February 4, 2025
TOKYO – The government will ease regulations on online-only shareholder meetings, it has been learned.
Such shareholder meetings were first allowed during the COVID-19 pandemic due to the circumstances, and the government will now revise the Companies Law to encourage the holding of online-only shareholder meetings, according to sources.
The Justice Ministry will consult the Legislative Council, an advisory body to the justice minister, before the end of this month.
GRAPHICS: THE YOMIURI SHIMBUN
Under the law, when companies hold shareholder meetings, they are required to designate a location where shareholders can attend. Due to this requirement, online-only shareholder meetings were previously not allowed.
However, the government revised the law on strengthening industrial competitiveness in 2021 following the outbreak of the novel coronavirus. Under the revised law, companies may be allowed a special exemption to hold online-only shareholder meetings. However, they must amend their articles of incorporation to allow for such meetings, undergo government screening and obtain confirmation from the justice and economy ministers.
Online-only meetings make it easier for shareholders located in regional cities and foreign countries to participate, and allow companies to save on venue costs. In the United States, online-only shareholder meetings are common.
At present, however, online-only meetings can be taxing to organize. The current application procedures, for example, take up to about three months. Additionally, if some shareholders have issues connecting to the meeting and are not able to join in the decision-making process, a resolution might be canceled.
Of the 4,059 listed companies, only 71, or 1.7%, had introduced online-only shareholder meetings as of the end of November, according to ICJ, Inc., a company that holds a stake in the Tokyo Stock Exchange.
The Legislative Council reportedly will discuss revising the part of the Companies Law that requires companies to designate physical venues, and examine eliminating the need to obtain confirmation from the ministers. The council is also expected to make rules related to connectivity issues and consider measures for elderly shareholders who do not have internet-ready devices. The council will compile a draft bill, with the aim of submitting the bill to the Diet as early as possible.