Q_iconDuring incorporation, we were asked to “decide on a method of public notice”. What does this mean and what should we do?

A_dark_iconA public notice is a means where a company gives notice to stakeholders such as shareholders, creditors, etc. and other third parties. For most companies, this is through the Kanpo.

★ Explanation ★

Stock companies are required to indicate their method of public notice in their registered matters.

public-noticeA public notice is a notice from a company to its stakeholders, such as shareholders, creditors, etc., and other third parties. It must publish certain items as stipulated in the Companies Act.

According to the Article 939-1 of the Companies Act, companies may choose from the following their method of public notice:

  • Publication in an official gazette (Kanpo);
  • Publication in a daily newspaper that publishes matters on current affairs; or
  • Electronic public notice

The Kanpo is an official gazette of the Japanese government, which is published on weekdays. A ‘daily newspaper’ refers to newspapers or publications that publishes matters on current affairs, such as the Nihon Keizai Shimbun (widely known as The Nikkei). Finally, an ‘electronic public notice’ refers to a public notice that is posted via a webpage on the internet.

While the use of an electronic public notice method has grown in recent times, there is still the impression that many companies use the Kanpo as their method of public notice.

An advantage of using the electronic public notice method is that not much expenses are incurred in the publishing of its financial statements, which companies are required to publicize. However, they are required to maintain public access of their balance sheet for five consecutive years. The publication methods only require a summary of the balance sheet.

Furthermore, if a company does not decide on its method of public notice in its articles of incorporation, the official gazette is automatically used (Companies Act, Article 939-4).