the shares, from the day when the examination provided for in article 124 is finished, and in case the promoters have not taken all the shares, from the day when the general meeting for organization is ended. The provisions of articles 51 (2 and 3), 52, and 53 (following) apply correspondingly to joint-stock companies.

142. After registration as provided in article 141 has been made at the place of the principal office, a person who has taken shares can no longer rescind his subscription on the ground of fraud or coercion.

51. The partnership must, within two weeks from the day of the making of the partnership contract, register at the place of the principal office and of each branch office the following facts: (1) The facts mentioned under Nos. 1 to 3 of the preceding article, the object of the partnership, its trade name, the name and domicile of each partner; (2) the principal and each branch office; (3) the date of the formation of the partnership; (4) if the term of its duration or causes for its dissolution are fixed, such term or causes; (5) the nature of the contribution of each partner, and the value of any contribution whose subject is property; (6) if the representation of the partnership has been committed to one or more of the partners exclusively, the names of such partners.

If after the formation of the partnership a branch office is established, the registration provided for in the preceding paragraph must be made at the place of such branch office within two weeks, and the fact that a branch office has been established must be registered within the same time at the place of the principal office and of each other branch office.

If a new branch office is established within the jurisdiction of the registry office, under whose jurisdiction the principal office or a branch office is situated, only such fact need be registered.

52. When a partnership transfers its principal office or a branch office to another place, such transfer must be registered at the former place within 2 weeks, and at the new place the registration provided for in article 51 (1) must be made within the same time. If the transfer is to a place within the jurisdiction of the same registry office, only the fact of transfer need be registered.

53. If an alteration takes place in the facts mentioned in article 51 (1) it must be registered at the place of the principal and of each branch office within two weeks.

C.-LIABILITY OF STOCKHOLDERS.

The legislation concerning liability of stockholders is included in articles already quoted, and the following:

144. The liability of a shareholder is limited to the amount of shares taken or acquired by him. A shareholder can not avail himself of a set-off against the company as to payments on shares.

D. DUTIES AND RESPONSIBILITIES OF DIRECTORS.

The legislation concerning duties and responsibilities of directors is covered by some of the foregoing and the following articles:

134. Directors and inspectors must inquire into the following particulars, and report thereon to the general meeting for organization, namely: (1) Whether the whole number of shares have been taken; (2) whether on each share the payment provided for in article 129 has been made; (3) whether the matters specified in article 122, Nos. 3 to 5, are proper. If directors or inspectors have been appointed from among the promoters, the general meeting for organization may appoint special examiners to inquire into and report upon the matters above mentioned in place of the said directors and inspectors.

157. An ordinary general meeting must be called by the directors once a year at a fixed time. In the case of a company in which distribution of profits takes place twice a year or oftener, a general meeting must be called at the time of each distribution.

158. The ordinary general meeting examines the documents submitted to it by the directors and the reports of the inspectors, and passes resolutions as to the distribution of profits or interest. The general meeting may appoint special examiners to examine into the correctness of the documents above mentioned.

159. An extraordinary general meeting may be called by the directors whenever there is a necessity for doing so.

160. The holders of at least one-tenth of the capital may require the directors to call an extraordinary general meeting. The request must be in writing, and must specify the object of the meeting and the reasons for its convening. If the directors

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do not proceed to call the general meeting within two weeks after such request has been made, the shareholders who made the request may call the meeting with the permission of the court.

168. The directors must deposit with the inspectors such number of share certificates as may have been provided by the company contract.

169. If not otherwise provided by the company contract, the management of the company's affairs and the appointment or removal of procurators are to be decided by a majority vote of the directors.

170. Each of the directors is entitled to represent the company. The provisions of article 62 apply correspondingly to directors.

171. The directors must keep at the principal and at each branch office the company contract and records of the resolutions passed at the general meetings and at the principal office the list of shareholders and the debenture list. Any shareholder or any creditor of the company may at any time during business hours demand an inspection of the above-mentioned documents.

172. In the list of shareholders the following particulars must be entered: (1) The name and domicile of the shareholders; (2) the number of shares held by each shareholder and the serial numbers of the certificates; (3) the amount paid upon each share and the date of the payment; (4) the date of the acquisition of each share; (5) if certificates of shares to bearer have been issued, their total number, their serial numbers, and the date of their issue.

173. In the debenture list the following particulars must be entered: (1) The name and domicile of the creditors; (2) the serial numbers of the debentures; (3) the total amount of the debentures; (4) the amount in money of each debenture; (5) the rate of interest on the debentures; (6) the manner and time of repayment of the debentures; (7) the date of the issue of the debentures; (8) the date of the acquisition of each debenture; (9) if debentures to bearer have been issued, their total number, their serial numbers, and the date of their issue.

174. If a company has lost half the amount of its capltal, the directors must, without delay, call a general meeting of shareholders and inform it thereof. If the property of the company is no longer sufficient to fully meet its obligations, the directors must at once apply to the court to have the company adjudged bankrupt. 175. A director must not, without the consent of a general meeting of shareholders, undertake commercial transactions in the same kind of business as that of the company, either on his own account or that of a third person, nor may he be a partner with unlimited liability in another commercial company carrying on the same kind of business as the company. If a director, in contravention of these provisions, undertakes a commercial transaction for his own account, the general meeting of shareholders may consider such action as done on account of the company. This right ceases if not exercised within 2 months from the time when one of the inspectors had notice of such transaction, or if a year has elapsed since the time of the transaction.

176. For doing business with the company either on his own account or that of a third person a director must have the consent of the inspectors.

177. A director who does an act contrary to law or regulations or to the company contract is not exempted from liability therefor to third persons even though he has done so in compliance with a resolution of a general meeting of shareholders. These provisions do not apply to a director who, in the general meeting, has opposed such act and has given notice thereof to the inspectors.

178. If a general meeting of shareholders passes a resolution to bring a suit against the directors, or if in case it passes a resolution not to bring such a suit, shareholders holding not less than one-tenth of the capital require of the inspectors that such a suit be brought, the company must bring the suit within 1 month from the day of the resolution or the request. Shareholders who have made such a request are bound to deposit their share certificates, and upon the demand of the inspectors to give proper security. If the suit fails such shareholders are liable for damages to the company only.

If the amount of the salary to be paid to the directors is not fixed by the company contract, it must be fixed by a resolution passed at a general meeting of shareholders.

190. The directors must submit to the inspectors the following documents 1 week before the day of an ordinary general meeting, namely: (1) An inventory; (2) a balance sheet; (3) a report on the company's business; (4) an account of profits and losses; (5) proposals relating to the reserve fund and to the distribution of profits and interest.

191. The directors must deposit before the day of an ordinary general meeting at the principal office the documents mentioned in the preceding article and the report

of the inspectors. Shareholders and creditors of the company may at any time during business hours demand an inspection of the documents above mentioned.

192. The directors must submit to the ordinary general meeting the documents mentioned in article 190 for approval. After such approval has been given the balance sheet must be published by the directors.

193. When the approval mentioned in article 192 has been given by the ordinary general meeting, the company is deemed to have absolved the directors and inspectors from responsibility. This does not, however, apply so far as directors or inspectors have acted in a dishonest manner.

203. When subscriptions for debentures are to be invited, the directors must publish the following particulars: (1) The particulars mentioned in article 173, Nos. 3 to 6; (2) the trade name of the company; (3) if debentures have been previously subscribed for, the total amount not yet paid back; (4) the amount for which the debentures are to be issued, or the lowest amount; (5) the capital of the company and the total amount paid in on the shares; (6) the amount of the actual property of the company as shown by the last balance sheet.

204. When the subscriptions for debentures are completed, the directors must call for the payment of the whole amount of each debenture. The directors must register at the place of the principal and of each branch office the particulars specified in article 173, Nos. 3 to 6, within 2 weeks from the day when they received payment of the full amount in accordance with the provisions of the foregoing paragraph. 205. In each debenture must be inserted the particulars specified in article 203, Nos. 1 and 2, and its serial number, and it must be signed by the directors.

E. RESTRICTIONS UPON DIRECTORS IN DEALING IN STOCKS, AND OTHERWISE. The legislation concerning restrictions upon directors in dealing in stocks, and otherwise, has already been given.

F.-REGULATIONS REGARDING PRICES OF PRODUCTS.

There is no legislation concerning regulations regarding prices of products.

G.-REGULATIONS REGARDING PROFITS AND DIVIDENDS.

Regulations regarding profits and dividends are found in some articles already quoted and in the following:

194. The company must appropriate at each distribution of profits at least onetwentieth of such profits to a reserve fund, until the latter amounts to one-fourth of the capital. If shares have been issued at a value higher than the par value, the amount exceeding the par value must be added to the reserve fund until the latter has reached the above-mentioned limit.

195. A company may distribute profits only after all losses have been made good and the amount for the reserve fund prescribed in article 194 has been set aside. If a distribution has been made in contravention of the foregoing provisions, the creditors of the company may demand that the amount so distributed be refunded. 196. If it appears that, according to the nature of the business for the carrying on of which the company is formed, operations can not be commenced within 2 years or longer from the day when the registration provided for in article 141 has been made at the place of the principal office, it may be provided in the company contract that a fixed interest shall be paid to the shareholders until the commencement of the business operations; but the rate of such interest shall not exceed the legal rate of interest. For such provision the permission of the court must be obtained.

197. All distributions of profits or interest shall be made in proportion to the amount paid in upon the shares according to the company contract. This, however, does not apply so far as there are different provisions in regard to preferred shares issued by the company.

H.-REGULATIONS REGARDING OWNERSHIP OF STOCK IN OTHER CORPORATIONS OR THE COMBINATION OF DIFFERENT CORPORATIONS.

The legislation concerning regulations regarding ownership of stock in other corporations or the combination of different corporations, not yet quoted, is in these articles:

223. When a company desires to consolidate with another it may give public notice thereof and forbid the assignment of name shares for a period of not more

than 1 month before the day of commencement of the general meeting of shareholders and during such meeting. After a resolution of consolidation has been passed by a general meeting the shareholders can not assign name shares from the day of the resolution until registration according to the provisions of article 81 has been effected at the place of the principal office.

81. When consolidation has been effected there must be made in the place of the principal office and of each branch office, within 2 weeks, a registration of the alteration in respect to the partnership which continues in existence after the consolidation, a registration of the dissolution in respect to the partnership which is extinguished by the consolidation, and a registration as prescribed in article 51, 1, in respect to the partnership which is created by the consolidation.

I.-REPORTS TO BE MADE TO THE GOVERNMENT.

This legislation is sufficiently covered by foregoing articles referring to required registrations, supervision by examiners appointed by the court, etc.

K.-REPORTS TO BE MADE TO THE STOCKHOLDERS.

The principal articles covering this topic have been quoted.

L.-PRIVILEGES OF STOCKHOLDERS REGARDING EXAMINATION OF BOOKS AND OVERSIGHT OF BUSINESS.

To those already quoted should be added only article 198, which reads: "The court may, upon the application of shareholders representing not less than one-tenth of the capital, appoint examiners to inquire into the affairs of the company and the state of its property. The examiners must report to the court the result of their examination. In such case the court may, if such measure is deemed necessary, order the inspectors to call a general meeting of shareholders."1

M.-METHODS OF TAXATION OF CORPORATIONS.

Legislation on this subject is included in the business-tax law, the income-tax law, and the laws concerning registration fees and stamp duties. The business tax is in general levied upon the basis of three considerations, viz, the volume of business as represented by the receipts from goods sold, the amount of capital or of commissions, or of contracting, as the case may be; the rental value of buildings, and the number of persons engaged in the business, according to the provisions of the inclosed law. Business carried on elsewhere as well as in Japan by the same people is estimated for taxation upon the amount of capital computed to be in use in Japan.

Article V of the regulations concerning the operation of the business-tax law reads: "In the case of a joint stock company the amount of capital forming the basis of assessment consists of the payments on shares, all accumulations of money of every sort, and any capital which has the nature of accumulated money, as existing at the end of each month of the previous year, calculated on the monthly average.'

The general nature and operation of the business-tax law will be seen by consulting its text.

The income tax is levied upon all people resident for 1 year or more in Japan. The articles of that law concerning the topic under consideration I conceive to be the following:

ART. III. Income tax shall be imposed at the rates specified below: Class 1, incomes of legal persons;2 class 2, interest on public bonds or companies' debentures payable in places where this law is enforced.

ART. IV. Incomes are calculated in accordance with the following classification: (1) Incomes under class 1 are based in respect of each fiscal year on the balance remaining over after the total losses for each fiscal year, the debits carried over from the previous fiscal year, and the amount reserved to meet liability for insurance have been deducted from the total profits of each fiscal year. But the income of a legal person coming under Article II is based in respect of each undertaking on the balance remaining over after the losses have been deducted from the profits derived

1 All the above references have been to the commercial code.

2 Used interchangeably with "juridical person."

3 In this law "fiscal year" and "business or fiscal year" have been substituted for "undertaking," which seems to be a mistaken translation in the Income Tax pamphlet translated at the British Legation, Tokio.

from the property or trade or business in question, in the place where this law is in force during each fiscal year. (2) Incomes under class 2 are based on the payments

due.

If in cases coming under subheading 1 of the preceding clause the profits include a dividend which has been received from a legal person from which income tax has been levied under this law, or interest upon public bonds or companies' debentures which has been paid in a place where this law is in force, such dividend or interest shall be subtracted.

ART. V. Income tax is not levied on the following incomes: (7) Dividends received from a legal person upon which income tax has been levied under this law.

ART. VII. A legal person which is liable to pay income tax shall present to the Government in each fiscal year a statement of its accounts showing profit and loss in respect of each fiscal year. But a legal person coming under Article II shall, in each fiscal year, in respect of each business year or fiscal year, calculate the profit and loss connected with property or business in the place where this law is in force and present a statement of account to the Government. (Nonresidents having property, business, or occupation within the jurisdiction of this law are liable only for income tax upon the income derived therefrom by Article II.)

ART. IX. The amount of income under class 1 shall be determined by the Government upon investigation of the statement of accounts of profit and loss, and incomes in class 2 shall be determined by the Government in accordance with the investigation of the investigation committee.

ART. XLII. With regard to incomes under class 1, the tax shall be collected each fiscal year in respect of each business year or fiscal year. With reference to incomes under class 2, at the time that the money is paid the person paying it shall collect the tax and present it to the Government.

The following articles are from the regulations for the enforcement of the incometax law:

ART. III. A legal person which is liable to pay income tax shall, in respect of each business, within 7 days after the ordinary general meeting, present to the taxation office to whose control it is subject a statement of profit and loss accounts.

ART. XXXI. If a legal person who is liable to pay income tax does not present a statement of accounts of profit and loss, the Government shall investigate the profit and loss and fix the amount of income.

ART. XXXIV. Persons who pay the interest of public loans and companies' loans which have been publicly raised shall at the time of payment deduct income tax. For further details of this law its text may be consulted.

The provisions of the law of registration fees which chiefly concern the topic under consideration are included in the following articles:

ART. VI. In case of a registration concerning commercial companies or other juridical persons created for purposes of profit, fees must be paid according to the following schedule, provided that if the fee in the cases mentioned under Nos. 1, 3, 6, and 9 would be below 10 yen it shall be 10 yen, namely: (3) The formation of a joint stock company, four one-thousandths of the payments made on shares. (4) The increase of the capital of a joint stock company, four one-thousandths of the payments made on shares for such increase. (5) Payments on shares of a joint stock company after the second payment, four one-thousandths of the amount of each payment. (9) The formation of a commercial company by way of consolidation or alteration of organization, one one-thousandth of the payments made on shares and of the value of the contributions made in property other than payments on shares. (10) The increase of the capital of a commercial company by way of consolidation, one onethousandth of the payments made on shares for such increase, and of the value of the contribution made in property other than payments on shares. (11) The issue of debentures, one one-thousandth of the whole amount of the debentures. (12) The establishment of branch offices, for each place, 10 yen. (13) The transfer of the principal office or of a branch office, for each case, 5 yen. (14) The appointment of a procurator or the extinction of his powers of representation, for each case, 5 yen. (15) The alteration, extinction, or cessation of facts registered, for each case, 5 yen. The registration of a fact which must be registered anew, according to the law concerning the operation of the commercial code, is deemed to be the registration of an alteration of a fact registered. (16) The renewal or cancellation of a registration, for each case, 3 yen. (17) The dissolution, for each case, 3 yen. (18) Appointment, removal, or change of líquidators, for each case, 1 yen. (19) The completion of the liquidation, for each case, 1 yen. If any registration mentioned under the foregoing numbers is made at a branch office, under each number a fee of 1 yen is to be paid for each case.

ART. VI. (2) For the registrations mentioned below fees are to be paid according