JAPAN Trends and Developments Contributed by: Yoshitaka Sakamoto, Tsunemichi Nakano, Michi Yamagami and Hideo Tsukamoto, Anderson Mori & Tomotsune
against scenarios in which, for example, mul - tiple unidentified investors virtually buy up the shares behind the backs of nominal sharehold - ers, refuse to engage in dialogue with the com - pany, and instruct their nominal shareholders to exercise their voting rights, ultimately undermin - ing the common interests of shareholders. Details of the specific system The following proposals are under consideration, and discussions within the Institution revealed divergence of opinions for each option. • Proposal A – Stock companies are entitled to request a shareholder listed in the share- holder register to provide information as to whether or not there is a beneficial share - holder and, if so, to provide relevant informa - tion about such beneficial shareholder, and the shareholder who is so requested must provide such information within a specified period. Furthermore, the stock company may request the beneficial shareholder to provide information as to whether or not there is a further beneficial shareholder and, if so, to provide information about such ultimate ben - eficial shareholder, and the beneficial share - holder who is so requested must provide such information within a specified period. Those who fail to provide the information or provide false information will be subject to a civil fine. This proposal aims to have the system allow for the identification of beneficial sharehold - ers through the promotion of dialogue between stock companies and their shareholders, and attempts to design the system only to the extent necessary to achieve this purpose.
• Proposal B – Proposal B is largely the same as Proposal A above, but goes further, restricting the voting rights of those who fail to provide information or who provide false information at the next shareholders’ meeting held after the date on which the stock com - pany requested them to provide information (Proposal B-1). A derivative of Proposal B-1 (Proposal B-2) follows the same approach as Proposal A in imposing a civil fine on those who fail to provide information or provide false information, but further states that the stock company can restrict their voting rights from being exercised at the next sharehold - ers’ meeting if the exercise of voting rights by such nominal shareholders and the equiva - lent is deemed to significantly undermine the common interests of shareholders. While these proposals build on Proposal A, they establish rules to restrict the voting rights of those who fail to provide relevant information on beneficial shareholders, in order to ensure effectiveness. • Proposal C – An obligation is imposed on stock companies to investigate relevant information on beneficial shareholders, incor - porate such information into the shareholder register and make it available for disclosure through the inspection of the shareholder register. On top of this, the voting rights of those who fail to provide relevant informa - tion on beneficial shareholders are restricted, while at the same time those who are listed or recorded in the shareholder register as the holders of the authority for giving instructions are permitted to directly exercise their voting rights (including attending the shareholders’ meetings to propose agendas or to request explanations on specific matters) and other rights attached to the shares.
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