Simplification of convocation, reports and resolutions procedures

Procedures for Convening a General Meeting of Shareholders

Japanese laws regarding procedures for convening shareholders’ meetings are strictly regulated, mainly to ensure that shareholders are not treated unfairly.

For example, Japanese Companies Act sets a deadline which the convocation notice must be sent to shareholders (Please refer to here), in order to prevent a company from intentionally sending a convocation notice shortly before the time of the meeting for shutting out shareholders who might oppose against the company.

Conversely, if all shareholders agree, then the such regulations can be relaxed.

 Note: This relaxation does not apply to the use of written or electronic voting methods.

Let’s look at this in more detail as below. 【 Skip to the conclusion 】

I. Omission of the procedure for convening a general meeting of shareholders

A general meeting can be held without going through the procedure of the notice of convocation  (Please refer to here),  if  a company acquires consents from all shareholders.

The format of such consents are not specified by law; thus, technically it can be acquired via phone. However, it is advisable to obtain such consent in writing or by e-mail for risk management.

Note: Regardless of above, the procedure for “determining” to convene a meeting cannot be omitted, according to the interpretation of the law. i.e., a general meeting of shareholders cannot be held without a resolution of the directors/board of directors.

Adaptation examples:

✓Rather than sending convocation notice in written or by electronically recorded (e-mail), a Japanese subsidiary (company with a Board of Directors) can informs its parent company, an overseas corporation, orally of the date and time of the meeting, etc.
*** A company without Board of Directors does not have any regulation for method of sending the convocation notices, in the first place.

✓Omit sending financial statements and other documents for the Ordinary general meeting of shareholders (which is obligatory for companies with a Board of Directors), to reduce time and costs.

✓ Obtaining the consent of all shareholders to omit the convocation procedure, in the unlikely event that the deadline for notice of convocation is missed.

II. General meeting attended by all shareholders

There is a precedent that states that if all shareholders attend the meeting without objection, the resolution of the meeting is valid even if the determination or notification procedure to convene the meeting is failed. This is because there is no substantial disadvantage for shareholders since they all attend to the meeting without objection.

In case of the proxy attendees:
Please be aware that in case when a proxy attends the meeting, the company need to give the shareholder a sufficient knowledge of “what is to be resolved at the meeting” for him/her to write a valid proxy letter.

Adaptation examples:

✓If the Company made some mistakes on determination or convening process, those defects can be cured when all shareholders attend the meeting.

Difference between “Omission of the procedure for convening a general meeting of shareholders” and “General meeting attended by all shareholders”

• In the case of omission of the convocation procedure
  Convocation procedures can be omitted if all shareholders agree
  → It is not necessary for all shareholders to be present at the meeting.

• In the case of a general meeting attended by all shareholders
  There are an error in the convocation procedure
  →The attendance of all shareholders are needed to cure such defect.

Of course, in case where the meeting is not legally convened and all shareholders do not agree, or do not attend the meeting, the resolution passed at the meeting may be revoked. Therefore it is always advisable to follow the law of convocation procedure with great care.

III. Omission of Resolutions and Reports of General Meetings of Shareholders

If all shareholders who are entitled to exercise their voting rights vote in favor of the matter proposed by a company (in writing or email), it is possible to pass a resolution without actually holding a shareholders’ meeting.

This method also can be applied to matters to be reported to the Ordinary general meeting of shareholders. (=Provision of business report is completed when company obtain the consent of all shareholders.)

In practice, a proposal and consent form stating “Please return by (Date)” is often delivered to shareholders, who are asked to sign the consent form and return it by mail or e-mail (PDF).

Unlikely to the convocation notice, there is no deadline for sending such proposal to the shareholders. In other words, it is possible to pass a resolution on the same day as the proposal is sent, if the company can gather the consent from all shareholders.

The date on which a resolution or report to have been made is “the date on which all consent forms are received” from the shareholders. For example, if a letter of consent is received from Mr. A on April 1st and received from Ms. B (all shareholders) on April 15th, the date of resolution is April 15th. Therefore, in the same situation, if a company want a particular resolution to be effective on April 20th (after the reception of all consents), such effective date need to be included on the proposal letter.

Sample Statement of the Proposal letter

Note: There are different interpretations as to whether the procedure for determine this proposal at directors / board of directors meeting is mandatory or not. However, considering the risk of cancellation of the resolution, it is highly recommended to go through the decision-making procedure as principle.

Conclusion ヾ(*´∀｀*)ﾉ 

✓Once the consent of all shareholders is obtained, the procedures for convening a general shareholders’ meeting, resolutions, and reports can be omitted (Except when a written or electronic voting method is adopted).

✓ The directors/ Board of Directors meeting for convening the general meeting of shareholders shall not be omitted.

The above methods are useful, for example, in the following cases:

(1) When a shareholder or a director is living in overseas and cannot participate in the meeting.

(2) When it is difficult to coordinate schedules with shareholders

(3) When a instant resolution at a general meeting is needed.
(Using the above method III, a resolution can be passed in one day.

Of course, all of the above methods require the consent and attendance of “all” shareholders”, so it cannot be used if even one of the shareholders is opposed or cannot be contacted. However, if, for example, an overseas corporation has a 100% owned subsidiary in Japan (i.e., if it is certain that all shareholders’ consent will be obtained), it is safer to use the abbreviated resolution procedure (above III) than to hold the actual meeting by following the strict convening regulations.

MK@ 04/21/2022