Meetings in Japanese companies
Note: If you’re unfamiliar with the stock-company (kabushiki kaisha, or KK) corporate structure in Japan, we recommend viewing this article prior to reading this article.
If you’ve incorporated your company as a stock-company (kabushiki kaisha, or KK), there are certain requirements that you must satisfy in order to comply with the corporate laws in Japan. This article will go over the fundamental requirements of shareholders’ meetings in Japan, as well as the general role and responsibilities that shareholders have in stock-companies in Japan.
How to call a shareholders’ meeting
First and foremost, a Japanese shareholders’ meeting must be called by the directors of the company, except in special cases. When calling a shareholders’ meeting, the general rule in Japan is that you must send a notice to all shareholders in your company of the date, location, and agenda of the meeting no later than 2 weeks prior to the meeting taking place, or no later than 1 week if the stock company is not a public company.
In the event that a shareholder cannot make it to the general meeting, you must also state whether said shareholder is able to exercise his/her voting rights via writing, according to Article 298 of the Japan Companies Act (JCA). In addition to these requirements, companies with an established board of directors are required under Article 299 of the JCA to have the notice for the shareholders’ meeting be in writing.
During a shareholders’ meeting, financial reports must be provided and approved. For companies with an accounting auditor, approval of the financial statements is not required, so long as it satisfies all of the following conditions:
- The audit report from the accounting auditor represents the company’s assets and profits or losses in accordance with generally accepted accounting principles (GAAP);
- The company has a board of directors; and
- Either the company auditors, the board of company auditors, the audit committee or the supervisory committee accepts the accounting auditor’s audit. (Source: Thomson Reuters, “Corporate governance and directors’ duties in Japan: overview”)
To read the official English translation of the Japanese Companies Act, please click here.
Rules to the shareholders’ meeting
If your company has a board of directors, you’ll be required to hold a board of directors’ meeting once every 3 months, as well as a general shareholders’ meeting at least once every year, held within three months after the end of the fiscal year (fiscal years in Japan are April 1st – March 31st).
There are numerous rules that are required in the event of a shareholders’ meeting. A majority of shareholders must be present at a shareholders’ meeting and a majority vote of the shareholders present is required.
Furthermore, shareholders who have more power (through percentage of shares, level, or holding period) have the right to request that directors hold a shareholders’ meeting. If nothing is done by the directors in a specific period of time, said shareholder may call a shareholders’ meeting after getting permission from the court.
For listed companies, directors are responsible for the operation and management of the company, with exceptions for specific types of corporate entities (e.g. companies with three committees and executive officers). Under the Companies Act, matters including but not limited to amendments to the Articles of Incorporation, approval of financial statements, and payment of dividends must be approved by a majority of the shareholders present at a shareholders’ meeting. For more information regarding this topic, we recommend taking a look at section 2.1 of ICLG.com’s online summary of Corporate Governance Laws and Regulations, 2018.
This page is intended to be used for informational purposes only and should not be a substitute for obtaining professional legal advice.