The Companies Act governs the formation, organization, operation, and management of companies in Japan, except where another Act provides a special rule. It is consulted by founders choosing a company form, shareholders checking voting and meeting rules, officers reviewing governance duties, and transaction teams checking statutory steps for business transfers or reorganizations. This article covers selected core provisions of the Act, especially company forms, incorporation, shares, organs, financial statements, dividends, and reorganizations, and does not cover securities disclosure, tax, labor law, or filing practice under subordinate ordinances.
Company Forms and Trade Names
The Act starts by defining which entities count as companies and how their names signal their legal form. Articles 1 through 6 set the frame for later rules on Stock Companies and Membership Companies.
Article 1 states the Act's basic scope: formation, organization, operation, and management of companies are governed by the Companies Act unless another Act provides otherwise. Article 2, item (i) defines a Company as a Stock Company, General Partnership Company, Limited Partnership Company, or Limited Liability Company. The same article defines related terms that later determine which rules apply, including Foreign Company in item (ii), Public Company in item (v), Large Company in item (vi), and several governance-organ categories for Stock Companies.
Article 3 gives Companies legal personality, and Article 4 places a Company's address at the location of its head office. Article 5 treats acts carried out by a Company as its business, or for its business, as commercial transactions. Article 6 then connects the legal form to the trade name: a Company must use the Japanese characters for Stock Company, General Partnership Company, Limited Partnership Company, or Limited Liability Company in its trade name according to its form, and must not use wording that could cause confusion with another company form.
The practical consequence is that the first statutory question is not only whether an entity exists, but what type of Company it is. A Stock Company is the form used for shares, Shareholders Meetings, Directors, and the governance-organ choices described later in Part II, while General Partnership Companies, Limited Partnership Companies, and Limited Liability Companies are Membership Companies governed mainly by Part III.
Incorporating a Stock Company
The incorporation provisions make the Articles of Incorporation, capital contribution, and registration steps central to the creation of a Stock Company. Articles 25, 26, 27, 28, 30, and 31, together with Article 49 and Article 911, show how the Act moves from planning documents to legal existence.
Article 25 provides two methods of incorporating a Stock Company. In one method, the Incorporators subscribe for all Shares Issued at Incorporation; in the other, the Incorporators subscribe for some shares and solicit additional subscribers. Article 25(2) requires each Incorporator to subscribe for at least one Share Issued at Incorporation. Article 26 requires the Incorporators to prepare Articles of Incorporation and sign or affix names and seals to them, and it also allows electronic or magnetic records if the statutory substitute for signature or name-and-seal is used.
Article 27 lists matters that must be stated or recorded in the Articles of Incorporation, including the purpose, trade name, head office location, value or minimum value of property contributed at incorporation, and the names and addresses of the Incorporators. Article 28 identifies matters that do not become effective unless stated or recorded in the Articles of Incorporation, such as contribution in kind, property promised to be acquired after formation, special benefits for Incorporators, and incorporation expenses. Article 30 requires notarial certification of the Articles of Incorporation prepared under Article 26(1), and Article 31 requires the Articles of Incorporation to be kept available for inspection or copy requests by specified persons.
Article 49 states that a Stock Company is formed by registration of incorporation at the location of its head office. Article 911 then requires the registration of incorporation of a Stock Company to be made within the statutory two-week period measured from the later of the listed dates, and Article 911(3) lists matters to be registered, including purpose, trade name, head office and branch locations, and capital amount.
Shares and Shareholders Meetings
For Stock Companies, shares are the channel through which economic interests and governance rights are organized. Articles 104, 105, 108, 295, 309, and 325-2 are useful entry points for reading the share and meeting rules.
Article 104 limits a Shareholder's responsibility to the amount of property subscribed for the shares held by that Shareholder. Article 105(1) then lists the basic rights of Shareholders: the right to receive Dividends of Surplus, the right to receive distribution of residual assets, and the right to vote at the Shareholders Meeting. Article 105(2) prevents a Stock Company from giving a Shareholder no rights at all for all of the rights listed in Article 105(1), items (i) and (ii).
Article 108 allows a Company with Class Shares to issue classes of shares with different features for listed matters. The list includes Dividends of Surplus, distribution of residual assets, voting rights at Shareholders Meetings, transfer restrictions, acquisition by the company, acquisition on specified grounds, acquisition by all shares of a class, veto rights for class meetings, director or Company Auditor election rights for class meetings, and other matters listed in that article. Because Article 108 ties these differences to the Articles of Incorporation, class-share design is a statutory drafting issue as well as a finance issue.
Article 295 gives the Shareholders Meeting authority to resolve matters provided in the Act and matters concerning the organization, operation, management, or other affairs of the Stock Company. For a Company with Board of Directors, Article 295(2) narrows that authority to matters provided in the Act and matters provided in the Articles of Incorporation. Article 309 sets voting thresholds for ordinary, special, and other resolutions. Article 325-2 requires a Stock Company whose Board of Directors decides to convene a Shareholders Meeting to take electronic provision measures for reference documents and other specified materials.
Governance Organs and Officer Duties
The Companies Act does not give every Stock Company the same organ structure. Articles 326, 327, 329, 348, 362, and 423 show how the statute connects governance design, business execution, and officer liability.
Article 326 requires a Stock Company to have one or more Directors. Article 326(2) permits a Stock Company to have a Board of Directors, Accounting Advisor, Company Auditor, Board of Company Auditors, Accounting Auditor, Audit and Supervisory Committee, or Nominating Committee, etc., as provided in the Articles of Incorporation. Article 327 then states cases where certain organs are required. For example, a Public Company must have a Board of Directors under Article 327(1), item (i), and a Company with Board of Directors must generally have a Company Auditor unless an exception in Article 327(2) applies.
Article 329 provides that officers and Accounting Auditors are elected by resolution of the Shareholders Meeting. Article 348 gives Directors authority to execute the business of a Stock Company, subject to the Act and the Articles of Incorporation, and states that Directors decide business execution by majority if there are two or more Directors. For a Company with Board of Directors, Article 362 gives the Board of Directors authority over business execution decisions, supervision of Directors' duties, and selection and dismissal of Representative Directors.
Article 423 is the main liability provision for officers and related persons. It provides that if a Director, Accounting Advisor, Company Auditor, executive officer, or Accounting Auditor neglects their duties, that person is liable to the Stock Company for resulting damage. The article is not a general statement that every bad business result creates liability; it is tied to neglect of duties and to damage arising from that neglect.
Accounts, Dividends, and Reorganization Routes
The later parts of the Act connect ordinary company administration with shareholder returns and structural transactions. Articles 435, 438, 453, 461, 467, 749, and 828 are useful landmarks for this part of the statute.
Article 435 requires a Stock Company to prepare financial statements and business reports for each business year, together with supplementary schedules. Article 438 requires financial statements and business reports to be submitted to the annual Shareholders Meeting, and it requires approval of the financial statements unless the exception in Article 439 applies. Article 439 allows a Company with Accounting Auditor to avoid annual Shareholders Meeting approval of financial statements if the statutory audit and Board of Directors conditions are satisfied, while still requiring reporting to the annual Shareholders Meeting.
Article 453 authorizes a Stock Company to distribute Dividends of Surplus to Shareholders. Article 461 limits the distributable amount by prohibiting listed acts, including Dividends of Surplus, where the total book value of money or other assets delivered to Shareholders would exceed the distributable amount on the effective date. These provisions separate the existence of a shareholder return mechanism from the accounting limit on how much may be distributed.
Article 467 requires Shareholders Meeting approval for specified business transfers and similar acts, subject to the detailed categories and exceptions in that article. Part V then supplies statutory routes for entity-level reorganizations. Article 749 lists required matters in an Absorption-type Merger agreement where the surviving company is a Stock Company, and related provisions govern Consolidation-type Mergers, Absorption-type Company Splits, Incorporation-type Company Splits, Share Exchanges, Share Transfers, and Share Deliveries. Article 828 provides that the invalidity of specified organizational acts, including incorporation, share issuance, capital reduction, mergers, company splits, share exchanges, share transfers, and share deliveries, may be asserted only by an action filed within the period stated for each act.