergers improperly as the corporate action event of “Consent
Solicitation” (using CONS in swift messages). This is apparently incorrect.
Under the legislation for the simplified merger process, surviving companies
do not have to collect shareholders’ consent to the merger.
Normally, simplified mergers do not per se have much influence on the
shareholders of the surviving company.
23
The Bank of Tokyo-Mitsubishi, Ltd.
Global Securities Services Division
Corporate Actions
(iii)
There is no established procedures for wielding the shareholders’ rights to
(a)represent the opposition to simplified mergers and (b)sell the shares to
the surviving company.
(a) In representing the opposition as the shareholder, the registration
requirements vary by company. It is not possible to sell the shares during
the registration process.
(b) The buyback price is determined at the discretion of the company. As
there is no legislation that specifically stipulates the method to
determine the share buyback price, shareholders who are not satisfied
with the offered price have nothing to do but to file a lawsuit, which is
out of the scope of our custody services.
(3) Other “Simplified” events
The above explanations about the simplified merger apply to the “simplified share
exchange” (please read “surviving company” in the above explanations as “parent
company” and read “dissolving company” as “subsidiary”) and also to the following
simplified events:
-
Simplified Spin-off and Acquisition
-
Simplified Acquisition of Business
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