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Nikon Annual Report 2009 41
8. EQUITY
Since May 1, 2006, Japanese companies have been subject to the
Companies Act of Japan (the “Companies Act”). The significant
provisions in the Companies Act that affect financial and account-
ing matters are summarized below:
(a) Dividends
Under the Companies Act, 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 that
meet certain criteria such as; (1) having the Board of Directors,
(2) having independent auditors, (3) having the Board of Corpo-
rate Auditors, and (4) the term of service of the directors is pre-
scribed as one year rather than two years of normal term by its
articles of incorporation, the Board of Directors of such company
may declare dividends (except for dividends in kind) at any time
during the fiscal year if the company has prescribed so in its arti-
cles of incorporation. The Company meets all the above criteria.
The Companies Act 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 articles of incor-
poration of the company so stipulate. The Companies Act pro-
vides certain limitations on the amounts available for dividends or
the purchase of treasury stock. The limitation is defined as the
amount available for distribution to the shareholders, but the
amount of net assets after dividends must be maintained at no less
than ¥3 million.
(b) Increases/Decreases and Transfer of Common Stock,
Reserve and Surplus
The Companies Act 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 Companies Act, the total amount of
additional paid-in capital and legal reserve may be reversed with-
out limitation. The Companies Act also provides that common
stock, legal reserve, additional paid-in capital, other capital sur-
plus and retained earnings can be transferred among the accounts
under certain conditions upon resolution of the shareholders.
(c) Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase trea-
sury stock and dispose of such treasury stock by resolution of the
Board of Directors. The amount of treasury stock purchased can-
not exceed the amount available for distribution to the sharehold-
ers which is determined by specific formula.
Under the Companies Act, stock acquisition rights are
presented as a separate component of equity.
The Companies Act also provides that companies can purchase
both treasury stock acquisition rights and treasury stock. Such
treasury stock acquisition rights are presented as a separate compo-
nent of equity or deducted directly from stock acquisition rights.
9. STOCK OPTION
The stock options outstanding as of March 31, 2009 and 2008 were as follows:
Stock Options
Persons
Granted
Number of
Options Granted
Date of
Grant
Exercise
Price Exercise Period
2001 Stock Options 9 directors 99,000 shares 2001.6.28 ¥1,321 From June 29, 2003
13 officers To June 28, 2011
2003 Stock Options 11 directors 203,000 shares 2003.6.27 ¥1,048 From June 28, 2005
11 officers To June 27, 2013
2004 Stock Options 12 directors 210,000 shares 2004.6.29 ¥1,225 From June 30, 2006
10 officers To June 29, 2014
2005 Stock Options 11 directors 178,000 shares 2005.6.29 ¥1,273 From June 30, 2007
10 officers To June 29, 2015
2007 Stock Options 12 directors 99,000 shares 20 07.3.14 ¥2,902 From February 28, 2009
12 officers To February 27, 2017
2007 Stock Options 8 directors 26,100 shares 2007.8.27 ¥ 1 From August 28, 2007
15 officers To August 27, 2037
2008 Stock Options 8 directors 117,900 shares 2008.11.25 ¥ 1 From November 26, 2008
16 officers To November 25, 2038