February 26, 2020
*Note: The overview of the guidelines (English version) was posted on May 22, 2020
The Ministry of Economy, Trade and Industry (METI) hereby releases the “Guidelines on Approaches to Hybrid Virtual Shareholder Meetings” (hereinafter referred to as the “guidelines”), which clearly describe approaches that companies should take in conducting hybrid virtual shareholder meetings* (in particular, legal and practical challenges and specific methods), The guidelines were formulated based on the discussions held by the Study Group on Proxy Process and shareholder Meetings in the New Era.
The term “hybrid virtual shareholder meetings” refers to physically-conducted shareholder meetings attended by board members and shareholders in which shareholders who are not physically present at the meetings are able to virtually participate over the internet or through other means.
It is considered effective and important for companies to hold regular, constructive dialogues with shareholders and investors in order to achieve sustainable corporate growth and improve mid- to long-term corporate value. From this standpoint, METI, focusing on shareholder meetings as decision-making bodies for companies, has been developing environments that will encourage companies to hold year-round constructive dialogues with shareholders.
In the past, METI’s discussions on ideal corporate approaches to holding shareholder meetings were insufficient compared to those on proxy process. To address this situation, in September 2018, it inaugurated a Study Group on Mid- to Long-term Challenges in Proxy Process and Shareholders Meetings and the study group held discussions. In May 2019, the study group compiled the “Draft Report by the Study Group on Mid- to Long-term Challenges in Enhancing Processes Involving Dialogue-type Shareholder Meetings - Summary of Issues Involving Hybrid Virtual Shareholder Meetings,” based on their discussions. In response, METI released the draft report and opened a call for public comments.
The Growth Strategy Follow-ups, which is a policy ratified in a cabinet decision in June 2019, upholds that “Aiming to develop optimal environments for company-shareholder dialogues from global perspectives, Japan should compile a list of ideal approaches to making use of new electronic methods for improving interactions at shareholder meetings by around the fall of 2019 and it also should continue to hold discussions on ideal approaches to year-round company-shareholder dialogues, bearing in mind the current situations in other countries.”
In light of these goals, in September 2019, METI inaugurated the Study Group on Ideal Approaches to Processes Involving Shareholder Meetings in the New Era. The study group held discussions toward formulating the guidelines, while taking into consideration the results of the call for public comments.
2. Overview of the guidelines
The guidelines are meant for companies studying the convening of hybrid virtual shareholder meetings. They explain specific approaches to holding such meetings that take into account legal and practical challenges and provide grounds on which these approaches are permissible.
The guidelines also present two categories of hybrid virtual shareholder meetings: “hybrid participation-type” and “hybrid remote attendance-type” based on whether or not participation of shareholders in shareholder meetings over the internet or through other means are considered to constitute “attendance” under the Companies Act. The guidelines show approaches to conducting these two types of meetings.
The guidelines aim to provide additional options for companies as example methods for holding shareholder meetings. But they do not provide specific recommendations for using any one particular example method of holding shareholder meetings over the others.
*Note: The “Hybrid participation-type" shareholder meeting is not considered “attendance” of the meeting under the Companies Act. For example, under “hybrid participation-type”, shareholders can view shareholders meetings on the internet but cannot vote during the meeting. Therefore, companies should announce that shareholders can vote by mail or by electric means before the date of the shareholders meeting in advance.
3. Results of the call for public comments
From December 26 (Thur.), 2019, to February 7 (Fri.), 2020, METI received public comments on Draft Guidelines on Approaches to Hybrid-type Virtual Shareholder Meetings.
- “Call for Public Comments on Draft Guidelines on Approaches to Hybrid-type Virtual Shareholder Meetings to Open” (press release on December 26, 2019)
As a result of the call, METI received comments from 6 individuals and associations. METI highly appreciates the generous cooperation of these individuals and associations.
For the outline of the major comments and METI’s approaches to them, see Appendix 3, titled “Results of the Call for Public Comments on the Draft Guidelines.”
4. Future actions
The Study Group on Ideal Approaches to Processes Involving Shareholder Meetings in the New Era has been advancing discussions on development of environments that will encourage companies to hold additional dialogues with shareholders in light of the institutional systems recently developed in Japan and overseas and the accumulation of business practices. The study group will compile a report of the results of the discussions and METI will release the report.
- Overview of the guidelines (PDF:218KB)
- Guidelines on Approaches to Hybrid Virtual Shareholder Meetings (in Japanese) (PDF:1,166KB)
- Results of the call for public comments (in Japanese) (PDF:212KB)
Division in Charge
Corporate Accounting, Disclosure and CSR Policy Office, Economic and Industrial Policy Bureau