JAPAN Law and Practice Contributed by: Akira Matsushita and Hideki Ben, Mori Hamada
2.14 Written Resolutions Shareholders can pass a resolution without holding a meeting if: • directors or shareholders submit a proposal of the matter to be resolved; and • all shareholders who have a right to vote on such matter agree to such a proposal in writing or in an electronic or magnetic record (Article 319 of the Companies Act). 3. Share Issues, Share Transfers and Disclosure of Shareholders’ Interests 3.1 Share Issues A private company can issue new shares to either its shareholders or third parties by an extraordinary reso- lution at a general shareholders’ meeting. However, if a private company grants rights to its shareholders to receive an allotment of shares, and if its articles of incorporation provide as such, it can issue such shares to the shareholders without the approval of a general shareholders’ meeting. A public company can generally issue new shares to either its shareholders or third parties by a board reso- lution to the extent of the number of shares authorised in its articles of incorporation. However, if the issue price for such new shares is particularly favourable to subscribers, a public company must obtain approval by an extraordinary resolution at a general sharehold- ers’ meeting for such share issue. Also, if subscribers would own a majority of total voting rights as a result of a third-party allotment, and if shareholders hav- ing 10% or more of total voting rights give a notice to the effect that they dissent to such allotment, the company would be required to obtain approval at a general shareholders’ meeting – unless the company’s financial condition has deteriorated greatly and there is an urgent necessity for such allotment in order for the company to continue in business. If the share issue violates laws and regulations or the articles of incorporation, or is affected by a method that is extremely unfair and shareholders are likely to suffer a disadvantage, shareholders may demand that
the company cease the share issue (Article 210 of the Companies Act). 3.2 Share Transfers As a general rule, shareholders may transfer their shares to a third party. However, in many private companies, their articles of incorporation provide that any transfer of shares requires approval of the company (by approval of the board of directors or a general shareholders’ meeting, which is determined in accordance with the type of company and the law or the articles of incorporation). The shareholder may request the company to purchase the shares, or to procure a person designated by the company to pur- chase the shares, if the company does not approve the transfer. The purchase price of this transfer will be determined by an agreement between the shareholder and the purchaser. If they cannot reach an agreement, the court will determine the price upon a petition by the shareholder or purchaser. As discussed in 4.2 Buybacks , shareholders may also transfer their shares to the company in accordance with certain procedures provided in the Companies Act, and the buyback of shares by the company is subject to the distributable amount of the company. As discussed in 3.4 Disclosure of Interests , certain acquisitions of shares in a Japanese company may require the filing of a prior or post-acquisition notifi- cation with the regulatory authority, or the permission thereof. 3.3 Security Over Shares Shareholders may establish pledges over their shares. Procedures to establish and perfect the pledges vary, depending on the types of pledges and on whether the company is one that issues share certificates or whether shares of the company are listed (ie, book- entry transfer shares). 3.4 Disclosure of Interests A shareholder of a listed company must file a large- scale shareholding report with the relevant local finance bureau (which is available to and accessible by the public through the internet) within five busi- ness days of the shareholder’s shareholding ratio in the company exceeding 5% (Article 27-23, FIEA). The
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