JAPAN Law and Practice Contributed by: Hiroshi Mitoma, Tomohiko Iwasaki, Kosuke Hamaguchi and Akira Komatsu, Nagashima Ohno & Tsunematsu
4.5 Shareholders in Publicly Traded Companies
• supplementary statements to each of the forego - ing. When finalised, the financial statements and business report will ultimately be submitted to the company’s annual shareholder meeting for either approval or report to the shareholders. Requirements Under the FIEA Publicly traded companies (in this context, listed com - panies and other companies that are required to file annual securities reports under the FIEA) are required to prepare consolidated financial statements as well. In addition, under the FIEA, a publicly traded com - pany is required to submit an annual securities report, which must contain audited financial statements (con - solidated and non-consolidated) and be filed within three months of the fiscal year end. A publicly traded company is also required to submit a semi-annual report, which contains summary financial information and must be filed within 45 days of the semi-annual end. Financial information contained in semi-annual reports is required to undergo semi-annual review by the accounting auditor. Requirements Under the Stock Exchange With a view to providing more timely financial informa - tion to public shareholders, the TSE Regulations also require that Japanese listed companies publish annual and quarterly summaries of consolidated financial results. Accounting auditors’ review of financial infor - mation contained in such summaries is voluntary sub - ject to certain exceptions. The Tokyo stock exchange requests that such summaries be made public within 45 days of the quarterly end. 5.2 Corporate Governance Arrangement Disclosure Corporate governance arrangements are generally required to be disclosed in business reports. Matters to be disclosed include: • a summary of the company’s corporate govern - ance system, internal audit and statutory audit system, outside directors and statutory auditors and their relationships with the company; and • details regarding compensation, corporate indem - nification and D&O insurance.
For publicly traded companies, a bulk shareholding report system exists. A shareholder holding more than 5% of the outstanding shares, as calculated pursuant to the relevant regulations, is required to file a bulk shareholding report within five business days of it sat - isfying such requirements. Thereafter, as long as the shareholder satisfies the requirements, the sharehold - er is required to file updated reports when material changes occur with respect to the information con - tained in the report, including the case of an increase or decrease of 1% or more in the shareholding ratio. In this regard, some beneficial owners satisfying the criteria stipulated in the FIEA are deemed to hold the relevant shares, but such regulation is not necessarily able to capture the ultimate beneficial owners. In the case of institutional investors, some excep - tions exist to relax the reporting timing and reduce the reporting contents. In relation to disclosure/iden - tification of beneficial owners of the shares held by institutional investors, amendment to the Companies Act is now being discussed. Under the Stewardship Code, institutional investors should have a clear policy on voting and publicly dis - close the same. Additionally, under the Code, insti - tutional investors are expected to disclose voting records, including reasons for their voting decisions, for each investee company on an individual agenda item basis. 5. Corporate Reporting and Disclosures 5.1 Financial Reporting Requirements The Companies Act provides for annual financial reporting requirements for all joint stock companies. Following the end of each fiscal year, a joint stock company is required to prepare: • financial statements (consisting of a balance sheet, profit and loss statement, statement of changes in shareholders’ equity, and notes to financial state - ments); • a business report; and
392 CHAMBERS.COM
Powered by FlippingBook