Pentax 2004 Annual Report Download - page 57

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No»10 SHAREHOLDERS’ EQUITY
Japanese companies are subject to the Code to which certain
amendments became effective from October 1, 2001.
The Code was revised whereby common stock par value was
eliminated resulting in all shares being recorded with no par value
and at least 50% of the issue price of new shares is required to be
recorded as common stock and the remaining net proceeds as
additional paid-in capital. The Code permits Japanese companies,
upon approval of the Board of Directors, to issue shares to existing
shareholders without consideration as a stock split. Such issuance
of shares generally does not give rise to changes within the
shareholders' accounts.
The revised Code also provides that an amount at least equal to
10% of the aggregate amount of cash dividends and certain other
appropriations of retained earnings associated with cash outlays
applicable to each period shall be appropriated as a legal reserve (a
component of retained earnings) until such reserve and additional
paid-in capital equals 25% of common stock. The amount of total
additional paid-in capital and legal reserve that exceeds 25% of
the common stock may be available for dividends by resolution of
the shareholders. In addition, the Code permits the transfer of a
portion of additional paid-in capital and legal reserve to the
common stock by resolution of the Board of Directors.
The revised Code eliminated restrictions on the repurchase and
use of treasury stock allowing Japanese companies to repurchase
treasury stock by a resolution of the shareholders at the general
shareholders meeting and dispose of such treasury stock by
resolution of the Board of Directors beginning April 1, 2002. The
repurchased amount of treasury stock cannot exceed the amount
available for future dividend plus amount of common stock,
additional paid-in capital or legal reserve to be reduced in the case
where such reduction was resolved at the general shareholders
meeting.
The amount of retained earnings available for dividends under
the Code was ¥119,888 million ($1,131,019 thousand) as of
March 31, 2004, based on the amount recorded in the Company's
general books of account. In addition to the provision that
requires an appropriation for a legal reserve in connection with the
cash payment, the Code imposes certain limitations on the
amount of retained earnings available for dividends.
The general shareholders meeting held in June 2003 approved
the introduction of the Committees System stipulated in the Code.
Before the Committees System was introduced, dividends had
been approved by the general shareholders meeting held subse-
quent to the fiscal year to which the dividends were applicable.
After introducing the Committees System, dividends may be paid
upon resolution of the Board of Directors, subject to certain
limitations imposed by the Code. Semiannual interim dividends
may also be paid upon resolution of the Board of Directors, subject
to certain limitations imposed by the Code.
On June 20, 2003 and June 21, 2002, the Company's share-
holders approved a stock option plan for the Group's directors and
key employees. Under the plan, 1,066 thousand options were
granted to them to purchase shares of the Company's common
stock during the exercise period from October 1, 2004 to Septem-
ber 30, 2008 or from October 1, 2003 to September 30, 2007.
The options were granted at an exercise price of ¥9,750, ¥7,670
or ¥6,690.