Corporations can raise capital from people other than shareholders determined by the board of directors as defined in statutes by issuing shares . Furthermore, it can be raised through diverse methods such as the issuance of new types of bonds. Examples include exchangeable and participating bonds in addition to convertible bonds and bonds with warrants.
Expanding Limits for Issuing Stocks and Bonds
The number of stocks without voting rights issued may be up to 25% of the total amount of stocks issued while bonds may not exceed four times the net assets. Listed corporations do not include stocks without voting rights that are issued by executing certificates or stock-related securities (stocks issued abroad and foreign convertible bonds, etc.) in the limit of stocks issued. Among convertible bonds and bonds with warrants, the amount applicable to the portion converted to stocks or to the portion of preemptive rights that can be exercised is not included in the limit of bonds issued. Therefore, stocks or bonds may be issued in the amount of the portions mentioned above.
Valuation for Inherited and Donated Assets
When securities such as stocks or bonds of listed companies are inherited or donated, the valuation of those stocks is the average closing price for the two months before and after the valuation date (total of four months).
Effect of Listing
Raising Capital When Needs Arise
Through such methods as issuance of convertible or exchangeable bonds, public offering, rights offering or overseas depository receipts, it is possible to raise capital when needed.
Enhanced Public Recognition
Frequent reporting of the stocks prices of the listed companies on various mass media, e.g., newspaper, TV, has tremendous publicity effects and helps to enhance the investor’s, both the domestic and overseas, perception of the companies. The companies can benefit from such enhanced public recognition. For example, the companies would be able to recruit good employees as people wish to work for the companies with a good reputation and growth potentials.
Facilitating Company Restructuring
Company restructuring can be promoted from matching the business purposes of the listed corporation. This type of environment is fostered through the improvement of listing requirements, etc. for the purpose of facilitating the listing of companies established by the spin-off or merging of listed corporations.
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