General meetings of shareholders and board meetings in a Japanese Kabushiki Kaisha involve a number of Japan-specific rules and practices. In addition, recent digitalization has led to changes in related systems and market practice, including electronic provision of materials for general meetings of shareholders and practical arrangements assuming online participation. This article outlines the basic rules for general meetings of shareholders and board meetings, as well as practical points for online formats.

１．Annual General Meeting of Shareholders

A Japanese Kabushiki Kaisha must convene an annual general meeting of shareholders after the end of each fiscal year, within a certain period. Under the Companies Act, there is no express rule stating that the meeting must be held “within three months after the fiscal year end.” However, in practice, many companies provide in their articles of incorporation that the annual general meeting must be held within three months after the fiscal year end (financial year end). As a result, for a company with a March 31 fiscal year end, it is common to hold the annual general meeting in June, whereas for a company with a December 31 fiscal year end, it is often held in March. The specific timing depends on each company’s fiscal year and its articles of incorporation.

At the annual general meeting of shareholders, the company typically (i) approves or reports on the financial statements for the fiscal year, (ii) appoints directors, company auditors, and other officers, and (iii) resolves on dividends of surplus and other matters required by the Companies Act or the articles of incorporation.

２．Matters Resolved by the Shareholders’ Meeting and the Board of Directors

(1) Matters Resolved by the Shareholders’ Meeting (Where a Board of Directors Is Established)

Although the shareholders’ meeting is the company’s ultimate decision-making body, where a board of directors is established, the shareholders’ meeting cannot resolve on any matter at its discretion. In such cases, the matters that may be resolved by the shareholders’ meeting are limited to those specified in the Companies Act or the articles of incorporation—typically matters relating to the company’s fundamental structure. Examples include the appointment of officers, amendments to the articles of incorporation, and appropriation of surplus.

(2) Matters Resolved by the Board of Directors

Important management decisions must be resolved by the board of directors. While day-to-day operations may be executed and represented by the representative director acting alone, decisions on “the execution of important operations” may not be delegated to individual directors (Companies Act, Article 362(4)). Typical examples include disposal or acquisition of important assets, large borrowings, significant personnel or organizational changes, and development of an internal control system.

３．Meeting Formats for Shareholders’ Meetings and Board Meetings

As a general rule, both shareholders’ meetings and board meetings are held with shareholders and directors physically attending. However, online participation has increasingly been adopted in practice, and relevant procedures and operational arrangements have been developed.

(1) Online Participation in Shareholders’ Meetings

Under Japanese law, a shareholders’ meeting generally must be convened by specifying a physical “place.” Accordingly, an unlisted company cannot hold a fully online shareholders’ meeting. In practice, however, a hybrid shareholders’ meeting is possible: the company designates a physical venue while allowing shareholders to participate online.

When holding a hybrid shareholders’ meeting, the company should plan in advance matters such as the communications environment, identity verification, how to handle questions and motions, handling of voting procedures, the scope of streaming, and consideration of image rights and privacy.

(2) Online Board Meetings and Other Formats

Directors are appointed by the shareholders’ meeting based on personal trust. Therefore, unlike shareholders’ meetings, directors may not attend a board meeting by proxy.

At the same time, directors may be located remotely, making in-person attendance difficult. This raises the practical question of whether board meetings may be held by online or similar means.

４．Rules for Preparing Minutes of Shareholders’ Meetings

When a shareholders’ meeting is held, the company must prepare minutes under the Companies Act. The minutes typically include the date and place of the meeting, the proceedings and results of resolutions, the names of attending officers, the name of the chairperson, and the name of the director responsible for preparing the minutes.

In addition, if directors, company auditors, accounting advisors, accounting auditors, and similar persons express certain opinions or make statements at a shareholders’ meeting, a summary must also be recorded in the minutes.

Are Minutes in English Valid?

The Companies Act does not prescribe the language of minutes of shareholders’ meetings. Accordingly, minutes may be prepared in English or another foreign language. However, in practice, procedures before the Legal Affairs Bureau, courts, and tax authorities generally assume Japanese. For this reason, it is advisable to treat the Japanese version as the original and prepare any foreign-language version as a translation.

For reference, it is possible to prepare a bilingual Japanese–English version of articles of incorporation; however, only the Japanese text has legal effect, and Japanese will prevail in the event of any inconsistency (see SERIES 2-03: What Are Articles of Incorporation?).

５．Conclusion

The Companies Act sets out detailed rules regarding the authority and procedures of shareholders’ meetings and board meetings. If a company exceeds its authority or makes procedural errors, it may face litigation risk from shareholders and others. It is therefore advisable to operate the company carefully, including consulting professionals as needed.

In addition, both shareholders’ meetings and board meetings have increasingly been held in online and similar formats as digitalization advances. If you manage a company in Japan or participate in a Japanese company as a shareholder, it is important to understand the benefits and risks of these mechanisms accurately.

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