(1) When a company intends to issue corporate bonds the holder of which is entitled to participate in the issuer's distribution of dividends (hereinafter referred to as "participating bonds") in accordance with Article 469(2)1 of the Act, its board of directors shall determine the following matters, if its articles of incorporation do not provide for the matters; provided, the foregoing shall not apply where the articles of incorporation provide that such matters shall be determined at a general meeting of shareholders:
1. The total amount of participating bonds;
2. Conditions for and details of participation in the distribution of dividends;
3. A statement that shareholders shall be granted the right to subscribe for participating bonds and the amount of participating bonds subject to the right of subscription.
(2) When a company intends to issue participating bonds to any person other than shareholders, the value of participating bonds that the company is authorized to issue and the details of participation in the distribution of dividends shall be determined by a special resolution adopted at a general meeting of shareholders under Article 434 of the Act, if its articles of incorporation do not provide otherwise for such matters.
(3) When a resolution is adopted pursuant to paragraph (2), the outlines of the resolution on the issuance of participating bonds shall be stated in the notice or public announcement given under Article 363 of the Act.
(4) A shareholder who has the subscription right for participating bonds is entitled to acquire the participating bonds allocated in proportion to the number of shares held by him or her; provided, the foregoing shall not apply to a fraction that falls short of the minimum amount, of the amount of each participating bond.
(5) A company shall set a specific date and publicly announce that shareholders recorded on the register of shareholders as of the date is entitled to acquire the participating bonds allocated, at least two weeks before the set date; provided, the public announcement shall be given at least two weeks before the first day of the period specified in Article 354(1) of the Act, if the date falls within the period.
(6) If shareholders have the right to acquire participating bonds, each shareholder shall be notified of the amount and issue price of participating bonds, conditions for participation in the distribution of dividends, and the purport that he or she will forfeit the right to acquire participating bonds if he or she fails to subscribe for the participating bonds by the specified deadline.
(7) When a company issues unregistered stock certificates, it shall give public announcement of the matters specified in paragraph (6).
(8) Notice under paragraph (6) or public announcement under paragraph (7) shall be given at least two weeks before the date specified in paragraph (5).
(9) If a person who has the right to acquire participating bonds fails to apply for subscription for the participating bonds by the deadline, notwithstanding notice under paragraph (6) or public announcement under paragraph (7), the person shall forfeit such right.
(10) When a company issues participating bonds, it shall register the following matters with the registry having jurisdiction over its main office within two weeks after payment is fully made in accordance with Article 476 of the Act:
1. The total amount of participating bonds;
2. The amount of each participating bond;
3. The amount paid for each participating bond;
4. A statement that the bond holder is entitled to participate in the distribution of dividends, and the conditions for and details of participation in the distribution of dividends.
(11) Upon any change in the registered matters under the subparagraphs of paragraph (10), a company shall file an application for registration of such change at the location of its main office within 2 weeks from the date of such change. <Amended on Jan. 21, 2025>
(12) If an event subject to registration occurs in a foreign country when participating bonds are offered in the foreign country, the period for registration shall begin on the date the relevant notice arrives.