Sharp 2007 Annual Report Download - page 60

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8. Contingent Liabilities
Loans guaranteed .........................................................................................................................
Notes discounted ......................................................................................................................... $ 54,641
4,308
$ 58,949
¥ 6,393
504
¥ 6,897
20072007
Yen
(millions) U.S. Dollars (thousands)
T he Japanese Corporate Law (“the Law”) became effective on May
1, 2006, replacing the Japanese Commercial Code (“the Code”).
The Law is generally applicable to events and transactions occurring
after April 30, 2006 and for fiscal years ending after that date.
Under Japanese laws and regulations, the entire amount paid
for new shares is required to be designated as common stock.
However, a company may, by a resolution of the Board of Directors,
designate an amount not exceeding one-half of the price of the
new shares as additional paid-in capital, which is included in capital
surplus.
U
nder the Law, in cases where a dividend distribution of
surplus is made, the smaller of an amount equal to 10% of the
dividend or the excess, if any, of 25% of common stock over the
total of legal earnings reserve and additional paid-in capital must
be set aside as legal earnings reserve or additional paid-in
capital. Legal earnings reserve is included in retained earnings in
the accompanying consolidated balance sheets.
Under the Code, companies were required to set aside an amount
equal to at least 10% of the aggregate amount of cash dividends and
other cash appropriations as legal earnings reserve until the total of
legal earnings reserve and additional paid-in capital equaled 25% of
common stock.
Under the Code, legal earnings reserve and additional paid-in
capital could be used to eliminate or reduce a deficit by a resolution
of the shareholders’ meeting or could be capitalized by a resolution
of the Board of Directors. Under the Law, both of these appropria-
tions generally require a resolution of the shareholders’ meeting.
L
egal earnings reserve and additional paid-in capital may
not be distributed as dividends. Under the Code, however, on
condition that the total amount of legal earnings reserve and addi-
tional paid-in capital remained equal to or exceeded 25% of
common stock, they were available for distribution by resolution of
the shareholders’ meeting. Under the Law, all legal earnings
reserve and all additional paid-in capital may be transferred to
other retained earnings and capital surplus , respectively, which are
potentially available for dividends.
T he maximum amount that the Company can distribute as
dividends is calculated based on the nonconsolidated financial
statements of the Company in accordance with Japanese laws and
regulations.
Year end cash dividends are approved by the shareholders
after the end of each fiscal year and semiannual interim cash
dividends are declared by the Board of Directors after the end of
each interim six-month period. Such dividends are payable to
shareholders of record at the end of each fiscal year or interim
six-month period. In accordance with the Law, final cash dividends
and the related appropriations of retained earnings have not been
reflected in the financial statements at the end of such fiscal year.
However, cash dividends per share shown in the accompanying
consolidated statements of income reflect dividends applicable to the
respective period.
On June 22, 2007, the shareholders approved the declaration
of year end cash dividends totaling ¥15,270 million ($130,513 thou-
sand) to shareholders of record as of March 31, 2007, covering the
year then ended.
7. Net Assets and Per Share Data
As of March 31, 2007, the Company and its consolidated subsidiaries had contingent liabilities as follows: