A shareholder agreement refers to a contract between two or more parties who either jointly establish a corporation for a specific project or business or involve a new investor in an existing company. This agreement sets out the rights and obligations between shareholders concerning the operation of the company.
In a Japanese joint-stock company, corporate governance and management are generally carried out through shareholder meetings and the board of directors, applying the majority rule based on each shareholder’s equity ratio. Shareholder agreements create a privately negotiated framework for company management, distinct from the statutory governance structures. These agreements are especially crucial for protecting the interests of minority shareholders, who may otherwise be disadvantaged by majority rule.
Among the key elements often included in shareholder agreements are the right to nominate directors and the clause binding the exercise of voting rights. For instance, Shareholder A might have the right to nominate two out of four directors, and the other shareholders are contractually obligated to exercise their voting rights to ensure those nominees are appointed at the general shareholders’ meeting.
This post will focus on voting agreements in shareholder contracts, particularly in the context of recent discussions and court rulings in Japan that have addressed the validity and enforceability of such agreements.
Continue reading “Voting Agreements in Japanese Shareholder Agreements: Key Legal Insights for Foreign Investors and Startups”
JAPAN IN LAW 