Guidance for Shareholders’ Meetings of Unlisted Companies

Importance of Holding Shareholders’ Meetings for Unlisted Companies

We live in an age of strict compliance requirements. Even unlisted companies are required to hold shareholders’ meetings in compliance with the law. Many small companies may have prepared only the minutes of the shareholders’ meeting and submitted them to the Legal Affairs Bureau for registration of changes in directors and officers without actually holding a shareholders’ meeting. However, if a dispute over management control of the company arises, there is a possibility that a minority shareholder will file a suit for invalidity or nonexistence of the shareholders’ meeting or a claim for compensation for damages. If the shareholders’ meeting is not properly held, the resolution to elect directors will also be invalid, and the directors will be required to return any compensation they have earned to the company. In addition, the company may be sanctioned with a fine for failing to hold a shareholders’ meeting and neglecting the procedures for appointing directors (Article 976, Paragraph 1, Item 22 of the Companies Act), as well as imprisonment for not more than five years or a fine of not more than 500,000 yen for registering a director as a director when he/she has not been appointed as a director (Article 157, Paragraph 1 of the Penal Code). (Article 157, Paragraph 1 of the Penal Code).

Preparation for Operation of General Meetings in Unlisted Companies

At a general shareholders’ meeting in an unlisted company, it is necessary to confirm the addresses of shareholders using the shareholders’ register, prepare a notice of the general shareholders’ meeting, prepare a scenario for the general shareholders’ meeting, and prepare a set of questions and answers to be asked. This is simpler than in the case of listed companies. Many companies are expected to stipulate the exercise of voting rights in writing. In this case, it is necessary to prepare reference documents for the shareholders’ meeting and a voting document and send them together with the notice of convocation (Article 301, Paragraph 1 of the Companies Act).

Reserving the Venue for Shareholders’ Meetings

In unlisted companies, shareholders’ meetings are often held in the company’s meeting room, etc. However, if there is no appropriate place in the company, it is necessary to reserve a place outside the company. It is also necessary to confirm the venue’s route, including the reservation of space for holding the general meeting of shareholders and the secretariat space for the reception desk.

Preparation of procedures for shareholders’ meetings

Before holding a general shareholders meeting, it is important to confirm in writing what roles each board member and staff member will have on the day of the meeting and where and when they will meet. This will involve people in various roles, such as posting information boards from the nearest station to the venue, setting up the venue, reception, cloakroom, shareholder information desk, microphone operator at the venue, sound operator, emcee, person in charge of souvenirs, etc.

The day of the general meeting of shareholders

On the day of the shareholders’ meeting, the attorney will sit behind the chairperson’s seat as the secretariat, answering questions from the chairperson and advising on legal issues (making notes). They will also provide advice on whether or not a shareholder’s proposal should be ruled on as a motion, and when a resolution to terminate the meeting should be passed. In cases where there is a dispute between family members, there are often arguments about the proceedings of the general meeting, such as the election of the chairman, and the method of resolution, etc. If there is a possibility that a dispute may arise, it is necessary to record the day of the shareholders’ meeting and transcribe it to preserve it as evidence for a future court case. In such cases, it may be necessary to record the day of the shareholders’ meeting and transcribe it to preserve it as evidence for future trials.

Support after the conclusion of the general meeting of shareholders

In the case of an ordinary general meeting of shareholders, a meeting of the Board of Directors is held immediately after the conclusion of the general meeting of shareholders to elect a representative director, determine the order of the chairperson of the Board of Directors, determine that compensation is left to the representative director, and determine positions such as vice president, senior managing director, and managing director (internal job classification system), etc. Therefore, it is also necessary to prepare for this meeting. We also prepare the minutes of the shareholders’ meeting and carry out the registration procedures for changes in directors.

Support for Shareholders’ Meetings

Kuribayashi provides many of our advisory clients with guidance on the operation of shareholder meetings every year. Please contact Kuribayashi Law Offices, which has abundant experience in providing guidance for general shareholders’ meetings.

Attorney’s Fees for Shareholders’ Meetings of Unlisted Companies (excluding consumption tax)

Services	Fee
Basic Services Checking of notice of convocation, scenarios for AGMs, and question-and-answer sheets Attendance at the AGM rehearsal Attendance of the secretariat on the day of the AGM Advice on draft answers to preliminary questions	200,000JPY
Special projects When major revisions or drafts of the draft question and answer book are involved Case of a shareholder meeting where there is a dispute	400,000JPY