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How to issue class shares without voting right in company in Japan

In the case you manage joint stock company in Japan and you have investor in your company, if the investor own majority of voting right, your status is unstable.
Assumed that you want to make a joint stock company with capital amount of 20 million yen.

You only want to invest 5 million yen and other investor ( your sponsor ) contributes 15 million yen.

If this company issue shares of equal voting right, your sponsor can posses majority of voting right in shareholder’s meeting.

Even if you become representative director of this company and find customers, once your sponsor wants to dismiss you from this company, it is possible without your consent.

So, your status is unstable.

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Even if shareholder other than you  possess only small ratio of total shares issued, in order to convene shareholders meeting, you need to notify these minority shareholders.
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However, if this company is a Company without Committees nor Public Company, it can issue shares without voting right without limitation.
( Most of company who is managed by family is not public company. )
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In order to make your company non public company, your company needs to enact this sentences in articles of incorporation.

(Shares with restriction on transfer)
Article 〇  All the shares to be issued by this company shall be shares with restriction on transfer and approval by the company shall be required to obtain the shares.

However, such approval is not required when any transfers are conducted to shareholders of this company.


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In the case a stock company does not enact stipulation above mentioned, this company is called ” Public company “.

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In other words, in the case a shareholder ( Nancy ) of stock company Z can transfer her shares to other person without approval of the company Z, this company is called ” Public company = Kokai kaisha = 公開会社 “.

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So, in the case a stock company is a company without committee nor public company, this company can issue shares with voting right to you and shares without voting right to your sponsor.
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On the other hand, in the case of public company or a stock company with committee ( Iinkai secchi kaisha = 委員会設置会社 ), the number of shares without voting right should be 50% or less of  all shares.
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In order to issue shares without voting right, you need to enact it in article of incorporation ( Teikan ) .

For example,

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(Total number of issuable shares and Total number of issuable class shares )

Articles 10 The total number of shares that the company is authorized to issue shall be 1000.

10-2             The total number of each class of shares that the company is authorized to issue shall be as follows.

1  Ordinary shares : 500

2 Class A preferred shares ( Yusen kabu A )  : 500
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When your company look for prospective shareholders of shares of without voting right, they will demand some reward.
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So, your company can enact this article.
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( Preferred Dividends )
Articles 11
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In the event that the company pays year end dividends set forth in Article 30 hereof, the company shall, in preference to the shareholders of the ordinary shares, pay to the holders of the preferred shares.

( Voting right )
Articles 12

Preferred shareholders shall not have voting right in general meeting of shareholders.
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However, even if this Articles 12 is enacted, Preferred shareholders have still voting right in general meeting of preferred shareholders.

If your company wants to remove such voting right, it should be also enacted in articles of incorporation.
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And matters above mentioned is matters to be registered in commercial register.
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So, when your company has determined these articles, your company needs to file registration of these items within 2 weeks from determination.
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