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49-538: Niwango, Inc. ( 株式会社 ニワンゴ , Kabushiki Kaisha Niwango ) was a Japanese company that was created to manage Niconico . Its headquarters were in the Nico Nico Headquarters Building ( ニコニコ本社ビル , Niko Niko Honsha Biru ) in Shibuya , Tokyo . It was a subsidiary of Dwango before absorbed into its parent on October 1, 2015. This article about a Japanese corporation- or company-related topic

98-533: A Dutch auction ), and accelerate repurchases. More than 95% of the buyback programs worldwide are through an open-market method, whereby the company announces the buyback program and then repurchases shares in the open market (stock exchange). In the late 20th and the early 21st century, there was a sharp rise in the volume of share repurchases in the United States. Large share repurchases started later in Europe than in

147-423: A "minimum holding buyback"). This does not require a resolution but the purchased shares must still be canceled. Repurchases account for a small fraction of the trading volume in a typical stock, making their price impact too small to generate short-term price manipulation. The short-term price increase after buybacks is modest and does not reverse on average. Share repurchases have been critically evaluated since

196-423: A (so-called) "close company" ( 非公開会社 , hi-kōkai gaisha ) , in which case the company (e.g. its board of directors or a shareholders' meeting, as defined in the articles of incorporation) must approve any transfer of shares between shareholders; this designation must be made in the articles of incorporation. The articles must be sealed by the incorporator(s) and notarized by a civil law notary , then filed with

245-511: A K.K. is carried out by one or more incorporators ( 発起人 , hokkinin , sometimes referred to as "promoters") . Although seven incorporators were required as recently as the 1980s, a K.K. now only needs one incorporator, which may be an individual or a corporation. If there are multiple incorporators, they must sign a partnership agreement before incorporating the company. The purpose statement requires some specialized knowledge, as Japan follows an ultra vires doctrine and does not allow

294-468: A K.K. must have a board of directors ( 取締役会 , torishimariyaku kai ) consisting of at least three individuals. Directors have a statutory term of office of two years, and auditors have a term of four years. Small companies can exist with only one or two directors, with no statutory term of office, and without a board of directors ( 取締役会非設置会社 , torishimariyaku-kai hi-setchi-gaisha ) . In such companies, decisions are made via shareholder meeting and

343-477: A K.K. to act beyond its purposes. Judicial or administrative scriveners are often hired to draft the purposes of a new company. Additionally, the articles of incorporation must contain the following if applicable: Other matters may also be included, such as limits on the number of directors and auditors. The Corporation Code allows a K.K. to be formed as a "stock company that is not a public company" ( 公開会社でない株式会社 , kōkai gaisha denai kabushiki gaisha ) , or

392-434: A company repurchases its own shares, it reduces the number of shares held by the public. The reduction of the float, or publicly traded shares, means that even if profits remain the same, the earnings per share increase. Repurchases allow stockholders to delay taxes which they would have been required to pay on dividends in the year the dividends are paid, to instead pay taxes on the capital gains they receive when they sell

441-565: A corporation can repurchase its own stock by distributing cash to existing shareholders in exchange for a fraction of the company's outstanding equity ; that is, cash is exchanged for a reduction in the number of shares outstanding . The company either retires the repurchased shares or keeps them as treasury stock , available for reissuance . Under U.S. corporate law , there are six primary methods of stock repurchase: open market, private negotiations, repurchase " put " rights, two variants of self-tender repurchase (a fixed price tender offer and

490-447: A minor issue when deciding how to structure a business in Japan. As all publicly traded companies follow the K.K. structure, smaller businesses often choose to incorporate as a K.K. simply to appear more prestigious. In addition to income taxes, K.K.s must also pay registration taxes to the national government and may be subject to local taxes. Generally, the power to bring actions against

539-424: A particular time interval again ranging from months to even years. According to SEC Rule 10b-18, the issuer cannot purchase more than 25% of the average daily volume. An accelerated share repurchase (ASR) is a share buyback strategy where a company repurchases a large chunk of its publicly traded equity shares. Companies rely on specialized investment banks to effectuate the transaction. In a typical ASR transaction,

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588-412: A potentially profitable investment for the manager. That is, they may repurchase the currently undervalued shares, wait for the market to correct the undervaluation whereby prices increase to the intrinsic value of the equity, and re-issue them at a profit. Alternatively, they may undertake a fixed price tender offer, whereby a premium is often offered over current market price; this sends a strong signal to

637-571: A prefix (e.g. 株式会社 電通 , kabushiki gaisha Dentsū , a style called 前株 , mae-kabu ) or as a suffix (e.g. トヨタ自動車 株式会社 , Toyota Jidōsha kabushiki gaisha , a style called 後株 , ato-kabu ). Many Japanese companies translate the phrase " 株式会社 " in their name as " Company, Limited "—this is very often abbreviated as " Co., Ltd. "—but others use the more Americanized translations "Corporation" or "Incorporated". Texts in England often refer to kabushiki kaisha as " joint stock companies ". While that

686-509: A price of less than ¥50,000 per share (effective 1982-2003 ), or operate with paid-in capital of less than ¥10 million (effective 1991–2005). On June 29, 2005, the Diet of Japan passed a new Companies Act ( 会社法 , kaisha-hō ) , which took effect on May 1, 2006. A kabushiki gaisha may be started with capital as low as ¥1, making the total cost of a K.K. incorporation approximately ¥240,000 (about US$ 2,500) in taxes and notarization fees. Under

735-421: A selective buyback. The notice to shareholders convening the meeting to vote on a selective buyback must include a statement setting out all material information that is relevant to the proposal, although it is not necessary for the company to provide information already disclosed to the shareholders, if that would be unreasonable. A company may also buy back shares held by or for employees or salaried directors of

784-661: Is a stub . You can help Misplaced Pages by expanding it . Kabushiki Kaisha A kabushiki gaisha ( Japanese : 株式会社 , pronounced [kabɯɕi̥ki ɡaꜜiɕa] ; lit.   ' share company ' ) or kabushiki kaisha , commonly abbreviated K.K. or KK , is a type of company ( 会社 , kaisha ) defined under the Companies Act of Japan . The term is often translated as "stock company", " joint-stock company " or "stock corporation". The term kabushiki gaisha in Japan refers to any joint-stock company regardless of country of origin or incorporation; however, outside Japan

833-593: Is also combined into one Unicode character at code point U+337F ㍿ SQUARE CORPORATION , while the parenthesized form can also be represented with a single character, U+3231 ㈱ PARENTHESIZED IDEOGRAPH STOCK as well as parentheses around U+682A 株 CJK UNIFIED IDEOGRAPH-682A and its romanization U+33CD ㏍ SQUARE KK . These forms, however, only exist for backward compatibility with older Japanese character encodings and Unicode and should be avoided when possible in new text. The first kabushiki gaisha

882-448: Is close to a literal translation of the term, the two are not precisely the same. The Japanese government once endorsed "business corporation" as an official translation but now uses the more literal translation "stock company." Japanese often abbreviate " 株式会社 " in a company name on signage (including the sides of their vehicles) to 株 in parentheses , as, for example, " ABC㈱ ." The full, formal name would then be " ABC株式会社 ". 株式会社

931-629: Is referred to as a company with a board of statutory auditors ( 監査役会設置会社 , kansayaku-kai setchi-gaisha ) . Close K.K.s may also have a single person serving as director and statutory auditor, regardless of capital or liabilities. A statutory auditor may be any person who is not an employee or director of the company. In practice, the position is often filled by a very senior employee close to retirement, or by an outside attorney or accountant. Japanese law does not designate any corporate officer positions. Most Japanese-owned kabushiki gaisha do not have "officers" per se , but are directly managed by

980-440: Is the open-market stock repurchase, representing almost 95% of all repurchases. A firm will announce that it will repurchase some shares in the open market from time to time as market conditions dictate and maintains the option of deciding whether, when, and how much to repurchase. Open-market repurchases can span months or even years. There are, however, daily buyback limits which restrict the amount of stock that can be bought over

1029-399: The balance sheet , which makes the company a more attractive target for takeover, since the cash can be used to pay down the debt incurred to carry out the acquisition. Anti-takeover strategies, therefore, often include maintaining a lean cash position and share repurchases bolster the stock price, making a takeover more expensive. The most common share repurchase method in the United States

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1078-574: The 1970's when Securities and Exchange Commission ascertained "that a large volume of stock buybacks would manipulate the market". Rule 10b-18 has been criticized for leaving stock repurchases "virtually unregulated". According to Lenore Palladino, an economist at the Roosevelt Institute , stock buy back programs are "one of the drivers of our imbalanced economy, in which corporate profits and shareholder payments continue to grow while wages for typical workers stay flat." Executive compensation

1127-565: The Illinois Business Corporation Act of 1933, giving kabushiki gaisha many traits of American corporations , and to be more exact, Illinois corporations. Over time, Japanese and U.S. corporate law diverged, and K.K. assumed many characteristics not found in U.S. corporations. For instance, a K.K. could not repurchase its own stock (a restriction lifted by the amendment of the Commercial Code in 2001), issue stock for

1176-469: The Legal Affairs Bureau in the jurisdiction where the company will have its head office. In a direct incorporation, each incorporator receives a specified amount of stock as designated in the articles of incorporation. Each incorporator must then promptly pay its share of the starting capital of the company, and if no directors have been designated in the articles of incorporation, meet to determine

1225-462: The Ministry of Finance. Under the new Company Law, public and other non-close K.K.s may either have a statutory auditor, or a nominating committee ( 指名委員会 , shimei-iin-kai ) , auditing committee ( 監査委員会 , kansa-iin-kai ) and compensation committee ( 報酬委員会 , hōshū-iin kai ) structure similar to that of American public corporations. If the company has an auditing committee, it

1274-540: The United States, but are nowadays a common practice around the world. U.S. Securities and Exchange Commission (SEC) rule 10b-18 sets requirements for stock repurchase in the United States. Rule 10b-18 provides a voluntary "safe harbor" from liability for market manipulation under Sections 9(a)(2) and 10(b) of the Securities Exchange Act of 1934 . Companies typically have two uses for profits. Firstly, some part of profits can be distributed to shareholders in

1323-521: The amount of damages being claimed, shareholders rarely had the motivation to sue on the company's behalf. In 1993, the Commercial Code was amended to reduce the filing fee for all shareholder derivative suits to ¥8,200 per claim. This led to a rise in the number of derivative suits heard by Japanese courts, from 31 pending cases in 1992 to 286 in 1999, and to a number of very high-profile shareholder actions, such as those against Daiwa Bank and Nomura Securities Stock buyback In most countries,

1372-415: The company delivers the cash up front to the investment bank and enters into a forward contract to have its shares delivered at specified future date, adhering to regulations. Subsequently, the bank, borrows shares of the company, and delivers those shares back to the company. Companies often engage in accelerated share repurchase (ASR) programs, if they have certain convictions about the intrinsic valuation of

1421-448: The company or a related company. This type of buyback, referred to as an "employee share scheme buyback", requires an ordinary resolution. A listed company may also buy back its shares in on-market trading on the stock exchange, following the passing of an ordinary resolution if over the 10/12 limit. The stock exchange's rules apply to "on-market buybacks". A listed company may also buy unmarketable parcels of shares from shareholders (called

1470-471: The company or if they have commitments of capital return to shareholders. Prior to 1981, all tender offer repurchases were executed using a fixed-price tender offer. This offer specifies in advance a single purchase price, the number of shares sought, and the duration of the offer, with public disclosure required. The offer may be made conditional upon receiving tenders of a minimum number of shares, and it may permit withdrawal of tendered shares prior to

1519-425: The decision-making power of the directors is relatively limited. As soon as a third director is designated such companies must form a board. At least one director is designated as a Representative Director ( 代表取締役 , daihyō-torishimariyaku ) , holds the corporate seal and is empowered to represent the company in transactions. The Representative Director must "report" to the board of directors every three months;

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1568-415: The directors on the corporation's behalf is granted to the statutory auditor. Historically, derivative suits by shareholders were rare in Japan. Shareholders have been permitted to sue on the corporation's behalf since the postwar Americanization of the Commercial Code; however, this power was severely limited by the nature of court costs in Japan. Because the cost to file a civil action is proportional to

1617-618: The directors, one of whom generally has the title of president ( 社長 , sha-chō ) . The Japanese equivalent of a corporate vice president is a department chief ( 部長 , bu-chō ) . Traditionally, under the lifetime employment system, directors and department chiefs begin their careers as line employees of the company and work their way up the management hierarchy over time. This is not the case in most foreign-owned companies in Japan, and some native companies have also abandoned this system in recent years in favor of encouraging more lateral movement in management. Corporate officers often have

1666-417: The exact meaning of this statutory provision is unclear, but some legal scholars interpret it to mean that the board must meet every three months. In 2015, the requirement that at least one director and one Representative Director must be a resident of Japan was changed. It is not required to have a resident Representative Director although it can be convenient to do so. Directors are mandatories ( agents ) of

1715-442: The form of dividends or stock repurchases. The remainder of profits are retained earnings , kept inside the company and used for investing in the future of the company, if profitable ventures for reinvestment of retained earnings can be identified. However, sometimes companies may find that some or all of their retained earnings cannot be reinvested to produce acceptable returns. Share repurchases are an alternative to dividends. When

1764-404: The incorporator, and then make payment for his or her shares by a date specified by the incorporator(s). Capital must be received in a commercial bank account designated by the incorporator(s), and the bank must provide certification that payment has been made. Once the capital has been received and certified, the incorporation may be registered at the Legal Affairs Bureau. Under present law,

1813-470: The initial directors and other officers. The other method is an "incorporation by offering," in which each incorporator becomes the stock underwriter of a specified number of shares (at least one each), and the other shares are offered to other investors. As in a direct incorporation, the incorporators must then hold an organizational meeting to appoint the initial directors and other officers. Any person wishing to receive shares must submit an application to

1862-437: The legal title of shihainin , which makes them authorized representatives of the corporation at a particular place of business, in addition to a common-use title. Kabushiki gaisha are subject to double taxation of profits and dividends, as are corporations in most countries. In contrast to many other countries, however, Japan also levies double taxes on close corporations ( yugen gaisha and gōdō gaisha ). This makes taxation

1911-500: The market that they believe that the firm's equity is undervalued, which is proven by their willingness to pay above market price to repurchase the shares. However, scholars also suggest that repurchases sometimes might be a cheap talk and convey a misleading signal due to the flexibility of repurchases. Share repurchases avoid the accumulation of excessive amounts of cash in the corporation. Companies with strong cash generation and limited needs for capital spending will accumulate cash on

1960-427: The offer's expiration date. Shareholders decide whether or not to participate, and if so, the number of shares to tender to the firm at the specified price. Frequently, officers and directors are precluded from participating in tender offers. If the number of shares tendered exceeds the number sought, then the company purchases less than all shares tendered at the purchase price on a pro rata basis to all who tendered at

2009-422: The old Commercial Code, a K.K. required starting capital of ¥10 million (about US$ 105,000); a lower capital requirement was later instituted, but corporations with under ¥3 million in assets were barred from issuing dividends , and companies were required to increase their capital to ¥10 million within five years of formation. The main steps in incorporation are the following: The incorporation of

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2058-559: The purchase price on a pro rata basis to all who tendered at or below the purchase price. If too few shares are tendered, then the firm either cancels the offer (provided it had been made conditional on a minimum acceptance), or it buys back all tendered shares at the maximum price. The first firm to use the Dutch auction was Todd Shipyards in 1981. In broad terms, a selective buyback is one in which identical offers are not made to every shareholder, for example, if offers are made to only some of

2107-484: The purchase price. If the number of shares tendered is below the number sought, the company may choose to extend the offer's expiration date. The introduction of the Dutch auction share repurchase in 1981 allows an alternative form of tender offer. A Dutch auction offer specifies a price range within which the shares will ultimately be purchased. Shareholders are invited to tender their stock, if they desire, at any price within

2156-459: The shareholders in the company. In the United States, no special shareholder approval of a selective buyback is required. In the UK, however, the scheme must first be approved by all shareholders, or by a special resolution (requiring a 75% majority) of the members in which no vote is cast by selling shareholders or their associates. Selling shareholders may not vote in favor of a special resolution to approve

2205-722: The shareholders, and the Representative Director is a mandatory of the board. Any action outside of these mandates is considered a breach of mandatory duty. Every K.K. with multiple directors must have at least one statutory auditor ( 監査役 , kansayaku ) . Statutory auditors report to the shareholders, and are empowered to demand financial and operational reports from the directors. K.K.s with capital of over ¥500m, liabilities of over ¥2bn and/or publicly traded securities are required to have three statutory auditors, and must also have an annual audit performed by an outside CPA . Public K.K.s must also file securities law reports with

2254-420: The stated range. The firm then compiles these responses, creating a demand curve for the stock. The purchase price is the lowest price that allows the firm to buy the number of shares sought in the offer, and the firm pays that price to all investors who tendered at or below that price. If the number of shares tendered exceeds the number sought, then the company purchases less than all shares tendered at or below

2303-432: The stock, whose price is now higher because of the smaller number of shares outstanding. Aside from paying out free cash flow, repurchases may also be used to signal and/or take advantage of undervaluation. If a firm's manager believes their firm's stock is currently trading below its intrinsic value, they may consider repurchases. An open market repurchase, whereby no premium is paid on top of current market price, offers

2352-476: The term refers specifically to joint-stock companies incorporated in Japan. In Latin script, kabushiki kaisha , with a ⟨k⟩ , is often used, but the original Japanese pronunciation is kabushiki gaisha , with a ⟨g⟩ , owing to rendaku . A kabushiki gaisha must include " 株式会社 " in its name (Article 6, paragraph 2 of the Companies Act). In a company name, " 株式会社 " can be used as

2401-604: Was the Dai-Ichi Bank , incorporated in 1873. Rules regarding kabushiki gaisha were set out in the Commercial Code of Japan , and was originally based on laws regulating German Aktiengesellschaft (which also means share company). However, during the United States-led Allied Occupation of Japan following World War II, the occupation authorities introduced revisions to the Commercial Code based on

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