How to incorporate a Stock company jointly? (Class shares)

How to incorporate a Stock company jointly? (Class shares)

Class shares of Stock Company in Japan

Assumed that you incorporate a Stock Company (K.K company ) with partner (Mr.P).
You will invest 10 yen and Mr.P will invest 5 yen.
You will become representative director and Mr.P will become managing director.
While you and Mr.P are operating the company without conflict, it is fine.

However there may be conflict between you and Mr.P in the future.
And Mr.P may resign from Managing director and leave the company.
Even if he resigns from managing director, he still owns shares of the company.
So when your company holds general meeting of shareholders, Mr.P has a right to attend the meeting and it may not be convenient for you.
So you hope to remove his shares without his consent.
(If Mr.P agrees to sale his shares to you at reasonal price, it is not problem).

In that case your company can use this article 107 of Companies act of Japan and issue class shares (種類株式).

Article 107 stipulates that A Stock Company can determine the matters listed below items as the features of all shares it issues.
(i) That such Stock Company may acquire such shares on condition of certain grounds arising.

So your company can determined that when Mr.P is not director of your company, your company can acquire Mr.P’s shares at 5 yen.

Moreover you may hope to remove Mr.P from director.
In that case, you will determine that Mr.P should be dismissed at general meeting of shareholders.
In order to remove Mr.P from director, shareholders with at least more than 50% voting rights attend the meeting and more than 50% approval of attended shareholders is necessary.
You have voting rights of more than 50% of all voting rights.
And you will attend the general meeting of shareholder and approve the agenda.
So Mr.P’s dismissal can be determined.

In any cases, I believe it may not be easy to operate a company with other person without conflict.