JAPAN Trends and Developments Contributed by: Yoshitaka Sakamoto, Tsunemichi Nakano, Michi Yamagami and Hideo Tsukamoto, Anderson Mori & Tomotsune
What is most difficult about this proposal is whether it is appropriate to impose an obliga - tion on stock companies to investigate relevant information on beneficial shareholders. Issues to consider While, as noted above, the purpose of the sys - tem remains a matter of debate, other issues to consider in establishing the system as raised by the report and the outline of deliberations within the Institution over such issues, are as follows. • Scope of companies subject to the system – not to mention listed companies, should the system also apply to non-listed companies, in light of the purpose of the system? At the deliberation, there were opinions express - ing support for the system to apply to non-list - ed companies too, as the need for a dialogue between the company and its shareholders may occur for non-listed companies as well. On the other hand, there were also opinions expressing that the suspension of voting rights could be an excessive regulation if there is no need for it, and there should be investigation into whether there is a need for such regulation with non-listed companies. • Meaning of “beneficial shareholders” – should “beneficial shareholders” mean “those who have the authority to instruct on the exer- cise of voting rights that are attached to the shares” or should the definition also pay attention to rights beyond voting rights, such as rights to dispose of shares? At the deliberation, opinions focusing on the vot - ing rights of shareholders suggested that “ben- eficial shareholders” means “those who have the authority to instruct on the exercise of voting
rights that are attached to shares” . On the other hand, there were opinions expressing that “ben- eficial shareholders” should cover investors who are: instructing on the policy for exercising vot - ing rights; expressing their ex post facto opinion over or giving retrospective criticism on the exer - cise of voting rights; giving consents for exercis - ing the voting rights; and receiving reports on the results of exercising the voting rights. • Mechanism for companies to identify ben- eficial shareholders – is it sufficient for the system to allow for stock companies to request that the nominal shareholders provide relevant information on beneficial sharehold - ers, or should the system place the nominal shareholders under an obligation to investi - gate the ultimate authority holding the right to give instructions, and, thereupon, impose further obligation to provide the results of such investigation to the stock company? At the deliberation, while some opinions expressed the view that it would be sufficient to allow for stock companies to request that the nominal shareholders provide relevant informa - tion on beneficial shareholders, others pointed out the burden on stock companies having to individually request information from each authority holding the right to give instructions in order to identify the beneficial shareholder, as well as concerns regarding the practical usability of the system. • Scope of relevant information on beneficial shareholders that stock companies are enti- tled to request – is it sufficient for the system to allow for stock companies to request infor - mation necessary to identify the beneficial shareholder (ie, (i) full name of the individual or name of the entity, and (ii) address and oth- er contact information) as well as the number
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