KEY JAPAN LEGAL AND REGULATORY MATTERSNIRAKUGC
HOLDINGS,
INC.*( 株式会社ニラク ▪ジー ▪シー ▪ホールディングス )(“Company”) is a stock company* ( 株式会社 ) incorporated under the Companies Act* ( 会社法 )of Japan (Act No. 89 of 1896) (“Japan Companies Act”) and our entire business operationis conducted in Japan. We are therefore subject to the Japan Companies Act and otherapplicable laws and regulations in Japan. The legal and regulatory regime in Hong Kong differsin certain material aspects from that in Japan. Set out below is a summary of certain provisions
under the articles of incorporation* ( 定款 ) of our Company (“Articles”), the Japan Companies
Act and other relevant legislations, regulations, rules and policies in Japan that we consider
may be material to shareholders of the Company (“Shareholders”) and potential investors. As
the information contained below is in summary form, it does not contain all of the informationthat may be important to you as potential investors. If you are in any doubt about any
content of this section or information contained in this document, you should obtain
independent professional advice.
A.

BEARER SHARES

Under Japan law, shares of the Company (“Shares”) are “bearer shares” in nature. A bearer,or a physical holder, of a share certificate issued by our Company is recognised as the owner of
the Shares represented by it. Ownership of our Shares can be transferred simply by the deliveryof our share certificates, with or without the transferor and the transferee having signed any
document evidencing such transfer. This creates inherent risks for Shareholders and potential
investors who choose to hold our Shares by physical possession of share certificates.
Set out below is a summary of certain aspects of Japan law provisions relevant to theownership and transfer of our “bearer shares”, the risks associated with these provisions and ourrecommended measures for our Shareholders and potential investors to mitigate these risks.
Ownership and title
Under the Japan Companies Act, if a company states in its articles of incorporation* (定款)that physical share certificates must be issued for its shares, its shares are “bearer shares”. Our
Articles provide that our Company must issue physical share certificates for our Shares, and ourShares are as such “bearer shares” in nature. Japan law provisions regarding the ownership of,and the title to, our bearer Shares are significantly different from those under the laws of Hong
Kong and other common law jurisdictions.
General provisions under Japan law
With respect to a company with “bearer shares”, Japan law generally recognises a bearer,or a physical holder, of a share certificate as the owner of the shares represented by such sharecertificate, regardless of whether the name of that bearer appears on such share certificate. It is
generally recognised under Japan law for the ownership of the shares of a Japan company to betransferred simply by the delivery of share certificates, with or without the transferor and thetransferee having signed any document evidencing such transfer. Bearers, or physical holders ofshare certificates are presumed under Japan law to have legal rights over the shares represented
by such certificates.

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KEY JAPAN LEGAL AND REGULATORY MATTERS
Notwithstanding these Japan law provisions, it is provided under our Articles and the Japan
Companies Act that title to our Shares shall not be perfected against our Company until andunless a person’s name and address are recorded in the share register of our Company (“Share
Register”). Under article 130 of the Japan Companies Act, a company is not obliged to treat
anyone as a shareholder unless and until he/she is registered as a shareholder on its shareregister. As an enhanced measure of Shareholders’ protection, our Articles provide that our
Company shall not associate any Shareholder’s right (such as voting rights and rights to receive
dividends) with any person unless his/her name appears on our Share Register in reliance on theabove provision under the Japan Companies Act. Soga Law Office, our legal adviser as to Japanlaw (“Japan Legal Adviser”) has confirmed that the aforementioned Articles provisions are incompliance with all relevant Japan law.
Our Company is required under Japan law to register bearers, or physical holders of ourshare certificates as a Shareholder in our Share Register without any onerous condition unless
we have reasonable grounds not to do so.
Failure to register interests in our Shares in our Share Register could result in themisappropriation or loss of a Shareholder’s rights. In particular, under Japan law, our Company
does not have the right to take action on a Shareholder’s failure to disclose his/her interests to
our Company. Hence, potential investors are strongly cautioned to register your interests in our
Shares in our Share Register after you have properly acquired title in our Shares, following theprocedures set out in “— Transfer of Shares” in this document below.
Risks associated with bearer shares
Our “bearer shares” create inherent risks for our Shareholders and potential investors whochoose to hold our Shares by physical possession of our share certificates. These risks include:(i)lost or destroyed share certificates - Shareholders and potential investors might lose
the ownership and value of our Shares represented by a share certificate if it is lost or
destroyed;(ii)

unauthorised third party acquiring the Shares - an unauthorised third party coming intopossession of a lost share certificate might seek to be recognised as a Shareholder,
thereby acquiring the ownership and value of the Shares represented by the lost sharecertificate and the rights attached to those Shares; and(iii)

non-transferability - Shareholders and potential investors who have reported a lost or
destroyed share certificate to our Company will not be able to register a transfer of the
Shares represented by the lost or destroyed share certificate or otherwise deposit such
Shares into the Central Clearing and Settlement System established and operated byHong Kong Securities Clearing Limited (“CCASS”) for trading on The Stock Exchange
of Hong Kong Limited (“Stock Exchange”) during a mandatory one-year waiting
period prescribed under Japan law.

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KEY JAPAN LEGAL AND REGULATORY MATTERS
See “— A. Bearer Shares — Lost / destroyed share certificates” in this document below for
details of the consequences for our Shareholders and potential investors if their share certificatesare lost or destroyed. Potential investors may also refer to “Understanding the Risks of Investingin Overseas Issuers” in the Stock Exchange’s website, “Investor Relations — Key Japan Legaland Regulatory Matters” in our Company’s website, or the circulars despatched by Hong Kong
Securities Clearing Company Limited (“HKSCC”) to the people admitted to participate in CCASS
as direct clearing participants or general clearing participants, custodian participants or investor
participants who may be an individual or joint individuals or a corporation (“CCASSParticipants”) from time to time.
To mitigate the risks associated with our “bearer shares”, we recommend a number ofmeasures for our Shareholders and potential investors and have adopted certain voluntarymeasures, both of which are set out below.
Recommended measures for our Shareholders and potential investors
1.

Holding your investments through CCASS - CCASS Beneficial Owners, who are investors of
our Company holding their underlying interests in our Shares through CCASS, are notexposed to the risks associated with our “bearer shares” as they do not physically possess
our share certificates. Interests of CCASS Beneficial Owners are essentially held and tradedin scripless, or paperless, form within CCASS. To become a CCASS Beneficial Owners,
apply for the 30,000,000 Shares initially being offered by our Company for subscription by
the public in Hong Kong (“Hong Kong Offer Shares”) by completing the application forms
for use by the public who requires such Hong Kong Offer Shares to be deposited directly
into CCASS (“YELLOW Application Forms”) or giving electronic instructions to HKSCC.
See “How to Apply for Hong Kong Offer Shares” in the Prospectus for details.
Due to certain Japan legal and regulatory provisions, CCASS Beneficial Owners are subject
to the following disadvantages:(i)Withholding tax: CCASS Beneficial Owners are subject to an initial withholding tax
rate of 20.420% on dividend payments as our Company is unable to ascertain theidentity, and consequently the tax residence, of the CCASS Beneficial Owners. This tax
rate is, in general, higher than that applicable to Shareholders who hold theirinvestments in our Company by physical possession of share certificates. CCASS
Beneficial Owners may apply for a refund of taxes withheld in excess to the Natural Tax
Agency of Japan, the official tax collecting agency of Japan (“National Tax Agency”)
but there may be delays in obtaining the refund payments. See “— E. Taxation” in thisdocument below for details.

(ii)

Currency of dividend payment: unlike Shareholders who hold their investments in
our Company by physical possession of share certificates, CCASS Beneficial Owners
do not have the option to elect the currency of their dividend payments. All dividends
payable to the CCASS Beneficial Owners will be in Hong Kong Dollars. See “— C.
Shareholders’ Rights — Dividends — Currency of Dividend Payments” in thisdocument below for details.

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KEY JAPAN LEGAL AND REGULATORY MATTERS(iii)

Shareholders’ rights: CCASS Beneficial Owners are not recognised as a Shareholder
under Japan law and are not presumed to be entitled to Shareholders’ rights. They relyon HKSCC Nominees Limited, a wholly-owned subsidiary of HKSCC (“HKSCC
Nominees”) to exercise the rights on their behalf in the same way it does forshareholders of other companies listed on the Stock Exchange the shares of which aredeposited into CCASS.

(iv)

Inspection of Share Register: CCASS Beneficial Owners are not recognised as a
Shareholder under Japan law and they may not inspect our Share Register unlessallowed to do so under the Personal Information Protection Act* (個人情報の保護に関する法律) of Japan (Act No. 57 of 2003) (“Personal Information Protection Act”).
See “— C. Shareholders’ Rights — Inspection of our Share Register” for details.

(v)

Voting on last-minute amendments: under Japan law, after the convocation noticeof a general meeting has been despatched, a Shareholder is permitted to propose
last-minute amendment(s) to the matters included in an existing meeting agenda of ageneral meeting without any prior notice, if a matter of similar nature is included in theoriginal meeting agenda. CCASS Beneficial Owners, who customarily do not attend
general meetings in person, may lose the chance to vote on a last-minute amendment
at their own will. See “— B. Shareholders’ Meetings — Request for last-minuteamendment to a meeting agenda” for details.

Despite these disadvantages, given the risks associated with our “bearer” Shares (which arevery significant in the opinion of directors of our Company (“Directors”)), it is our Board’s
strong recommendation that potential investors should hold your investments in
our Company through CCASS.
2.

Surrendering your share certificates - Shareholders and potential investors who choose toinvest outside CCASS and physically possess our share certificates are recommended tosurrender their share certificates to our Company. Surrendered share certificates will becancelled and the risks associated with our “bearer shares” will no longer apply. However,before a Shareholder may transfer or trade the Shares represented by a surrendered sharecertificate or otherwise deposit the Shares into CCASS, they must wait for a period of up
to six business days for a new share certificate to be re-issued. See “— A. Bearer Shares— Share certificate surrender” in this document below for details. Successful applicants orpartially successful applicants of the Hong Kong Offer Shares wishing to surrender theirshare certificates should apply through Computershare Hong Kong Investor Services
Limited (“Hong Kong Share Registar”) immediately upon receipt of their share certificates.

Share certificates will be sent to successful or partially successful applicants by registered
post. If you do not elect to adopt the recommended measures above, you run the risks
associated with our “bearer shares” and are highly cautioned to, above all, safe-keep yourphysical share certificates at all times.

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KEY JAPAN LEGAL AND REGULATORY MATTERS
Voluntary measures adopted by our Company
We have put in place the following voluntary measures to minimise your exposure to therisks associated with our “bearer shares” for our Shareholders other than CCASS Beneficial
Owners:1.

Registration of share transfers

Upon the listing of the Shares on the Main Board of the Stock Exchange (“Listing”), ourCompany will be subject to certain requirements in Hong Kong to register transfers of our Sharesand other documents relating to or affecting the title to our Shares. These include paragraph 1(1)of Appendix 3 to the Rules Governing the Listing of Securities on the Stock Exchange (“Listing
Rules”) and the Stamp Duty Ordinance (Chapter 117 of the Laws of Hong Kong) (“Stamp Duty
Ordinance”). To comply with these requirements, we have amended our Articles to adopt thefollowing internal procedures for share certificates and share transfers:(i)our Company will issue share certificates in registered form with the names andaddresses of our Shareholders imprinted thereon;(ii)

any person seeking to have his/her name and address recorded as a Shareholder in our
Share Register must present an instrument of transfer and/or a contract note duly
stamped pursuant to the Stamp Duty Ordinance and executed by such person (astransferee) and the original holder of the relevant Shares (as transferor) whose name(s)appear on the relevant share certificate and our Share Register (the “record
Shareholder”);(iii)

our Company will regard a standard transfer form customarily adopted by listedcompanies on the Stock Exchange or a transfer form printed at the back of the sharecertificates as an acceptable instrument of transfer and/or a contract note referred toin paragraph (ii) above;(iv)

where the transferor or transferee is a clearing house, execution by hand or
machine-imprinted signature will be accepted for the purpose of paragraphs (ii) and (iii)
above; and(v)

our Share Register maintained in Hong Kong will be our sole and principal shareregister.

See “— A. Bearer Shares — Transfer of Shares” in this document below for detailed
procedural and documentary requirements. Our Directors have undertaken to the Stock
Exchange not to put forward any proposal to our Shareholders which would otherwise revokethese Articles provisions so long as our Shares are listed on the Stock Exchange, unless and until
our Company ceases to issue share certificates upon implementation of a scripless, or paperlesssecurities market on the Stock Exchange.

5KEY JAPAN LEGAL AND REGULATORY MATTERS
Our Japan Legal Adviser is of the view that the Articles provisions set out above should bepermissible under the applicable Japan laws and regulations that are currently in force as at thedate of this document. This is on the basis that (i) we are allowed under Japan law to impose
documentary and procedural requirements to register a person as a Shareholder in our Share
Register if we have reasonable grounds to do so; and (ii) our obligations to, as a company listedon the Stock Exchange, comply with paragraph 1(1) to Appendix 3 to the Listing Rules and theStamp Duty Ordinance would likely be regarded as a reasonable ground; and (iii) the Articles
provisions set out above are disclosed to our Shareholders and potential investors in theprospectus issued by our Company on 24 March 2015 (”Prospectus”).
Notwithstanding the views of our Japan Legal Adviser above, you should note that the
Articles provisions set out above have not been tested in a Japan court. It is possible for a bearer,or physical holder, of our share certificate to initiate legal proceedings against these Articles
provisions and require a Japan court to recognise him/her as a Shareholder of our Company. We
consider that the likelihood of these legal proceedings is remote, as substantially all potential
investors are expected to hold their investments in our Company through CCASS as in the caseof most companies listed on the Stock Exchange. Nevertheless, we have been advised by ourJapan Legal Adviser that our Articles provisions are highly likely to be upheld by a Japan court.
See “Risk Factors — Risks Relating to Key Japan Legal and Regulatory Matters — Our
Shares are “bearer shares” in the Prospectus in nature and there are significant risks associatedwith physical possession of share certificates and “Risk Factors — Risks Relating to Key Japan
Legal and Regulatory Matters — Our Articles provisions on the registration of share transfers are
not judicially precedented in Japan and may be challenged in court” in the Prospectus for the
residual risks associated with our “bearer shares” despite the internal rules we put in place.
CCASS Beneficial Owners are not subject to the Articles provisions above and may trade,transfer and deal in our Shares electronically under the customary procedures in Hong Kong andarrangements made with their respective securities brokers.
2.

Single Share Register maintained in Hong Kong

To minimise the risks exposed to our Shareholders and potential investors in respect of our“bearer” Shares, our Articles provide that our Hong Kong Share Registrar will maintain our Share
Register, which will be our sole and principal share register, in Hong Kong upon Listing. All issued
Shares of our Company will be registered in our Share Register and subject to the Articles
provisions set out in “— A. Bearer Shares — Voluntary Measures adopted by our Company — 1.
Registration of Share Transfers” in this document above. This includes any application forregistration of share transfer lodged with our headquarters in Japan. See “— A. Bearer Shares— Transfer of Shares” in this document below for details.
Our Japan Legal Adviser has confirmed that there is no provision under Japan law underwhich our Company is required to appoint a share registrar or transfer agent based in Japan or
maintain a share register within the Japanese territory. Our Hong Kong Share Registrar will be
responsible for the customary share registrar duties as required under the Listing Rules.

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KEY JAPAN LEGAL AND REGULATORY MATTERS
3.

Adoption of scripless securities model

As a permanent solution to the risks associated with our “bearer shares”, our Company has
undertaken to use all reasonable endeavours to, subject to Shareholders’ approval, adopt the
scripless, or paperless securities model as soon as all relevant legislations, rules and regulations
have been enacted and in place for the implementation of a scripless securities market on the
Stock Exchange. Under the scripless securities model currently proposed by the Stock Exchange
and the Securities and Futures Commission of Hong Kong (“SFC”), our Company will cease toissue share certificates and all risks associated with our “bearer shares” will no longer apply.
The relevant legislative changes to implement a scripless securities market on the Stock
Exchange have been gazetted and tabled at the Legislative Council of Hong Kong in June 2014.
Transfer of Shares
Our Articles provide that transfers of our Shares are free from restrictions or limitation anddo not require approval from our Board of Directors or Shareholders. Set out below are theprocedures and documentary requirements for registering a share transfer in our Share Register.
Shareholders outside CCASS (WHITE Application Form / White Form eIPO applicantsunder the offer by our Company of the Hong Kong Offer Shares for subscriber by the
public in Hong Kong (“Hong Kong Public Offering”)
Shareholders who choose to invest outside CCASS may lodge an application for registeringa transfer in our Share Register either with our Hong Kong Share Registrar or our Company’s
headquarters in Japan, subject to the same documentary requirements:
Hong Kong Share Registrar

Headquarters in Japan

Address . . . . . . . . . . . Shops 1712-1716,
17/F Hopewell Centre,
183 Queen’s Road East,
Wan Chai,Hong Kong
Office hours . . . . . . . 9:00 a.m. to 4:30 p.m.
(Hong Kong time)

1-39 Hohaccho 1-chome,
Koriyama-shi,
Fukushima,
Japan

Processing time . . . . up to ten business days

ten business days

9:00 a.m. to 5:00 p.m.
(Japan time)

Documentary
Applicants for registration of share transfers are required to produce
requirements . . . . . the following documents, or the relevant application will not beprocessed:•
share certificates representing the Shares to be transferred; and•an acceptable transfer document which must conform to therequirements under the Stamp Duty Ordinance and be an
instrument of transfer and/or contract note duly executed by thetransferee and the transferor, whose name and address isrecorded as the record Shareholder in our Share Register. An
acceptable transfer document can be a standard transfer form
customarily adopted by companies listed on the Stock Exchange
or a transfer form printed at the back of the share certificates.

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KEY JAPAN LEGAL AND REGULATORY MATTERS
Our Share Registrar will also record the applicant’s signature on the relevant transfer
document as specimen signature for future verification purpose. Applications made with ourheadquarters in Japan must be made in person.
It is the responsibility of the applicant to contact the record Shareholder to sign as thetransferor on the transfer document before making an application to us. If an applicant cannot
locate the record Shareholder to sign on the relevant transfer document, or if the record
Shareholder refuses to sign on the same, the relevant application will not be processed. For
simultaneous multiple transfers, a separate transfer document is required for each such transfer.
CCASS Beneficial Owners (YELLOW Application Form / electronic applicants via HKSCC
under the Hong Kong Public Offering)
CCASS Beneficial Owners are not subject to the procedures and requirements above andmay trade, transfer and deal in our Shares electronically under the customary procedures in Hong
Kong and arrangements made with their respective securities brokers.
Lost / Destroyed share certificates
Procedures for replacement of lost or destroyed share certificates adopted by our Company
differ from those under the Companies Ordinance (Chapter 622 of the Laws of Hong Kong)(“Companies Ordinance”) in Hong Kong and those adopted by most companies listed on the
Stock Exchange.
Consequences of lost / destroyed share certificates
A Shareholder is exposed to significant risks if he/she loses its share certificate or has it
destroyed. He/she may lose the value of our Shares represented by the lost or destroyed sharecertificate (together with the rights attached to those Shares) and run the risk of an unauthorised
third party coming into contact of a lost share certificate and requiring a Japan court to recognise
him/her as a Shareholder.
Shareholders are required to report a lost or destroyed share certificate to our Company
through our Hong Kong Share Registrar. We are not allowed under Japan law to re-issue areplacement share certificate in lieu of a lost or destroyed share certificate until the expiry of amandatory one-year waiting period prescribed under Japan law. There is no circumstance underJapan law under which we are able to shorten the one-year waiting period.
During the one-year waiting period, we are required to handle the relevant Shareholders’rights in accordance with the Japan Companies Act as follows:(i)the person whose name and address are recorded in our Share Register as the holderof the relevant Shares (i.e. the record Shareholder) will continue to be treated as our
Shareholder;(ii)

dividends, if declared, will be paid to the record Shareholder;8

KEY JAPAN LEGAL AND REGULATORY MATTERS(iii)

no person may effect a valid registration of a transfer of the relevant Shares orotherwise deposit the Shares into CCASS for trading on the Stock Exchange, subject
to the circumstances set out in “— Cancellation of a lost/destroyed share certificate
report” below;(iv)

no other person will be registered as a holder of the relevant Shares in our Share
Register;(v)

a record Shareholder who reports a lost or destroyed share certificate will continue tobe entitled to exercise all voting rights attached to the relevant Shares.

Under Japan law, there are limited circumstances whereby a person other than the record
Shareholder may report a lost or destroyed share certificate. These include an unregisteredowner of our Shares who has lost his/her share certificates prior to registering a valid transfer in
our Share Register. In order to report a lost or destroyed share certificate, such unregisteredowner must present an acceptable transfer document, which must conform to the requirements
under the Stamp Duty Ordinance and be an instrument of transfer and/or contract note duly
executed by the transferee and the record Shareholder as the transferor. In that case, no one
shall be entitled to exercise the voting rights attached to the relevant Shares during the one-year
waiting period. If an unregistered owner fails to present an acceptable transfer document, noreport of lost or destroyed share certificate will be accepted and no replacement share certificate
will be issued. In that case, an unregistered owner may seek to assert his/her title with acompetent court in Japan.
CCASS Beneficial Owners are not subject to the risks associated with the loss ordestruction of share certificates, including the one-year waiting period, as they do not physicallypossess share certificates. You are strongly recommended to hold your investments in our
Company through CCASS. Due to certain Japan legal and regulatory provisions, CCASS
Beneficial Owners are subject to certain disadvantages. See “— A. Bearer Shares —Ownership and Title — Recommended measures for our Shareholders and potential investors” inthis document above for details.
Reporting a lost / destroyed share certificate
We accept reports of lost or destroyed share certificates through our Hong Kong Share
Registrar. We do not handle lost or destroyed share certificates at our headquarters in Japan.
Cancellation of a lost / destroyed share certificate report
If a lost share certificate is recovered, the person who filed the original lost share certificate
report shall inform our Hong Kong Share Registrar to release himself/herself from the one-year
waiting period.
There are limited circumstances whereby an unauthorised third party might come intopossession of a share certificate reported as lost and seek to be recognised as a Shareholder.
In that case, we are required under Japan law to terminate the one-year waiting period and a9

KEY JAPAN LEGAL AND REGULATORY MATTERS
replacement share certificate will not be issued to the person who filed the original lost sharecertificate report. We consider that these circumstances are very rare in practice as substantiallyall of our potential investors are expected to hold their investments in our Company through
CCASS, as in the case of most companies listed on the Stock Exchange.
It is a provision under our Articles that no one shall be registered as a Shareholder in our
Share Register unless an acceptable transfer document (which must conform to the requirements
under the Stamp Duty Ordinance and be an instrument of transfer and/or contract note duly
executed by the transferee and the record Shareholder as the transferor) is presented to us. As
such, an unauthorised bearer of a share certificate reported as lost will not be recognised as a
Shareholder in our Share Register unless he/she is able to present an acceptable transfer
document. In that case, an unauthorised bearer may seek to assert his/her title with a competentcourt in Japan if he/she believes that he/she has genuine and valid title to the relevant Shares.
Once we become aware that an unauthorised bearer of a share certificate reported as lostis seeking to be recognised as a Shareholder, we will notify the record Shareholders through ourHong Kong Share Registrar by writing to his/her registered address recorded in our Share
Register. Record Shareholders may assert his/her title with a competent court in Japan. It istherefore important to update your contact details with our Hong Kong Share Registrar from time
to time.
Share certificate surrender
Shareholders and potential investors who choose to invest outside CCASS are encouraged
to surrender their share certificates to us. Surrendered share certificates will be cancelled and therisks associated with our “bearer shares” will no longer apply.
Implications of share certificate surrender
Surrendered share certificates will be cancelled, void and destroyed and our Share Register
will indicate that no share certificate exists in respect of the Shares represented by them. As
such, the risks associated with our “bearer shares”, including the risks associated with a lost or
destroyed share certificate, will no longer apply.
However, you should note that our Hong Kong Share Registrar may take up to six businessdays to re-issue a new share certificate in lieu of a surrendered share certificate. During thewaiting period of up to six business days, the relevant Shares may not be transferred or otherwise
deposited into CCASS for trading on the Stock Exchange. This will in particular affect
Shareholders and potential investors who seek to trade the Shares on a “T+2” basis, whereby
dealings in Shares on the Stock Exchange customarily take place two business days prior tosettlement. The waiting period of up to six business days may lead to settlement failure. It is the
responsibility of individual Shareholder to carefully formulate their investment schedule, taking
into account the waiting period of up to six business days to avoid settlement failure.

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KEY JAPAN LEGAL AND REGULATORY MATTERS
See “Risk Factors — Risks Relating to Key Japan Legal and Regulatory Matters —Surrendered Share certificates can only be re-issued after a waiting period of up to six businessdays, which could result in settlement failures” in the Prospectus for details.
Our Directors have been advised that the waiting period of up to six business days does notcontravene the provisions under Rules 13.59 and 13.60(1) of the Listing Rules.
Surrendering your share certificates
We accept applications for surrendering a share certificate through our Hong Kong Share
Registrar. We do not handle share certificate surrenders at our headquarters in Japan.
Any record Shareholder whose name and address appears on our Share Register is entitledto surrender their share certificates to us. To apply, he/she must bring along (i) the sharecertificates he/she is seeking to surrender; (ii) identity proof; (iii) a completed and duly signed
share certificate surrender form; (iv) specimen signature of such Shareholder (in case of individual
Shareholders) or authorised corporate representative (in case of corporate Shareholders) to ourHong Kong Share Registrar. Surrendered share certificates will be acknowledged by a written
receipt. Shareholders wishing to check or verify the record of their shareholdings in respect of
their surrendered share certificates may request to inspect and/or print a copy of our Share
Register in accordance with the requirements and procedures set out in “— C. Shareholders’
Rights — Inspection of our Share Register” in this document below.
Successful applicants or partially successful applicants of the Hong Kong Offer Shareswishing to surrender their share certificates should apply though our Hong Kong Share Registrar
immediately upon receipt of their share certificates. Share certificates will be despatched byregistered post, at the applicants’ own risks.
Re-issuing a new share certificate in lieu of a surrendered share certificate
A new share certificate can be re-issued in lieu of a surrendered share certificates byapplying to our Hong Kong Share Registrar. To apply, a Shareholder must bring along (i) identity
proof; and (ii) a completed and duly signed share certificate re-issuance form, the signature(s) on
which must match the ones on the share certificate surrender form, to our Hong Kong Share
Registrar.
B.

SHAREHOLDERS’ MEETINGS

Set out below are the Japan law provisions with respect to matters relating to the
convocation of and voting in our general meetings which in our opinion are relevant to our
Shareholders and potential investors and materially differ from the conventional requirements
applicable to other companies listed on the Stock Exchange.

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KEY JAPAN LEGAL AND REGULATORY MATTERS
Record date
Our annual general meeting (“AGM”) is usually held in June every year. Our Articles providethat our Board of Directors may from time to time designate a record date for our AGMs andextraordinary general meetings. A record date is the date for determining the list of eligible
Shareholders entitled to vote in our AGMs and extraordinary general meetings. We may also set
the same or a different record date to determine the eligibility of our Shareholders to receive
dividends and/or other distributions.
AGMs
Under the Japan Companies Act, an AGM must be held within three months from the record
date. Upon Listing, we plan to set our (i) record date for attendance and voting at our AGM shortly
before the despatch date of our AGM convocation notice; and (ii) record date for final dividend
entitlement shortly after the announcement of any final dividend declared. To comply with therequirements under the Japan Companies Act and Rule 13.66(1) of the Listing Rules, a record
date in relation to our AGMs and final dividend, if any, will be announced by public notice inJapan, which will be replicated on the Stock Exchange’s website and our Company’s website inEnglish and Chinese, at least 14 days prior to the proposed record date.
Our Directors have been advised that Rule 13.66(2) of the Listing Rules does not apply to
us as our dividend payments (annual, interim or other) are not subject to Shareholders’ approval
under our Articles.
Extraordinary general meetings
Our Board of Directors may under the Japan Companies Act set a record date of an
extraordinary general meeting. To comply with the requirements under the Japan Companies Act,a record date in relation to our extraordinary general meetings will be announced by public noticein Japan, which will be replicated on the Stock Exchange’s website and our Company’s website
in English and Chinese, at least 14 days prior to the proposed record date.
Interim and other dividend payments
Upon Listing, we plan to set our record date for interim or other dividend entitlement shortly
after the announcement of any interim or other dividend declared. To comply with therequirements under the Japan Companies Act and Rule 13.66(1) of the Listing Rules, a record
date in relation to our interim or other dividend, if any, will be announced by public notice inJapan, which will be replicated on the Stock Exchange’s website and our Company’s website inEnglish and Chinese, at least 14 days prior to the proposed record date.
Shareholders who acquire our Shares after the record date will not be entitled to vote in our
general meetings and/or receive dividend payment, if any.

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KEY JAPAN LEGAL AND REGULATORY MATTERS
Notice and distribution of annual report and accounts
Under Japan law and our Articles, we are required to convene our AGM within three months
after the day following 31 March, which is the last day of each financial year. Under our Articles
and the Listing Rules, we are required to despatch the convocation notice of our AGM at least
21 days prior to the date thereof. Upon Listing, we will, as required under the Listing Rules andthe Japan Companies Act, prepare and despatch the following documents together with our
AGM convocation notice:(a)a business report* (事業報告), which would include an overview of our key businessstatus, such as, the progress and results of the business, capital expenditures andfund-raising, trends in assets and profit/loss in the most recent three financial years,
corporate reorganisations, status of major subsidiaries, shares outstanding and major
shareholders, share acquisition rights (“SARs”), operation systems, and a status
update of other important aspects of our business. Our business report* (事業報告) will
be prepared in Japanese, English and Chinese upon Listing;(b)

an audited financial report, which would include material annual financial informationsuch as the auditor’s report and opinion, the consolidated statement of income,consolidated balance sheet, consolidated statement of changes in net assets, andnotes to the consolidated financial statements, and the same for the statements of ourCompany and of our Company and our subsidiaries (“Group”) on a consolidated basis,
respectively. Our audited financial report will be prepared in accordance with theJapanese Generally Accepted Accounting Principles (“JGAAP”) as required under theJapan Companies Act in Japanese, English and Chinese; and(c)either (i) an annual report including our Group’s annual accounts, which will be incompliance with the contents requirements under Appendix 16 to the Listing Rules; or(ii) a summary financial report, which will be in compliance with the contents
requirements under Rule 13.46(2)(a) of the Listing Rules. Our annual report or summary
financial report, as the case may be, will be prepared in accordance with theInternational Financial Reporting Standards which include standards and interpretors
promulgated by the International Accounting Standard Board (“IFRS”).

All documents above will be approved and authorised by our Board of Directors before they
are despatched to our Shareholders.
Proxies and corporate representatives
Our Articles provide that any Shareholder who is entitled to attend and vote in a general
meeting of our Company may appoint another person as his/her proxy to attend and vote on
his/her behalf. Corporate Shareholders may appoint corporate representatives to attend or voteon its behalf. A Shareholder (including nominee companies such as HKSCC Nominees) who is theholder of two or more Shares may appoint multiple proxies or corporate representatives torepresent him/her and vote on his/her behalf in a general meeting of our Company. A proxy or
corporate representative needs not be a Shareholder of our Company and there is no limitation

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KEY JAPAN LEGAL AND REGULATORY MATTERS
or restriction on the qualification and identity of the proxies and/or corporate representatives tobe appointed by our Shareholders. A proxy or corporative representative is entitled to exercise
the same powers as if he/she was the Shareholder himself/herself provided that he/she canpresent a duly signed authorisation document proving his/her authority.
Upon Listing, we expect to require Shareholders and their proxies or corporate
representatives to submit their authorisation documents, the form and substance of which willcommensurate with the forms of proxy adopted by other companies listed on the Stock
Exchange. Detailed requirements will be set out in the convocation notice of each general
meeting (including AGM).
Request for a general meeting
A Shareholder who has no less than 3% of the voting rights in our Company may request
our Directors to convene a general meeting. If our Directors do not send out a convocation noticefor such general meeting to be held and such general meeting is not convened by our Directors
within eight weeks from the date of such request, the relevant Shareholder who made the request
may convene a general meeting with court permission.
Request for additional matters in a meeting agenda
Any Shareholder who has either (i) no less than 1% of the voting rights in our Company; or(ii) no less than 300 Shares may request our Directors to include certain additional matter(s) or
amend certain existing matter(s) in the meeting agenda of a general meeting. Such request must
be made to our Directors no less than eight weeks prior to the general meeting of our Company.
If the request is made to our Directors less than eight weeks prior to the general meeting, therequested additional matter(s) or amendment(s) may be included or made in the next general
meeting of our Company.
Our Articles provide that we must announce (as a voluntary announcement on the Stock
Exchange’s website and our Company’s website) the date of a general meeting no less than 10
weeks prior to the date of that meeting so that our Shareholders, if eligible, will have a two-weekperiod to exercise the right set out above.
Request for last-minute amendments to a meeting agenda
After the convocation notice of a general meeting has been despatched, a Shareholder ispermitted to propose a last-minute amendment to the matters included in an existing meeting
agenda of a general meeting of our Company without any prior notice if a matter of similar nature
is included in the original meeting agenda. For example, a Shareholder may propose last-minuteamendments to an existing meeting agenda and nominate a person for election as a Director any
time before the relevant general meeting or even at the meeting, if the original meeting agenda
includes a proposal of the appointment of a new Director, or Directors, to our Board of Directors.
These last-minute amendments are a theoretical mechanism which, according to our Directors’knowledge, is exceptional and rarely put into actual practice in Japan.

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KEY JAPAN LEGAL AND REGULATORY MATTERS
If any agenda in a general meeting is rejected without receiving 10% of the votes cast at thatgeneral meeting, last-minute amendments of substantially the same nature will not be treated as
an official agenda by our Company in the forthcoming general meetings within the following three
years. For example, Shareholders may not be able to propose a person for election as a Director
as a last-minute amendment in the following three years if a last-minute nomination of the same
person as a proposed Director fails to receive 10% favourable votes in a general meeting in thepast three years (so long as the backgrounds or conditions of both proposals are similar).
Due to these Japan law provisions, we are unable to comply with Rule 13.70 of the Listing
Rules and paragraph 4(4) of Appendix 3 to the Listing Rules, which provide that (i) an issuer shall
publish an announcement or issue a supplementary circular upon receipt of a notice from ashareholder to propose a person for election as a director at the general meeting where such
notice is received by the issuer after publication of the notice of meeting; and (ii) the minimum
length of the period for notice to propose a person for election as a director and that person to
notify the issuer of his willingness to be elected, must be at least seven days. We have appliedfor, and the Stock Exchange has granted us, a waiver from strict compliance with theserequirements on the basis of the voluntary measures we put in place, the details of which are set
out in “Waivers — B. Additional Waivers — Announcement of Nomination of Director(s)” and“Waivers — B. Additional Waivers — Articles of Incorporation — Nomination of Director(s)”.
Shareholders and potential investors (in particular, CCASS Beneficial Owners, who
customarily do not attend general meetings in person) should note that you may lose the chance
to vote on a last-minute amendment if you do not attend a general meeting in person, or if you
have not appointed a proxy to attend and vote on your behalf. Under our Articles, where a
Shareholder (including CCASS Beneficial Owners, who cast their votes by giving instructions to
HKSCC Nominees) has casted a written vote on the original matter (regardless of whether such
vote was for, against or abstention from the relevant matter), his/her vote will be counted asabstention from any last-minute amendment thereof. If a Shareholder has not casted a written
vote on the original matter, they will lose the right to vote on any last-minute amendment thereof
unless they attend the relevant general meeting in person or through their proxies. CCASS
Beneficial Owners who are unable to give instructions to HKSCC Nominees on the original matter
prior to the specified deadline will lose their right to vote on any last-minute amendment thereof.
In both circumstances, the voting rights of the relevant Shareholder / CCASS Beneficial Owner
will not form the quorum of the original matter and any last-minute amendment thereof.
Casting your votes in different ways
Under the Japan Companies Act, a Shareholder (including a nominee such as HKSCC
Nominees) is permitted to divide his/her Shares and cast his/her votes corresponding to these
Shares in different ways, casting his/her votes partly for and partly against a resolution. A
Shareholder who wishes to cast his/her votes in different ways is required to notify our Companyof his/her intention and the reasons therefor at least three days prior to the date of the relevant
general meeting. Our Company may object to a Shareholder casting his/her votes in different
ways if the Shareholder holds our Shares on his/her own behalf rather than as a nominee on
behalf of others. Upon Listing, we will enclose a notification form with the convocation notice ofeach general meeting. Shareholders who wish to cast their votes in different ways should notify

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KEY JAPAN LEGAL AND REGULATORY MATTERS
our Company by completing and returning the prescribed notification form to our Hong Kong
Share Registrar. Shareholders (including nominee companies such as HKSCC Nominees) may
also make a permanent election to cast their votes in different ways at all forthcoming general
meetings, which may be withdrawn by writing to our Hong Kong Share Registrar.
Material Interests in a transaction
The Listing Rules require that, where a transaction or arrangement of an issuer is subject toshareholders’ approval under the provisions of the Listing Rules, any shareholder that has amaterial interest in the transaction or arrangement shall abstain from voting on the resolution(s)approving the transaction or arrangement in a general meeting. In addition, controllingshareholders must abstain from voting in favour of certain matters under the Listing Rules. There
are also certain matters where independent shareholders approvals are required under the Codeson Takeovers and Merger and Share Buy-backs (“Takeovers Code”).
Under Japan law, a company shall not amend its constitutional document to restrain or
restrict its shareholders, including controlling shareholders, from voting on any particularresolution. Each Shareholder is, in general, entitled to a single vote for each Share he/she holds
in our Company and we may not restrict this right in the circumstances provided under the Listing
Rules and the Takeovers Code.
To afford our Shareholders protections comparable to those available under the Listing
Rules and the Takeovers Code, our Shareholders have resolved to adopt the following alternative
provisions in our Articles:“Where a transaction or arrangement or contract or other matter is required to be approvedby our Shareholders under the Listing Rules and/or the Takeovers Code:(a)a general meeting shall be convened to seek our Shareholders’ approval of suchmatter;(b)

our Hong Kong Share Registrar shall count the votes casted at the said general
meeting in accordance with the criteria and requirements under the Japan Companies
Act;

(c)

we shall appoint our compliance adviser or another independent financial or legal
adviser to review the votes counted by our Hong Kong Share Registrar and confirm thatthe resolution would have been successfully passed if the votes cast had excluded thevotes of our Shareholders that would otherwise be required to be abstained orotherwise uncounted under the Listing Rules and/or the Takeovers Code; and(d)the Shareholders’ approval referred to in item (a) above and the confirmation referred
to in item (c) above shall be made conditions precedent in the relevant transaction
agreement and we shall implement such matter only if both conditions have beensatisfied.”16

KEY JAPAN LEGAL AND REGULATORY MATTERS
Our Japan Legal Adviser is of the view that the alternative provisions in our Articles set out
above should be permissible under the applicable Japan laws and regulations that are currently
in force as of the date of this document on the basis that (i) while there are no definitive provisions
in the Japan Companies Act, it is generally accepted that reasonable closing conditions, such as
approval by regulatory authorities, may be included in a contract for a transaction that requires
shareholders’ approval under the Japan Companies Act; (ii) our voluntary measures in place
would likely be regarded as a reasonable closing condition because our Company, as a company
listed on the Stock Exchange, is required to comply with Rule 2.15 of the Listing Rules and theother relevant provisions under the Listing Rules and/or the Takeovers Code; and (iii) the closing
condition would be disclosed to all Shareholders prior to the relevant general meeting, andtherefore, our Shareholders who vote on the transaction should be aware of, and vote on thebasis of, the transaction as a package including that condition.
We consider that the alternative provisions in our Articles set out above will allow us tocomply with (i) the abstention requirements under Rule 2.15 of the Listing Rules and otherrelevant requirements under the Listing Rules which specifically apply these abstention
requirements; and (ii) the abstention requirements under the Takeovers Code with respect totransactions that require independent shareholders’ approval.
We have applied for, and the Stock Exchange has granted us, a waiver from strict
compliance with the requirement under paragraph 14 of Appendix 3 to the Listing Rules to amend
our Articles in accordance with the abstention requirements under the Listing Rules. See“Waivers — B. Additional Waivers — Articles of Incorporation — Material Interests in a
Transaction” in the Prospectus for details.
C.

SHAREHOLDERS’ RIGHTS

Entitlement of certain Shareholders’ rights under Japan law may differ from those available
under Hong Kong law and/or the Listing Rules.
CCASS Beneficial Owners
A CCASS Beneficial Owner is not recognised as a Shareholder under Japan law until he/she
withdraws the relevant Shares from CCASS and re-registers himself/herself as the registered
Shareholder in our Share Register.
HKSCC Nominees will exercise the rights on behalf of CCASS Beneficial Owners in the sameway it does for shareholders of other companies listed on the Stock Exchange the shares ofwhich are deposited into CCASS.

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KEY JAPAN LEGAL AND REGULATORY MATTERS
Inspection of our Share Register
Shareholders and creditors
We generally allow a Shareholder or a creditor to inspect our Share Register from time totime as required under the Japan Companies Act. We however are entitled under the Japan
Companies Act to refuse a request from such persons to inspect our Share Register under thefollowing limited circumstances:(i)

where a request is made for a purpose other than in relation to securing or exercisingrights as a Shareholder or creditor;(ii)

where a request is made for the purpose to interfere with our business operation or todamage the interests of our Shareholders as a whole;(iii)

where a request is made to inform, in exchange for payment, a third party of any factthat could not have been obtained other than from an inspection (including copying);(iv)

where a person making a request has informed, in exchange for payment, a third partyof any fact that could not have been obtained other than from an inspection (including
copying) during the last two years; and(v)

where the person making a request is carrying on, or engaged in, a businesssubstantially in competition with our business (this requirement has been removed in
the certain amendments made to the Japan Companies Act in June 2014 which willtake effect on 1 May 2015 (“JCA Amendments”)).

A Shareholder or creditor wishing to inspect our Share Register shall attend our Hong Kong
Share Registrar’s office during normal business hours in Hong Kong. Our Hong Kong Share
Registrar will require the person to complete a prescribed form setting out his/her details and the
purposes of inspection. Our Hong Kong Share Registrar will then contact our Company and notify
the relevant Shareholder or creditor of our Company’s decision within two business days and, if
approved, our Hong Kong Share Registrar will notify the Shareholder or creditor the date ofinspection. A printed copy of our Share Register may also be requested. Other than applicable
printing costs, no fee will be charged for the inspection.
Non-shareholder and non-creditor
Any person who is not a Shareholder or creditor of our Company (including national andprefectural government agencies) may also, to the extent allowed under the Personal Information
Protection Act, inspect and obtain a copy of our Share Register. As advised by our Japan Legal
Adviser, our Share Register is, under the Personal Information Protection Act, open for inspection
for persons other than our Shareholders and creditors if:(i)

the inspection of our Share Register is based on laws and regulations;18

KEY JAPAN LEGAL AND REGULATORY MATTERS(ii)

the inspection of our Share Register is necessary for the protection of the life, body, or
property of an individual and if it is difficult to obtain the consent of the person who isthe subject of the inquiry;(iii)

the inspection of our Share Register is necessary for improving public health orpromoting the sound growth of children and if it is difficult to obtain the consent of theperson who is the subject of the inquiry; or(iv)

the inspection of our Share Register is necessary for cooperating with a state organ,
a local government, or an individual or a business operator entrusted by one in
executing the affairs prescribed by laws and regulations and if obtaining the consent
of the person who is the subject of the inquiry is likely to impede the execution of suchaffairs.

CCASS Beneficial Owners are not recognised as a Shareholder under Japan law and they
may not inspect our Share Register unless they are allowed to do so under the Personal
Information Protection Act.
Shareholders who have surrendered their share certificates to our Company may inspect our
Share Register to check and verify their shareholdings in our Company.
Dividends
Record date for distributing dividends
Our AGM is usually held in June every year. Our Articles provide that our Board of Directors
may from time to time designate a record date for our AGMs and extraordinary general meetings.
A record date is the date for determining the list of eligible Shareholders entitled to vote in our
AGMs and extraordinary general meetings. We may also set the same or a different record dateto determine the eligibility of our Shareholders to receive dividends and/or other distributions.
Final dividend
Upon Listing, we plan to set our record date for final dividend entitlement shortly after theannouncement of any final dividend declared. To comply with the requirements under the Japan
Companies Act and Rule 13.66(1) of the Listing Rules, a record date in relation to final dividend,
if any, will be announced by public notice in Japan, which will be replicated on the Stock
Exchange’s website and our Company’s website in English and Chinese, at least 14 days prior
to the proposed record date.

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KEY JAPAN LEGAL AND REGULATORY MATTERS
Interim and other dividend payments
Upon Listing, we plan to set our record date for interim or other dividend entitlement shortly
after the announcement of any interim or other dividend declared. To comply with therequirements under the Japan Companies Act and Rule 13.66(1) of the Listing Rules, a record
date in relation to our interim or other dividend, if any, will be announced by public notice inJapan, which will be replicated on the Stock Exchange’s website and our Company’s website inEnglish and Chinese, at least 14 days prior to the proposed record date.
Shareholders who acquire our Shares after the record date will not be entitled to receive
dividend payment, if any.
Restrictions on dividend distributions
Our Company may declare and pay, in accordance with the Japan Companies Act and ourArticles, (i) interim cash dividends (declared at the end of the second quarter of a financial year)with the approval of our Board of Directors and (ii) other dividends (including year-end dividends)
with the approval of our Board of Directors (unless such dividend is proposed to be paid in kind(other than scrip dividends in the form of Shares, bonds (including convertible bonds) and SARs
issued by our Company, which the Japan Companies Act prohibits) without giving Shareholders
the right to demand distribution in cash, in which case a special resolution in a general meeting
would be required). Scrip dividends in the form of Shares, bonds (including convertible bonds) or
SARs issued by our Company are prohibited under the Japan Companies Act. The amount orvalue of any dividends declared may not exceed the available the retained earning recorded in our
financial statements prepared in accordance with JGAAP, with certain adjustments (including thededuction of the book value of any treasury stock of our Company) (“Distributable Amount”).
The Japan Companies Act provides that a company’s Distributable Amount is calculatedusing the retained earnings* (剰余金) recorded in a company’s financial statements prepared inaccordance with JGAAP (rather than IFRS) with certain adjustments (including deduction of thebook value of any treasury stock* (自己株式) held by a company) available under the Japan
Companies Act and the relevant ordinance of the Japanese Ministry of Justice. The Japan
Companies Act also requires an amount equivalent to 10% of any dividend resulting in a decrease
in retained earnings* (剰余金) to be allocated to reserves* (準備金) until the aggregate amount of
the reserve* (準備金) equals 25% of the amount of share capital. See “Appendix V — Summaryof our Articles of Incorporation and Japan Corporation Law — 6. Dividends and Distributions” in
the Prospectus for a detailed description on how Distributable Amount is calculated under theJapan Companies Act.
Given that our consolidated financial information set out as Appendix I to the Prospectus
have been prepared in accordance with IFRS, the amounts of the consolidated retained earnings
determined under IFRS differ from the retained earnings* (剰余金) recorded in our Company’s
entity level financial statements under JGAAP. The differences are caused by items which include,for example, the adjustment related to goodwill and intangible asset amortisation, share-based
payments and derivative financial liabilities.

20

KEY JAPAN LEGAL AND REGULATORY MATTERS
Our Company will procure our accounting auditor to prepare reconciliation between our
financial statements under JGAAP and IFRS for each financial year following the Listing anddespatch of such reconciliation documents to our Shareholders together with our annual report(or summary financial report). For indicative purposes, our Company’s annual report
incorporating financial statements (or a summary financial report) prepared in accordance withIFRS will include the Distributable Amount as at the end of the financial year.
Currency of dividend payments
Shareholders entitled to receive cash dividends from our Company (other than CCASS
Beneficial Owners) will have the option of receiving their entitlements in either Japanese Yen or
Hong Kong Dollars (to be converted by our Company at the then prevailing foreign exchange
rates available to our Company), provided that, in order to elect Japanese Yen, Shareholders
must supply bank account details in Japan (such bank must be a member of The Japanese
Bankers Currency Exchange Institution) to our Company through our Hong Kong Share Registrar.
No partial election will be allowed, and Shareholders, including nominee companies which holdShares on behalf of our Shareholders, cannot elect to receive part of the cash dividends inJapanese Yen and part of the cash dividends in Hong Kong Dollars. If no election is made by a
Shareholder, such Shareholder will receive dividend payments in Hong Kong Dollars.
Shareholders who have previously elected to receive dividend payments in Japanese Yen andsupplied bank account details in Japan to our Company will continue to receive dividend
payments in Japanese Yen. Each such Shareholder can exercise their option by informing ourHong Kong Share Registrar of its election. Upon declaration of dividend payment, our Hong Kong
Share Registrar will notify our Company of the aggregate amount in Japanese Yen and Hong
Kong Dollars to be paid to our Shareholders. Dividend payments in Hong Kong Dollars will be
paid by our Hong Kong Share Registrar to the relevant Shareholders upon receipt of the requisite
funds from our Company, whereas dividend payments in Japanese Yen will be directly paid by ourCompany.
All CCASS Beneficial Owners will receive dividend payments in Hong Kong Dollars. Any
CCASS Beneficial Owner who wishes to elect to receive his/her dividend payments in Japanese
Yen must withdraw the relevant Shares from CCASS and supply bank account details in Japan(such bank must be a member of The Japanese Bankers Currency Exchange Institution) to ourCompany through our Hong Kong Share Registrar.
Compulsory Acquisitions
Under the Companies Ordinance, the minority shareholders of a Hong Kong-incorporated
company may be compulsorily brought out or may require an offeror to buy out their interests if
the offeror acquires 90% of the issued shares in a successful takeover without shareholders’approval. Under the relevant Japan laws and regulations, compulsory acquisitions can beachieved without shareholders’ approval by the following transactions:(i)

An offeror (which must be a Japan-incorporated company) having acquired 90% ormore of the voting rights in a stock company* (株式会社) (which our Company is one)may (aa) acquire the remaining interests of the minority shareholders by way of a share

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KEY JAPAN LEGAL AND REGULATORY MATTERS
exchange* (株式交換) arrangement; or (bb) cash out the remaining interests of theminority shareholders by way of a merger* (合併) arrangement (the “JCA Compulsory
Acquisitions”) only with the approval of the board of directors of the said company.
In case of a share exchange* (株式交換) arrangement, the offeror must be a stockcompany* (株式会社) or a limited liability company* (合同会社).
(ii)

Under the JCA Amendments, which will come into effect on 1 May 2015 , an offeror
having acquired 90% or more of the voting rights in a stock company* (株式会社) (which
our Company is one) may compulsorily acquire the interests of all remaining
shareholders only with the approval of the board of directors of the said company (the“JCA Amendment Compulsory Acquisition”).

Other than the transactions above, there is currently no provision under Japan laws andregulations similar to the compulsory acquisition regime under the Companies Ordinance thatwould otherwise allow an offeror in a successful takeover to buy out the minority shareholders
without shareholders’ approval, regardless of the shareholding percentage acquired by suchofferor.
Apart from the JCA Compulsory Acquisitions and the JCA Amendment Compulsory
Acquisition, under Japan laws, an offeror of a successful takeover or the minority shareholders
of a Japan-incorporated company may also achieve a similar outcome of compulsory acquisitions
by proposing a number of alternative transactions (the “Share Transactions”) to the subject
company, all of which are subject to shareholders’ approval.
To initiate the Share Transactions, an offeror in a successful takeover or minority
shareholders may either (i) request for the convocation of a general meeting; or (ii) request for
additional matter(s) to be included in the agenda of a general meeting. See “- B. Shareholders’Meetings” in this document above for the detailed procedures.
Under the Japan Companies Act, the approval threshold of the Share Transactions is
two-third of the votes of shareholders present at a general meeting, which is significantly lower
than the 90% threshold of the compulsory acquisition regime under the Companies Ordinance.
As an enhanced measure of shareholders’ protections, our Articles provide that at least 90% of
the votes of Shareholders present at a general meeting are required to effect the Share
Transactions.
Our Directors are of the view that, in relation to compulsory acquisitions, the level ofprotections under our Articles and the relevant Japan laws and regulations taken as a whole islargely commensurate to the shareholders’ protections provided under the Companies Ordinance(given the Articles provisions put in place by us).

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KEY JAPAN LEGAL AND REGULATORY MATTERS
In addition, investors should note that, unlike the Companies Ordinance, there is norestriction under the relevant Japan laws and our Articles on the acquisition price of thetransactions set out above. Minority shareholders may resort to a number of court procedures to(i) request the court to cease the relevant transactions; or (ii) determine a fair acquisition price.
There may be significant delays and costs involved in the initiation of the aforementioned court
procedures.
See “Appendix V — Summary of our Articles of Incorporation and Japan Corporation Law— 8. Compulsory Acquisitions” in the Prospectus for the details of the compulsory acquisition
provisions under Japan law and our Articles.
D.

CAPITAL STRUCTURE

Set out below are the key provisions under Japan law regarding allotment and issue of
Shares to a third party and share repurchases on the Stock Exchange, which differ from theregulatory regime in Hong Kong.
Issuing Mandate
There is no concept of pre-emptive rights (as defined in the Listing Rules) under Japan law.
Under the Japan Companies Act, when a Japanese company issues new shares and SARs
(including convertible bonds), certain subscription requirements (the “Subscription
Requirements”) shall be determined. The Subscription Requirements include the number ofshares or SARs (including convertible bonds) to be issued, price, payment due date and othermatters prescribed under the Japan Companies Act.
Under our Articles, the Subscription Requirements of any new issue of Shares or SARs
(including convertible bonds) must be determined by an ordinary resolution in a general meeting,provided however that the Subscription Requirements of the issue and allotment of Shares or
SARs (including convertible bonds) at a price or term especially favourable to the allottees must
be determined by a special resolution in a general meeting. Our Board may issue and allot the
Shares or SARs once the Subscription Requirements have been determined and approved by an
ordinary or special resolution (as the case may be) in a general meeting.
Our Articles further provide that (a) the total number of Shares authorised by our
Shareholders to be issued is 2,000,000,000 Shares; and (b) our Shareholders may entrust thepower to determine the Subscription Requirements of any new issue of Shares or SARs (including
convertible bonds) to our Board by way of a general mandate. The authority of the said generalmandate must be approved with an ordinary (or a special resolution, if such mandate specificallyprovides for an allotment at a price or term especially favourable to the allottee) resolution in a
general meeting, which resolution shall prescribe, among others, the maximum number of Shares
and SARs to be issued and allotted under the general mandate and the minimum price to be paidby the allottees. Under our Articles, the general mandate shall not be effective for more than one

23

KEY JAPAN LEGAL AND REGULATORY MATTERS
year from the date of the resolution approving the same. As advised by our Japan Legal Adviser,
the general unconditional mandate given to our Board by our Shareholders relating to the issue,
allotment and dealings of our Shares (“Issuing Mandate”) was duly approved by our
Shareholders at our extraordinary general meeting held on 16 March 2015.
The Articles and Japan Companies Act provisions described above apply equally to thedisposal of our treasury stock* (自己株式), if any.
On 16 March 2015, our Board has been granted with the Issuing Mandate to issue, allot anddeal in our Shares, the details of which are set out in “Appendix VI — Statutory and General
Information — A. Further Information about our Company — 5. Extraordinary General Meeting
held on 16 March 2015”. Under our Articles and the Japan Companies Act, the Issuing Mandateis only enforceable when:(i)

our total number of issued Shares will not exceed 2,000,000,000 Shares, which are thetotal number of Shares authorised to be issued by our Company, as a result of the issue
and allotment made under the Issuing Mandate; and(ii)

the allotments under the Issuing Mandate are not made at a price or term especiallyfavourable to the allottees, in which case a special resolution in a general meeting isrequired.

For the avoidance of doubt, the Issuing Mandate grants power to our Board to issue, allot
and deal with Shares only and does not grant authority to issue SARs and dispose of treasury
stock* (自己株式). Our Japan Legal Adviser has confirmed that the Shareholders’ resolution in our
extraordinary general meeting held on 16 March 2015 approving the Issuing Mandate contained
all the required information prescribed under our Articles. Our Directors have undertaken to the
Stock Exchange that they will not exercise the Issuing Mandate if any of conditions (i) to (ii) set
out above has not been fulfilled, in which case they will seek specific approval from ourShareholders in order to issue and allot new Shares.
As to the term “especially favourable” referred to in (ii) above, our Japan Legal Adviser has
confirmed that there is no clear definition under Japan law as to the circumstances where theterms of an allotment may be deemed as especially favourable to the proposed allottees. Under
the internal rules of The Japan Securities Dealers Association, an allotment may be taken as
especially favourable to the proposed allottees when less than 90% of the market value of the
Shares so allotted is set as consideration from the proposed allottees. Our Board may from time
to time appoint an independent expert to determine whether an allotment is especiallyfavourable.

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KEY JAPAN LEGAL AND REGULATORY MATTERS
Our Directors have been advised that the Issuing Mandate is in compliance with Rule 13.36
of the Listing Rules. The aggregate number of Shares under the Issuing Mandate is subject to thelimit under Rule 13.36(2)(b) of the Listing Rules and is no more than the sum of:(a)

20% of the total number of Shares issued by our Company immediately uponcompletion of the Hong Kong Public Offering and the conditional placing of the Internal
Offer Shares (“International Offering”) (“Global Offering”); and(b)the aggregate number of Shares repurchased by our Company, if any, under thegeneral unconditional mandate given to our Board by our Shareholders relating to therepurchase of Shares (“Repurchase Mandate”) referred to below.

Share repurchases
Under the Japan Companies Act, a company may in general repurchase its shares throughthe following ways:(i)a company may repurchase its own shares upon agreement with one or more particularshareholder(s) with a special resolution in a general meeting approving (a) the number
and class of the shares to be repurchased; (b) the contents and the aggregate amountof consideration to be paid in exchange for the repurchased shares; (c) the period
during which the company may repurchase its shares (which shall not be more than
one year); and (d) the name of such particular shareholder(s). Once approved, thecompany may repurchase the shares within the scope of the special resolution
following certain prescribed procedures under the Japan Companies Act, provided
however that, where the repurchase price exceeds the market price of the shares, thecompany shall give a notice to other shareholders to provide them with theopportunities to participate in the share repurchase prior to the general meeting
approving the share repurchase;(ii)

a company may repurchase its own shares through an offer to all shareholder with an
ordinary resolution in a general meeting approving items (a) to (c) set out in (i) above.
Once approved, the company may repurchase the shares within the scope of theordinary resolution following certain prescribed procedures under the Japan
Companies Act; and(iii)

a company may repurchase its own shares through a market transaction etc.*(市場取引等) as defined under the Japan Companies Act with an ordinary resolution ina general meeting or, where allowed under its articles, a resolution of its board of
directors, approving items (a) to (c) set out in (i) above. Once approved, the company
may repurchase the shares within the scope of the said resolution.

Upon Listing, we will effect repurchases of our Shares outside the Stock Exchange inaccordance (i) and (ii) above, subject to compliance with all applicable Listing Rules and/or the
Takeovers Code. Repurchases on the Stock Exchange will be effected under the Repurchase
Mandate granted to our Board by our Shareholders on 16 March 2015 in compliance with Rule25

KEY JAPAN LEGAL AND REGULATORY MATTERS
10.06 of the Listing Rules and in accordance with (iii) above as market transactions etc.*(市場取引等). Our Articles provide that repurchases of our own Shares can be effected througha market transaction etc.* (市場取引等) as defined under the Japan Companies Act with aresolution of our Board (so long as such repurchases comply with the applicable requirements
under the Listing Rules), allowing our Directors to effect repurchases under the Repurchase
Mandate without Shareholders’ specific approval.
Based on the foregoing Articles and Japan law provisions, repurchases under the
Repurchase Mandate must be market transactions etc.* (市場取引等) as defined under the Japan
Companies Act. There is no judicial precedent or interpretation confirming that a repurchasethrough the Stock Exchange, which is not a securities exchange in Japan, is a market transaction
etc.* (市場取引等). Given the lack of judicial precedent, our Directors have undertaken to the
Stock Exchange that they will not exercise the Repurchase Mandate to repurchase our Shares on
the Stock Exchange unless there is clear judicial authority allowing us to make repurchases on
the Stock Exchange thereunder.
For details of the Japan law and Listing Rules provisions on the repurchases of our Shares,
see “Appendix VI — Statutory and General Information — B. Repurchase of our Shares” in the
Prospectus.
E.

TAXATION

Set out below are the key tax obligations that might arise from dealing in our Shares. It does
not purport to be a complete analysis of all possible tax situations that may be relevant to adecision to purchase the Shares or with regard to the taxation of our Company. Potential
investors should consult your own tax advisers as to the possible tax consequences of thepurchase and ownership of the Shares based on their particular circumstances. No conclusion
should be drawn with respect to issues not specifically addressed by this summary. The following
description of Japan law is based upon the Japan law and regulations in effect and as interpretedby the National Tax Agency as at the date of this document and is subject to any amendments
to the relevant laws (or their interpretation) later introduced, whether or not on a retroactive basis.
It is not intended to be, nor should it be construed to be, legal or tax advice.
It is emphasised that none of our Company, our Directors, or other parties involved in the
Global Offering can accept responsibility for any impact on the tax liabilities of, Shareholders/potential investors resulting from their subscription for, purchase, holding or disposal of orotherwise dealing in our Shares or exercising any rights attaching to them.

26

KEY JAPAN LEGAL AND REGULATORY MATTERS
1.

Withholding Tax on Dividend Payment

Japanese Shareholders
Shareholders who choose to invest outside CCASS who are either a resident in Japan or a
corporation incorporated in Japan are subject to the following withholding tax rate on dividend
distribution:
Individual
Shareholder that
Individual

Dividends paid and due

is interested in

Shareholder that

3% or more ofis interested in

the entire issued

less than 3% of

Shares of ourour total number

total number ofCorporateof issued Sharesissued Shares

Shareholder

20.315%20%

20.420%20%

15.315%15%

On or before 31 December 2037 . . . . . . . . . . .
On or after 1 January 2038 . . . . . . . . . . . . . . .

Non-Japanese Shareholders
Shareholders who choose to invest outside CCASS who are not residents in Japan or
corporations incorporated in Japan without a permanent establishment in Japan are subject tothe following withholding tax rate on dividend distribution:
Individual

Dividends paid and due

Individual

Shareholder that is

Shareholder that isinterested in 3% orinterested in lessmore of the entire

than 3% of our total

issued Shares of ournumber of issued

total number of

Sharesissued Shares

Corporate Shareholder

On or before 31 December
15.315% or 10% (1) 20.420% or 10% (1) 15.315% or 5%/10% (1)2037 . . . . . . . . . . . . . . . . . .
On or after 1 January 2038 . .
15% or 10% (1)20% or 10% (1)15% or 5%/10% (1)

Note:
(1)

Individual and corporate Shareholders who are residents or entities incorporated in Hong Kong having nopermanent establishment in Japan will be subject to a withholding tax in Japan not exceeding 10% (or notexceeding 5% for corporate Shareholders who are interested in 10% or more of our total number of issued Sharesfor the six consecutive months ending on the record date for dividend distribution) for dividend payments under the
Hong Kong-Japan Tax Treaty. See “— Hong Kong-Japan Tax Treaty’’ in this document below for details.

27

KEY JAPAN LEGAL AND REGULATORY MATTERS
CCASS Beneficial Owners
Notwithstanding that CCASS Beneficial Owners are not recognised under the Japan
Companies Act as Shareholders, Zeirishi-Hojin PricewaterhouseCoopers (税理士法人プライスウ
ォーターハウスクーパース), our Japan tax adviser (“Tax Adviser”) has confirmed that Japanese
tax laws would recognise CCASS Beneficial Owners who hold their investments through CCASS,
being the ultimate payees of any dividend, as taxpayers. As such, the withholding tax rateapplicable to the dividend paid to CCASS Beneficial Owners should, in principle, be the tax rateapplicable to each CCASS Beneficial Owner on an individual basis in accordance with theiridentity, shareholding percentage and tax residence.
However, due to the inherent characteristics of CCASS, our Company is not able toascertain the identity, and consequently the tax residence, of the CCASS Beneficial Owners. Our
Company is therefore unable to apply a rate of withholding tax on an individual basis to CCASS
Beneficial Owners. In addition, CCASS does not have the capacity to attribute to each CCASSParticipant (and, accordingly, to each CCASS Beneficial Owner) its respective share of distributed
profits with the purpose of enabling our Company to apply the proper withholding tax (if any).
As such, our Company will withhold tax on the dividends payable to CCASS Beneficial
Owners at the highest possible withholding tax rates under Japan law, which is 20.420% fordividends paid and due on or before 31 December 2037.

28

KEY JAPAN LEGAL AND REGULATORY MATTERS
Withholding tax held in excess
CCASS Beneficial Owners are subject to an initial withholding tax rate of 20.420%, whichis the highest possible withholding tax rate under Japan law. Eligible CCASS Beneficial Owners
may apply for a refund of taxes withheld in excess of the applicable rates that would have applied
to them if they choose to invest outside CCASS from the National Tax Agency. Set out below are
the rates of refunds that our CCASS Beneficial Owners may be entitled to depending on theirresidence or jurisdictions of incorporation:(a)Hong Kong CCASS Beneficial Owners

CCASS Beneficial Owners who are either residents in Hong Kong or corporations
incorporated in Hong Kong without any permanent establishment in Japan may be entitled toclaim a refund of taxes withheld in excess from the National Tax Agency at a rate set out below:
Individual
Shareholder that
Individual

is interested in

Shareholder that

3% or more ofis interested in

the entire issued

less than 3% of

Shares of ourour total number

total number ofCorporateof issued Sharesissued Shares

Shareholder

20.420%20.420%20.420%15.315%20.420%15.315%5.105%

0%5.105%

Withholding tax rate initially withheld by ourCompany . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Applicable tax rate that would have applied
to them if they choose to invest outside
CCASS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Possible rate of refunds from the National Tax
Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

29

KEY JAPAN LEGAL AND REGULATORY MATTERS(b)

Japanese CCASS Beneficial Owners

CCASS Beneficial Owners who are either residents in Japan or corporations incorporated inJapan may be entitled to claim a refund of taxes withheld in excess from the National Tax Agency
at a rate set out below:
Individual
Shareholder that
Individual

is interested in

Shareholder that

3% or more ofis interested in

the entire issued

less than 3% of

Shares of ourour total number

total number ofCorporateof issued Sharesissued Shares

Shareholder

20.420%20.420%20.420%20.315%20.420%15.315%0.105%

0%5.105%

Withholding tax rate initially withheld by ourCompany . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Applicable tax rate that would have applied
to them if they choose to invest outside
CCASS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Possible rate of refunds from the National Tax
Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Japanese CCASS Beneficial Owners should note that, if they elect to invest in our Company
through a recognised financial instruments business operator * (金融商品取引業者等), theobligation to pay the relevant withholding tax rests with those operators. As such, they areentitled to claim a full refund of the withholding tax withheld by our Company from the National
Tax Agency (i.e. 20.420% of the dividends paid).

30

KEY JAPAN LEGAL AND REGULATORY MATTERS(c)

Other CCASS Beneficial Owners

Other CCASS Beneficial Owners who are neither residents in Japan or Hong Kong or
corporations incorporated in Japan or Hong Kong without any permanent establishment in Japan
may be entitled to claim a refund of taxes withheld in excess from the National Tax Agency at a
rate set out below:
Individual
Shareholder that
Individual

is interested in

Shareholder that

3% or more ofis interested in

the entire issued

less than 3% of

Shares of ourour total number

total number ofCorporateof issued Sharesissued Shares

Shareholder

20.420%20.420%20.420%15.315%20.420%15.315%5.105%

0%5.105%

Withholding tax rate initially withheld by ourCompany . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Applicable tax rate that would have applied
to them if they choose to invest outside
CCASS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Possible rate of refunds from the National Tax
Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CCASS Beneficial Owners may be able to claim a refund from the National Tax Agency ofwithholding tax withheld in excess of by completing and returning a designated application form
prepared by us in the form and substance acceptable to the National Tax Agency. Electronic
copies of such application forms will be available on our Company’s website upon Listing. In
addition, physical application forms for tax refund in Japanese, English and Chinese will be madeavailable to our Shareholders at our Company’s principal place of business in Hong Kong and ourHong Kong Share Registrar. Our Company will announce to our Shareholders on each occasion
these application forms become available. Potential investors should note that there may bedelays in obtaining this refund. Detailed documentary requirements for the refund processapplicable to our CCASS Beneficial Owners will be specified in our dividend payment
announcements.
Hong Kong-Japan Tax Treaty
Following the conclusion of the Agreement between the Government of the Hong Kong
Special Administrative Region of the People’s Republic of China and the Government of Japanfor the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes
on Income dated 9 November 2010 (“Hong Kong-Japan Tax Treaty”), effective in Japan since
14 August 2011, dividends paid by our Company to our Shareholders who (i) are Hong Kong
residents or companies incorporated in Hong Kong; and (ii) have no permanent establishment inJapan, will be subject to a withholding tax in Japan not exceeding 10% (or not exceeding 5% forcorporate Shareholders who are interested in 10% or more of our total number of issued Sharesfor the six consecutive months ending on the record date for dividend distribution) for dividends
payable after 1 January 2012.

31

KEY JAPAN LEGAL AND REGULATORY MATTERS
Corporate and other individual Shareholders who hold the Shares in their own names andbelieve that they are entitled to reduced withholding tax rates on dividend payments made by ourCompany under the Hong Kong-Japan Tax Treaty will need to make an application to the National
Tax Agency through our Hong Kong Share Registrar to establish their eligibility to the satisfactionof the National Tax Agency.
Applications for reduced withholding tax rates under the Hong Kong-Japan Tax Treaty
applicable to dividend payments by our Company can be made before the record date on which
Shareholders are determined to be eligible for such dividends. Applications must be made using
the Application Form for Income Tax Convention (Relief from Japanese Income Tax on Dividends).
Such application form is available in Japanese and English on the website of the National Tax
Agency at www.nta.go.jp/tetsuzuki/shinsei/annai/joyaku/annai/pdf2/250.pdf. Application
forms in Japanese and English, together with an unofficial Chinese translation of the instructions
for completing the application form, will be made available to our Shareholders at our Company’s
principal place of business in Hong Kong and our Hong Kong Share Registrar prior to the record
date on which Shareholders are determined to be eligible for dividend payments. Our Company
will announce to our Shareholders on each occasion these application forms become available.
Detailed documentary requirements for the application process under the Hong Kong-Japan Tax
Treaty will be specified in our dividend payment announcements.
Alternatively, Shareholders may be able to claim a refund from the National Tax Agency ofwithholding tax withheld in excess of the rate payable under the Hong Kong-Japan Tax Treaty.
Applications must be made using the Application Form for Refund of the Overpaid Withholding
Tax Other Than Redemption of Securities and Remuneration Derived from Rendering Personal
Services Exercised by an Entertainer or a Sportsman in Accordance with the Income Tax
Convention which is available in Japanese and English on the website of the National Tax Agency
at www.nta.go.jp/tetsuzuki/shinsei/annai/joyaku/annai/pdf2/260.pdf. Physical application
forms for tax refund in Japanese and English, including an unofficial Chinese translation of the
instructions for completing the application form, will be made available to our Shareholders at our
Company’s principal place of business in Hong Kong and our Hong Kong Share Registrar. Our
Company will announce to our Shareholders on each occasion these application forms become
available. Potential investors should note that there may be delays in obtaining this refund.
Detailed documentary requirements for the refund process under the Hong Kong- Japan Tax
Treaty will be specified in our dividend payment announcements.
Potential investors are strongly advised to consult their professional advisers if you are inany doubt as to the implications of the Hong Kong-Japan Tax Treaty or the application process
for any reduced rates on dividend payments made by our Company. We do not assume any
responsibility to ensure withholding is made at the reduced treaty rate or to ensure no withholding
is made for Shareholders who would be so eligible under any applicable income tax treaty.

32

KEY JAPAN LEGAL AND REGULATORY MATTERS
Our Tax Adviser is of the view that at this moment, CCASS Beneficial Owners cannot makea claim under a tax treaty, because the name, address and other information of a CCASS
Beneficial Owner cannot be identified due to the inherent characteristics of CCASS. We will, on
an on-going basis, discuss with the National Tax Agency regarding the applicability of any tax
treaty between Japan and any other country to CCASS Beneficial Owners residing in such othercountry. In the event that the National Tax Agency has approved the application of tax treaty tosuch CCASS Beneficial Owners, we will publish a separate announcement on the Stock
Exchange’s website and our Company’s website describing the procedures to make a claim
under tax treaty.
2.

Stamp duty

Japan stamp duty
Share transfers do not attract stamp duty in Japan. However, issue of a new Share
Certificate in Japan would be subject to Japanese stamp duty (印紙税) ranging from ¥200 to¥20,000. Upon Listing, all share certificates of our Company will be issued by our Hong Kong
Share Registrar. Accordingly, no Japanese stamp duty is, in principle, payable for our new sharecertificates.
Hong Kong stamp duty
Our Shares are considered as ‘‘Hong Kong stock’’ for the purpose of the Stamp Duty
Ordinance. Dealings in the Shares in our Company, which are required to be registered in our
Share Register through the Hong Kong Share Registrar in Hong Kong, are subject to Hong Kong
stamp duty. The current ad valorem rate of Hong Kong stamp duty is 0.1% on the higher of theconsideration for or the market value of the Shares and it is charged on the purchaser on every
purchase and on the seller on every sale of the Shares. In other words, a total stamp duty of 0.2%
is currently payable on a typical sale and purchase transaction.
3.

Capital gain tax

Japan capital gains tax
As a general rule, gains derived from the sale outside Japan of our Shares by non-resident
Shareholders or corporate Shareholders established outside Japan who have neither apermanent establishment in Japan nor a permanent representative in Japan to which the Sharesare attributable are generally not liable to any Japanese income or corporate taxes, except for (i)any Shareholder who is interested in 25% or more in our Company’s entire issued Shares at any
time during the taxable year of sale or during two preceding years; and (ii) any Shareholder whotransfers 5% or more of our total number of issued Shares in the taxable year of sale.

33

KEY JAPAN LEGAL AND REGULATORY MATTERS
The above taxation is subject to the application of relevant double tax treaties and, basedon the provisions of the Hong Kong-Japan Tax Treaty, capital gains realised by a Shareholder,
who is a resident or corporation in Hong Kong, will not be taxable under Japanese capital gains
tax (even if such Shareholder is interested in 25% or more in our Company’s total number ofissued Shares at any time during the taxable year of sale or during two preceding years, andtransfers 5% or more of our total number of issued Shares in the taxable year of sale). The
absence of capital gains taxation in Japan is not subject to any specific formalities and ourShareholders who are residents or corporations in Hong Kong are therefore not required to takeany action in order to enjoy this exemption.
Our Tax Adviser has confirmed that in respect of Shares deposited into CCASS, only capitalgains realised by the CCASS Beneficial Owners are taxable under Japan law. Neither HKSCC
Nominees nor the CCASS Participants are subject to any Japanese capital gains tax reporting or
payment obligation directly arising from dealing in our Shares on behalf of the CCASS Beneficial
Owners (even if a CCASS Beneficial Owner is interested 25% or more in our Company’s total
number of issued Shares at any time during the taxable year of sale or during two preceding
years, and transfers 5% or more of our total number of issued Shares in the taxable year of sale).
Individual Shareholders
Individual Shareholders who are residents in Japan who effect their dealings in our Sharesthrough a recognised financial instruments business operator (金融商品取引業者等) are subject tocapital gains tax in Japan at 20.315% for the year ending before 31 December 2037 or 20% for
the year ending on or after 31 December 2038.
Corporate Shareholders
Corporate Shareholders established in Japan are subject to capital gains tax in Japan at
approximately 36%.
Hong Kong capital gains tax
No tax is imposed in Hong Kong in respect of capital gains from the sale of the Shares.
Trading gains from the sale of the Shares by a person carrying on a trade, profession or businessin Hong Kong, where such gains are derived from or arise in Hong Kong from such trade,
profession or business, will be subject to Hong Kong profits tax.
4.

Inheritance tax and gift tax

Japanese inheritance tax and gift tax at progressive rates may be payable by an individual
who has acquired common Shares* (普通株式) of our Company as a legatee, heir or donee eventhough neither the acquiring individual nor the deceased nor donor is a Japanese resident.

34

KEY JAPAN LEGAL AND REGULATORY MATTERS
5.

GeneralZeirishi-Hojin PricewaterhouseCoopers* (税理士法人プライスウォーターハウスクーパース),
our Tax Adviser, has advised our Company in writing as to (1) our potential investor’s exposure
to (i) Japanese withholding tax on dividend payments from our Company; (ii) Japanese capitalgains tax from dealing in the Shares of our Company; (iii) Japanese stamp duty on issue of sharecertificates; (iv) Japanese inheritance tax and gift tax from the acquisition of the Shares of ourCompany as legatee, donee and heir; (2) our Company’s exposure to Japanese withholding tax
on dividend payments from our subsidiaries; and (3) the Japanese corporate income tax rates
applicable to our Group during the three years ended 31 March 2014 and the six months ended
30 September 2014 (“Track Record Period”).
F.

FOREIGN EXCHANGE CONTROLThe Foreign Exchange and Foreign Trade Act of Japan* (外国為替及び外国貿易法) (Act No.

228 of 1949) and the cabinet orders and ministerial ordinances (collectively, the ‘‘Foreign
Exchange Regulations’’) thereunder govern certain matters relating to the issue of equity-related
securities by us and the acquisition, holding and disposal of Shares by foreign investors of ourCompany. Under certain prescribed circumstances, Shareholders and CCASS Beneficial Owners
may be required to file a foreign exchange report or notification to The Bank of Japan.
The filing obligations are generally exempted if: (i) a Shareholder or CCASS Beneficial Owner
is a resident of, or a corporation organised under the laws of, certain exempted jurisdictions(which include Hong Kong, the U.S., the United Kingdom, Canada, Australia, the PRC, among
others); and (ii) if their shareholding interests in our Company do not exceed 10%.
See “Appendix V — Summary of our Articles of Incorporation and Japan Corporation Law— 10. Foreign Exchange Control” in the Prospectus for a list of the exempted jurisdictions anddetails of the filing requirements under the Foreign Exchange Regulations.
G.

SHAREHOLDERS PROTECTION
Set out below is a comparison of the applicable laws and regulations in Hong Kong andJapan on certain key shareholder protection standards that we consider material to our
Shareholders and investors.
Amendment to constitutional documents
Under Hong Kong law, any alteration to the articles of association of a company (except foralternation to the maximum number of shares that the company may issue) must generally bemade by a 75% majority vote in a general meeting. Under Japan law, in order to amend thearticles of incorporation, the resolution of the shareholders’ meeting shall in general be approved35

KEY JAPAN LEGAL AND REGULATORY MATTERS
by at least two-thirds of the voting rights of the shareholders present at a meeting where theshareholders holding at least one-third of the voting rights who are entitled to exercise theirvoting rights are present. The standard of shareholders’ protection under Japan law is similar toor comparable with that under Hong Kong law.
Variation of rights
Under Hong Kong law, rights attached to shares in a class of shares in a company may bevaried only with either (a) a written consent of holders representing at least 75% of the total voting
rights of holders of shares in the class; or (b) a 75% majority vote passed at a separate general
meeting of holders of shares in the class sanctioning the variation, unless otherwise provided
under the articles of association. Under Japan law, in order to vary the rights attached to anyclass of shares, the resolution of the general meeting shall be approved by at least two-thirds ofthe voting rights of the shareholders present at a meeting where the shareholders holding at leasta majority (which is lowered to one-third under our Articles) of the voting rights who are entitled
to exercise their voting rights are present. Moreover, if a proposed amendment would be
detrimental to shareholders of such class of shares, the resolution of the class shareholders’meeting must be approved by at least two-third of the voting rights of the class shareholders
present at a meeting where the class shareholders holding at least a majority of the voting rights
who are entitled to exercise their voting rights are present. The standard of shareholders’protection under Japan law is not materially different to that under Hong Kong law.
Under our Articles, our Company is not allowed to issue any other class of Shares other thanour common Shares* (普通株式). The requirements in relation to class meetings set out above are
therefore not applicable to us.
Liability to the company
Under Hong Kong law, a person who is a member of a company is not bound by any
alteration of the articles of association of the company that takes effect after the date on which
the person became a member if the alteration increases the person’s liability to the company
unless the person agrees in writing before, on or after the alternation taking effect to be boundby such alteration. Under Japan law, existing shareholders are not subject to any liability to thecompany except to the extent of the amount payable in respect of the shares such existing
shareholders subscribed or purchased when they acquired such shares from our Company. The
standard of shareholders’ protection under Japan law is not materially different to that underHong Kong law.
Winding Up
Under Hong Kong law, the voluntary winding up of a company must be approved byshareholders with a 75% majority vote in a general meeting. Under Japan law, in order tovoluntarily wind up a company, the resolution of a shareholders’ meeting must be approved by

36

KEY JAPAN LEGAL AND REGULATORY MATTERS
at least two-thirds of the voting rights of the shareholders present at a meeting where theshareholders holding at least a majority (which is lowered to one-third in our Articles) of the voting
rights who are entitled to exercise their voting rights are present. The standard of shareholders’protection under Japan law is not materially different to that under Hong Kong law.
Auditors
Under Hong Kong law, the appointment, removal and remuneration of auditors must be
approved by a majority vote in a general meeting. Under Japan law and our Articles, in order toappoint an accounting auditor of our Company, the resolution of our general meeting must be
approved by a majority vote of our Shareholders present at the meeting where the Shareholders
holding at least one-third of the voting rights who are entitled to exercise their voting rights arepresent. The removal of accounting auditor requires a resolution of a general meeting to beapproved by at least a majority of the voting rights of the Shareholders present at a meeting
where the Shareholders holding at least a majority of the voting rights who are entitled to exercise
their voting rights are present. The remuneration of accounting auditor, on the other hand, isdetermined by the Audit Committee of our Company (“Audit Committee”) which is entirely madeup of independent non-executive directors of our Company (“Independent Non-executive
Directors”). The standard of shareholders’ protection under Japan law is similar to orcomparable with that under Hong Kong law.
Register of members
Under Hong Kong law, a member of a company is entitled, on request made in the mannerprescribed under law and without charge, to inspect the register of members of the company. In
the case of our Company, our Hong Kong Share Registrar will maintain our Share Register inHong Kong and make available a copy for inspection by our Shareholders and creditors.
However, there are certain limited circumstances under the Japan Companies Act under which
our Company may reject a request for inspection from our Shareholders and creditors. In
addition, the Personal Data Information Act provides that we may not allow a person other thanour Shareholders and creditors to inspect our Share Register except under certain
circumstances. For details of the rejection criteria under the Japan Companies Act and therelevant provisions under the Personal Information Protection Act, see “— C. Shareholders’
Rights — Inspection of our Share Register” in this document above.
Compulsory Acquisition
Under the Companies Ordinance, the minority shareholders of a Hong Kong-incorporated
company may be compulsorily brought out or may require an offeror to buy out their interests if
the offeror acquires 90% of the issued shares in a successful takeover without shareholders’approval. Under the relevant Japan laws and regulations, compulsory acquisitions can beachieved without shareholders’ approval by the following transactions:(i)

An offeror (which must be a Japan-incorporated company) having acquired 90% ormore of the voting rights in a stock company* (株式会社) (which our Company is one)may (aa) acquire the remaining interests of the minority shareholders by way of a share37

KEY JAPAN LEGAL AND REGULATORY MATTERS
exchange* (株式交換) arrangement; or (bb) cash out the remaining interests of theminority shareholders by way of a merger* (合併) arrangement (the “JCA Compulsory
Acquisitions”) only with the approval of the board of directors of the said company. In
case of a share exchange* (株式交換) arrangement, the offeror must be a stockcompany* (株式会社) or a limited liability company* (合同会社).
(ii)

Under the JCA Amendments, an offeror having acquired 90% or more of the voting
rights in a stock company* (株式会社) (which our Company is one) may compulsorily
acquire the interests of all remaining shareholders only with the approval of the boardof directors of the said company (the “JCA Amendment Compulsory Acquisition”).

Other than the transactions above, there is currently no provision under Japan laws andregulations similar to the compulsory acquisition regime under the Companies Ordinance thatwould otherwise allow an offeror in a successful takeover to buy out the minority shareholders
without shareholders’ approval, regardless of the shareholding percentage acquired by suchofferor.
Apart from the JCA Compulsory Acquisitions and the JCA Amendment Compulsory
Acquisition, under Japan laws, an offeor of a successful takeover or the minority shareholders ofa Japan-incorporated company may also achieve a similar outcome of compulsory acquisitions
by proposing a number of alternative transactions (the “Share Transactions”) to the subject
company, all of which are subject to shareholders’ approval.
To initiate the Share Transactions, an offeror in a successful takeover or minority
shareholders may either (i) request for the convocation of a general meeting; or (ii) request for
additional matter(s) to be included in the agenda of a general meeting. See “— B. Shareholders’Meetings” in this document above for the detailed procedures.
Under the Japan Companies Act, the approval threshold of the Share Transactions is
two-third of the votes of shareholders present at a general meeting, which is significantly lower
than the 90% threshold of the compulsory acquisition regime under the Companies Ordinance.
As an enhanced measure of shareholders’ protections, our Articles provide that at least 90% of
the votes of Shareholders present at a general meeting are required to effect the Share
Transactions.
Our Directors are of the view that, in relation to compulsory acquisitions, the level ofprotections under our Articles and the relevant Japan laws and regulations taken as a whole islargely commensurate to the shareholders’ protections provided under the Companies Ordinance(given the Articles provisions put in place by us).

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KEY JAPAN LEGAL AND REGULATORY MATTERS
Meetings
Under Hong Kong law, except for a private company or a company limited by guarantee, acompany must, in respect of each financial year, hold a general meeting as its annual general
meeting within six months after the end of its accounting reference period. Japan law provides
that a Japan company must hold an annual general meeting within three months from the end ofits financial year. The standard of shareholders’ protection under Japan law is similar to orcomparable with that under Hong Kong law.
Right to convene meetings
Under Hong Kong law, the directors are required to call a general meeting if the company
has received requests to do so from members of the company representing at least 5% of thetotal voting rights of all the members having a right to vote at general meetings. In addition, acompany must circulate a resolution proposed as a written resolution if it has received requests
to do so from the members of the company representing not less than 5% (or a lower percentage
prescribed in the company’s articles of association) of the total voting rights of all the members
entitled to vote on the resolution. Japan law provides that a shareholder who has held no lessthan 3% of the voting rights in a company for the last six consecutive months may request its
directors to convene a general meeting. If the directors do not send out a convocation notice forsuch general meeting to be held and such shareholders’ meeting is not convened by the directors
within eight weeks from the date of such request, the relevant Shareholder who made the request
may convene a general meeting with court permission.
The standard of shareholders’ protection under Japan law is not materially different to that
under Hong Kong law.
Notice of meetings
Under Hong Kong law, the notice period for all general meetings is 14 days (regardless ofwhether an ordinary or special resolution is proposed for consideration), except the notice period
for an annual general meeting is 21 days. Our Articles provide that convocation notice of our
AGMs and extraordinary general meeting must be despatched 21 days prior to the date thereof.
In addition, after the convocation notice of a general meeting has been despatched, aShareholder is permitted to propose a last-minute amendment to the matters included in anexisting meeting agenda of a general meeting of our Company without any prior notice if a matterof similar nature is included in the original meeting agenda. For example, a Shareholder may
propose last-minute amendments to an existing meeting agenda and nominates a person forelection as a director at any time before the relevant general meeting or even at the meeting, if
the meeting original agenda includes a proposal of the appointment of a new Director, orDirectors, to our Board of Directors. These last-minute amendments are a theoretical mechanism
which, according to our Directors’ knowledge, is exceptionally rarely put into actual practice inJapan.

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KEY JAPAN LEGAL AND REGULATORY MATTERS
Distribution of notices
Under Hong Kong law, notice of a general meeting must be (i) given in hard copy form orin electronic form; or (ii) by making the notice available on a website; or (iii) a combination of theaforementioned manners. Japanese companies have similar procedures for the distributions ofnotices and voting. Upon Listing, notice of our general meetings will be despatched in hardcopies and published on a Japanese newspaper as well as our Company’s website and thewebsite of the Stock Exchange.
Voting
The Listing Rules require that, where a transaction or arrangement of an issuer is subject toshareholders’ approval under the provisions of the Listing Rules, any shareholder that has amaterial interest in the transaction or arrangement shall abstain from voting on the resolution(s)approving the transaction or arrangement in a general meeting. In addition, controllingshareholders must abstain from voting in favour of certain matters under the Listing Rules. There
are also certain matters where independent shareholders approvals are required under the
Takeovers Code. See “— B. Shareholders’ Meetings — Material Interests in a Transaction” in thisdocument above for the voluntary measures we have put in place to afford our Shareholders
protections comparable to those available under the Listing Rules and the Takeovers Code.
Proxies
Under Hong Kong law, a member of a company is entitled to appoint another person(whether a member or not) as a proxy to exercise all of the member’s rights to attend and to
speak and vote at a general meeting. A company must also ensure that in a notice calling ageneral meeting of the company, there must appear, with reasonable prominence, a statement
informing the members of their rights to appoint a proxy. In addition, a body corporate which isa member of a company may authorise any person it thinks fit to act as its corporate
representative at any meeting of the company, exercising the same powers on behalf of the body
corporate as the body corporate could exercise if it were an individual member of the company.
In the case of our Company, we do not impose any restriction or limitation on the identity or
qualification of proxies or corporate representatives appointed by our Shareholders. See “— B.
Shareholders Meetings — Proxies and Corporate Representatives” in this document above forpowers entitled to be exercised by proxies or corporate representatives appointed by our
Shareholders, which are not materially different by those offered under Hong Kong law.
Voting by poll
Under Rule 13.39(4) of the Listing Rules, any vote of shareholders at a general meeting must
be taken by poll except where the chairman, in good faith, decides to allow a resolution which
relates purely to a procedural or administrative matter to be voted on by a show of hands. Voting
in our general meetings is conducted by poll in practice. Each Share held by our Shareholders,in general, entitles them one vote in our general meeting. Under our Articles, we must count ourvotes in accordance with the number of Shares owned by each Shareholder. Voting by show ofhand is not possible under the Japan Companies Act and our Articles.

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KEY JAPAN LEGAL AND REGULATORY MATTERS
Appointment of directors
Under Hong Kong law, the appointment of each director is required to be voted on
individually. A unanimous approval of the shareholders is required to pass a resolution permitting
appointment of two or more directors by a single resolution. Japan law generally does not require
the appointment of each director to be voted on individually. The standard of shareholders’protection under Japan law is not materially different to that under Hong Kong law as this ispurely an administrative matter. In case of our Company, cumulative voting on the appointment
of Directors is prohibited under our Articles.
Declaration of interest
Under Hong Kong law, if a director of a company is in any way, directly or indirecly,interested in a transaction, arrangement or contract, or a proposed transaction, arrangement orcontract, with the company that is significant in relation to the company’s business and the
director’s interests is material, the director must declare the nature and extent of the director’sinterest to the other directors. A declaration of interest in a transaction, arrangement or contractthat has been entered into must be made as soon as reasonably practicable, and a declarationof interest in a proposed transaction, arrangement or contract must be made before the company
enters into the said transaction, arrangement or contract. Under the Japan Companies Act, a
director must report all the material facts, including his/her interest, with respect to a transaction
at the meeting of the board of directors to approve the relevant transaction prior to voting on it.
Any such director with an interest in the transaction is not entitled to be counted in the quorum
for voting on the transaction. Directors are in general not required to declare any material interest
in any transaction with the company as soon as practicable after he/she is aware of such interest,
but as the interest must be declared prior to approval of the transaction and the relevant director
is not entitled to have his or her vote counted towards a quorum, this is not materially detrimental
to shareholders. The standard of shareholders’ protection under Japan law is similar to orcomparable with that under Hong Kong law.
In addition, our Articles provide that a Director shall not vote on any Board resolution
approving any contract or arrangement or any other proposal in which he or any of his close
associates (as defined under the Listing Rules) has a material interest (as explained under the
Listing Rules) nor shall he be counted in the quorum in the relevant meeting.
Loans to directors
Under Hong Kong law, a company may only make loans to a director in certain limited
circumstances. The Japan Companies Act does not contain specific provisions on loans to, or
credit transactions with, directors, but such transactions will be governed by article 356 andarticle 365 of the Japan Companies Act which restrict transactions that result in a conflict ofinterest. Although companies are not prohibited from entering into transactions with theirdirectors, such transactions must be approved by a vote of the board of directors which excludes

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KEY JAPAN LEGAL AND REGULATORY MATTERS
the interested director from voting and being counted for the quorum. The relevant director mustalso report all material facts relating to such transaction at the meeting of the board of directors
and after such transaction takes place without delay. The standard of shareholders’ protection
under Japan law is similar to or comparable with that under Hong Kong law.
In addition, our Articles provide that our Company shall not directly or indirectly make a loan,
enter into a guarantee or provide security to a Director except as permitted under both the Japan
Companies Act and the Companies Ordinance (as if our Company was a public company
incorporated in Hong Kong).
Payments to directors
Under Hong Kong law, any payment to a director or former director of a company ascompensation for loss of office or retirement from office is required to be approved by a majority
vote in a general meeting. Under Japan law, for companies with three committees*(委員会設置会社) (which our Company is one), any remuneration, compensation or other payment(including compensation for loss of office or retirement from office) is made to directors or past
directors must be determined and approved by their remuneration committees. Given that the
majority of the Remuneration Committee of our Company (“Remuneration Committee”)
comprises Independent Non-executive Directors, we consider that the standard of protection
under Japan law is not materially different from that under Hong Kong law.
Alteration of share capital
Under Hong Kong law, any alteration of share capital in the company must be approved bya majority vote in a general meeting. Japan law provides that an increase in the number of sharesauthorised to be issued can only be made by an alteration of a company’s articles ofincorporation* (定款), which requires the resolution of the shareholders’ meeting to be approvedby at least two-thirds of the voting rights of the shareholders present at a meeting where theshareholders holding at least a majority (which is lowered to one-third under our Articles) of thevoting rights who are entitled to exercise their voting rights are present. The standard of
shareholders’ protections under Japan law is similar to or comparable with that under Hong Kong
law.
Reduction of share capital
Under Hong Kong law, reduction of share capital in a company is generally subject toconfirmation by the court or supported by a solvency statement given by all directors of thecompany and be approved by shareholders with a 75% majority vote in a general meeting.
Alternatively, a company may reduce its capital by seeking approval of disinterested members by
a 75% majority vote together with the satisfaction of a solvency test and publication of notices
in the government’s gazette and newspaper. Japan law generally permits a company to reduce
its share capital without a court confirmation and instead by way of a resolution of theshareholders’ meeting to be approved by at least two-thirds of the voting rights of the42

KEY JAPAN LEGAL AND REGULATORY MATTERS
shareholders present at a meeting where the shareholders holding at least a majority (which islowered to one-third under our Articles) of the voting rights who are entitled to exercise theirvoting rights are present. The standard of shareholders’ protections under Japan law are notmaterially different to that under Hong Kong law.
Redemption of shares
Under Hong Kong law, a company may make a payment in respect of a redemption of its
own shares out of the company’s distributable profits, out of the proceeds of a fresh issue ofshares made for the purpose of redemption or out of its capital. Under Japan law, any shares tobe purchased by a company must be acquired from distributable profits and a company may
issue callable shares so long as such shares are issued as a separate class. Our Company
however issues one class of shares only, being common Share(s)* (普通株式). Our Articles providethat our Company shall not issue any class of shares other than common Shares. The standardof shareholders’ protection in respect of share redemption under Hong Kong law is therefore notapplicable to us.
Financial assistance
Under Hong Kong law, a company is prohibited from giving financial assistance for theacquisition of its shares or shares in its holding company in certain circumstances. Although there
are no specific provisions in the Japan Companies Act that are intended to prevent financial
assistance, giving direct or indirect financial assistance for the acquisition of its shares or sharesin its holding company that results in a reduction of the net assets of a company would amountto a violation of fiduciary duty of directors and other officers, unless there is a reasonable groundto do so. The standard of shareholders’ protections under Japan law is not materially different tothat under Hong Kong law.
In addition, our Articles provide that our Company may not give financial assistance for the
purpose of or in connection with a purchase made or to be made by any person of any Share
except as permitted under both the Japan Companies Act and the Companies Ordinance (as if
our Company was a listed company in Hong Kong).
H.

ONGOING INVESTOR EDUCATION

Information contained in this document is available at our Company’s website upon Listingfor the benefits of potential investors who may invest in our Company in secondary markets. If
we become aware of any legal or regulatory development which may affect the information
contained in this section, we will update the relevant contents on our Company’s website andissue a voluntary announcement.
We will also caution our investors the risks associated with our “bearer shares” in our sharecertificates, annual/interim reports and the front page of the “Investor Relations” section of ourCompany’s website.
24 March 2015
* For identification purpose only

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