JAPAN Law and Practice Contributed by: Hiroshi Mitoma, Tomohiko Iwasaki and Kosuke Hamaguchi, Nagashima Ohno & Tsunematsu
amount of compensation of each director also needs to be disclosed. If the compensation is linked to performance, the KPIs used for the calculation of the amount of such compensa - tion, the reasons for choosing such KPIs or other prescribed details must also be disclosed. Furthermore, a listed company is required to dis - close the compensation of individual directors, statutory auditors and other officers in its annual securities report under the FIEA if the amount of such individual compensation is JPY100 million or more. In the case of a closely held company, while there is no such disclosure requirement, its financial statements may have to make available the total amount of compensation paid to its directors, statutory auditors and other officers. 5. Shareholders 5.1 Relationship Between Companies and Shareholders Shareholders, through their ownership of shares, have equity interests in a joint stock company. The basic and primary rights of shareholders are: • the right to receive dividends; • the voting right at shareholder meetings; and • the right to receive residual assets upon the liquidation of the company. Shares are issued only upon the full payment of the issuance price by a shareholder; according - ly, there exists no obligation of shareholders to make an additional investment/payment in their capacity as shareholders. Additionally, unlike in some other jurisdictions, it is generally con - strued that a controlling shareholder does not
owe any fiduciary duty in relation to the opera - tion of the company. Accordingly, in principle, the risk assumed by shareholders is limited to the equity amount invested in the company. However, in limited cir - cumstances, a doctrine to pierce the corporate veil exists pursuant to court precedent where the benefit of the corporate form is abused or the existence of the corporate form becomes a mere facade. While there is no publicly available record of the shareholders of a company, a shareholder or a creditor of a company can request inspection of the shareholders register that the company is required to keep under the Companies Act. 5.2 Role of Shareholders in Company Management Shareholders are not directly involved in the management of a company. Rather, shareholders, in their capacity as mem - bers of a shareholder meeting, vote on agenda items presented at the shareholder meeting and make resolutions on such proposed matters. In the case of a company with a board of directors, the shareholder meeting only has the power to make resolutions on the matters stipulated by law or stipulated in the articles of incorporation. Accordingly, it is not expected that a shareholder meeting will make resolutions regarding the day- to-day management of the company. Once a resolution is passed by a shareholder meeting, the directors of the company owe a duty to act in accordance with such a resolution. In the case that a director or a company is to take certain actions that are likely to adversely affect shareholders or the company, under limited cir -
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