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Kazutoshi Hirose

Mr. Akechi - President
PX Group of Companies



New Japanese Corporate Law circulated:
September 5, 2005
The current laws concerning to the companies are provided in the Japanese Commercial code, both the laws The Yugen Kaisha law (the "YK Law") and the Special Measurement Law concerning the audit of Kabushiki Kaisha (the "Special Measurement Law") will be rescinded, when the new Corporate Law and the Coordination Law will take effect, which shall be around May 2006.

Among other things, the new law would repeal the YK law and provide that any YKs in existence as of the effective date of the new law would continue as KKs under the new corporation law (i.e., existing YKs will be automatically reformed as a KK as a matter of legal characterization under Japanese law). A KK that has been reformed from a YK pursuant to this law must include the phrase "Yugen Kaisha" in its corporate name, and is referred to as a "Special Yugen Kaisha" (Tokurei Yugen Kaisha). The new law would also allow a Special Yugen Kaisha to retain indefinitely its governance structure under the repealed YK Law. This means that, practically speaking, there would be few differences between the old YK and the new Special Yugen Kaisha that is a KK.

The new law creates a new juridical limited liability company, the Godo Kaisha. The tax character of this entity has not yet been determined.

Under the new law, small and medium sized enterprise will find it very difficult to establish a limited company.

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