What is Kabunushi Soukai (Shareholders Meeting)
Annual Shareholders Meeting (定時株主総会 Teiji Kabunushi Soukai)
Every Kabushiki Kaisha has to hold Shareholders Meeting at least once a year within two or three months from the end of each fiscal year. This meeting is Annual Shareholders Meeting (定時株主総会 Teiji Kabunushi Soukai). Many companies hold Annual Shareholders Meeting in March or June. Because many companies stipulate in articles of incorporation that their fiscal year end on the last day of December or March.
As our another article explained, Shareholders meeting are necessary when company decides the amount of Executive Remuneration, too.
Extraordinary Shareholders Meeting (臨時株主総会 Rinji Kabunushi Soukai)
In addition, companies sometimes hold shareholders meetings if they needs to make a decision which requires resolution by shareholders meeting but they cannot wait until the next annual meeting. This meeting is called Extraordinary Shareholders Meeting (臨時株主総会 Rinji Kabunushi Soukai).
What Shareholders Meeting can Decide？
In a company without a board of directors, the shareholders meeting can make decisions on all matters related to the company.
In a company with a board of directors, on the other hand, the shareholders meeting can only vote on a limited number of matters listed in the Corporation Law and the Articles of Incorporation.
The matters listed in the Corporate Law include, for example, the election and dismissal of directors, the approval of financial statements and other important documents, and amendments to the articles of incorporation.
The powers of a shareholders meeting of a company with a board of directors are very small compared to those of a company without a board of directors.
The reason for this limitation on the authority of the shareholders meeting is based on the idea that, where a board of directors exists, the majority of the company’s decision-making should be delegated to the “board of directors,” which is a management expert, and that only matters of particular importance to the company should be decided by the shareholders meeting.
Invitation to Shareholders Meeting
To hold shareholders meeting, board of directors (or directors in case of companies without board of directors) need to decide (i) the date, (ii) place, (iii) matters to be resolved and (iv) other items.
Then, companies are required to issue invitation to each shareholder by 1 week (in case of non public company) or 2 weeks(in case of public company) prior to the meeting.
Quorum and Approval Rate Required
In order to make a valid resolution, the quorum and approval rate required by Japanese Companies Act have to be satisfied. The quorum and approval rate varies depending on the matters to be resolved.
For instance, ordinary resolution such as approval of financial statements shall be made by a majority of the votes of the shareholders present at the meeting where the shareholders holding a majority of the votes of shareholders who are entitled to excise their vote are present.
Whereas, Special Resolution such as change of articles of incorporation shall be made by a majority of two thirds or more of the votes of the shareholders present at the meeting where the shareholders holding a majority of the votes of the shareholders entitled to exercise their votes at such shareholders meeting are present.
Minutes of the Meeting
After shareholders meeting, companies have to make the minutes and keep them for 10 years. The Corporate Law governs the matters to be recorded in the minutes of shareholders’ meetings. For more details about preparation of minutes, please refer to our article titled “How to prepare Minutes of Shareholders Meeting in Japan“.
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