Japan Securities Dealers Association (JSDA) subsidiary Reform Promotion Center For Securities Clearing and Settlement System held a seminar in Tokyo two weeks ago on the impending dematerialization of stock certificates in Japan.
The seminar agreed a number of points. First, that issuing companies must stipulate the shift to dematerialization of stock certificates in their Articles of Incorporation. However, listed companies will be deemed by law to have amended their Articles of Incorporation simultaneously on a date that will be stipulated by law. Boards of Directors will still have to pass a resolution. Collection of existing physical certificates will not be necessary.
Secondly, all types of stocks will be dematerialized.
Thirdly, all stocks will be managed on the book-entry account books created by so-called Account Management Institutions (AMIs) – namely, securities companies, custodian banks or trust banks that have accounts at the CSDs.
Fourthly, registration will change. Traditionally, shareholders!| names have been either listed on a list maintained by the issuer or corporate registrar or the list of shareholders maintained by the Japan Securities Depository Center (JASDEC). Under the new system, all shareholders! names will be registered on the list of shareholders. Name registration, and consequent securing of entitlements, will be conducted at a single Record Date. Transfer of rights regarding stocks, such as transfer of ownership, pledging of stocks, issuing of new stocks, will be processed by book-entry.
Fifthly, current participants of the book-entry transfer system (shareholders who have deposited their stocks at JASDEC) will have their information transferred to the new system automatically.
Sixthly, after the transition to the new system, shareholders will not be able to withdraw of physical stocks from the CSD.