JAPAN Law and Practice Contributed by: Akira Matsushita and Hideki Ben, Mori Hamada
entitled to vote, unless otherwise provided for in the articles of incorporation. Many listed companies have eliminated the quorum requirements for ordinary reso - lutions by setting forth such provisions in their articles of incorporation; however, under the Companies Act, for certain agenda items, including elections or dis- missals of directors, quorum cannot be eliminated and must be at least one third of the votes of the share - Certain important matters – such as amendments to the articles of incorporation and the issuance of new shares (excluding those which may be carried out by a resolution at a board of directors’ meeting), mergers, share exchanges, company splits, share transfers or material business transfers (excluding those to which a short-form or small-sized exception is applied) – must be resolved by an extraordinary resolution made by a majority of two thirds of the votes of shareholders present at a general shareholders’ meeting, with the required quorum being shareholders holding a major- ity of the votes of the shareholders entitled to vote being present, unless otherwise provided for in the articles of incorporation. Many listed companies have decreased the quorum for extraordinary resolutions from a majority to one third of the votes of the share- holders entitled to vote by setting forth such provi- sions in their articles of incorporation. Other Special Matters The Companies Act also provides stricter require- ments for resolutions for certain limited matters. 2.7 Types of Resolutions and Thresholds holders entitled to vote. Extraordinary Resolution As discussed in 2.6 Quorum, Voting Requirements and Proposal of Resolutions , the Companies Act generally provides for certain types of resolutions that must be voted on, thresholds for those resolu - tions and which type of resolution is necessary for a particular agenda. 2.8 Shareholder Approval In a company that does not have a board of directors, any matter regarding a company can be resolved at a general shareholders’ meeting of the company. By contrast, in a company that has a board of directors, a general shareholders’ meeting can only resolve mat-
ters that are stipulated for this type of meeting in the Companies Act and in the company’s articles of incor- poration, as the execution of operations of the com- pany is generally delegated to the board of directors. It is the general rule that matters material to the com- pany, or its shareholders, require shareholder approval to be obtained pursuant to the procedures set out in the Companies Act. Generally, shareholder approval for agenda items must be obtained by calling a gen- eral shareholders’ meeting; if all shareholders of the company consent in writing to agenda items to be resolved at the meeting, a resolution is deemed to have been approved. The required percentage of the approval differs depending on the type of the resolu- tion, as discussed in 2.6 Quorum, Voting Require- ments and Proposal of Resolutions . 2.9 Voting Requirements In order to pass a resolution, a certain number of votes for the agenda item is required, as discussed in 2.6 Quorum, Voting Requirements and Proposal of Resolutions . As a general rule, companies are not required to adopt any specific method of counting the votes, and they are allowed to use a method that is reasonable depending on the situation. Thus, voting may be con- ducted by clapping hands or a show of hands. For shareholders who are unable to attend the meet - ing to cast votes, the company may provide voting cards and electronic voting cards. Shareholders are also allowed to vote by proxies but many listed com- panies in their articles of incorporation restrict the recipient of a proxy to another shareholder of the company. Under the Companies Act, if a company has more than 1,000 shareholders who have the right to vote, the company must use voting cards unless it sends shareholders proxy cards with the convoca- tion notice pursuant to the Financial Instruments and Exchange Act (FIEA). 2.10 Shareholders’ Rights Relating to the Business of a Meeting Unless otherwise provided for in the articles of incor- poration, a shareholder of a public company with a board of directors who own – consecutively for the
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