JAPAN Trends and Developments Contributed by: Yo Ota and Bonso Morimoto, Nishimura & Asahi
any explicit determination as to the length of time that may be secured to explore potential competing bids. Therefore, it is necessary to ascertain, on a case-by- case basis, how long target companies may obtain additional negotiation periods for by implementing takeover defence measures. Necessity of Investigating Beneficial Shareholders With the recent intensification of shareholder activism, there is renewed recognition of the need to identify “beneficial shareholders” who actually exercise influ- ence through shareholder proposals and proxy vot- ing. In general, for individuals and ordinary business corporations, the shareholder whose name appears in the shareholder register is deemed the beneficial shareholder. However, with respect to other types of shareholders, listed companies may in some cases be unable to ascertain the beneficial shareholder, since the identities of the beneficial shareholders behind nominee shareholders do not clearly appear in the shareholder register. In some instances, there is a risk that campaigns contrary to the common interests of general shareholders may be initiated by activist funds pursuing short-term profits or by institutional inves- tors with opaque or undisclosed investment inten- tions. Accordingly, it is desirable for listed companies to identify on an ongoing basis the beneficial share- holders behind nominee shareholders. Although the need for listed companies to scrutinise the identity of beneficial shareholders is increasing, they currently have no effective means of doing so. To address this situation, as part of an amendment to the Companies Act, discussions are currently under way at the Ministry of Justice’s council regarding the establishment of effective means to identify beneficial shareholders behind nominee shareholders. In addi- tion, on 26 June 2025, the Financial Services Agency (FSA) amended Japan’s Stewardship Code (which applies if a shareholder voluntarily chooses to adopt it) to set out new guidelines for improving the transpar- ency of beneficial shareholder identification. Principle 4-2 of the amended code provides that financial insti- tutions should: • in response to requests from investee companies, explain how many shares they own or hold in the company; and
• disclose in advance a policy on how they will respond to such requests, in order to facilitate constructive dialogue. Although the principle is not legally binding, the need to identify beneficial shareholders is expected to grow further in the context of constructive dialogue between investee companies and investors. Submission of an Annual Security Report Before the Date of the Annual General Shareholders’ Meeting Previously, in practice, many listed Japanese com- panies submitted their annual securities reports only after the conclusion of their annual shareholders’ meetings, taking into account the time required for audit procedures. Among listed companies that held their annual general shareholders’ meetings in June 2024, only about 3% submitted their annual securi- ties reports beforehand. With respect to this practice, there have been persistent requests – especially from foreign institutional investors – for annual securities reports to be made public before the date of annual shareholders’ meetings. This would allow sharehold- ers to engage in dialogue with the management of list- ed companies during the meetings and provide them with sufficient information to decide whether to vote in favour of the matters proposed by the companies. In light of these circumstances, on 28 March 2025, the FSA – in the name of Mr Katsunobu Kato, Minister of State for Financial Services – issued a request to all Japanese listed companies to submit their annual securities reports prior to holding their annual general shareholders’ meetings. The Minister stated that: • it would be most desirable for annual securities reports to be submitted at least three weeks before the date of annual general shareholders’ meetings; and • starting this year, listed companies should consider submitting their annual securities reports at least one day – and preferably several days – prior to the date of the meetings. Based on the request, during the 2025 annual share- holders’ meeting season, approximately 55% of all listed companies published their securities reports in
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