3.Corporate Matters and Procedure

In principle, a company is incorporated under the Companies Act and must observe various regulations thereunder. The main procedural matters under the Companies Act are convening and holding shareholder and board meetings, and preparation of minutes, management changes, relocation of the head office and amendments to the articles of incorporation. In addition, there are matters related to shares, such as the issuance of new shares, the grant of stock options, the issuance of bonds and stock splits.

AZX assists clients in all aspects of corporate matters, including consideration of necessary procedures, preparation of schedules, preparation of necessary documentation and registration procedure.

Q1　(Scope of Authority of Shareholders’ Meetings)

The shareholders’ meeting is the ultimate decision-making body, but does this mean that it can decide everything?

There are matters that cannot be determined at a shareholders’ meeting.

For a company without a formal board of directors, a shareholders’ meeting can resolve matters specified under the Companies Act and all matters related to the organization, operation and management of the company (Companies Act Article 295, Section 1). However, for a company with a formal board of directors, a shareholders’ meeting can resolve only those matters specified under the Companies Act and in the articles of incorporation (Companies Act Article 295, Section 2). Accordingly, for a company with a formal board of directors, a shareholders’ meeting cannot determine everything.

(Posted: January 27, 2012)

Q2　(Adding Directors)

We would like to add one more director to the board. If the new director will not be a representative director, is it sufficient to have the director affix his/her seal on the acceptance, without attaching a certificate of seal registration?

For a company with a formal board of directors, in the election of the representative director, under the registration procedure, the acceptance must be stamped with the registered seal and also be accompanied by a certificate of seal registration. However, this does not apply in the election of a director who is not a representative director.

On the other hand, for a company without a formal board of directors, the director’s acceptance must be stamped with the registered seal and also be accompanied by a certificate of seal registration.

(Posted: August 6, 2012)

Q3　(Citizenship of Representative Directors)

Can someone who is not a Japanese citizen become the representative director?

There is no special regulation on citizenship, so a foreign citizen can become a representative director. Previously, as practical matter, for registration purposes at least one representative director was required to have an address in Japan. But, currently, the application of this requirement has been ceased.

Q4　(Minutes in English)

We have a few foreigners among our directors and shareholders. Can we prepare our shareholder and board minutes in English?

The Companies Act does not contain any special restriction regarding the language of the minutes. However, without a specific regulation that permits foreign language documents, minutes prepared in a foreign language cannot be said to be valid. As a practical matter, for registration purposes this means a registration attempt with foreign language minutes attached would be rejected. So, it would be better to prepare the official minutes in Japanese, and prepare an English translation as necessary.

(Posted: January 27, 2012)

Q5　(Director Seals)

Is it necessary for all directors to affix their registered seals to shareholder and board minutes?

The Companies Act does not establish any special restrictions on affixing seals to minutes, so there is no problem in using a non-registered seal under the Companies Act. However, for registration purposes, such as in the change of a representative director, the registered seal and the company’s representative seal registered at the legal affairs bureau may be required.

Also, even if the minutes are not used for registration purposes, as an acknowledgement to the importance of the minutes as a document, the usual practice in Japan is for the representative director to affix the representative seal of the company, rather than having the directors affix their personal seals.

(Posted: January 27, 2012)

Q6　(Interested Transactions)

When a director has an interest in a matter, how should this situation be handled at the board meeting?

At a directors meeting, a director with an interest in a matter cannot be involved in the resolution for that matter (Companies Act Article 369, Section 2). That director is also excluded from the calculation of both the quorum and the denominator of the required vote,as to the resolution for that matter.

Also, if the chairman of the directors’ meeting is the interested director, he loses his authority to act as chairman for that proposal, and for that proposal another chairman must be elected.

(Posted: January 27, 2012)