IR Top Page > Management Objectives > Introduction of Countermeasures
(as of February 27, 2009)
At the shareholders meeting that was held in June 2008, shareholders approved "countermeasures concerning actions involving large-scale purchases of company stock, etc.," which is a takeover defense mechanism. These measures prescribe rules for procedures and other items concerning the provision of information by parties planning to make a large-scale purchase. Furthermore, these measures include responses that Capcom can take in the event that this purchaser does not comply with the rules or that the large-scale purchase would be harmful to the Capcom Group's corporate value and shareholder value. On this page, I will explain the purpose of these countermeasures, why they are necessary, and the contents of this defense mechanism.
Introduction of Countermeasures (TAKEOVER DEFENSE) in Response to a Large-Scale Purchase of Capcom Shares
Capcom Co., Ltd. (the “Company”), is pleased to announce that the Company has resolved, at the meeting of its board of directors held on April 17, 2008, that, subject to the approval of the 29th Annual Shareholders’ Meeting, the Company will implement certain measures as a safeguard against acquisition activities of the Company’s share certificates, etc., of or over a certain scale by a specific shareholder or a specific group of shareholders (the “Plan”).
The Company group believes that it is desirable that the party having control over the decisions on the financial and business policies of the Company group be a party which has a sufficient understanding of the substance of the Company group’s finance and business as well as the source of the Company group’s management principles and corporate value, which in turn are capable of continuously securing and enhancing the corporate value of the Company group and the common interests of the shareholders.
So long as the Company is a listed company, purchases and sales of the Company’s shares are to be determined by the shareholders in principle, and we believe that even where a large-scale purchase of the Company’s shares is to be conducted, such matter should be ultimately judged by the intention of the shareholders. We will not deny all large-scale purchases if the conduct benefits the corporate value of the Company group and the common interests of the shareholders.
However, if a large-scale purchase of the Company’s shares is to be conducted, we cannot deny the possibility that such large-scale purchase will not benefit the corporate value of the Company group and the common interests of the shareholders, such as in the following cases: in light of the purpose of such purchase, the purchase will undermine the corporate value or inflict irrecoverable damage upon the Company; the purchase will essentially force the shareholders to sell their Company shares; the purchase is conducted in such a way so as not to provide the shareholders and the Board of Directors with sufficient time or information necessary to examine the large-scale purchase, or for the Board of Directors to present an alternative proposal; or the purchase requires negotiations with the large-scale share purchaser in order to reach conditions more favorable than those presented by the large-scale share purchaser.
The Company believes that such a party engaging in a large-scale purchase which does not benefit the corporate value of the Company group and the common interests of the shareholders is inappropriate as a party having control over the decisions on the financial and business policies of the Company group, and that it is necessary to secure the corporate value of the Company group and the common nterests of the shareholders by taking necessary and appropriate countermeasures against such a largescale purchase by a large-scale share purchaser.
The purpose of the Plan is to appropriately respond to a purchase of the Company’s share certificates, etc. aimed at increasing the holding ratio of voting rights of a specific group of shareholders to 20% or more, or a purchase of the Company’s share certificates, etc. which would result in a specific group of shareholders’ holding ratio of voting rights being 20% or more (irrespective of the specific method of purchase, such as purchase on an exchange-established securities market, tender offer, or others, but excluding those given consent to in advance by the Board of Directors; hereinafter, such purchase activity shall be referred to as the “Large-scale Share Purchase” and the party engaging in the Largescale value of the Company group and the common interests of the shareholders where the Large-scale Share Purchase has a material impact on the Company group’s corporate value. Share Purchase the “Large-scale Share Purchaser”) in order to secure or enhance the corporate.
Even if a Large-scale Share Purchase is conducted by a Large-scale Share Purchaser, whether or not the shareholders should accept and respond to such act shall ultimately be determined by the shareholders. However, the achievement of the Large-scale Share Purchase would mean the acquisition of management power capable of having an immediate impact on the management of the Company group, and has the possibility of having a material impact on the corporate value of the Company group and the common interests of the shareholders.
On the other hand, in reality, it is difficult for the shareholders to appropriately determine the impact on the corporate value of the Company group by the Large-scale Share Purchase without the provision of sufficient information on the Large-scale Share Purchaser. In particular, taking into consideration the aforementioned matters inherent in the corporate value of the Company’s group, the Company believes that it is the responsibility of the Company’s director to: receive from the Large-scale Share Purchaser information necessary and sufficient for the shareholders’ judgment; provide as reference for the shareholders’ judgment the examination and evaluation of the Board of Directors on the impact that the management policies, etc. proposed by the Large-scale Share Purchaser would have on the Company group’s corporate value; as the case may be, have the Board of Directors negotiate or consult with the Large-scale Share Purchaser regarding the Large-scale Share Purchase or policies of the management of the Company group; or present as the Board of Directors of the Company an alternative proposal regarding the management policies, etc. of the Company’s group.
As a consequence of such understanding of the current situation, the Company came to establish requirements and contents of the rules providing the procedures, etc. for the provision of information by the Large-scale Share Purchaser (the “Large-scale Share Purchase Rules”), and countermeasures that the Company may take if the Large-scale Share Purchaser fails to comply with the Large-scale Share Purchase Rules or if the corporate value of the Company group is undermined due to the Largescale Share Purchase (the “Large-scale Share Purchase Countermeasures”).
The Plan is comprised of the Large-scale Share Purchase Rules which are to be complied with by the Large-scale Share Purchaser (indicated in 2. below), and the Large-scale Share Purchase Countermeasures which the Company may take against a Large-scale Share Purchase (indicated in 3. below).
The Plan firstly requires as the Large-scale Share Purchase Rules that the Large-scale Share Purchasers provide information for judgment making of the shareholders and the Board of Directors for the common interests of the shareholders (indicated in 2.(1) below), as well as a granting of a period for examination and evaluation by the Board of Directors (indicated in 2.(2) below).
The Plan secondly provides as the Large-scale Share Purchase Countermeasures that the elements for the Board of Directors to resolve to trigger appropriate countermeasure permitted by the Companies Act, other laws, regulations, and the Company’s articles of incorporation shall be limited to cases where the Large-scale Share Purchaser fails to comply with the Largescale Share Purchase Rules, and cases where the corporate value of the Company group or the common interests of the shareholders will be materially undermined due to the Large-scale Share Purchase (indicated in 3.(2)(3) below).
- (1)
- Information provision to the Board of Directors
Prior to the Large-scale Share Purchase, the Large-scale Share Purchaser shall provide the Board of Directors with information written in Japanese which is necessary and sufficient for the Company’s shareholders to come to a decision and for the Board of Directors to formulate their decision (the “Information”).
Specifically, in conducting a Large-scale Share Purchase, the Large-scale Share Purchaser must submit to the location of the head office, addressed to the Representative Director and CEO of the Company, a Statement of Intention containing a pledge by the Large-scale Share Purchaser to comply with the Large-scale Share Purchase Rules, specifying the following: name and address or location of head office of the Large-scale Share Purchaser, name of representative, contact address in Japan, governing law (in the case of an overseas corporation), and outline of the Large-scale Share Purchase. Within ten (10) business days from (excluding the first day; hereinafter the same shall apply with respect to all periods referred to) the receipt of the Statement of Intention described above, the Company’s representative director and CEO will deliver to the Large-scale Share Purchaser a list specifying the Information to be initially provided. The general items of the Information are as follows. In addition, when the Large-scale Share Purchaser submits the Statement of Intention to the Company and completes the provision of the Information, the Company shall make an announcement to that effect.- (i)
- Outline of the specific group of shareholders (including the Large-scale Share Purchaser) related to the Large-scale Share Purchase.
- (ii)
- Purpose and specific substance of the Large-scale Share Purchase.
- (iii)
- Holding ratio of voting rights of a specific group of shareholders (including the Largescale Share Purchaser) and the number of certificates held thereby.
- (iv)
- The calculation basis of the acquisition price of the Company’s share certificates, etc., support of the acquisition fund and specific substance and conditions for financing pertaining to the Large-scale Share Purchase.
- (v)
- If a specific group of shareholders related to the Large-scale Share Purchase (including Large-scale Share Purchasers) acquires the management rights of the Company group, then the management policy, management plan, business plan, financial policy, capital policy, dividend policy, numerical targets and calculation basis of the management and financial statements for the three (3) years after acquiring the management rights, as well as candidates for officers and their career summary.
- (vi)
- Previous transactional and competition relationships between a specific group of shareholders (including Large-scale Share Purchasers) and the Company group’s key business partners related to the Large-scale Share Purchase.
- (vii)
- The role of the Company’s group within the group of Large-scale Share Purchasers after the implementation of the Large-scale Share Purchase.
- (viii)
- Substance of the changes scheduled for after the implementation of the Large-scale Share Purchase regarding the employees, key business partners, customers, local community, and other stakeholders of the Company group.
- (ix)
- Information regarding the price of consideration when the Large-scale Share Purchase is to be conducted with consideration other than cash.
- (x)
- A pledge of the person in charge to the effect that the substance of the document indicating the Information provided by the Large-scale Share Purchaser is true and accurate in material aspects, and does not include any misleading indications or omissions regarding material facts.
- (xi)
- In addition to each of the above, any information reasonably regarded as necessary by the Board of Directors and its independent committee (indicated in 2.(3) below).
- (2)
- Examination and Evaluation of the Board of Directors
The Large-scale Share Purchaser shall not conduct the Large-scale Share Purchase until the lapse of sixty (60) days since the date of completion of the provision of the Information to the Board of Directors (in the case where the Large-scale Share purchase involves the purchase of all of the shares of the Company by tender offer with consideration solely in the form of cash) or ninety (90) days (in the case of other Large-scale Share Purchases) (the “Board of Directors Evaluation Period”). The purpose of the foregoing is to provide the Board of Directors an opportunity to examine and evaluate the Information, negotiate and consult with the Largescale Share Purchaser, formulate opinions on the Large-scale Share Purchase, as well as prepare and present alternative proposals to the shareholders for the common interests of the shareholders.
During the Board of Directors Evaluation Period, the Board of Directors shall examine and evaluate the Information, respect the advice of the independent committee to the greatest extent possible regarding such Large-scale Share Purchase or management policies, etc. regarding the proposal of such Large-scale Share Purchase, and make a decision on whether or not to trigger the Large-scale Share Purchase Countermeasures. - (3)
- Examination and Advice of the Independent Committee
The Board of Directors will establish an independent committee in order to appropriately manage the Large-scale Share Purchase and prevent arbitrary decisions by the Board of Directors. The independent committee will appoint from the Company’s outside directors or corporate auditors, or external knowledgeable individuals who are independent from the management which executes the Company’s business. Pursuant to the seeking of advice by the Board of Directors, the Independent Committee shall collect and examine information necessary for the decision from outside third parties, and provide the Board of Directors with advice on Sufficiency of information provided by the Large-scale Share Purchaser, Compliance or non-compliance of the Large-scale Share Purchase Rules by Largescale Share Purchaser, and pros and cons of the triggering of the Large-scale Share Purchase Countermeasures, and Fulfillment or non-fulfillment of requirements for the triggering of the Large-scale Share Purchase Countermeasures, and pros and cons of the triggering of the Largescale Share Purchase Countermeasures.
- (1)
- Substance of the Large-scale Share Purchase Countermeasures
If the Large-scale Share Purchaser satisfies the requirements for triggering certain Large-scale Share Purchase Countermeasures indicated in (2) below such as the conducting of the Largescale Share Purchase without following the procedures designated for the Large-scale Share Purchase Rules, the Board of Directors shall respect the advice of the independent committee to the greatest extent possible and may resolve to conduct appropriate Large-scale Share Purchase Countermeasures permitted under the Companies Act, other laws, regulations, and the Company’s articles of incorporation, such as the allotment of share options without contribution, etc.
Outline of an Allotment of Share Options without Contribution is below:- (i)
- Shareholders Subject to Allotment of Share options and Conditions for Allotment
To shareholders entered or recorded in the Company’s latest shareholder register or substantial shareholder register as of a record date fixed and publicly notified by the Board of Directors, the share options (shinkabu-yoyakuken) shall be allotted in proportion to the respective numbers of their shares held (excluding common shares of the Company held by itself) at a ratio of one (1) share option per one (1) share. - (ii)
- Class and Number of Shares Subject to Share options
The class of shares subject to the share options is the Company’s common shares. The total number of shares subject to the share options is, at most, the total number of shares authorized to be issued by the Company as of a date specified as a record date by the Board of Directors, minus the total number of common shares issued by the Company (excluding common shares of the Company held by itself). The number of shares subject to one (1) share option is separately specified by the Board of Directors. However, if the Company carries out a stock split or stock consolidation, the number of subject shares shall be adjusted as necessary. - (iii)
- Total Number of Allotted Share options
The total number of allotted share options shall be specified by the Board of Directors. - (iv)
- Amount to be Paid-in for Share options
Without contribution. - (v)
- Restriction on the Transfer of Share options
The amount of the capital contribution to be made upon the exercise of a share option shall be the amount specified by the Board of Directors, but not less than one (1) yen. - (vi)
- Restriction on the Transfer of Share options
The transfer of share options may be subject to Board of Directors’ approval. - (vii)
- Exercise Period of Share Options
The exercise period, acquisition clause and other necessary matters regarding the share options shall be determined separately by the Board of Directors. - (viii)
- Conditions for the Exercise of Share Options
The following persons may not exercise any share options:- (1)
- Specified large holder8;
- (2)
- holder of specified large holder;
- (3)
- Specified large-scale purchaser9;
- (4)
- Person having a special relationship with a specified large-scale purchaser;
- (5)
- Person who acquires or succeeds to the share options from a person falling under any of items (1) through (4) without the approval of the Board of Directors; or
- (6)
- An affiliate of any person falling under any of items (1) through (5)10 (those mentioned in items (1) through (6) are collectively referred to as the “Ineligible Person”).
- (ix)
- Acquisition Clause
At any time on or before the day immediately preceding the first day of the exercise period of share options, the Company may acquire all of share options without contribution on a date separately specified by the Board of Directors if the Board of Directors deems appropriate for the Company to acquire share options.
On a day separately specified by the Board of Directors, the Company may acquire all of the share options that are held by a person other than an Ineligible Person and that have not been exercised on or before the business day iimmediately preceding such date specified by the Board of Directors, and deliver the Company’s shares equivalent to the number of subject shares per share option to him/her in exchange for the share options so cquired. Other particulars of acquisition clause shall be separately specified by the Board of Directors. - (x)
- Share Option Certificates
No share option certificates for share options shall be issued. - (xi)
- Others
Any other necessary matters shall be separately specified by the Board of Directors.
- (2)
- Requirements for Triggering the Large-scale Share Purchase Countermeasures
The Board of Directors may resolve to trigger a specific Large-scale Share Purchase Countermeasure only with the satisfaction of the requirements provided in the following items.- (i)
- The Board of Directors may resolve to trigger the Large-scale Share Purchase Countermeasure if the Large-scale Share Purchaser fails to submit the Statement of Intention to the Board of Directors, or otherwise conduct the Large-scale Share Purchase without providing sufficient information provided in the Large-scale Share Purchase Rules, the Large-scale Share Purchaser conducts the Large-scale Share Purchase before the lapse of the Board of Directors Evaluation Period, or the Largescale Share Purchaser otherwise fails to comply with the Large-scale Share Purchase Rules.
- (ii)
- The Board of Directors will not resolve to trigger the Large-scale Share Purchase Countermeasure in principle if the Large-scale Share Purchaser complies with the Large-scale Share Purchase Rules, although it may indicate its opinion against such Large-scale Share Purchase as a result of the examination and evaluation of the substance of the Statement of Intention and the Information, or present as the Board of Directors of the Company an alternative proposal regarding the management policies, etc. of the Company’s group.
However, even if the Large-scale Share Purchaser otherwise complies with the Largescale Share Purchase Rules, the Board of Directors will resolve to trigger appropriate Large-scale Share Purchase Countermeasure in principle if the independent committee determines that the Large-scale Share Purchase materially undermines the corporate value of the Company group and the common interests of the shareholders, and advise that the Large-scale Share Purchase Countermeasure be triggered. Provided further,that even if the independent committee advises that the Large-scale Share Purchase Countermeasure be triggered, it is possible that the Board of Directors will not resolve to trigger the Large-scale Share Purchase Countermeasure if the Board of Directors determines that it would be inappropriate to trigger the Large-scale Share Purchase Countermeasure. Specifically, a conduct falls under a Large-scale Share Purchase which materially undermines the corporate value of the Company group and the common interests of the shareholders group if it falls under any of the following types:- (a)
- The purpose of the Large-scale Share Purchase or acquisition of managementrights is to boost the share price and cause the parties interested in the Company to purchase the share certificates, etc. for a high price, without the true intention of participating in the company management (a so-called greenmailer case).
- (b)
- The purpose of the Large-scale Share Purchase or acquisition of management rights is mainly to cause the Company group to transfer immovable property, movable property, intellectual property rights, know-how, corporate proprietary information, key business partners, customers, etc. which are necessary for the business operations of the Company group and other assets of the Company group to a specific group of shareholders (including the Large-scale Share Purchaser) related to the Large-scale Share Purchase (a socalled scorching management case).
- (c)
- The purpose of the Large-scale Share Purchase or acquisition of management rights is mainly to divert all or an important part of the assets of the Company group to security or resources of the repayment of obligations of a specific group of shareholders (including the Large-scale Share Purchaser) related to the Large-scale Share Purchase.
- (d)
- The purpose of the Large-scale Share Purchase or acquisition of management rights is mainly to temporarily control the management of the Company, thus enabling the Large-scale Share Purchaser: (i)to sell or otherwise dispose of highly-valued assets, such as real property or securities, that are owned by the Company group; and (ii) to temporarily distribute higher dividends from the gains of such disposals, or to sell its shares at an inflated price caused by such temporarily higher dividends.
- (e)
- The manner of the Large-scale Share Purchase proposed by the Large-scale Share Purchaser may essentially force the shareholders to sell their Company shares by conducting a tender offer and not offering to acquire all of the shares in the initial acquisition, and setting unfavorable acquisition conditions or not setting clear conditions for the second stage.
- (f)
- It is objectively and reasonably determined that a Large-scale Share Purchaser’s acquisition of management rights and treatment policies, etc. regarding the Company’s customers, employees, and other interested parties after the acquisition threatens to materially undermine the Company’s corporate value, including, without limitation, material damage to the interests of not only the shareholders but also the Company’s customers, business partners, employees, and other stakeholders, or threatens to materially prevent the maintenance and enhancement of the Company’s corporate value.
- (g)
- The conditions of the Large-scale Share Purchase (including the price/type of consideration, time of purchase, appropriateness of the purchase method, possibility of the actual execution of the purchase, as well as the treatment policies, etc. regarding the Company’s employees, key business partners, customers, and other interested parties after the purchase) are materially insufficient or inappropriate in light of the essence of the Company’s corporate value.
- (3)
- Procedures for Triggering the Large-scale Share Purchase Countermeasures
In resolving to trigger a specific Large-scale Share Purchase Countermeasure, the Board of Directors shall receive advice of external experts and respect the opinion and advice of the independent committee to the greatest extent possible in order to ensure the objectiveness and reasonableness of the decision of the Board of Directors, and resolve pros and cons of triggering the Large-scale Share Purchase Countermeasures by the following procedures. In such a case, the Company shall announce the outline of such resolution.- (i)
- Case where Large-scale Share Purchaser fails to comply with the Large-scale Share Purchase Rules
The Board of Directors may in principle resolve to trigger the Large-scale Share Purchase Countermeasures if the Large-scale Share Purchaser fails to comply with the Large-scale Share Purchase Rules and is advised by the independent committee to trigger the Large-scale Share Purchase Countermeasures. However, the Board of Directors may resolve to trigger the Large-scale Share Purchase Countermeasures without the advice of the independent committee if it is objectively evident that the Large-scale Share Purchaser has failed to comply with the Large-scale Share Purchase Rules and triggering the Large-scale Share Purchase Countermeasures after the advice by the independent committee will give rise to a material disadvantage on the part of the Company or the Company’s shareholders. - (ii)
- Case where Large-scale Share Purchaser does comply with the Large-scale Share Purchase Rules The Board of Directors will not resolve to trigger the Large-scale Share Purchase Countermeasures in principle if the Large-scale Share Purchaser complies with the Large-scale Share Purchase Rules. However, if advised by the independent committee that the Large-scale Share Purchase satisfies the requirements listed under each item of the proviso clause of 3.(2)(ii) above and that the Large-scale Share Purchase Countermeasures should be triggered, the Board of Directors may resolve to trigger the Large-scale Share Purchase Countermeasures.
In addition, the directors may negotiate and consult with the Large-scale Share Purchaser on the improvement of conditions for the Large-scale Share Purchase as necessary, and present as the Board of Directors of the Company an alternative proposal to the shareholder regarding the management policies, etc. of the Company’s group.
However, if after having once resolved to implement the allotment of share options without contribution but subsequently being advised by the independent committee of the satisfaction of one of the following events, the Board of Directors may suspend the allotment share options without contribution (if before the allotment without contribution comes into effect), or resolve to acquire the share options without contribution (if after the allotment without contribution comes into effect) until the day before the exercise commencement period of such share options.- (a)
- The Large-scale Share Purchaser withdraws the Large-scale Share Purchase or the Large-scale Share Purchase otherwise ceases to exist.
- (b)
- The factual situation changes and the Large-scale Share Purchase by the Large-scale Share Purchaser does not satisfy any of the requirements listed under each item of the proviso clause of 3.(2)(ii) above, or the Large-scale Share Purchase by the Large-scale Share Purchaser does satisfy the requirements but it is inappropriate to conduct the allotment of share options without contribution.
The effective period of the Plan shall be from the approval of the Annual Shareholders’ Meeting until the end of the annual shareholders’ meeting of the latest business year ending within two (2) years from the end of the Annual Shareholders’ Meeting.
Despite being before the expiration of the effective period of the Plan, the Board of Directors may, from the perspective of the securing and enhancement of corporate value and the common interests of the shareholders, and taking into consideration the status of the development of relevant laws and regulations, amend and review the Plan from time to time to the extent consistent with the purpose of the entrustment of the Plan (including cases where laws, regulations, securities exchange rules, etc. regarding the Plan are enacted, revised or repealed and it is appropriate to reflect such enactment, revision or repeal, or cases where it is appropriate to correct the wording due to any typographical errors or omissions). In addition, if the Board of Directors comprised of directors elected at the Company’s shareholders’ meeting resolves to abolish the Plan, the Plan shall be abolished. If the Company abolishes or amends the Plan, the Company shall promptly make an announcement to that effect.
The provisions of the laws and regulations cited in the Plan are based on the provisions which are in effect as of April 17, 2008. If it becomes necessary to amend the clauses or the meaning of the terms in each of the above paragraphs due to the enactment, revision or repeal of the laws and regulations thereafter, the Board of Directors may take into consideration the purpose of such enactment, revision or repeal, and deem the clauses or the meaning of the terms in each of the above paragraphs to be replaced as is appropriate to a reasonable extent.
