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Tokyo Stock Exchange Equities

Equities: Ordinary shares, preferred shares, warrants, preferred subscription certificates, Exchange Traded Fund (ETF), Real Estate Investment Fund (REIT), listed investment trusts
Debt: Public bonds, convertible bonds, government bonds (JGBs), municipal bonds, bank debentures, corporate bonds, samurai bonds (foreign bonds in JPY), shogun bonds (issued in domestic market by foreign institutions in foreign currency)
Money Market: Certificates of deposit, commercial paper, treasury bills, finance bills, bankers acceptances, gensaki, REPO
Other: Unit-type investment trusts, open-type investment trusts, bond investment trusts, stock investment trusts

Board Lots
Equities: Shares are traded in Units. The number of shares per unit is determined by the issuing company, ranges from 1 to 3,000 shares.
Government Bonds: Minimum lot - JPY 50,000 par value
Convertible Bonds: JPY 500,000 or JPY 100,000 par value

Dividend Payment Frequency:

Semi-annual or annual subject to the respective issuing company’s financial condition. Payments are received net of withholding tax via Zengin (banking payment system) or by cheque. With the introduction of new Corporate Law, it is expected that some issuing companies may start to issue quarterly dividend payments.

Interest Payment Frequency
Generally semi-annual or annual

Interest Accrual Rate:
Bond/debt interest accrues on semi-annual ½ basis or annual 1 basis. For first or last interest, interest may accrue on an actual/365-day basis.

Corporate Actions

Common Events: Cash Dividend, Bonus issues, Board Lot Change, Merger/stock swap/stock stransfer, Corporate Spin-Off, Name Change, Change in Fiscal Year End Reporting, Amalgamation / Assimilation (pari-passu) of shares, Repurchase Offer / Tender Offer, Capital Reduction, Consolidation / Subdivision of shares, Proxy Voting, Rights issues / New Share Subscription Rights, Interest, Redemption, Early Redemption, Conversion of Bonds/Warrants, Civil Rehavilitation / Corporate Rehavilitaion Law and Bankruptcy.
Rights Tradeable: Depends on each event
New Shares from Exercised Rights: Typically received three weeks after exercise date.

Foreign Investor Restrictions
Unrestricted Voting Rights

Shares Blocked: No.

Meeting Notices/

Provided in Japanese and translated into English by the subcustodian. Annual general meetings and extraordinary general meetings must be announced at least two weeks in advance.

Meeting Outcome
On request, subject to availability

Company Reports
On request, subject to availability.

Power of Attorney:
Not required.

Most company meetings are convened on the same day in June, as 75% of all listed companies close their financial year at the end of March.

Foreign Ownership
Market Entrance Requirements
Tax exempt Government Bonds are an FII market. Please contact your RBC Dexia Investor Services representative.

JGB accounts require prior approval. Underlying clients must confirm certain details which are lodged for approval with the BoJ and the Nihombashi Tax Office


The below seventeen companies impose aggregate Foreign Ownership Limits (FOL):

Tokyo Broadcasting System Inc., Nippon Television Network, Chubu-Nippon Broadcasting, Asahi Broadcasting Corporation, RKB Mainichi Broadcasting System, Fuji Television Network, Broadcasting System of Niigata, Sky Perfect Communication Inc, Space Shower Networks, WOWWOW Inc, TV Asahi Corporation, All Nippon Airways Co., Skymark Airlines Co. Ltd., Nippon Telegraph & Telephone Corp., Japan Airlines Corporation, JSAT Corporation and TV Tokyo Corporation.

Aggregate foreign ownership is limited to 33.3% of the issued and outstanding shares of the five FOL stocks - All Nippon Airways, Japan Airlines Corporation, Skymark Airline, Nippon Telegraph & Telephone Corp and JSAT Corporation. For the remaining stocks, the foreign ownership is limited to 20% of the issued and outstanding shares.

By law foreign investors may not hold FOL shares at JASDEC on books close date. FOL shares are withdrawn from JASDEC, sent for registration, and held physically to secure foreign shareholder rights and to be eligible for any corporate entitlement. Unregistered shares can lead to missed entitlement and there is no formal entitlement claim process under Japanese Law. Issuing companies monitor the level of foreign ownership and will reject registration if the percentage reaches the foreign ownership limit.

Where foreign ownership limits have been reached, locally registered stock cannot be re-registered as foreign owned. As such, entitlements are therefore unprotected. The Radio Law and Broadcasting Law has been amended to impose restrictions on foreign ownership for indirect foreign onwership of Japanese broadcasting firms.

Ministry of Finance regulations governing short selling, state that no person shall engage in the sale of, or commission of the sale of, or intermediation of the sale of securities not owned by the purported seller or commissioner, with certain exceptions. Margin trades are not classified as "short positions", provided that client agreements include a clause to ensure timely recall.

Repatriation Policy
No currency restriction

Securities Lending

A Ministry of Finance ordinance states that margin trades are not classified as ‘short positions’ provided that client agreements include a clause to ensure timely recall.


Dividend Tax Rate
Cash and Stock dividends are subject to a 7% withholding tax at source, except where a double treaty is in place. Only the after-tax portion of a stock dividend is paid in stock.

Effective Date* Dividend Withholding Tax Rate**
April 1 to December 31, 2003 10% income tax + 0 % inhabitant tax
January 1, 2004 to March 31, 2009 7% income tax + 3 % inhabitant tax
April 1, 2009 onwards 15% income tax + 5% inhabitant tax

* Date on which the dividend is approved at annual general meeting (final book close) or effective date of payment which has been approved at board of directors’ meeting (interim dividend).
** Preferential rate from April 1, 2003 to March 31, 2009.
*** Inhabitant tax rate only applies to resident investors.

In accordance to the tax reform, the current withholding tax rate for the Japanese residents (individual) is total of 10% (7% national tax and 3% local resident tax).

Note: investors holding over 5% in any company will not benefit from rate reductions and will either continue to pay the tax rate of 20% or any applicable tax treaty rat

Interest Tax Rate
Interest is subject to a 15% withholding tax at source, except where a double taxation treaty is in place.

Legislation was approved by the Japanese Parliament on March 28, 2001 which is intended to allow foreign institutional investors to obtain exemption from withholding tax on interest from JGBs, provided the bonds are deposited in the BoJ’s book-entry system through a specific foreign branch or agent of a Qualified Foreign Intermediary (QFI). QFIs have to be approved as Foreign Indirect Participants (FIPs) of the book-entry system.

Capital Gains Tax Rate: Foreign Investors are exempt.

Tax Treaties

Armenia India Singapore
Australia Indonesia Slovak Republic
Austria Ireland South Africa
Bangladesh Israel Spain
Belarus Italy Sri Lanka
Belgium Korea, South Sweden
Brazil Kyrgyzstan Switzerland
Bulgaria Luxembourg Tadzhikistan
Canada Malaysia Thailand
China Mexico Turkey
Czech Republic Moldova Turmenistan
Denmark Netherlands Ukraine
Egypt New Zealand United Kingdom
Fiji Norway United States
Finland Pakistan Uzbekistan
France Philippines Vietnam
Georgia Poland Zambia
Germnay Romania
Hungary Russia

Stamp Duty
The buyer pays JPY200 per trade

Other Taxes: