On February 28 2018, the Ministry of Justice released
the interim proposal concerning the revision of the Companies
Act (in relation to corporate governance, and so on) (Interim
Proposal) for public comment. Certain revisions proposed in
this Interim Proposal will affect existing practices relating
to shareholder meetings.
Provision of shareholders' meeting materials
Under the prevailing Companies Act, a stock company is
required to provide printed paper copies of shareholder meeting
materials (for example, reference documents for shareholders'
meetings, the company's financial statements and business
reports, and so on) to shareholders of the company unless it
obtains the consent of each shareholder to provide such
materials online. However, the revisions proposed in the
Interim Proposal would permit an alternative method of
providing shareholder meeting materials (the electronic
provision system). As long as the stock company's articles of
incorporation allow for this electronic provision system, the
alternative procedure would mean that the company would not
need to obtain shareholders' consent, and the director of the
stock company would be able to post electronic copies of the
materials on a website (such as the company's official website)
and indicate the address where those materials could be
accessed in the notice of shareholders' meeting.
It should be noted that: (i) the Interim Proposal provides
that the book-entry transfer institution may only handle shares
of stock companies that have adopted the electronic provision
system in their articles of incorporation, meaning all listed
companies would be required to adopt the electronic provision
system; (ii) in order to protect the interests of shareholders,
shareholders would be entitled to request printed paper copies
of the shareholders' meeting materials; and (iii) notices of
shareholders' meetings would still be required, although
matters to be stated therein would be limited.
Restrictions on proposals by shareholders
In light of recent cases where shareholders were found to
have abused their rights to submit proposals at meetings of
shareholders, the Interim Proposal includes a revision to
address this. Under the revision, the Interim Proposal limits
the number of proposals a shareholder of a company with a board
of directors may make at a single meeting, under the right to
demand a notice of a summary of proposals (article 305,
paragraph 1 of the Companies Act), to a certain number. In
addition, the Interim Proposal provides that, if the content of
any proposal by a shareholder is inappropriate (such as when a
shareholder submits a proposal solely for the purpose of
defaming or insulting a person), the shareholder will be
prohibited from exercising both its right to propose (the right
to submit proposals at the shareholders' meeting [article 304
of the Companies Act] and its right to demand a notice of a
summary of proposals [article 305, paragraph 1 of the Companies
Act]).
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| Hiroki Kawaguchi |