Japanese Stock Splits Explained: Record Date, Effective Date, 100-Share Lots and the ¥500,000 Line

What a stock split is

A stock split (株式分割) divides each share into several, for example one share into two. Every holder's share count rises in proportion, ownership percentages do not change, and the company receives no money. Under Article 183 of the Companies Act, a company with a board decides it by board resolution.

What the resolution sets

• Ratio: for example, one share into three.
• Record date: holders on the register on this day receive the new shares.
• Effective date: usually the day after the record date. Under Article 184, record-date holders acquire the additional shares on the effective date.

A company with a single class of shares may raise its authorized share count by the same ratio without a shareholder vote (Article 184(2)), which is why split filings often include "定款の一部変更" (partial amendment of the articles).

Why split: 100-share lots and ¥500,000

Japanese shares trade in lots of 100 (単元株). At a price of ¥5,000, the minimum purchase is ¥500,000. The Tokyo Stock Exchange wants trading units below ¥500,000, and companies whose unit is ¥500,000 or more at fiscal year-end must disclose their "policy on reducing the investment unit" (投資単位の引下げに関する考え方) under the listing rules. A split is the most direct way to bring the unit down, and companies usually say the aim is to make the shares easier for individual investors to buy.

Things to watch around a split

• After the effective date, share price, EPS and dividends per share all adjust by the ratio. Filings often show post-split equivalents.
• If a dividend forecast is restated in post-split terms, the filing usually notes there is no substantive change.
• The reverse, combining several shares into one, is a reverse split (株式併合). It is also used in squeeze-outs; see Japan tender offer rules.

TDnet filings to watch

Kabuto's split stories are under Capital, each linked to the TDnet original.

Sources

• 会社法(e-Gov 法令検索)