Paperless ShareSystemFAQ

January 2007
Japan Securities Dealers Association
Reform Promotion Center for Securities Clearingand Settlement System(Head Office of Committee for Reform of Securities
Clearing and Settlement System*)Tel 03-3667-4500 (9:00～17:00)
URL: http://www.kessaicenter.com/*The committee is the cross-industry project established inJuly 1997 for early realization of Reform Promotion forSecurities Clearing and Settlement System.

Contents
Q1: What are “Electronic Share Certificates (Paperless share certificates)”?....................... 2
Q2: Why change to the Paperless Plan? .............................................................................. 2
Q3: What does it mean that “The system will be implemented by June 2009”?.................... 3
Q4: What does it mean that “Your paper certificates will become invalid”?........................... 3
1. What will happen to non-listed shares?................................................................ 3
Q5: What are “shareholder’s rights”?.................................................................................... 4
Q6:How can I confirm who “the registered holder of the paper certificate which you hold” is? ... 4
1. I am a shareholder registered in the list of shareholders of the issuer. What do Ihave to do now?.................................................................................................. 4
2. What if I am NOT registered as a shareholder on the list of shareholders of theissuer of the paper certificate I currently hold?.................................................... 6
3. What needs to be done if the registered shareholder has passed away?........... 64. What will be done with my Less-than-One-Voting-Unit shares? ......................... 65. What will be done with my fractional shares? ..................................................... 7
6. What will be done if the issuer of the shares no longer exists? (Due to merger,change of names, extinction, de-listing, etc.) ...................................................... 8
7. Do I have to return my paper certificates when the paperless system isadopted?............................................................................................................. 88. May I expect the paper certificates deposited with JASDEC will be returned
after the paperless system is adopted? .............................................................. 8
9. Can I keep my paper certificates after the paperless system is adopted? .......... 810. Can I sell my paper certificates after the paperless system is adopted?............. 8Q 7: I have lost my paper certificates. What should I do? ..................................................... 9Q 8: What does it mean that “You might lose your shareholder’s rights”? .......................... 10Q 9: What is a “Transfer Agent”? ........................................................................................ 10
Q10: What is a “Special Account”? ..................................................................................... 11
1. How can I confirm whether my shares are kept in my “Special Account”? ........ 11
2. Will I receive dividends while my shares are kept in a “Special Account”?........ 11
Q11: Will I receive notices of the shareholders’ meetings or dividends?............................. 111

Q1:

Whatare“ElectronicShareCertificates(Paperlesssharecertificates)”?
Once the paperless system is implemented, all paper share certificatesissued by listed companies will become invalid (*1) and shareholders’ rights
will be recorded electronically in shareholders’ accounts (*2) at financial
institutions (*3) such as securities companies.

*1: Paper certificates will lose all legal value and become nothing more than pieces ofpaper.
(See Q4-1 for details)Your paper certificates will NOT be collected for the adoption of the paperless system(Q6-7, 6-8 and 6-9).
*2: They are called “kouza kanrikikan” in the relevant law.
*3: They are called “furikae kouzabo” in the relevant law.

Q2: Why change to the Paperless Plan?
The paperless system offers us more efficient and safer share management
as well as allowing shares to be bought and sold more easily.
The paperless system also lowers the risk to shareholders of lost or stolen
shares.
From a trading viewpoint, it decreases the risk of fraudulent certificates andsimplifies the procedures for trading, such as delivery of shares andregistration of new shareholders.

*Reference*
Benefits of the paperless system for issuers will include cutting the costs of printing
at the time of issuance and postage, stamp duty, as well as the costs involved withthe collection and issuance of certificates due to certain company reorganization
procedures (such as mergers, stock exchanges, stock transfers, etc.).
Securities companies will benefit from the system by being able to handle shares
more safely and easily and achieving a saving on the costs of storage andtransportation of paper certificates.
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Q3: What does it mean that “The system will be implemented by June2009”?
The concerned parties have agreed to try to implement the system inJanuary 2009.
Considering the progress of preparation for the system in the industry, theactual implementation date will be set by a cabinet ordinance, and willprobably be announced in 2008.

Q4: What does it mean that “Your paper certificates will become invalid”?
It simply means your paper share certificates will themselves lose all legal
value and will become nothing more than pieces of paper.
Currently, the assignment or creation of a pledge on shares is perfected by
the delivery of the paper share certificates. After the implementation of thepaperless system, the delivery of a paper share certificate itself will nolonger be necessary for the assignment of or creation of a pledge on shares.
Moreover, after the implementation of the paperless system, you will not beable to transfer shares, exercise shareholder’s rights or claim dividends
based on possession of the paper share certificates.

-1: What will happen to non-listed shares?
Non-listed shares are NOT subject to the paperless system and theirpaper share certificates will remain valid. Transfer of non-listed shares
will be perfected by delivery of paper share certificates.
However, for the perfection of a transfer of shares of a non-listed issuer,
whose Articles of Incorporation set forth that it will not issue any papershare certificates, registration of the new shareholder will be required.
The application for the registration will have to be made by both thetransferee and transferor.

*Reference*
The New Companies Law (effective on May 1, 2006) sets forth that acorporation established after the enforcement of the New Companies Law may
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elect not issue paper share certificates unless its Articles of Incorporation set
forth that it will issue paper share certificates.

Q5: What are “shareholders’ rights”?
Shareholders’ rights mean the position of a shareholder, including
shareholder voting rights, rights to receive dividends and rights to claim thedistribution of residual assets in the case of the dissolution of the company.

Q6: How can I confirm who “the registered holder of the paper certificate
which you hold”

is?

Check the description in the column entitled “Name of shareholder” on thereverse side of the share certificate.

If your paper share certificate was issued after the enforcement of the New
Companies Law (May 1, 2006), your name as a shareholder may not be
printed on the certificate. If this is the case, please contact the relevanttransfer agent to confirm whether or not you are the registered shareholder.

If you did not complete a proper procedure and have not yet beenregistered as a shareholder on the list of shareholders of the issuer, youwill not be regarded as a shareholder under the book-entry transfer systemafter the paperless system is adopted.

If notices of shareholders’ meeting are addressed to you and the dividends
are paid to you, you are being treated as the shareholder.

-1: I am a shareholder registered in the list of shareholders of the issuer.
What do I have to do now?
Your rights as a shareholder (ref: Q5) will NOT be affected by theimplementation of the paperless system.
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Your shares will be recorded in a “Special Account” opened by the issuer.
This process will be based on the list of shareholders in order to protect
the rights of existing shareholders.

A “Special Account“ is automatically opened by the issuer and you will be
informed of its details, which means you do NOT have to do anything toopen a “Special Account”.

However, the “Special Account” does not allow you to trade your shares.
In order to sell any of your shares that are recorded in the “SpecialAccount”, you will need to open an account with a securities company
then transfer the relevant shares from your “Special Account” to youraccount with the securities company. Please note that this process may
take some time.

*Reference*
It is prohibited to deposit paper share certificates with or to request delivery of
already deposited paper certificates from JASDEC or a securities company
during the two weeks prior to the implementation of the paperless system, toallow JASDEC and securities companies to prepare for the implementation of
the paperless system.

Settlements of trades of listed shares on securities exchanges can only be madethrough the JASDEC facility, not by the delivery of the paper share certificates.
Therefore, the number of trades that can be settled during the foresaid period
may be restricted.

Moreover, trading of shares recorded in a “Special Account” will be stopped for afew weeks after the implementation of the paperless system until the recording
process is completed for such shares. Practically speaking, this means you will
not be able to buy or sell these shares for a few weeks before and after theimplementation of the paperless system.

5-2: What if I am NOT registered as a shareholder on the list ofshareholders of the issuer of the paper certificate I currently hold?
You need to request the issuer to register you as a shareholder as soon
as possible.
Please contact your securities company or the relevant transfer agent for
details of the procedure.
(ref; Q8)

-3: What needs to be done if the registered shareholder has passedaway?
You need to legally inherit the shares as well as request the issuer toregister you as the holder of such shares. Please contact your securities
company or the relevant transfer agent for details of the procedure.

-4: What will be done with my Less-than-One-Voting-Unit shares (*)?
Securities

companies

Less-than-One-Voting-Unit

donot

acceptsharesthataredeposits

registeredonoftheshareholders’ list in respect of which paper share certificates have notbeen issued (registered Less-than-One-Voting-Unit shares).

After the implementation of the paperless system, the issuer will record
such registered Less-than-One-Voting-Unit shares in the Special Account.

Please contact a securities company for the details of the process toliquidate such shares.

Your Less-than-One-Voting-Unit shares can be bought by the issuer. In
this case, you can sell your shares without transferring the shares fromthe Special Account to your account with a securities company.

Moreover, some issuers will allow shareholders to buy additional sharesto enable you to obtain one voting unit of shares through your Special
Account. Please contact the relevant transfer agent for details of the6procedure.

*Less-than-One-Voting-Unit shares*
Less-than-One-Voting-Unit shares are shares that do not constitute one voting
unit of shares. Both the transfer of such shares and the notification of beneficial
shareholders (jisshitu kabunushi houkoku) are possible.

The ways that Less-than-One-Voting-Unit shares can be owned are as listed
below:
1. Registered with a transfer agent
2. Registered with JASDEC
3. Physically owned with paper share certificates-5: What will be done with my fractional shares (*)?
It is generally planned that such shares will be automatically transferred
to a shareholder’s Special Account based on the list of shareholders. This
will be done after a split of shares and adoption of a certain
Less-than-One-Voting-Unit share system, which will be effective as of theimplementation date of the paperless system.

Further information will be announced by the relevant issuer.

*What is a fractional share?
It is a fractional number of shares less than one share, which is either one
hundredth of a share or a ratio stated in the issuer’s Articles of Incorporation, ora multiple thereof. Fractional shares are kept in a register of fractional
shareholders, which is different from the shareholders’ list.
A company, which adopted a certain Less-than-One-Voting-Unit sharesystem introduced by the Commercial Code revision effective on October 2003,
cannot adopt a fractional share system at the same time. A fractional share will
be liquidated with cash in the case where any fractional shares are created byshare consolidation or other arrangements.

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The new Companies Law, which became effective on May 1, 2006, permits
a company which adopted the fractional share system before the enforcement of
the law to continue the system as an interim measure.

-6: What will be done if the issuer of the shares no longer exists ? (Dueto merger, change of names, extinction, de-listing, etc.)
Please contact your correspondent securities company for details
regarding the status of the issuer.

-7: Do I have to return my paper certificates when the paperless system
is implemented?
No, you do not have to return your paper certificates.

-8: May I expect the paper certificates deposited to JASDEC will be
returned after the paperless system is implemented?
No. Legally JASDEC has no responsibility to return paper sharecertificates to shareholders in order to avoid unnecessary confusion witha large amount of invalid paper share certificates in the market.

-9: Can I keep my paper certificates after the paperless system isimplemented?
Yes, you may keep your paper share certificates. However you should
understand that they are invalid and legally worthless, just like memorialstamps.

-10: Can I sell my paper certificates after the paperless system isimplemented?
It is not prohibited to sell invalid paper share certificates. However, youneed to clearly mention that the certificates are invalid and make surethat you do not sell them as valuable securities.

8Q7: I have lost my paper certificates. What should I do?
Contact your correspondent securities company or the relevant transfer
agent, and confirm with them that you are on the issuer’s shareholders’ list
as the shareholder of the relevant shares.

Contact the issuer or the relevant transfer agent for details of the procedure
for lost certificates, such as the nullification procedure for paper sharecertificates.

*Reference*
An outline of the nullification procedure for paper share certificates follows:
1) The person, who lost his/her paper share certificates, requests the issuer or its
transfer agent to record that fact on the lost-share-certificate-register. The issuer
will record such fact on the lost-share-certificate-register, which is open to thepublic, and inform such fact to the registered shareholder and the registeredpledge-holder (if any) of the relevant shares.
If the relevant paper share certificates are submitted to the issuer to exercise
any rights attaching to the paper share certificates, the fact that the certificateswere recorded on the lost-share-certificate-register will be notified to the person
who submitted the paper share certificates.

2) The transfer of shares or exercise of voting rights, etc. is not possible while thecertificatesof

therelevant

sharesarerecordedonthelost-share-certificate-register. However, a shareholder can exercise his/hervoting rights as long as he/she is registered as a shareholder of the relevant
shares on the shareholders’ list and has requested to be recorded on
the-lost-share-certificate-register.

3) A person actually holding the relevant paper share certificate may request
cancellation of the entry on the lost-share-certificates-register. Once acancellation request is made, the issuer will report the name and address of therequester as well as the certificate numbers to the person who requested theshares be recorded on the lost-share-certificate register, and then cancel such9

recordation after two weeks.

4) Paper share certificates recorded on the lost-share-register will become invalid
one year after the registration day, and the new paper share certificates will beissued to the person who requested the shares be recorded on thelost-share-certificate register.

Q8: What does it mean that “You might lose your shareholder’s rights”?
If you are not the registered holder of a share certificate, the special
account for the relevant shares will be opened under the name of theregistered holder and not your name.

If the above is the case, you should request the issuer to register you as theshareholder as soon as possible, or you will be at risk of losing yourshareholder’s rights and the shares if the person actually registered as theshareholder sells the relevant shares without your knowledge.
Moreover, the process for registration of shareholder for those shares canbe very complicated.

Q9: What is a “Transfer Agent”?
A “Transfer Agent” is a trust company or a securities company to which therelevant issuer has entrusted maintenance of its shareholders’ list andservices required for the registration of shareholders.

A “Transfer Agent” is normally mentioned on documents sent from theissuer, such as notices of the shareholders’ meetings.

10Q10: What is a “Special Account”?
A “Special Account” is an account opened by an issuer with a financial
institution such as a trust company. This is done to protect shares and therights of shareholders whose shares are not deposited with JASDEC.
(Ref; Q6-1)

A “Special Account” is maintained not for the purpose of buying or sellingshares. If you wish to sell any shares that are recorded in a SpecialAccount, you need to open an account with a securities company andtransfer the shares to that account.

-1: How can I confirm whether my shares are kept in my “SpecialAccount”?
Please contact the issuer or the relevant transfer agent.

-2: Will I receive dividends while my shares are kept in a “SpecialAccount?”
You will receive any dividends paid and receive notices of shareholders’meetings as usual.

Q11: Will I receive notices of the shareholders’ meetings or dividends?
You will receive these notices from the issuer, if applicable, in the same
way as before the paperless system was implemented.

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