Brother International 2008 Annual Report Download - page 32

30 Brother Annual Report 2008
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Brother Industries, Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2008 and 2007
8. Equity
Since May 1, 2006, Japanese companies have been subject to the Corporate Law of Japan (the “Corporate Law”), which
reformed and replaced the Commercial Code of Japan. The significant provisions in the Corporate Law that affect
financial and accounting matters are summarized below:
(a) Dividends
Under the Corporate Law, companies can pay dividends at any time during the fiscal year in addition to the year-end
dividend upon resolution at the shareholders meeting. For companies meet certain criteria such as; (1) having the
Board of Directors, (2) having independent auditors, (3) having the Board of Corporate Auditors, and (4) the term of
service of the directors is prescribed as one year rather than two years of normal term by its articles of incorporation.
The Board of Directors may declare dividends (except for dividends in kind) at any time during the fiscal year if the
company has prescribed so in its articles of incorporation. The Company meets all the above criteria.
The Corporate Law permits companies to distribute dividends-in-kind (non-cash assets) to shareholders subject
to a certain limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the arti-
cles of incorporation of the company so stipulate. The Corporate Law provides certain limitations on the amounts
available for dividends or the purchase of treasury stock. The limitation is defined as the amount available for distri-
bution to the shareholders, but the amount of equity after dividends must be maintained at no less than ¥3 million.
(b) Increases / decreases and transfer of common stock, reserve and surplus
The Corporate Law requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a
component of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on the
equity account charged upon the payment of such dividends until the total of aggregate amount of legal reserve
and additional paid-in capital equals 25% of the common stock. Under the Corporate Law, the total amount of addi-
tional paid-in capital and legal reserve may be reserved without limitation. The Corporate Law also provides that
common stock, legal reserve, additional paid-in capital, other capital surplus and retained earnings can be trans-
ferred among the accounts under certain conditions upon resolution of the shareholders.
(c) Treasury stock and treasury stock acquisition rights
The Corporate Law also provides for companies to purchase treasury stock and dispose of such treasury stock by
resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available
for distribution to the shareholders which is determined by specific formula. Under the Corporate Law, stock acqui-
sition rights, which were previously presented as a liability, are now presented as a separate component of equity.
The Corporate Law also provides that companies can purchase both treasury stock acquisition rights and treasury
stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted directly
from stock acquisition rights.
9. Stock Options
The stock options outstanding as of March 31, 2008 are as follows:
Persons Number of Date of Exercise
Stock Option Granted Options granted Grant Price Exercise Period
¥1
30 years starting on the
2007 Stock Option 6 directors 46,000 shares Mar 19, 2007 following day of stock
($0.010) option grant date
2008 Stock Option 6 directors 65,100 shares Mar 24, 2008 ¥1 Same as above
($0.010)