Japanese Government Mulls Liberalization of Online-only Shareholder Meetings

Yomiuri Shimbun file photo
Employees of Kyushu Electric Power Co. greet shareholders to its general shareholders meeting in Chuo Ward, Fukuoka, on June 25.

The government plans to allow companies to hold their shareholder meetings totally online, and is considering the liberalization within fiscal 2021. The government expects that the liberalization can contribute to prevention of further spreading of infections with the novel coronavirus, because large numbers of attendees won’t need to gather at meeting venues.

The government also aims to make it possible for shareholders who live far from the venues to participate in the meetings, and plans to submit a bill to revise relevant laws for the purpose during next year’s ordinary Diet session.

The current Companies Law requires companies to set up physical meeting spaces when they invite shareholders to attend meetings. While there are precedents for shareholders participating remotely while the real meetings were being held in physical venues, the law does not permit online-only meetings.

According to Mitsubishi UFJ Trust and Banking Corp., 122 companies held shareholders meetings with both in-person and remote attendees in June, accounting for only 5% of companies that settle their accounts end-March.

A majority of the other companies held shareholders meetings in the conventional way, while taking measures to prevent infections. The extra costs involved in setting up a video streaming system seemed to be a cause of reluctance.

The United States and some other countries allow shareholders meetings to be totally online. Germany and France have relaxed the regulations for limited periods of time as measures to cope with the novel coronavirus crisis.

In a speech delivered Dec. 16, Prime Minister Yoshihide Suga expressed willingness toward the liberalization. “I want to realize a swift digitization of all of Japanese society, such as making shareholders meetings online,” he said.

Many companies have welcomed the move. Gree Inc., a major internet service company, held this year’s shareholders meeting combining real and online attendances. Next year, Gree aims to hold its meeting totally online.

A Gree official said, “If the obligation to set up a real venue is omitted, the result will be a huge reduction in costs, and shareholders living in provincial regions will be able to participate.”

At SoftBank Group Corp.’s shareholder meeting this year, Chairman and President Masayoshi Son did not appear on the podium, and instead attended via a teleconference system.

However, there are shareholders who want to directly meet the top managers. A spokesperson of the company said, “A wide range of considerations are necessary over how to hold [shareholders meetings] from now on.”

To shift to totally online meetings, companies have to improve their communications systems so that video streaming is not interrupted. Also there are cases that shareholders judge whether to support or oppose proposals after listening to debates on the day of a shareholders meeting.

Thus companies need to not only distribute live video images but also have systems to tabulate the voting rights via the internet.

Masahiro Nakagawa, an official of Mitsubishi UFJ Trust and Banking Corp.’s corporate consulting department, said, “The government needs to clearly present measures that companies need to take, such as preparing two or more internet lines.”