(Amended several times)
To Masatake Terauchi, Chairman of the Organizing Commission of the South Manchurian Railway Joint Stock Company, and eighty other members of the Commission:
The following orders are hereby given respecting the several matters relating to the organization of the South Manchuria Railway Joint Stock Company, all matters pertaining to the management of which have been entrusted to the Commission.
August 1, 1906.
Isaburo Yamagata,
Minister of Communications.
Yoshiro Sakatani, LL.D.,
Minister of Finance.
Viscount Tadasu Hayashi,
Minister for Foreign Affairs.
ARTICLE I.—In accordance with the Additional Agreement of the Japan-China Treaty relating to Manchuria, signed on December 22nd, 1905, the Company shall engage in the traffic of the following railways:
Dairen-Changchun.
Nankuanling-Port Arthur.
Tafangshen-Liushutun.
Tashihchiao-Yingkou.
Yentai-Yentai Coal Mine.
Suchiatun-Fushun.
Mukden-Antunghsien.
ARTICLE II.—The railways mentioned in the preceding Article shall be changed to the 4 feet 8.5 inch gauge within three (3) years counting from the day on which the company commences its operations.
On the Dairen-Changchun Railway the tracks between Dairen and Suchiatun (near Mukden) shall be doubled.
ARTICLE III.—The company shall make the various arrangements necessary for the lodging and meals of the passengers, as well as for the storage of goods at the principal stations on the line.
ARTICLE IV.—For the convenience and the profit of the railway, the company may engage in the following accessory lines of business:
Mining, especially the operation of the coal-mines at Fushun and Yentai.
Water transportation.
Electrical enterprises.
Sale on commission of the principal goods carried by the railways.
Warehousing.
Business relating to the land and buildings on the land attached to the railways.
In addition, any business for which Government permission has been given.
ARTICLE V.—The company shall, subject to the permission of the Government, make the necessary arrangements for engineering works, education, sanitation, etc. within the area of lands used for the railways and the accessory lines of business.
ARTICLE VI.—To defray the expenses necessary for the arrangements mentioned in the preceding Article, the company may, subject to the permission of the Government, collect fees of those who live within the area of lands used for the railways and the accessory lines of business, or make any other assessments for necessary expenses.
ARTICLE VII.—The total amount of the company's capital stock shall be 440 million Yen, of which 200 million Yen shall be furnished by the Imperial (Japanese) Government. The amount of each share shall be 50 Yen.
ARTICLE VIII.—The capital to be furnished by the Government mentioned in the preceding Article shall consist of the following properties:
The existing railways.
All properties belonging to the railways, except those in the based territory specially designated by the Government.
The coal mines at Fushun and Yentai.
The Government shall subscribe company shares to the face value of 120,000,000 Yen on December
1, 1920, in accordance with Law No. 34 of 1920.
ARTICLE IX.—The rolling stock now being used by the Government, and the rails as well as the accessories of the Mukden-Antunghsien temporary railway, shall be sold to the company at a reasonable price.
ARTICLE X.—The shares not owned by the Government shall be open to subscription by Japanese and Chinese subjects. If the Chinese Government desires to subscribe shares, the company shall comply therewith.
ARTICLE XI.—When the dividend of the company for any business year is less than six (6) per cent. per annum on the paid amount for the shareholders other than the Governments of Japan and China (hereafter to be styled merely "the shareholders"), the Government shall supply the deficiency for a period of fifteen (15) years only (or for thirty (30) business years if the calendar year be divided into two business years), commencing from the day of the registration of the company's establishment. However, the amount of money to be furnished by the Government to supply the deficiency referred to shall, under no circumstances, exceed six (6) per cent. per annum on the capital paid in by the shareholders.
ARTICLE XII.—When the dividend of the company for any business year does not exceed six (6) per cent. per annum on the capital paid in by the shareholders, the dividend on the shares owned by the Government need not be paid.
The shares owned by the Chinese Government shall be dealt with in a similar way to those owned by the Imperial Government.
ARTICLE XIII.—The Government shall guarantee the payment of interest on the debentures which the company may issue for the reconstruction of the railways, or for the operation of the accessory business, and on those which the company may issue for consolidating or redeeming these debentures. The Government shall, if necessary, guarantee the repayment of the principal.
The amount of the face value of the debentures to be guaranteed by the Government shall not be greater than twice the paid-up capital or exceed the authorized capital.
The debentures mentioned in the first paragraph shall be redeemed within twenty-five (25) years counting from the year of their issuance.
ARTICLE XIV.—For the debentures issued in accordance with the provisions in the first paragraph of the preceding Article, the Government shall supply the amount corresponding to the interest on the debentures.
When the dividend on the capital paid up by the shareholders exceeds six (6) per cent. per
annum, the surplus shall first be applied to the payment of the interest on the debentures. However, in this case the amount of surplus shall be deducted.
ARTICLE XV.—When there is any surplus after paying the interest on the debentures, as mentioned in the preceding Article, out of the profits of the company's business, the said surplus shall be apportioned to the shares owned by the Governments of Japan and China until the rate is equal on the respective amounts paid up by all shareholders. Provided, however, that when the dividends on the shares owned by the Japanese and Chinese Governments reach 4.3 per cent. per annum, a second dividend may be paid not exceeding 4 per cent. on the paid-up capital of the shareholders. When the dividends on the shares owned by the Japanese and Chinese Governments shall happen to exceed 4.3 per cent. per annum, the second dividend may be increased to the extent of what exceeds 4.3 per cent., the additional dividend not exceeding 2 per cent. per annum on the paid-up capital of the shareholders.
ARTICLE XVI.—The money to be supplied by the Government, as provided for in Articles 11 and 14, shall bear interest at six (6) per cent. per annum. The interest shall be added annually to the principal, and the total shall be the company's indebtedness to the Government.
When the dividend for all the shares exceeds ten (10) per cent. per annum, the surplus shall be devoted to the redemption of the company's debt mentioned in the preceding paragraph.
ARTICLE XVII.—Any surplus of funds raised by means of the debentures mentioned in Article 13 shall be deposited with the Division of Deposits in the Department of Finance.
ARTICLE XVIII.—The company shall determine estimates of the capital to be paid up and the debentures to be floated during each business year, their face value, issuing price, rate of interest, date of issuance et cetera, and shall receive the Government's approval.
ARTICLE XIX.—The company shall determine the regulations relating to its finances and business, and shall secure the Government's approval.
When the company desires to alter the regulations mentioned in the preceding paragraph and the articles of incorporation, similar steps shall be taken.
ARTICLE XX.—The plans of the company's business, the estimate of the cost of operation, the budget of income and expenditures connected with the company's business, the settlement of the same and the rate of the dividend for each business year shall be submitted to the Government
for approval. When the company desires to alter the foregoing items, similar steps shall be taken.
ARTICLE XXI.—At the designation of the Government the company shall report on the following matters:
The present condition of the cost of operation as well as the income and expenditures connected with the company's business.
The actual condition of the company's work in general.
ARTICLE XXII.—Without the permission of the Government the company shall not dispose of its principal rights and properties; nor give the same for security.
ARTICLE XXIII.—When the Government deems it necessary, it may order the freight charges to be reduced, but only under special conditions.
ARTICLE XXIV.—The Government may, when it deems necessary, order the company to make new works arrangements or modify the existing ones.
ARTICLE XXV.—At the designation of the Government the company shall be under obligation at any time to place the railways, land and any other articles at the service of the Government.
ARTICLE XXVI.—The Articles and paragraphs relating to the funds to be supplied by the Government guarantees mentioned in the present order shall be confirmed upon the approval of the Imperial Diet.