Treaties, Laws and Speeches

Revised Articles of Association of the South Manchuria Railway Joint Stock Company

(Amended several times)

Chapter I.—General Provisions

ARTICLE I.—This company shall be called the South Manchuria Railway Joint Stock Company and is established in accordance with Imperial Ordinance No. 142 of 1906 and in obedience to the order of the Imperial Japanese Government.

ARTICLE II.—The liability of the shareholders of this company is limited to the value of shares owned by them.

ARTICLE III.—This company shall establish its head office at Dairen and a branch office at Tokyo.

ARTICLE IV.—The objects of the company are as follows:

I. To engage in the transportation business of the following railways in Manchuria:

Dairen-Changchun Railway.

Nankuanling-Port Arthur Railway.

Tafangshen-Liushutun Railway.

Tashihchiao-Yingkow Railway.

Yentai-Yentai Coal Mine Railway.

Suchiatun-Fushun Railway.

Mukden-Antunghsien Railway.

II. To engage in the following lines of accessory business for the benefit of the railways:

Mining, especially the operation of the coal mines at Fushun and Yentai.

Water transportation.

Electrical Enterprises.

Warehousing.

Business relating to the land and buildings on the land attached to the railways.

Any other business for which the permission of the Government may be given.

ARTICLE V.—The capital of the company shall be 440,000,000 Yen. However, the amount of the first subscription of shares shall be Yen 20,000,000 not including the shares to be owned by the Imperial Japanese Government. The second and subsequent subscriptions shall be opened from time to time, as necessity may require, upon the resolution of a general meeting of the shareholders.

ARTICLE VI.—The public notices of the company shall be published in the newspapers in which official announcements of the Kwantung Government are published at the place where the company's head office is situated and in the newspapers in which are published the public notices of the court of law to whose jurisdiction the company's branch office is subject.

Chapter II.—Shares

ARTICLE VII.—The share certificates of this company shall all be registered, and each share shall be fifty (50) Yen.

ARTICLE VIII.—The certificates of shares of this company shall be of the following five denominations:

ARTICLE VIII.—The certificates of shares of this company shall be of the following five denomination:

One share certificates.

Ten share certificates.

One hundred share certificates.

One thousand share certificates.

Ten thousand share certificates.

ARTICLE IX.—The certificates of shares of this company shall bear the name of the company, the date of registration, the total amount of capital, the amount of each share, the amount paid up and the number of the certificate. They shall bear the signature and seal of the President,

ARTICLE X.—As regards payments upon the shares of second and subsequent issues, the president shall determine the amount to be paid up and the date as required by the (company's) business, and shall give notice thereof to each shareholder at least sixty days in advance.

ARTICLE XI.—If a shareholder fails to make payment by the day fixed for payment on the shares, delay interest shall be charged him at the rate of four sen per day per one hundred yen on the amount due.

ARTICLE XII.—If a shareholder fails to make payment within fifteen days from the date fixed for the first payment on the shares the company may demand that payment be made within thirty days: and if the money is not paid in by that time the company may notify him that his rights as a shareholder of this company shall be forfeited.

In the case mentioned in the previous paragraph, where rights are lost the application money previously paid shall not be refunded.

ARTICLE XIII.—If at the second and subsequent calls on the shares a shareholder fails to make payment within fifteen days after the date fixed for payment, the company may notify such shareholder that payment must be made within thirty days, and that, in the case of failure to comply, his rights as a shareholder of this company shall be forfeited.

When, in the case mentioned in the previous paragraph, a shareholder has forfeited his rights as such, the company shall notify each assignor (i.e. one who has previously held the shares) of shares that payment must be made within fifteen days, and the assignor who first pays the amount in arrears shall acquire the shares. If no assignor pays, the company shall sell the shares at auction. If the amount realized by the auction is not sufficient to cover the amount in arrears, the previous shareholder shall be required to make good the deficit. If the previous shareholder does not make good within fourteen days, the company shall demand performance of the assignors.

ARTICLE XIV.—The liability of the assignors mentioned in the preceding article is extinguished after two years from the time when the assignment was entered in the Register of Shareholders.

ARTICLE XV.—If a company or any other legal person, public or private, owns the shares of this company, it shall appoint its representative and have his name entered in the Register of Shareholders of this company. If shares are held by two or more persons in common, they are required to appoint one person to exercise their rights as shareholder. Persons holding shares in common are jointly and severally liable to the company for the payment upon the shares.

ARTICLE XVI.—When shares are to be assigned, the parties concerned shall make a written statement in accordance with the form prescribed by this company and apply for the alteration of the certificates of shares. However, when a person inherits shares by virtue of succession, bequest or any decision rendered by a court of law, such person is required to attach to the statement referred to a certificate of the census official or other documents as evidence that the company may deem necessary.

The assignment of any share shall not be valid unless the name and domicile of the assignee are entered on the share certificate in question.

ARTICLE XVII.—Should any certificate of shares be destroyed, multilated or lost, the shareholder may apply for a new certificate of shares by presenting to the company a statement giving the facts in the case and signed by two or more persons approved by the company as guarantors. However, in case of loss, a public notice to that effect shall be given at the expense of the applicant, and the new certificate of shares shall be issued only when no objection is raised within sixty days from the date of the said public notice.

ARTICLE XVIII.—If any shareholder wishes to change the denominations of his certificate of shares, the said certificate shall be presented to the company together with the application.

ARTICLE XIX.—For the registration of a change of an owner's name on a certificate of shares, the issue of a new certificate of shares or the alteration of the denomination of a certificate of shares, the prescribed fee of the company shall be collected from the applicant.

ARTICLE XX.—During a period not exceeding thirty days immediately preceding each ordinary general meeting of shareholders and during the sixteen days between November 25th and December 10th of each year, the company shall suspend the assignment of shares.

Chapter III.—Shareholders

ARTICLE XXI.—The shareholders of this company shall be limited to the Government of Japan and China, and the subjects of Japan and China.

ARTICLE XXII.—The Imperial Japanese Government shall furnish the following properties as capital, and the company shall deliver to the Government two million shares, amounting to Yen 100,000,000, which is the value of the said properties:

The existing railways (except the rolling stock

now actually in use, as well as the rails and accessories of the Mukden-Antunghsien temporary railway).

All properties within the leased territory as may be designated by the Government.

The coal-mines at Fushun and Yentai.

The Imperial Japanese Government in addition to the capital mentioned in the foregoing paragraph shall subscribe on December 1, 1920, shares to the amount of 120,000,000 Yen in accordance with law No. 34 of 1920, in return for which the company shall issue to it 2,400,000 shares.

The Imperial Japanese Government on the date of subscribing the shares mentioned in the foregoing paragraph shall accept the liability of paying the capital and interest of the sterling debentures issued by the company in London to the total face value of 12,000,000 pounds sterling in lieu of paying 117,156,000 Yen for the shares.

ARTICLE XXIII.—Each shareholder shall have the right to one vote for each share owned by him.

ARTICLE XXIV.—The shareholders and their legal representatives shall report to the company their domiciles, names and a copy of their legal seals, when they acquire shares. When any alteration in the above facts has taken place, similar measures shall be taken.

Shareholders and their legal representatives domiciled abroad may be required to designate provisional domiciles or representatives in Japan. In such cases provisional domiciles and the representatives shall be reported to the company, as well as any changes in the same.

Chapter IV.—General Meetings

ARTICLE XXV.—An ordinary general meeting shall be called by the president in June every year, and extraordinary general meetings when the president or the inspectors deem them necessary, or when shareholders owning at least one tenth or more of the total number of shares have presented a written request stating the objects and reasons for holding a general meeting. When the shareholders have requested a general meeting to be called, the president shall take steps for calling the same within fourteen days.

ARTICLE XXVI.—The discussion at general meeting shall be confined to the subjects previously announced.

ARTICLE XXVII.—The date, time and place of a general meeting shall be determined by the president, and a notice to that effect shall be sent out to the shareholders at least fourteen days in advance of such meeting.

ARTICLE XXVIII.—The president shall act as chairman of a general meeting.

ARTICLE XXIX.—The shareholders may appoint only shareholders of this company as their representatives, and their powers of attorney shall be presented to the company.

ARTICLE XXX.—The chairman of the general meeting shall be allowed to exercise his right to vote as a shareholder.

ARTICLE XXXI.—Resolutions of a general meeting shall be adopted by a majority vote of the shareholders present. In case of a tie, the chairman shall have the casting vote.

ARTICLE XXXII.—The issuance of company debentures or amendments to the articles of incorporation shall be decided when shareholders representing one half or more of the total capital are present by a majority vote (as amended April 16, 1907).

If, in the case mentioned in the preceding paragraph the necessary quorum is not present, a provisional decision may be made by a majority of the shareholders present. A notification giving the essential details of the said provisional decision shall be sent to each shareholder, and another general meeting shall be called in not less than one month.

At the second general meeting the said provisional decision shall be confirmed or rejected by a majority vote of the shareholders present.

ARTICLE XXXIII.—The minutes of a general meeting shall be recorded in the proceedings of the general meetings, and the same shall bear the signatures and seals of the president and chief officers present.

ARTICLE XXXIV.—The chairman of the general meeting may adjourn the meeting or change the place of meeting. The discussion at an adjourned meeting shall be confined to the subjects on which no decision was made at the preceding meeting.

Chapter V.—Chief Officers

ARTICLE XXXV.—The chief officers of this company shall be as follows:

ARTICLE XXXVI.—The term of office of the president and vice-president shall be five years, and they shall be appointed by the Government subject to the Imperial sanction.

The term of office of the inspectors shall be four years and they shall be appointed by the

Government from among those who own one hundred shares or more.

The term of office of the inspectors shall be three years, and they are to be elected by the shareholders at a general meeting of the shareholders.

ARTICLE XXXVII.—The renumerations and allowances of the president, vice-president and directors shall be determined by the Government.

The renumeration of the inspectors shall be determined by a resolution of a general meeting of the shareholders.

ARTICLE XXXVIII.—The directors are required, during their term of office, to deposit with the inspectors one hundreds shares of the company owned by them. These shares shall not be returned to their owners even on their retirement from office until all affairs transacted during their term of office shall have been approved at a general meeting.

ARTICLE XXXIX.—In the event of the office of any inspector becoming vacant, an extraordinary general meeting of the shareholders shall be called for the purpose of a by-election, and the new inspector shall hold office during the remainder of the term of office of this predecessor.

However, a by-election may be postponed until the next general meeting of the shareholders, except when the number of inspectors has decreased to two or less.

ARTICLE XL.—The president shall represent the company and have general control of all its affairs.

The vice-president shall represent the president when he is prevented from discharging his official duties, and shall act as president when that office is left vacant.

When the president and vice-president are prevented from discharging their duties, the Government shall cause one of the directors to act for the president (added June 27, 1906). The vice-president and the directors shall assist the president, and each shall take charge of a part of the business of the company. The inspectors shall inspect the affairs of the company.

ARTICLE XLI.—During their respective terms of office the president, vice-president and directors shall not engage in any other occupations or business under any name whatever without the permission of the Government.

ARTICLE XLII.—The president shall keep at the head-office as well as the branch office copies of the Articles of Incorporation and of the Record of Resoultions of the general meetings of shareholders. He shall also keep at the head office the Register of Shareholders and the Ledger of Debentures.

ARTICLE XLIII.—The president shall submit the following documents to the inspectors seven days in advance of the date set for the ordinary general meeting of shareholders:

(1) An inventory of the company's properties.

(2) A balance sheet.

(3) A report on the company's works.

(4) An account of the profits and losses.

(5) Proposals relating to the reserve funds and to the dividends.

ARTICLE XLIV.—The president shall have in readiness at the head office before the day of an ordinary general meeting of the shareholders the documents mentioned in the preceding articles and the inspector's report.

ARTICLE XLV.—The president shall submit to an ordinary general meeting of the shareholders the documents mentioned in Article 43 and obtain its approval.

The president shall publish the balance sheet when he has obtained the approval mentioned in the preceding paragraph.

ARTICLE XLVI.—The inspectors are required to examine the documents to be submitted by the president to a general meeting of shareholders and to report their views at the said meeting.

ARTICLE XLVII.—The inspectors may at any time demand the president to report on the business of the company, and may examine the management of its affairs and the condition of its properties.

Chapter VI.—Supervisors

ARTICLE XLVIII.—The supervisors of the South Manchuria Railway Joint Stock Company may at any time inspect the arrangements of the company's work, or examine the safes and books of the company, as well as the various documents and articles belonging to it.

The supervisors may, whenever they deem it necessary, order the company to report on the various business accounts and the condition of the company.

The supervisors may attend the general meetings of the shareholders or any other meetings and express their opinions, but they are not entitled to vote.

Chapter VII.—Accounts

ARTICLE XLIX.—The business year of this company shall commence on April 1 and end on March 31 of the following year (as amended March 11, 1912).

ARTICLE L.—The company shall set aside as a reserve fund one-twentieth or more of the profits, whenever they are apportioned until the reserve funds amount to one-fourth of the capital.

Special reserve funds other than that provided for in the preceding paragraph shall be determined by a resolution of the general meeting.

ARTICLE LI.—The dividends to the shareholders shall be paid according to the Register of Shareholders as it stands on June 1 (as amended March 11, 1912).

ARTICLE LII.—When the company is certain to be able to pay dividends for the business year, it may, before the termination of that year, pay once only to the shareholders other than the Japanese and Chinese Governments, dividends equal to the amount paid up on shares multiplied by one-half the estimated rate of dividend, the amount so paid not exceeding the amount brought forward from the preceding year.

The portional dividends paid in accordance with the provisions of the two foregoing paragraphs shall in respect to the accounts of the company for the business year in question be deemed to be company property, and the distribution of the profits at an ordinary general meeting shall be determined on the basis of such estimate; provided, however, that the payment of dividends to shareholders other than the Japanese and Chinese Governments shall irrespective of changes in shareholders in the meantime, be made by paying over the balance after deducting from the amount (of the declared dividend) the amount distributed in accordance with paragraph 1 (as amended August 25, 1917).

ARTICLE LIII.—When the dividend of the company does not exceed six per cent. per annum of 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 Japanese Government.

ARTICLE LIV.—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 old debentures, shall be guaranteed by the Imperial Japanese Government. The reimbursement of the principal may also, if necessary, be guaranteed by the Imperial Japanese Government.

The total amount of debentures to be guaranteed by the Imperial Japanese Government shall be less than twice the paid up capital and shall not exceed the authorized capital (as amended February 5, 1910).

ARTICLE LV.—For the debentures issued in accordance with the provisions of 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 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 from the money to be supplied by the Government mentioned in the preceding paragraph.

ARTICLE LVI.—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 equals 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 (added June 20, 1914, and amended September 11, 1920).

ARTICLE LVII.—The money to be supplied by the Imperial Japanese Government, as provided for in Article 55, shall bear interest at six per cent. per annum. The interest shall be added annually to the principal, and the total shall be the company's indebtedness to the Imperial Japanese Government.

When the dividend for shares shall exceed ten per cent. per annum, the surplus shall be devoted to the redemption of the company's debt mentioned in the preceding paragraph.

Chapter VIII.—Expenses for Oganizing the Company

ARTICLE LVIII.—The expenses for organizing the company shall not exceed 50,000 Yen.

Of the amount mentioned in the preceding paragraph that advanced by the Government shall be reimbursed by the company.

Supplementary Article

ARTICLE LIX.—Five hundred thousand shares representing 50,000,000 Yen included in the additional capitalization authorized by resolution of a special general meeting of the shareholders on April 16, 1920 shall be issued at above par; provided,

that there shall be no objection to issuing it in instalments (as amended April 16, 1920).