Japan Moves to End Paper Distribution of Shareholder Meeting Materials, Opening the Door to One-Share Investing?

[Financial News, Tokyo = Seo Hye-jin, correspondent] The Japanese government plans to abolish a system that requires companies to mail paper copies of shareholder meeting materials when requested by shareholders. The move is aimed at easing concerns that a lower stock trading unit could sharply increase the number of shareholders and drive up printing and mailing costs. It is also expected to speed up discussions on lowering the barrier to small-scale investing so that individuals can buy shares starting from just one share.
According to Nihon Keizai Shimbun, or The Nikkei, on the 25th, the Japanese government plans to submit a revision to the Companies Act to the ordinary session of the Diet as early as 2027, after discussions at the Legislative Council.
Since March 2023, listed companies in Japan have been required to disclose shareholder meeting materials online. However, the rule that companies must mail paper materials to shareholders who request them has remained in place to accommodate those who have difficulty using the internet.
As a result, even if most shareholders view the materials online, companies still have to maintain printing and mailing systems to handle requests from a small number of shareholders. Many companies choose to send paper materials to all shareholders from the outset rather than respond to individual requests. For large companies, shareholder meeting materials can exceed 100 pages.
According to the Tokyo Stock Exchange (TSE), only 8.6% of listed companies sent out nothing more than a notice containing the URL for online access at this year's June shareholder meetings. Companies that sent the full set of materials, including business reports, financial statements and audit reports, accounted for 47.4%, while 44.0% sent both an access notice and summary materials.
The Nikkei said the revision is also seen as a stepping stone toward lowering Japan's stock trading unit. In the United States and Europe, shares can be purchased starting from one share, but in Japan trading is generally conducted in lots of 100 shares. Japanese companies have long worried that reducing the trading unit would make small-scale investing easier for individual investors, but could also sharply increase shareholder management costs.
The Japanese government therefore plans to first remove the obligation to distribute paper materials, easing the cost burden on companies before advancing discussions on abolishing the unit-share system.
Even if the law is revised, however, paper mailings will not disappear entirely. Companies will still have to send shareholders by mail, at least two weeks before the meeting, an access notice containing the URL for viewing the shareholder meeting materials online, along with a voting form.
Meanwhile, members of the Legislative Council also said that digital-vulnerable groups, including elderly shareholders, should continue to be accommodated. The Japanese government is considering a two- to three-year grace period after the law is amended to ensure the changes are fully communicated.
[email protected] Seo Hye-jin Reporter