Public Notice: Which method of public notice should we choose?

The method of public notice to be chosen

All Kabushiki-Kaisha (KK) may stipulate following three methods of public notice in their articles of incorporation (Companies Act Article 939, Paragraph 1).
(1) By official gazette (Kanpo)
(2) By publication in a daily newspaper
(3) By electronic public notice.
* Note: If none of the above is stated in the Articles of Incorporation, then (1) is selected automatically.

Many of my clients often think that above (3) is the most convenience method, yet in fact, around 80% of Japanese KKs stipulates it as (1) by Official Gazette. Each method has its own advantages and disadvantages, so it is advisable to choose the method that best suits your company’s business plan.

Three Options of the method 

Official Gazette

The official gazette is a paper/ electronical public notice published by the Japanese government. In the circumstance where a new law or regulation is promulgated, the provisions will be first published in the official gazette. Additionally, the names of political parties during elections and information on companies that have been ordered to begin bankruptcy proceedings are also published here.
If you want to have a gender to the actual content, it can be viewed on the Internet for free without membership registration: https://www.npb.go.jp/en/books/kanpo.html (only in Japanese)

*Double public notice is a procedure that allows a company to omit individual notification to creditors when creditor protection procedures must be taken( ex. Capital reduction, merger, etc.)  by publishing the statutory public notice with the combination of official gazette and daily newspaper or electronic public notice. Therefore, if you choose the Official Gazette as the method, the individual notification cannot be omitted.

POINT: The reasons for the popularity of this method are because it is relatively inexpensive and also the companies do not have to publish the all the content of their balance sheet. On the other hand, the overall duration will be longer compering with the electronic public notice; therefore you must be careful about the time schedules in the case of procedures for which one (or two) months prior notification of statutory public notice is required.

Daily newspaper

This method is to publish in a Japanese daily newspaper. This can be a national or regional newspaper, but sports newspapers are not acceptable. It can also be an English-language newspaper, but must be established in conjunction with a daily newspaper or other methods.

Points: The daily newspaper method tends to be expensive, so it is not recommended to use this method from the beginning of the company’s establishment. However, of the three methods, the number of readers will probably be the largest.

Electronic public notice

This method is to post the information on the Website (not limited to the company’s own website). It is not necessary to include the URL in the Articles of Incorporation, but it must be registered in the corporate registry.

Points: The advantage of electronic public notices is that there is no time lag between the date of application for publication and the date of actual publication. Therefore, it can be very effective in situations where the procedures such as capital reduction must be done promptly. In addition, it is inexpensive to publish an annual publication of Settlement of Accounts.
However, the disadvantage of the electronic public notices is that it must publish the full content of balance sheets, and that the information must remain available to the public for five years.

It is also important to note that an public notice survey is required for the statutory public notices. For example, in order to carry out a capital reduction procedure, a statutory notice must be published at least one month prior to the effective date. If the public notice was posted on the website, it is necessary to order a specialized agency to issue a certificate proving that the notice was posted for one month without any server downtime during the process.

*Even if the articles of incorporation stipulate that electronic public notices are to be used, it is possible to use electronic public notices only for settlement of accounts, while statutory public notices are published in the official gazette. In this case, however, individual notice to creditors cannot be omitted.

Good and bad examples for stating public notice(´-ω-`)

MK@ 03/21/2022