On "MIC
Ordinance to Amend Part of the Regulations
for Enforcement of the Radio Law" and "MIC
Ordinance to Amend Part of the Regulations
for Enforcement of the Broadcast Law"
[In
Relation to the "Law
to Amend Part of the Radio Law and the
Broadcast Law" (Law No. 107 of 2005)]
Necessity
In line with the " Law to Amend Part of the Radio
Law and the Broadcast Law" (Law No. 107 of 2005),
MIC will add the provisions concerning foreign capital
restrictions to causes of disqualification for radio
station licenses as to terrestrial broadcasting stations.
Under the Law No. 107, the scope of indirect foreign
capital is to be specified by the applicable MIC ordinance.
Thus, in
accordance with the revised Radio Law and
the revised Broadcast Law, MIC has to establish
i) an "MIC Ordinance to Amend Part of
the Regulations for Enforcement of the Radio
Law" and ii) an "MIC Ordinance
to Amend Part of the Regulations for Enforcement
of the Broadcast Law," respectively.
Outline of MIC Ordinances
"MIC Ordinance
to Amend Part of the Regulations
for Enforcement of the Radio Law" (MIC
Ordinance No. 16 of 2006)
i)
Ratio of voting rights to be specified by
the applicable MIC ordinance, as indirect
voting rights (Article 5 paragraph (4) item
iii) of the Radio Law)
In accordance with the provisions of Article
5 paragraph (4) item iii) of the Radio Law,
in addition to the ratio of direct voting
rights possessed by a juridical person or
organization, this MIC Ordinance is to specify
the ratio of indirect voting rights to be
calculated as the ratio of foreign capital.
Specifically, as follows:
a) Principle [Article 6-3-2 paragraphs (1)
and (2) of the Regulations for Enforcement
of the Radio Law]
Where both of a "Ratio of 'voting rights
of a person (a foreign-affiliated juridical
person under the Japanese Corporate Law)
listed under Article 5 paragraph (4) item
iii) a) of the Radio Law who occupies one-tenth
or higher of voting rights of a licensee'
to 'voting rights of a licensee'" (=A)
and a "Ratio of 'voting rights of a
foreign juridical person, etc.' to 'voting
rights of said foreign-affiliated juridical
person'" (=B) are one-tenth or higher,
the ratio of indirect voting rights shall
be A x B. However, where ratio B is higher
than half the total voting rights, the ratio
of indirect voting rights shall be ratio
A.
Note: Where there are one A and plural Bs,
and where one of Bs exceeds half the total
voting rights, there is no need to calculate
the rest of Bs.
[Reference] 
b) Exemption 1 [Article 6-3-2 paragraph
(3) of the Regulations for Enforcement of
the Radio Law] ( exemption in case of voting
rights lower than one-tenth)
If Ratio A or Ratio B is lower than one-tenth,
in the cases where there are plural Ratio
As between both ends of Ratio A or Ratio
B, a foreign juridical person, etc. can virtually
control a licensee. In order to prevent such
cases, in cases where one foreign juridical
person, etc. possesses voting rights of two
or more juridical persons and/or organizations,
when the calculation described in the preceding
a) results in one-tenth or higher, the result
shall be calculated in accordance with the
calculation method in the preceding a).
[Reference]
.
c) Exemption 2 [Article 6-3-2 paragraph
(4) of the Regulations for Enforcement of
the Radio Law] ( Exemption in case of actual
control)
Even if one foreign juridical person,
etc. does not directly possess voting rights
of a foreign-affiliated juridical person
under the Japanese Corporate Law, the foreign
juridical person, etc. can virtually control
a licensee by indirectly possessing voting
rights of the licensee. In order to prevent
such cases, with respect to a juridical person
or organization, voting rights of which one
foreign juridical person, etc. possesses
exceed one half of the total voting rights,
when the calculation described in the preceding
a) results in one-tenth or higher, upon calculation
of the preceding a) and b) such a juridical
person or organization shall be dealt with
as a foreign juridical person.
[Reference] 
[Reference] 
d) Exemption 3 [Article 6-3-2 paragraph
(5) of the Regulations for Enforcement of
the Radio Law] ( Exemption in case of inquiry)
Upon calculation of a ratio of indirect voting rights
pertaining to shareholders of a licensee, the cooperation
from said shareholders is required. However, said
shareholders have no legal obligation to report the
"ratio of voting rights of foreign juridical
person, etc. to all of their voting rights" to
the licensee. Where the licensee cannot obtain cooperation
from shareholders, the licensee cannot calculate the
ratio of indirect voting rights. In such a case, the
licensee cannot judge whether share transfer shall
be made or not, nor specify limited voting stocks.
Thus, when the licensee, in accordance with
the principle of the preceding a), request
share transfer and specify limited voting
stocks, the licensee inquires in writing
or via e-mails of shareholders, who may be
objects (juridical persons or organizations
possessing one-tenth or more voting rights
of the licensee) of indirect voting rights
calculation, about the ratio of foreign juridical
person, etc. In spite of such efforts, when
the licensee cannot calculate the ratio of
indirect voting rights due to no reply from
such shareholders, the licensee shall regard
all voting rights of said shareholders as
the ratio of indirect voting rights and calculate
the ratio in accordance with the method of
a).
[Reference]
e) Note for Exemptions 1 and 2 [Article
6-3-2 paragraph (6) of the Regulations for
Enforcement of the Radio Law]
Since the licensee,
in fact, cannot grasp the real situation
of Exemptions 1 and 2 as needed (or upon
stock transfer), upon calculation (=upon
stock each transfer of shareholders' list
and actual shareholders' list) of the ratio
of indirect voting rights, in usual, the
licensee may not calculate indirect voting
rights based upon the methods of Exemptions
1 and 2.
With regard to those calculations, when
the licensee comes to know the fact that
can be used for calculation based upon the
methods of Exemptions 1 and 2, the licensee
shall report the results of such calculations
to the Minister for Internal Affairs and
Communications. In this case, the date of
the report shall be regarded as made on the
day of the report.
Pursuant to the provisions of Article 52-8
paragraph (3) of the Broadcast Law, surpassing
voting rights as clarified by said calculation
shall be restricted.
ii) Ratio of "voting rights of foreign
juridical person, etc." to a Japanese
juridical person or organization whose voting
rights shall be added to the ratio of indirect
voting rights (Article 5 paragraph (4) item
iii) b) of the Radio Law) [Article 6-3-3
of the Regulations for Enforcement of the
Radio Law]
This specifies the scope of persons listed
under Article 5 paragraph (4) item iii) b)
of the Radio Law. As a matter of fact, since
the scope is specified in the preceding article,
the scope is to be specified as in the preceding
article.
"MIC Ordinance to Amend Part
of the Regulations for
Enforcement of the Broadcast Law" (MIC
Ordinance No. 17 of 2006)
i) Methods to enter or record
shareholders in an actual shareholders'
list (Article 52-8 paragraph (2) of the
Broadcast Law)
With respect to entering
or recording (stock transfer) in an actual
shareholders' list, where surpassing the
ratio of foreign capital if all names of
requested shares are transferred, the licensee
shall enter or record shareholders in accordance
with the order of the following a) through
c). Basically, those methods follow the
cases of the Nippon Telegraph and Telephone
Corporation Law. [Article 17-3-2 paragraph
(1)]
a) With respect to shares possessed by persons who
are not targets for foreign capital restrictions,
all of such shares shall be entered. Specifically,
with regard to persons under Article 5 paragraph (4)
item iii) b) of the Radio Law possessing less than
one-tenth of voting rights, all shares pertaining
to voting rights shall be entered or recorded. However,
in case where Article 6-3-2 paragraph (3) of the Regulations
for Enforcement of the Radio Law (Exemption of less
than one-tenth of voting rights) applies, since even
a case of a ratio less than one-tenth of voting rights
is regarded as a ratio of indirect voting rights,
such shares shall be excluded from those shares to
be entered or recorded.
b) With respect to shares possessed by persons whose
shares are regarded as calculation targets of foreign
capital restrictions, the licensee shall compare shares
entered or recorded in previously noticed actual shareholders'
list of the previous business year and shares as noticed,
then enter or record whichever is less shares on a
person-by-person basis. Thereby, however, when surpassing
the ratio of foreign capital restrictions, the licensee
shall enter or record such shares by lottery on a
per-share basis.
The term "foreigners, etc." in
Article 52-8 paragraph (1) of the Broadcast
Law refers to persons under Article 5 paragraph
(1) item i) through item iii) of the Radio
Law and persons under paragraph (4) item
iii) of the same article; and do not include
juridical persons or organizations whose
ratios of voting rights are calculated as
ratios of indirect voting rights in accordance
with the Exemption (Exemption in case of
inquiry) under Article 6-3-2 paragraph (5)
of the Regulations for Enforcement of the
Radio Law among Exemptions of ratios of indirect
voting rights. Thus, it is stipulated that "foreigners,
etc." in this case include juridical
persons or organizations to whom the same
paragraph shall apply. The same shall apply
to the following relevant provisions.
c) After entering or recording in accordance
with a) and b), when the ratio of foreigners,
etc. does not reach one-fifth after application
of Article 17-3-3 paragraph (2) (recovery
of limited voting stocks), shares that have
not been entered or recorded shall be entered
or recorded. In this case, the licensee shall
enter or record such shares by lottery on
a per-share basis.
ii) Shares to come to have voting rights
(Article 52-8 paragraph (3) of the Broadcast
Law)
Pursuant to the provisions of Article
52-8 paragraph (3) of the Broadcast Law,
voting rights are automatically restricted.
Said automatically restricted shares are
specified as follows. [Article 17-3-3 paragraph
(1)]
a) When foreign juridical person, etc. obtain
anew or add voting rights of a juridical
person or organization who is being a shareholder
of the licensee, if the ratio of the licensee
exceeds the ratio of foreign capital restrictions,
a portion of shares among said shares newly
obtained or added, equivalent to voting rights
exceeding the ratio of foreign capital restrictions,
shall become limited voting stocks.
[Reference]
The number of shares to be limited voting stocks
is limited to a portion equivalent to a ratio of voting
rights of said "foreign-affiliated juridical
person under the Japanese Corporate Law" possessed
by foreign juridical person, etc. Needless to say,
limited voting stocks refer to a portion of voting
rights of shares exceeding the ratio of foreign capital
restrictions. Thus, this MIC Ordinance has no stipulation
thereon.
b) After calculations under Article 6-3-2
paragraph (6) of the Regulations for Enforcement
of the Radio Law, namely after calculations
pursuant to Article 6-3-2 paragraph (3) (Exemption
of voting rights less than one-tenth) and
Article 6-3-2 paragraph (4) ( Exemption in
case of actual control), in cases where the
ratio of voting rights of the licensee exceeds
the ratio of foreign capital restrictions,
a portion of shares concerning said calculations,
equivalent to voting rights exceeding the
ratio of foreign capital restrictions, shall
become limited voting stocks. In accordance
with the provisions of Article 6-3-2 paragraph
(6), calculations under the provisions of
paragraphs (3) and (4) shall be made not
upon occurrence of such circumstances (upon
obtaining anew or adding shares) falling
under the provisions of Article 6-3-2 paragraph
(6), but when the licensee comes to know
such circumstances and reports to the Minister
for Internal Affairs and Communications to
that effect. Thus, such cases shall be stipulated
aside from the preceding a). The calculation
under paragraph (5) of the same article (
Exemption in case of inquiry) shall be the
case falling under a).
iii) Cases where limited voting stocks come
to have voting rights [Article 17-3-3 paragraph
(2)]
In the following cases, within the scope
where the ratio of foreign juridical person,
etc. does not exceed one-fifth of all voting
rights, shares whichever earlier become limited
voting stocks shall become shares as having
voting rights.
a) Cases where the ratio of foreign capital
comes to less than one-fifth after foreigners,
etc. (refer to i) a)) possessing voting rights
of the licensee whose shares include limited
voting stocks transfer shares. This refers
to cases of the transfer, etc. of shares
relating to foreigners, etc. as entered or
recorded in a shareholders' list.
b) Cases where even after transfer of names
in an actual shareholders' list (after the
procedures under i) a) to b)), the ratio
of voting rights of foreign juridical person,
etc. does not exceed one-fifth. The transfer
of names in an actual shareholders' list
shall be made following i). After entering
or recording shares whichever is less in
comparison with the current actual shareholders'
list and notified shares prior to entering
or recording all persons regarded as possessing
notified shares, limited voting stocks shall
become shares as having voting rights.
In these cases, this MIC Ordinance has no
specific provisions on the relationship with
persons whose shares are refused to transfer
their names in accordance with the provisions
of Article 52-8 paragraph (1) or paragraph
(2) of the Broadcast Law. However, since
the licensee judges upon request without
making a list, etc. of shareholders who were
refused to be entered or recorded, a concept
of a chronological order does not occur and
an actual shareholders' list is to be dealt
with following the procedures under i) c).
Thus, this MIC Ordinance has no specific
provisions.
iv) Rivision of other provisions
In addition to the above, the following rules will
be revised:
a) Revising the article title of Article
17-3 [Article 17-3]
Along with changes in
the positions of the provisions of Article
17-3 paragraphs (2) and (3), the article
title of Article 17-3 shall be changed.
b) Notice on refusal of stock transfer [Article
17-3-4]
Upon refusing transfer of names in
an actual shareholders' list, when resulting
in cases where limited voting stocks occur
and where limited voting stocks come to become
shares as having voting rights, the licensee
shall notify each shareholder, etc. to that
effect.
Supplementary provisions
i)
Date of enforcement [Paragraph (1) of the
Supplementary Provisions]
This MIC Ordinance
shall come into force on the day of enforcement
the provisions listed under Article 1 item
ii) of the Supplementary Provisions of the
Law to Amend Part of the Radio Law and the
Broadcast Law. (April 1, 2006)
ii) Limited voting stocks as of the day
of enforcement [Paragraph (2) of the Supplementary
Provisions]
In accordance with the provisions
of Article 5 of the Supplementary Provisions
of the Law to Amend Part of the Radio Law
and the Broadcast Law, Paragraph (2) of the
Supplementary Provisions provides for the
applicable MIC Ordinance pursuant to the
provisions to be read as otherwise, to which
the provisions of Article 52-8 paragraph
(3) of the Broadcast Law shall be applied.
Basically, upon the day of enforcement, in
cases where the ratio of voting rights possessed
by foreigners, etc. exceeds one-fifth of
voting rights of the licensee, a portion
of shares equivalent to those exceeding one-fifth
among shares possessed or regarded as possessed
by a foreign-affiliated juridical person
under the Japanese Corporate Law, etc. shall
be limited voting stocks. When two or more
persons fall under such cases, shares to
become limited voting stocks shall be distributed
proportionally to them.
NB: Related documents below can be obtained
from the MIC website
( ”Features”: http://www.soumu.go.jp/joho_tsusin/eng/features.html )
- On "MIC Ordinance to Amend Part of
the Regulations for Enforcement of the Radio
Law ” — Article 6-3-2 and Article 6-3-3 — (Related
to Article 5 paragraph (4) of the Radio Law)Article
6-3-2 and Article 6-3-3 —(Related to Article
5 paragraph (4) of the Radio Law)
- On "MIC Ordinance
to Amend Part of the Regulations for
Enforcement of the Broadcast Law ” —from
Article 17-3-2 and thereafter (Related
to Article 52-8 paragraph (1)-(3) of the
Broadcast Law)
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