REGULATORY INSIGHT

Beneficial shareholder identification and virtual-only meetings under Japan's Companies Act review — the records listed companies would keep

22 October 2026

Who has to show what, and from when

The Legislative Council’s subcommittee on the Companies Act (shares and shareholder meetings) produced an interim proposal in March 2026 and, after public consultation, began work towards its final proposals at its 18th meeting on 30 September. A bill is expected to go to the Diet no earlier than 2027; no date of enactment or effect has been set.

Two of the measures under review are worth understanding now: identification of beneficial shareholders, and virtual-only shareholder meetings. Both are built so that what the company knew, and what it recorded, will be questioned after the event. Custodians and overseas institutional investors holding Japanese listed shares would be on the receiving end of the first. What follows are proposals in subcommittee papers; the final content may change.

What the subcommittee papers propose

• Identification on the company’s request: a listed company could ask intermediaries registered as shareholders (domestic and overseas custodians and the like) for the names, corporate numbers, addresses and shareholdings of the next intermediaries and of those who can direct the exercise of voting rights. Intermediaries would have to pass the request down the chain, and the requesting company would bear the cost
• A duty on beneficial shareholders to notify: beneficial shareholders above the large shareholding reporting threshold (over 5%) would have to notify the company, with a properly filed large shareholding report treated as notification
• Consequences of breach: a non-penal fine for wilful or grossly negligent failure to provide information or for false information. One proposal would allow voting rights on shares in breach above a set percentage to be suspended at meetings dealing with director elections, reorganisations and the like — with the burden of proof on the company
• Virtual-only meetings: currently available only to listed companies confirmed by ministers under the Industrial Competitiveness Enhancement Act. The proposal would place them in the Companies Act and make them available to all stock companies, subject to provision in the articles and other requirements
• Communication failures and annulment: where reasonable measures against communication failure were in place, a failure would be grounds for annulling a resolution only if caused by the company’s wilful misconduct or gross negligence, or if it affected the resolution
• Communication records: a record of the meeting’s communications would be created and kept (two years in the proposal), and shareholders could ask to inspect and copy it

Where it gets difficult in practice

1. Answers to an identification request come back through several layers of intermediaries. Unless each request records which intermediary was asked, when, and what came back by which route, the company cannot meet its burden of proof when it relies on non-response to suspend voting rights
2. The information obtained only means something when matched against large shareholding reports and the shareholder register. Unless the register at each record date, the responses and the reports are kept aligned in time, breach cannot be determined
3. To use the safe harbour, the company must show that reasonable measures were in place. The measures taken in advance, when a failure began and how far it reached, and how the chair decided must all be reconstructable after the meeting
4. Once communication records are open to inspection and copying, the company will be asked to account for their completeness and integrity. Relying on the streaming provider’s logs leaves the company unable to vouch for them for the whole retention period

Carry it by hand, or build it in

There are two ways to meet a requirement like this. One is to carry it by hand: write the procedures and have people check and record. The other is to build in a mechanism that leaves the record you will be asked for as a matter of course.

The first is quicker to start, but it breaks down as the procedures and the people involved multiply. Exceptions accumulate, the granularity of the record drifts, and you lose the ability to establish the scope afterwards. The second puts the design effort up front, but keeps you able to check after the event.

We research and develop technology that carries conformity with regulation as a mechanism rather than as manual routine, and we hold the results as patent applications. See Domains for more.

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