Japanese Business Glossary

子会社 (Kogaisha) refers to a subsidiary company in Japanese. A subsidiary is a company that is controlled by another company, known as the parent company or holding company. This control is typically established through ownership of more than 50% of the subsidiary’s voting shares, giving the parent company significant influence over the subsidiary's management and operations.

Kogaisha operates as a separate legal entity from the parent company, meaning it has its own assets, liabilities, and financial statements. However, the parent company can influence the subsidiary's strategic decisions, business policies, and overall direction. This structure allows the parent company to diversify its business operations, enter new markets, and manage risks more effectively by spreading them across different entities.

In corporate structures, having Kogaisha can offer several advantages, such as tax benefits, improved management efficiency, and the ability to focus on specific business areas. It also provides a mechanism for organizing and managing various business activities under a larger corporate umbrella while maintaining distinct operational entities.

総会 (Sokai) refers to a general meeting or assembly, commonly held by organizations, corporations, or associations in Japan. This gathering involves the members or shareholders of the entity coming together to discuss and decide on important matters related to the organization’s operations, governance, and future direction.

In the corporate context, a sokai typically refers to a shareholders' meeting, where key issues such as the election of directors, approval of financial statements, distribution of dividends, and other significant decisions are discussed and voted upon. These meetings are crucial for ensuring transparency, accountability, and participation of the shareholders in the company’s decision-making process.

Annual General Meetings (AGMs) are a common type of sokai, held once a year, where standard agenda items are addressed. Extraordinary General Meetings (EGMs) can also be convened as needed to address urgent or specific issues that arise outside the regular schedule.

The sokai provides a platform for communication between the company’s management and its shareholders, enabling them to express their views, ask questions, and make informed decisions that affect the organization's future. It is a fundamental aspect of corporate governance, ensuring that the interests of all stakeholders are considered and respected.

社宅 (shataku) refers to company housing or corporate dormitories in Japan. These are residential accommodations provided by companies to their employees as a benefit. Shataku can take the form of apartments, houses, or dormitory-style living arrangements and are typically located near the workplace or in convenient locations for commuting.

Providing shataku is a common practice among Japanese companies, particularly large corporations, as it offers several advantages. For employees, it provides affordable and convenient housing options, often at a lower cost than market rates. This can be especially beneficial for new hires, young professionals, or employees relocating from other regions.

For employers, offering shataku helps attract and retain talent by providing a valuable perk that enhances the overall compensation package. It can also foster a sense of community and loyalty among employees, as living in company-provided housing can facilitate stronger relationships and camaraderie among coworkers.

The conditions and policies regarding shataku, such as eligibility, rent, and duration of stay, are typically outlined by the company. Employees may be required to follow certain rules and regulations while residing in company housing. Overall, shataku serves as an important employee benefit that supports the well-being and stability of the workforce.

新株予約権 (shinkabu yoyakuken) refers to stock acquisition rights or stock options in Japan. This financial instrument grants the holder the right to purchase a specified number of new shares in a company at a predetermined price within a certain period. These rights are often issued to employees, executives, or investors as part of compensation packages or as an incentive to align their interests with the company's long-term performance.

The purpose of shinkabu yoyakuken is to motivate employees and executives to contribute to the company's success, as the value of the stock options can increase if the company's stock price rises. This aligns their personal financial interests with the company's growth and profitability. For investors, these stock acquisition rights provide an opportunity to invest in the company's future potential at a predetermined price, which can be advantageous if the market price of the shares increases.

The terms and conditions of shinkabu yoyakuken, including the exercise price, vesting period, and expiration date, are typically outlined in a formal agreement. The exercise of these rights results in the issuance of new shares, which can dilute the ownership percentage of existing shareholders but also provide the company with additional capital.

Overall, shinkabu yoyakuken is a strategic tool used by companies to attract, retain, and motivate key personnel and investors by offering them a stake in the company's future success.

自己株式 (Jikokabushiki) refers to treasury stock or shares that a company has repurchased and holds in its own treasury in Japan. These are shares that were previously issued and outstanding but have been bought back by the issuing company. Treasury stock can result from share buybacks, where the company uses its excess cash to repurchase its own shares from the open market or through direct negotiations.

There are several reasons why a company might repurchase its own shares. By reducing the number of outstanding shares, the company can increase the earnings per share (EPS) and potentially boost the stock price. This can be beneficial for shareholders and can make the company's stock more attractive to investors. Additionally, holding treasury stock provides the company with flexibility for future corporate actions, such as using the shares for employee stock compensation plans, mergers and acquisitions, or reselling them in the market at a later date.

It is important to note that while treasury stock is held by the company, it does not have voting rights and does not receive dividends. This means that the repurchased shares do not have the same rights as shares held by external investors.

In summary, Jikokabushiki represents a strategic financial maneuver that allows companies to manage their capital structure, support stock prices, and maintain flexibility for future corporate needs.

株式交換 (kabushiki kokan) refers to a share exchange or stock swap in Japanese. This process involves one company acquiring another company by exchanging its own shares for the shares of the target company. As a result, the target company becomes a wholly owned subsidiary of the acquiring company.

In a kabushiki kokan, shareholders of the target company receive shares of the acquiring company in proportion to their existing holdings. This exchange ratio is determined based on the valuation of both companies and is outlined in the share exchange agreement. The process typically involves several steps, including negotiations, due diligence, approval from the boards of directors, and, in many cases, approval from shareholders of both companies.

Kabushiki kokan is commonly used in mergers and acquisitions as it allows the acquiring company to take control of the target company without needing to pay cash upfront. It provides a way to consolidate businesses, expand market presence, or achieve strategic goals. For the shareholders of the target company, the share exchange can offer an opportunity to become part of a larger, potentially more stable and profitable entity.

Overall, kabushiki kokan is a strategic financial maneuver that facilitates corporate restructuring and growth by leveraging equity rather than cash, aligning the interests of both companies and their shareholders.