Assumed that you are operating a joint stock company ( K.K company ) in Japan.
If your company wants to issue stock options to director or employee of your company, it can issue “stock acquisition right = shinkabu yoyaku ken = しんかぶよやくけん = 新株予約権 “.
Assumed that your company has issued one “stock acquisition right ” ( hereinafter referred to as stock options) to director Ms. S.
Your company can issue stock options to her for free of charge or with charge.
By exercising of one stock option, she can acquire 50 shares of your company.
By exercising one stock option, she can purchase share of your company at 100 yen for one share.
If at the time of her exercising, market price of share is 150 yen, she can acquire profit of 2500 yen.
1 stock option × 50 shares × 100 yen – 150 yen × 50 shares = 2500 yen
So, she will try to increase of market price of shares of your company.
It means she will do her best in her work and it should be beneficial to your company, too.
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There is another way to use stock option.
Assumed that your company wants to receive contribution from venture capital.
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Now, you have 10 shares of your company. ( 1 JPY for one share ).
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If your company wants to receive 100 yen from venture capital, your company will issue 100 shares to venture capital.
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So, the venture capital will become major shareholder of your company and your status is unstable.
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In that case, your company can issue stock options ( exercising price of stock option is 1 yen ) before it issue 100 shares to venture capital.
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Then, in the future if you wants to become major shareholder again, you can exercise stock options.
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How to determine issue of stock options
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Assumed that your company is a company with restriction on transfer of shares.
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In the case a shareholder wants to sell her shares to other person, she need to acquire approval of the company.
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This is called “Hi koukai kaisha = 非公開会社”.
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In the case “Hi koukai kaisha = 非公開会社” issues ( including disposition of treasury shares ) shares of the company, determination of shareholders meeting is required.
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Because, if the company has issued new shares, it will change of percentage of shareholders.
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If current shareholders has not received new shares, ratio of her shares will decrease.
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So, in order to issue new shares of Hikoukai kaisha, decision of shareholders meeting is required.
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This provision is applied to issue of stock options.
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So, if your company is Hikoukai kaisha, in order to issue stock options, following matters should be determined by resolution of shareholders meeting.
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1 The features and the number of stock option
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Assumed 10 stock options.
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2 In the case a person can receive stock options without paying money, such matter
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3 In the case a person need to pay money ( or property ) to receive stock options, the amount of money to be paid.
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Assumed 1 yen for one stock option
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4 The date when a person can receive stock options.
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5 In the case a person needs to pay money to receive stock options, the due date of such payment.
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The Subscription Requirements ( ex. the amount of money paid by stock options receiver ) should be equal for each stock option subscribers.
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However, your company can issue several kind of stock options.
Ex. 2017, 1st month stock options and 2017, 5th months stock options.
And even if subscription requirements are different from 2017, 1st month stock options and 2017, 5th months stock options each other, it is legal.
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Registration of issue of stock option
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In the case your company has issued stock options, it needs to file registration of issue of stock options within two weeks from issue.
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Matters to be registered with legal affairs bureau
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1 The number of stock option
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Assumed 10 stock options.
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2 The number of shares by exercising of one stock option.
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Assumed 100 shares.
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So, a person who has one stock option can receive 10 shares, if she exercise her stock option.
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3 The amount of money paid by her ( a person who has stock options ) at the time of exercising.
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Yes, it should be determined when stock option is issued.
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4 If she can exercise stock option by contribution of property, such statement and content of contribution ( ex. car ) and value ( ex. 1 million yen ).
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5 Period of exercising of voting right.
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ex. She can exercise stock options during 1st, January 2017 to 31th, December 2027.
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6 Condition to exercise her stock option.
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ex. If she has resigned from your company, she can not exercise her stock option.
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7 In the case your company issues stock options for free of charge, such statement.
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8 In the case your company issued stock option with charge, the amount of payment.
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9 The date of issue of stock option.
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10 The name of stock option.
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ex. Number 1 Stock option.
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The amount of registration tax is 90000 yen.
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