Company Law Column Part 7: General Meeting of Shareholders (2)
1．The Rights of ShareholdersShareholders have various rights in the relationship with the company. I would like to explain today focusing on the rights of shareholders in relations with the General Meeting of Shareholders
2．Shareholders' rights to make proposals
Proposals or items of business at the General Meeting of Shareholders shall be proposed by shareholders who convened the meetings under Malaysia Company Law. In Japan, shareholders’ right to make proposals is that other shareholders (except shareholders who convened the meeting) have the rights to the proposal under the certain requirement. In Malaysia, shareholders’ right to make proposals shall be approved in case shareholders may request the convocation of the meeting to Directors (Paragraph 2, Article 311).
The following steps shall enable shareholders to exercise the rights to make proposals;
1. comply with hard copy or electronic method
2. make statements of general natures from a business perspective
3. Shareholders’ rights to make proposals shall be exercised by signing
Proposals may be the context of resolution and it may be changed at said meeting.
3. Voting rights of Shareholders
(1) The methods for exercising a voting right
Shareholders have one voting right per one share under Japan Company Law (one-share-one-vote principle, Japan Company Act Paragraph 1, Article 308). As mentioned at the previous column, the methods for exercising a voting right under Malaysia Company Law are;
1. Resolution is taken by voting
2. Resolution is taken on a show of hands
1. In the case of resolutions, if taken by voting, voting rights may be exercised based on holding shares unless otherwise specified in the Articles of Incorporation (one-share, one-vote) (Paragraph1, Article 293 (a) (iii))
2. In the case of resolutions, if taken on a show of hands, voting rights may be exercised (one-hare, one-vote) unless otherwise specified in the Articles of Incorporation (Paragraph 1, Article 293 (a) (ii))
(2) Special regulations in relations with resolutions
Special regulations are set for exercising voting rights under Malaysia Company Law.
A Resolutions in Written
In the case of unlisted companies, resolutions in written may be exercised based on holding shares ( Paragraph 1, Article 293 (a) (i)).
B Exercising voting rights by proxies
In case shareholders appoint proxies, its proxies may exercise the voting rights under Malaysia Company Law (Paragraph 1, Article 334).
In case resolutions are taken on a show of hands, voting rights shall be exercised after appointed one proxy notwithstanding specified in the Articles of Incorporation (Paragraph 1, Article 294).
C Exercising voting rights in the case of joint shareholding
Joint shareholding shall be one shareholder under Malaysia Company Law. Joint shareholders shall be entitled to vote unless it is against the agreement made among shareholders (Article 295).
D Diverse exercise of voting rights
Shareholders who own more than 2 voting rights, they may exercise voting rights diversely under Japan Company Law (Japan Company Law Paragraph 1, Article 313). Shareholders who have more than 1 voting rights at the meeting, it shall not be required to exercise all voting rights and vote in same opinion ( Paragraph 1, Article 332) and diverse exercise is approved.
4．Violations of Laws and Regulations as well as the Articles of Incorporation
Under Japan Company Law, in the event that any violations of laws and regulations as well as the Articles of Incorporation for resolutions are found, the said violations shall be disputed. Under Malaysia Company Law, the court shall determine the effectiveness of resolutions of the General Meeting of Shareholders (Article 582). In the event that there has been any severe violations and the court determines it is failed to obey such order or it may cause the severe violations, resolutions of General Meeting of Shareholders shall be invalid (paragraph 1, Article 582).
Details of non-correctable severe violations have not been stated clearly under Malaysia Company Law. When notices relating resolutions of General Meeting of Shareholders and Board of Directors have not been sent or violations of laws and regulations, as well as the Articles of Incorporation, are found due to uncompleted management procedures, these shall not be considered severe violations.
In case violations of laws and regulations as well as the Articles of Incorporation are found or resolutions of General Meeting of Shareholders and Board of Directors are held due to uncompleted management procedures, the court may determine revision or invalid of resolutions of General Meeting of Shareholders upon the decision of the court or petition of any other interested person (Paragraph 3, Article 582).
In case the Company fails to comply with the procedural requirements of the General Meeting of Shareholders, the court may order the cancellation or amendment of resolutions of General Meeting of Shareholders (Article 346).
Note: This translation has been prepared by eeevo malaysia Sdn Bhd. In the event of a discrepancy between the English version and the Japanese version of the Terms, the Japanese-language version shall prevail.
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