(1) A company may capitalize its reserve, in whole or in part, by a resolution of the board of directors: Provided, That this shall not apply where the articles of incorporation provide that such shall be determined at a general meeting of shareholders. <Amended by Act No. 10600, Apr. 14, 2011>
(2) In cases falling under paragraph (1), the company shall issue shares to the shareholders in proportion to the number of shares which they hold. In such cases, Article 443 (1) shall apply mutatis mutandis to fractional shares.
(3) When a resolution is adopted by the board of directors in accordance with paragraph (1), the company shall fix a date and give a public notice two weeks prior to such date to the effect that new shares under paragraph (2) shall be alloted to the shareholders entered on the register of shareholders on that date: Provided, That if the above date falls within the period mentioned in Article 354 (1), such public notice shall be given two weeks prior to the first day of such period.
(4) In cases falling under the proviso to paragraph (1), shareholders shall become those of new shares under paragraph (2) on the date of the resolution of a general meeting of shareholders.
(5) When shareholders become holders of new shares pursuant to paragraph (3) or (4), directors shall immediately notify the shareholders to whom the new shares have been allocated and the pledgees entered on the register of shareholders, of the classes and number of the shares allocated to the shareholders. <Amended by Act No. 12591, May 20, 2014>
(6) The latter part of Article 350 (3) shall apply mutatis mutandis in cases falling under paragraph (1). <Newly Inserted by Act No. 5053, Dec. 29, 1995>
(7) The provisions of Article 339 shall apply mutatis mutandis to the issuance of shares prescribed in paragraph (2).[This Article Wholly Amended by Act No. 3724, Apr. 10, 1984]