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 \u201cwithin three months after the fiscal year end.\u201d 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\u2019s fiscal year and its articles of incorporation.<\/p>\n
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.<\/p>\n
| \n <\/p>\n<\/td>\n | \n Company with<\/p>\n March 31 fiscal year end<\/p>\n<\/td>\n | \n Company with<\/p>\n December 31 fiscal year end<\/p>\n<\/td>\n<\/tr>\n | ||||||||
| \n Fiscal year end (financial year end)<\/p>\n<\/td>\n | \n March 31<\/p>\n<\/td>\n | \n December 31<\/p>\n<\/td>\n<\/tr>\n | ||||||||
| \n Timing of annual general meeting<\/p>\n<\/td>\n | \n By the end of June<\/p>\n<\/td>\n | \n By the end of March<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n <\/p>\n \uff12\uff0eMatters Resolved by the Shareholders\u2019 Meeting and the Board of Directors<\/strong><\/span><\/p>\n (1) Matters Resolved by the Shareholders\u2019 Meeting (Where a Board of Directors Is Established)<\/p>\n Although the shareholders\u2019 meeting is the company\u2019s ultimate decision-making body, where a board of directors is established, the shareholders\u2019 meeting cannot resolve on any matter at its discretion. In such cases, the matters that may be resolved by the shareholders\u2019 meeting are limited to those specified in the Companies Act or the articles of incorporation\u2014typically matters relating to the company\u2019s fundamental structure. Examples include the appointment of officers, amendments to the articles of incorporation, and appropriation of surplus.<\/p>\n <\/p>\n (2) Matters Resolved by the Board of Directors<\/p>\n 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 \u201cthe execution of important operations\u201d 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.<\/p>\n <\/p>\n \uff13\uff0eMeeting Formats for Shareholders\u2019 Meetings and Board Meetings<\/strong><\/span><\/p>\n As a general rule, both shareholders\u2019 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.<\/p>\n <\/p>\n (1) Online Participation in Shareholders\u2019 Meetings<\/p>\n Under Japanese law, a shareholders\u2019 meeting generally must be convened by specifying a physical \u201cplace.\u201d Accordingly, an unlisted company cannot hold a fully online shareholders\u2019 meeting. In practice, however, a hybrid shareholders\u2019 meeting is possible: the company designates a physical venue while allowing shareholders to participate online.<\/p>\n When holding a hybrid shareholders\u2019 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.<\/p>\n <\/p>\n (2) Online Board Meetings and Other Formats<\/p>\n Directors are appointed by the shareholders\u2019 meeting based on personal trust. Therefore, unlike shareholders\u2019 meetings, directors may not attend a board meeting by proxy.<\/p>\n 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.<\/p>\n General rule<\/p>\n<\/td>\n Directors convene and attend in person.<\/p>\n<\/td>\n<\/tr>\n Exception 1 (Online meeting)<\/p>\n<\/td>\n An online meeting with real-time audio and video is permitted.<\/p>\n<\/td>\n<\/tr>\n Exception 2 (Teleconference)<\/p>\n<\/td>\n A teleconference raises issues such as difficulty identifying speakers because participants cannot see each other. However, if the participants can be authenticated and each director can immediately recognize the others\u2019 statements and engage in sufficient discussion, it may be treated as a valid board meeting.<\/p>\n<\/td>\n<\/tr>\n Exception 3 (Written resolution)<\/p>\n<\/td>\n If the articles of incorporation provide for it, a resolution may be deemed adopted without holding a board meeting by obtaining unanimous consent of all directors in writing or by electronic record. If the company has company auditors, it is also necessary that the company auditors do not object.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n <\/p>\n \uff14\uff0eRules for Preparing Minutes of Shareholders\u2019 Meetings<\/strong><\/span><\/p>\n When a shareholders\u2019 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.<\/p>\n In addition, if directors, company auditors, accounting advisors, accounting auditors, and similar persons express certain opinions or make statements at a shareholders\u2019 meeting, a summary must also be recorded in the minutes.<\/p>\n Are Minutes in English Valid?<\/strong><\/p>\n The Companies Act does not prescribe the language of minutes of shareholders\u2019 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.<\/p>\n For reference, it is possible to prepare a bilingual Japanese\u2013English 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?<\/a>).<\/p>\n <\/p>\n \uff15\uff0eConclusion<\/strong><\/span><\/p>\n The Companies Act sets out detailed rules regarding the authority and procedures of shareholders\u2019 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.<\/p>\n In addition, both shareholders\u2019 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.<\/p>\n <\/p>\n Contact Us<\/span><\/strong><\/span><\/p>\n In our Japan Business Law Guide, we will continue to share useful information tosupport your business expansion and operations in Japan. <\/p>\n <\/p>","protected":false},"excerpt":{"rendered":" General meetings of shareholders and board meetings in a Japanese Kabushiki Kaisha involve a number of Japan-s … <\/p>\n |
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