St. John Company Case Study

FACTS

On July 17,1997, St. John Knits, Inc. and Commercial Development Co., Ltd (CDC) entered into a joint-venture agreement. Pursuant to the agreement, ST. John Knits, Inc. and CDC established a Japanese limited liability stock company, to be called St. John Co., Ltd., to engage in the importing, marketing, selling and distributing of certain ST. JOHN products in Japan.

At the time of the organization and registration of St. John Co., Ltd (i.e. July 23,1997), it had an initial paid-in capital of one hundred fifteen million Japanese Yen (¥115,000,000) represented by two thousand three hundred (2,300) common voting shares with a par value of fifty thousand Japanese Yen (¥50,000) each ("Common Stock").

Of the initial paid-in capital of St. John Co., Ltd, CDC contributed in cash the sum of fifty-six million three hundred fifty thousand Japanese Yen (¥56,350,000) in exchange for the issuance by St. John Co., Ltd of one thousand one hundred twenty-seven (1,127) Shares of Common Stock of St. John Co., Ltd.

John Co., LTD, St. John Inc. contributed in cash the sum of fifty-eight million six hundred fifty thousand Japanese Yen (¥58,650,000) in exchange for the issuance by St. John Co., Ltd of one thousand one hundred seventy-three (1,173) Shares of Common Stock of St. John Co., Ltd. (c). Accordingly, the Ownership Percentage of each Party as of the Incorporation Date was as