On April 20, 2016, the ordinance amending part of the Commercial Registration Ordinance (the Ordinance of the Ministry of Justice No. 32 of 2016) (“Amended Ordinance”) was promulgated and will become effective as of October 1, 2016. Under the Amended Ordinance, Japanese companies must attach a list of shareholders as discussed below (“Shareholders List”) to certain types of applications for commercial registrations. The Amended Ordinance also clarifies the criteria to access such Shareholders List or other attached documents with the registration. This alert summarizes what will be changed under the Amended Ordinance.
What are the purposes of the amendment?
The ordinance will be amended to: (i) prevent forgery of minutes of shareholders’ meetings and secure the accuracy of corporate registrations; (ii) respond to pressures on the Japanese government from outside of Japan, to enable the government to collect information on the owners of Japanese companies; and (iii) help to solve disputes among related parties in regard to the validity of the shareholders’ resolution by clarifying the identities of the shareholders and the number of their votes.
What will be changed under the Amended Ordinance?
1.Required submission of a Shareholders List
a.When is submission of a Shareholders List required?
On and after October 1, 2016, stock companies (Kabushiki Kaisha or KK), investment corporations (toshi houjin), and special-purpose companies (Tokutei Mokuteki Kaisha or TMK) established under the Japanese law, must attach a Shareholders List to an application for corporate registration when a change in the corporate registration is made by either.
i. consent from all the shareholders (or class shareholders); or
ii. resolution by a shareholders’ meeting (or class shareholders’ meeting) to such change.
For example, when a company changes a director(s), statutory auditor(s), or its articles of corporation, or issues shares beyond the authorized number of shares, or changes its fundamental organization, the company must prepare a Shareholders List and submit it with its application for the amendment of its the corporate registration.
b. What information must be included in the Shareholders List? The Shareholders List must include the following information on either: (i) all the shareholders (or class shareholders) where consent from all the shareholders is required or (ii) the smaller number of the top ten shareholders with voting rights and the top two-thirds of the shareholders with voting rights:
i. Shareholder name;
ii. address of shareholders;
iii. number of shares held by the shareholders; and
iv. number of voting rights held by the shareholders.
With regard to the timing, the shareholders who can exercise voting rights at a shareholders’ meeting, and shareholders as of the reference day, (if such date was set by the company) will be the subject of the Shareholders List.
A sample Shareholders List in Japanese is listed at:<http://www.moj.go.jp/MINJI/minji06_00095.html>. The Shareholders List should be affixed with a representative’s seal as registered with a legal affairs bureau.
2. Criteria related to a request for accessing attachments to corporate registrations.
Now that the Shareholders List is included as an attachment to corporate registration applications and available for view, the following criteria related to a request for viewing attachments to corporate registrations (including the Shareholders List) will be added as of October 1, 2016:
a. when a person intends to view the attachments, he or she must specify the part of the document that he or she would like to view in an application for view (previously, only a document name was required for this purpose);
b. he or she must specify his or her address and the identity of his or her attorney, and the application form must be signed by him/her or affixed with his/her seal; and
c. certificate of his or her authority (such as corporate registration) and a document proving he or she has a legitimate interest must be attached to the application form. Regarding the legitimate interest, for example, when he or she is a shareholder of a Japanese company who did not get a notice of a shareholder meeting and would like to know whether he/she was listed as a shareholder in the Shareholder List who could vote for the shareholders’ meeting to see if the shareholders’ meeting could be rescinded or not, such person could be considered the person who has a legitimate interest in viewing a Shareholders List. Whether an inquiring person has a legitimate interest or not would be determined by a registrar on a case-by-case basis.
Japanese companies must generally apply for registration within two (when the application is made to a legal affairs bureau where a headquarters is located ) or three weeks (when the application is made to a legal affairs bureau where a branch is located) of a change in a registration matter (e.g. changes of a director(s), statutory auditor(s), its fundamental organization or its articles of corporation, or issuance of shares beyond the authorized number of shares). As those registration matters often require a shareholders’ meeting, preparing a Shareholders List will become another “to do” item for those responsible for corporate registration. Companies having more than one shareholder should discuss a flow and timeline and be ready to prepare the Shareholders List by October 1, 2016. Also, going forward, Japanese companies should be mindful that certain information on their shareholders may be accessed by a person or an entity that has a legitimate interest in the documents attached to the application form.