Nikon 2016 Annual Report Download - page 68

66 NIKON REPORT 2016
9. Equity
Japanese companies are subject to the Companies Act of Japan (the
“Companies Act”). The signicant provisions in the Companies Act
that affect nancial and accounting matters are summarized below.
(a) Dividends
Under the Companies Act, companies can pay dividends at any time
during the scal year in addition to the year-end dividend upon resolu-
tion at the shareholders’ meeting. For companies that meet certain
criteria, such as: (1) having a Board of Directors, (2) having indepen-
dent auditors, (3) having an Audit & Supervisory Board, 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 of such company may declare dividends (except for divi-
dends in kind) at any time during the scal year if the company has
prescribed so in its articles 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 incorporation of
the company so stipulate. The Companies Act provides certain limita-
tions on the amounts available for dividends or the purchase of trea-
sury stock. The limitation is dened 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 divi-
dends 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 the
legal reserve and additional paid-in capital equals 25% of the
common stock. Under the Companies Act, the total amount of addi-
tional paid-in capital and the legal reserve may be reversed without
limitation. The Companies Act also provides that common stock, legal
reserve, additional paid-in capital, other capital surplus and retained
earnings can be transferred among the accounts under certain con-
ditions upon resolution of the shareholders.
(c) Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act 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 deter-
mined by a specic 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 trea-
sury stock acquisition rights are presented as a separate component
of equity or deducted directly from stock acquisition rights.
(7) Plan assets as of March 31, 2015 and 2016
a. Components of plan assets
Plan assets consisted of the following:
2015 2016
Debt investments 58% 61%
Equity investments 36 32
General account 3 4
Others 3 3
Total 100% 100%
b. Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering the long-term rates of return which are expected currently and in the future
from the various components of the plan assets.
(8) Assumptions used for the years ended March 31, 2015 and 2016 were set forth mainly as follows:
2015 2016
Discount rate 1.0% 0.5%
Expected rate of return on plan assets 1.3% 1.0%