Pioneer 2016 Annual Report Download - page 43

a. Dividends
Under the Companies Act, companies can pay divi-
dends at any time during the fiscal year in addition to
the year-end dividend upon resolution of the share-
holders’ meeting. For companies that meet certain
criteria such as: (1) having a board of directors, (2)
having independent auditors, (3) having an audit and
supervisory board, and (4) the term of service of direc-
tors being prescribed as one year rather than two
years 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 of the above criteria.
Semiannual interim dividends may also be paid
once a year upon resolution by the board of direc-
tors 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 treasury stock. The limitation is defined as
the amount available for distribution to the sharehold-
ers, 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 an addi-
tional paid-in capital (a component of capital surplus)
or as a legal reserve (a component of retained earn-
ings), depending on the equity account charged upon
the payment of such dividends, until the aggregate
amount of additional paid-in capital and legal reserve
equals 25% of the common stock. Under the Compa-
nies Act, the total amount of additional paid-in capital
and 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 trans-
ferred among the accounts under certain conditions
upon resolution of the shareholders’ meeting.
c. Treasury Stock and Treasury Stock
Acquisition Rights
The Companies Act also provides for companies to
purchase treasury stock and dispose of such trea-
sury stock by resolution of the board of directors. The
amount of treasury stock purchased cannot exceed
the amount available for distribution to the share-
holders which is determined by a specified 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 component of equity or
deducted directly from stock acquisition rights.
9. Equity
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 accounting matters are summarized below:
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Pioneer Corporation Annual Report 2016