With the peak of annual shareholders meetings coming in two months, companies in Japan are weighing the possibility of livestreams or online attendance with voting to lessen the risk of coronavirus infections.
Face-to-face shareholders meetings with board members and investors are the norm in Japan.
The country’s corporate law requires companies to set a physical venue for the meeting. But the government recently released instructions and confirmed that online options are legal as long as companies hold a meeting at a physical location.
Following the government’s push, and amid the deepening coronavirus crisis, some companies are seriously considering these hybrid meetings.
For one, information technology company Asteria Corp. is thinking about letting its shareholders watch the livestream, ask questions and cast their votes via the internet for its meeting to be held in June.
Last month, software developer Fuji Soft Inc. was reportedly the first in the country to allow shareholders such a level of online participation.
Although Asteria has already streamed its meetings, it would be a first for the company to invite questions and voting online during the meeting, using blockchain technology to reinforce security.
Given the pandemic, “We’ve just started thinking of hosting a meeting where the whole process can be done without shareholders’ physical attendance,” said President and CEO Yoichiro Hirano.
To meet the legal requirements, the company would still prepare a location. This year Asteria has also decided not to hand out gifts to those who do show up in person — breaking with its custom of showing gratitude to investors.
The stipulation in corporate law that businesses must have a physical venue for shareholders meetings precludes them from going virtual-only.
But in late February, the Ministry of Economy, Trade and Industry made clear that the hybrid-type of shareholders meetings — held both in person and online — are permissible under the law.
In light of the safety concerns over the virus, the economy ministry, together with the Justice Ministry, issued a guideline on April 2. It says companies can restrict the number of stockholders in attendance at a physical venue and host a meeting without them there.
While uncertainty as to how long the coronavirus threat will last makes the postponement of a shareholders meeting difficult, the statements have given companies like Asteria a tailwind to pursue online plans.
Video conferencing service provider V-cube Inc. is currently developing a service enabling livestreaming and voting during shareholders meetings, aiming to launch it in June. The company has received inquiries from 20 to 30 listed companies in just the past week or two, according to spokesman Kohei Takami.
Chieko Matsuda, professor of corporate strategy at the Tokyo Metropolitan University’s graduate school, expects the numbers of companies that will introduce livestreams for the general shareholders meetings in June “would grow dramatically,” due to the need for coronavirus precautions and lower technical hurdles. Or at least, many are exploring the possibility, she said.
In cases where a physical meeting becomes less feasible, the simplest solution for companies, she said, would be to host the event in a tiny meeting room in their office and stream it, while asking investors to vote in advance.
The coronavirus, may be a game-changer, albeit an unfortunate one. But even without the pandemic, exclusively in-person meetings increasingly seem out of place in an internet-connected world.
“Taking the meetings online is very much in the interests of stockholders, especially those who live far away. In this sense, I think this move is progressing,” said Matsuda.
She also mentioned that the virus outbreak could change the practices around physical meetings as well. As companies have decided not to hand out gifts to investors to reduce the risk of infections, Matsuda noted, this might lead to the abolition of the tradition.