TOKYO -- Japan will encourage companies to be flexible in holding annual shareholders meetings as the coronavirus outbreak disrupts preparation of earnings reports.
The government has already extended the deadline for yearly financial statements to September. In light of this, a financial watchdog and business representatives have decided to allow companies to postpone general shareholders meetings or hold them in two parts.
A group including the Financial Services Agency and the Japan Business Federation lobby, or Keidanren, is set to issue a statement endorsing this policy on Wednesday.
The aim is to protect not only investors, but also employees and auditors who could be put at risk by rushing to complete financial reports as the outbreak spreads.
Delaying annual meetings is permitted under Japanese law. But to do so, a business must also change the record date -- the date on which shareholders must hold stock in order to exercise voting rights and be entitled to dividends. Companies are often reluctant to take this step, since investors will not receive dividends when expected.
The law also allows for general shareholders meetings to be split into two parts, although this is almost never done in Japan. For example, a company could hold a meeting by the end of June to handle such matters as board appointments and dividends, then another to approve its financial statements.
The upcoming statement will tout this as an option as long as the second meeting is held within a "reasonable time frame," seen as two to three months.
Separately, the Ministry of Economy, Trade and Industry also issued guidance recently that would in effect allow for virtual shareholders meetings and recommended that companies allow stockholders to exercise their voting rights in advance.
In the guidance posted on the website, the economy and trade ministry says companies can limit the number of attendants at shareholders meetings in order to ensure safety. It also says a meeting can be held without shareholders actually present.