Business law essay
1 BUSL377 Japanese Trade Law Week 7: Corporation Law and Corporate Governance (I) Dr Kay-Wah Chan E4A 241 Tel: 9850 7088 Email: [email protected] (2017) 1 2017 Note 1: If there is any discrepancy between: 1. the Textbook; and 2. these slides/lecture notes or what I said in the lecture follow these slides/lecture notes and what I said the lecture. 2 2017 Note 2: In June 2014, the National Diet has passed/approved amendments of the Companies Act . These amendments became effective on 1 May 2015. This unit BUSL377 Japanese Trade Law (S1, 2017) will be based on the Companies Act (as amended accordingly) and therefore includes the amendments passed/approved by the National Diet in June 2014. 3 2017 Companies Act Act/Law No.86 of 2005 Passed on 29 June 2005, promulgated on 26 July 2005, effective from 1 May 2006 (some provisions on merger effective from 1 May 2007) Replacing the old law: Deleting Part 2 of Commercial Code Repealing the Limited Liability Company Act/Law (Act/Law No.74 of 1938), and the Act/Law of Exceptional Provisions to the Commercial Code concerning the Audit, etc., of Stock Companies (Act/Law no.22 of 1974) Amendments passed by the National Diet in June 2014 (effective from 1 May 2015) – e.g. introducing a new and additional kind of organizational structure for stock company 4 2017 2 Objective of reform in company law in Japan in 2005 1. To reform the law to be in line with the socio- economic situation: Deregulations Tighter regulation 2. To update the language of the law (replacing the classical literary Japanese used in the relevant provisions in the Commercial Code by modern Japanese) 5 2017 Changes brought by the Companies Act 2005 3. Deregulation: Lower capital requirement for establishing a company Old law: joint stock companies and private limited companies ( yûgen kaisha ), minimum capital of 10 million and 3 million yen respectively Now: one yen Introducing a new form of company: LLC Flexibility in corporate governance structure Flexibility and simplicity in corporate reorganisation Easier corporate rehabilitation 6 2017 Changes brought by the Companies Act 2005 4. To have tighter regulation in some areas: Expansion in scope of compulsory establishment and disclosure of internal control systems 7 2017 Types of companies 1. Joint-stock / stock company ( Kabushiki-Kaisha 株 式会社 ) 2. General/Unlimited/Full partnership company ( Gômei-Kaisha 合名会社 ) 3. Limited partnership company ( Gôshi-Kaisha 合資 会社 ) 4. Limited liability company (LLC) ( Gôdô-Kaisha 合同 会社 ) 8 2017 3 The name of a company shall be its trade name (Art.6 para 1) . A company must use in its trade name the words "Kabushiki-Kaisha“, "Gômei-Kaisha," "Gôshi-Kaisha“, or "Gôdô-Kaisha" respectively for stock company, general partnership company, limited partnership company or limited liability company (Art.6 para 2) A company cannot use in its trade name any word which makes it likely that the company may be mistaken for a different form of company (Art.6 para 3) No party which is not a company may use in its name or trade name any word which makes it likely that this party may be mistaken as a company (Art.7) 9 2017 N.B. The following slides (until before the “Reference list”) are in respect of Stock/Joint- Stock Companies only. 10 2017 Stock / Joint-stock company ( Kabushiki-Kaisha ) 株式会社 Number of shareholders: one or more Shareholders: can be individuals or incorporated bodies A shareholder's liability - limited to the amount of the subscription price of the shares held (Art.104 Companies Act ) 11 2017 Stock / Joint-stock company ( Kabushiki-Kaisha ) 株式会社 A shareholder has rights such as: right to receive dividends of surplus; right to receive distribution of residual assets; right to vote at a shareholders meeting (Art.105 Companies Act ) A shareholder may transfer the shares he/she/it holds (Art.127 Companies Act ) A shareholder may pledge the shares he/she/it holds (Art.146 Companies Act ) 12 2017 4 Stock / Joint-stock company ( Kabushiki-Kaisha ) 株式会社 A stock company shall prepare a shareholder registry with particulars such as: shareholders’ names and addresses; number of shares held by the shareholders; days when the shareholders acquired the shares (Art.121) For inspection and copying by shareholders and creditors (Art.125 para 2) 13 2017 Stock/Joint-stock company ( Kabushiki-Kaisha ) 株式会社 Open Company / Public Company ( Kôkai Kaisha ) 公開会社 “Restricted Share- Transfer Company / Closed Company / Non- Public Company” Kabushiki Jôto Seigen Kaisha / Hikôkai Kaisha 株式譲渡制限会社 / 非公開 会社 All or part of the shares not subject to restrictions on transfer All of the shares subject to restrictions on transfer 14 2017 Stock/Joint-stock company ( Kabushiki-Kaisha ) 株式会社 Large companies 大会社 Small and medium companies 中小会社 With capital of 500 million yen or more OR With total liabilities of 20 billion yen or more With capital of less than 500 million yen AND With total liabilities of less than 20 billion yen 15 2017 Stock / Joint-stock company ( Kabushiki-Kaisha ) 株式会社 Organs • Shareholders’ meeting • Directors / board of directors • (Corporate / company) auditor ( Kansayaku 監査役 ) / Board of corporate (company) auditors • Accounting auditor ( Kaikei Kansanin 会計監査人 ) • Accounting advisor/counsellor ( Kaikei Sanyo 会計参 与 ) 16 2017 5 Stock / Joint-stock company ( Kabushiki-Kaisha ) 株式会社 Organs • (for companies with nominating committee etc. 指名 委員会等設置会社 [this kind of companies were previously called “companies with committees” or “committee establishment companies” 委員会設置会社 ] ) 3 committees: (i) nomination/nominating committee, (ii) audit committee, and (iii) remuneration/compensation/benefit committee (together called “nominating committee etc.”) • (for companies with audit etc. committee 監査等委員 会設置会社 ) 1 committee: “audit etc. committee” 17 2017 Organisational structure of a stock/joint-stock company It must have shareholders’ meeting It must have one or more director(s) (Art.326 para 1) The following companies must have a board of directors: 1. A public/open company; 2. A company with a board of (corporate) auditors; 3. A company with nominating committee etc. 4. A company with audit etc. committee (Art.327 para 1) A large closed company must have accounting auditor(s) (Art.328 para 2) A large company (except closed companies, companies with nominating committee etc., and companies with audit etc. committee) must have accounting auditor(s) and a board of (corporate) auditors (Art.328 para 1) 18 2017 Organisational structure of a stock/joint-stock company (Except (a) companies with nominating committee etc.; (b) companies with audit etc. committee; and (c) closed companies with accounting advisor(s) ( kaikei sanyo 会計参与 )) a company with a board of director must have (corporate) auditor(s) (Art.327 para 2) (Except companies with nominating committee etc.
and companies with audit etc. committee) a company with accounting auditor(s) ( kaikei kansanin 会計監査人 ) must have (corporate) auditor(s) ( kansayaku 監査役 ) (Art.327 para 3) 19 2017 Organisational structure of a stock/joint-stock company Companies with nominating committee etc. and companies with audit etc. committee cannot have (corporate) auditor but must have accounting auditor (Art.327 paras 4 and 5) A company with nominating committee etc. must have one or more executive officers ( shikkôyaku 執行 役 ) (Art.402 para 1) 20 2017 6 Large open joint-stock companies - 6 choices of organisational structure: 1 Shareholders’ meeting Board of Directors Board of Auditors Accounting Auditor(s) 2 Shareholders’ meeting Board of Directors Board of Auditors Accounting Auditor(s) Accounting Advisor(s) 3 Shareholders’ meeting Board of Directors Nominating Committee etc. + Executive Officer(s) Accounting Auditor(s) 21 2017 Large open joint-stock companies - 6 choices of organisational structure: 4 Shareholders’ meeting Board of Directors Nominating Committee etc. + Executive Officer(s) Accounting Auditor(s) Accounting Advisor(s) 5 Shareholders’ meeting Board of Directors Audit etc.
Committee Accounting Auditor(s) 6 Shareholders’ meeting Board of Directors Audit etc.
Committee Accounting Auditor(s) Accounting Advisor(s) Source : Kawamoto, Ichiro, Kishida, Masao, Morita, Akira, and Kawaguchi, Yasuhiro. Nihon no Kaisha Ho (Company Law of Japan) , Shojihomu 2006, pp.191-193, Tsuyoshi Yamada, Yo Ota and Kenichi Masuda, Atarashii Bijinesu Ho (New Business Law), Koubundou 2006, p.14, Anderson Mōri & Tomotsune, Introduction to Japanese Business Law & Practice 2 nd edition, LexisNexis 2014, p.44, and 2014 amendments of the Companies Act . 22 2017 Large closed joint-stock companies - 10 choices of organisational structure: 1 Shareholders’ meeting Director(s) Auditor(s) Accounting Auditor(s) 2 Shareholders’ meeting Director(s) Auditor(s) Accounting Auditor(s) Accounting Advisor(s) 3 Shareholders’ meeting Board of Directors Auditor(s) Accounting Auditor(s) 4 Shareholders’ meeting Board of Directors Auditor(s) Accounting Auditor(s) Accounting Advisor(s) 23 2017 Large closed joint-stock companies - 10 choices of organisational structure: 5 Shareholders’ meeting Board of Directors Board of Auditors Accounting Auditor(s) 6 Shareholders’ meeting Board of Directors Board of Auditors Accounting Auditor(s) Accounting Advisor(s) 7 Shareholders’ meeting Board of Directors Nominating Committee etc.
+ Executive Officer(s) Accounting Auditor(s) 8 Shareholders’ meeting Board of Directors Nominating Committee etc.
+ Executive Officer(s) Accounting Auditor(s) Accounting Advisor(s) 24 2017 7 Large closed joint-stock companies - 10 choices of organisational structure: 9 Shareholders’ meeting Board of Directors Audit etc.
Committee Accounting Auditor(s) 10 Shareholders’ meeting Board of Directors Audit etc.
Committee Accounting Auditor(s) Accounting Advisor(s) 25 Source : Kawamoto, Ichiro, Kishida, Masao, Morita, Akira, and Kawaguchi, Yasuhiro. Nihon no Kaisha Ho (Company Law of Japan) , Shojihomu 2006, pp.191-193, Tsuyoshi Yamada, Yo Ota and Kenichi Masuda, Atarashii Bijinesu Ho (New Business Law), Koubundou 2006, p.14, Anderson Mōri & Tomotsune, Introduction to Japanese Business Law & Practice 2 nd edition, LexisNexis 2014, p.44, and 2014 amendments of the Companies Act . 2017 Small/medium open joint-stock companies - 12 choices of organisational structure: 1 Shareholders’ meeting Board of Directors Auditor(s) 2 Shareholders’ meeting Board of Directors Auditor(s) Accounting Advisor(s) 3 Shareholders’ meeting Board of Directors Board of Auditors 4 Shareholders’ meeting Board of Directors Board of Auditors Accounting Advisor(s) 5 Shareholders’ meeting Board of Directors Auditor(s) Accounting Auditor(s) 6 Shareholders’ meeting Board of Directors Auditor(s) Accounting Auditor(s) Accounting Advisor(s) 26 2017 Small/medium open joint-stock companies - 12 choices of organisational structure: 7 Shareholders’ meeting Board of Directors Board of Auditors Accounting Auditor(s) 8 Shareholders’ meeting Board of Directors Board of Auditors Accounting Auditor(s) Accounting Advisor(s) 9 Shareholders’ meeting Board of Directors Nominating Committee etc. + Executive Officer(s) Accounting Auditor(s) 10 Shareholders’ meeting Board of Directors Nominating Committee etc. + Executive Officer(s) Accounting Auditor(s) Accounting Advisor(s) 27 2017 Small/medium open joint-stock companies - 12 choices of organisational structure: 11 Shareholders’ meeting Board of Directors Audit etc.
Committee Accounting Auditor(s) 12 Shareholders’ meeting Board of Directors Audit etc.
Committee Accounting Auditor(s) Accounting Advisor(s) 28 Source : Kawamoto, Ichiro, Kishida, Masao, Morita, Akira, and Kawaguchi, Yasuhiro. Nihon no Kaisha Ho (Company Law of Japan) , Shojihomu 2006, pp.191-193, Tsuyoshi Yamada, Yo Ota and Kenichi Masuda, Atarashii Bijinesu Ho (New Business Law), Koubundou 2006, p.14, Anderson Mōri & Tomotsune, Introduction to Japanese Business Law & Practice 2 nd edition, LexisNexis 2014, p.44, and 2014 amendments of the Companies Act . 2017 8 Small/medium closed joint-stock companies - 19 choices of organisational structure: 1 Shareholders’ meeting Director(s) 2 Shareholders’ meeting Director(s) Accounting Advisor(s) 3 Shareholders’ meeting Director(s) Auditor(s) 4 Shareholders’ meeting Director(s) Auditor(s) Accounting Advisor(s) 5 Shareholders’ meeting Director(s) Auditor(s) Accounting Auditor(s) 6 Shareholders’ meeting Director(s) Auditor(s) Accounting Auditor(s) Accounting Advisor(s) 29 2017 Small/medium closed joint-stock companies - 19 choices of organisational structure: 7 Shareholders’ meeting Board of Directors Accounting Advisor(s) 8 Shareholders’ meeting Board of Directors Auditor(s) 9 Shareholders’ meeting Board of Directors Auditor(s) Accounting Advisor(s) 10 Shareholders’ meeting Board of Directors Board of Auditors 11 Shareholders’ meeting Board of Directors Board of Auditors Accounting Advisor(s) 30 2017 Small/medium closed joint-stock companies - 19 choices of organisational structure: 12 Shareholders’ meeting Board of Directors Auditor(s) Accounting Auditor 13 Shareholders’ meeting Board of Directors Auditor(s) Accounting Auditor Accounting Advisor 14 Shareholders’ meeting Board of Directors Board of Auditors Accounting Auditor 15 Shareholders’ meeting Board of Directors Board of Auditors Accounting Auditor Accounting Advisor 31 2017 Small/medium closed joint-stock companies - 19 choices of organisational structure: 16 Shareholders’ meeting Board of Directors Nominating Committee etc. + Executive Officer(s) Accounting Auditor 17 Shareholders’ meeting Board of Directors Nominating Committee etc. + Executive Officer(s) Accounting Auditor Accounting Advisor 32 2017 9 Small/medium closed joint-stock companies - 19 choices of organisational structure: 18 Shareholders’ meeting Board of Directors Audit etc.
Committee Accounting Auditor 19 Shareholders’ meeting Board of Directors Audit etc.
Committee Accounting Auditor Accounting Advisor 33 Source : Kawamoto, Ichiro, Kishida, Masao, Morita, Akira, and Kawaguchi, Yasuhiro. Nihon no Kaisha Ho (Company Law of Japan) , Shojihomu 2006, pp.191-193, Tsuyoshi Yamada, Yo Ota and Kenichi Masuda, Atarashii Bijinesu Ho (New Business Law), Koubundou 2006, p.14, Anderson Mōri & Tomotsune, Introduction to Japanese Business Law & Practice 2 nd edition, LexisNexis 2014, p.44, and 2014 amendments of the Companies Act . 2017 Choices of organisational structure Low level of flexibility (few choices) for large open companies High level of flexibility (many choices) for small and medium closed companies For these companies, ownership and management may not be separated 34 2017 Organisational structure Set out in the articles of incorporation Therefore, disclosed through the registry 35 2017 Shareholders’ meeting Annual shareholders’ meeting shall be called within a defined period of time after the end of each business year (Art.296 para 1) Authority to resolve: matters provided for in Companies Act ; the organization, operations and administration of the company; and any and all other matters regarding the company (Art.295 para 1) ; but (for company with board of directors) only the matters provided for in Companies Act or in the articles of incorporation (Art.295 para 2) For other details, read Textbook pp.36-37 36 2017 10 Directors Each joint-stock company must have one or more Directors (Art.326 para 1) BUT: for a joint-stock company with a board of directors: there must be three or more Directors (Art.331 para 5) for a company with nominating committee etc., each committee must have three or more directors (Art.400 paras 1 and 2) (a director can belong to more than one committee at the same time) for a company with audit etc. committee, there must be 3 or more directors who are members of the audit etc. committee and over half of them must be external directors (Art.331 para 6) Directors are appointed and removed by shareholders’ meeting Directors must be natural persons (no nationality restrictions) (Art.331 para 1 (i)) 37 Directors Directors can be employees of the company EXCEPT that: For a company with audit etc. committee, its director(s) who is/are member(s) of the audit etc. committee cannot concurrently be the manager or other employee of the company or its subsidiary companies (Art.331 para 3) For a company with nominating committee etc., its directors cannot concurrently be the managers or other employees of the company (Art.331 para 4) For closed companies, possible for Articles of Incorporation to provide that a director must be a shareholder (not possible under old law before 2005) (Art.331 para 2) 38 Directors Term: generally two years (expiration at the conclusion of annual general meeting for the latest accounting period ending within 2 years from assuming office) (Art.332 para 1) BUT for companies with audit etc. committee (except audit etc.
committee members) and companies with nominating committee etc., one year (expiration at the conclusion of AGM for the latest accounting period ending within 1 year from assuming office) (Art.332 paras 3 and 6 respectively) For closed companies (which are not companies with audit etc. committee or companies with nominating committee etc.), can be up to ten years if so provided by the articles of incorporation (Art.332 para 2) 39 Directors Directors have duty of care ( 善管注意義務 ) and duty of loyalty ( 忠実義務 ) towards the company (Arts.330 Companies Ac t + Art.644 Civil Code & Art.355 Companies Act ) 40 2017 11 Execution of the business of the company 1. Companies with no committees a. With no board of directors By the directors, unless otherwise provided in the articles (Art.348 para 1) Decision by majority of directors if more than one director unless otherwise provided in articles (Art.348 para 2) Delegate to individual director(s) except for certain matters specified in Art.348 para 3 : Appointment or dismissal of manager Establishment, relocation and closure of branch office Items listed in Art.298 para 1 (in relation to calling of shareholders meeting) Internal control system Exemption of liability under Art.423 para 1 pursuant to articles of incorporation according to Art.426 para 1 41 2017 Execution of the business of the company 1. Companies with no committees b. With board of directors (BOD) By the Representative Director(s) and by such other directors (executive directors) as appointed so to do by the board (Art.363 para 1) Decision on execution of the business by the BOD BUT can be delegated to representative director(s) and/or other director(s) except for important decision and certain matters specified in Art.362 para 4 : Disposal or acceptance of important asset Borrowing of large amount Appointment or dismissal of manager or other important employee Establishment, change and closure of branch office or other important organisation Issuance of bonds Internal control system Exemption of liability under Art.423 para 1 pursuant to articles of incorporation according to Art.426 para 1 42 2017 Execution of the business of the company 1. b. Companies with no committees (with board of directors) (Cont’d) BUT: for companies with six or more directors and with one or more outside/external director, board of directors can appoint three or more special directors and delegate to such special directors decision-making power on: Disposal or acceptance of important asset Borrowing of large amount (Art.373 para 1) 43 2017 Outside/external director Defined in Art.2(xv) ; fulfilling all of the 5 conditions below: 1. A director who (i) currently is not an executive/managing director, or executive officer, or manager, or other employee of the company or its subsidiary company and (ii) has not been in any of such positions of the company or its subsidiary company in the 10 years before taking up the position as an external director of the company; 2. If a director at anytime within the 10 years before taking up the position as an external director of the company has been a director, corporate auditor or accounting advisor (excluding executive/managing director, or executive officer, or manager, or other employee) of the company or its subsidiary company, he/she in the 10 years prior to being such a director, corporate auditor or accounting advisor has not served as an executive/managing director, or executive officer, or manager, or other employee of the company or its subsidiary company; 44 2017 12 Outside/external director Defined in Art.2(xv) ; fulfilling all of the 5 conditions below: 3. A director who (i) is not a “parent company etc.”* (when such “parent company etc.” is a natural person) of the company and (ii) is not a director, executive officer, manager, or other employee of a “parent company etc.”; * Art 2 (IV-2) defines “parent company etc.” as: 1. A parent company; or 2. A person (excluding juridical person) who controls the management of a stock company (as stipulated in relevant ordinance of the Ministry of Justice) Art 2 (IV) defines “parent company” as: “(as stipulated in relevant ordinance of the Ministry of Justice) a juridical person that controls the management of a stock company, including a company which has a stock company as its subsidiary company” 45 2017 Outside/external director Defined in Art.2(xv) ; fulfilling all of the 5 conditions below: 4. A director who is not an executive/managing director, or executive officer, or manager, or other employee of a “subsidiary company etc.”** (excluding the company and its subsidiary companies) of a “parent company etc.” of the company; and ** Art 2 (III-2) defines “subsidiary company etc.” as: 1. A subsidiary company; or 2. (as stipulated in relevant ordinance of the Ministry of Justice) a juridical person whose management is controlled by a party that is not the company Art 2 (III) defines a “subsidiary company” as: “(as stipulated in relevant ordinance of the Ministry of Justice) a juridical person whose management is controlled by the company, including a stock company in which the company holds a majority of all votes” 46 2017 Outside/external director Defined in Art.2(xv) ; fulfilling all of the 5 conditions below: 5. A director who (i) is not the spouse or a relative within the second degree of kinship of a director, executive officer, manager or other important employee of the company and (ii) is not the spouse or relative within the second degree of kinship of the company’s “parent company etc.” (when such “parent company etc.” is a natural person). Please see slide above on how Art 2 (IV-2) defines “parent company etc.” 47 2017 Execution of the business of the company 2. Companies with audit etc. committee By the Representative Director(s) appointed by the BOD (Art.399-13 para 1 (iii)) from among the directors (except those who are members of the audit etc. committee) (Art.399-13 para 3) Decision on execution of the business by the BOD BUT can be delegated to representative director(s) and/or other director(s) except for important decision and certain matters specified in Art.399-13 para 4 : Disposal or acceptance of important asset Borrowing of large amount Appointment or dismissal of manager or other important employee Establishment, change and closure of branch office or other important organisation Issuance of bonds Exemption of liability under Art.423 para 1 pursuant to articles of incorporation according to Art.426 para 1 48 2017 13 Execution of the business of the company 2. Companies with audit etc. committee BUT: if more than half of its directors are external directors, the BOD can delegate to representative director(s) and/or other director(s) decisions regarding execution of important operations except any in the list of matters specified in Art.399-13 para 5 , e.g.: Exemption of liability under Art.423 para 1 pursuant to articles of incorporation according to Art.426 para 1 Decision on the contents of merger contracts (except those that do not require approval by resolution of the shareholders’ meeting of the company) Designation (by the board of directors) of the director(s) to call the board of directors meeting Etc. BUT: articles of incorporation can provide that the BOD can delegate to director(s) decisions regarding execution of important operations (except the matters specified in Art.399-13 para 5 ) ( Art.399-13 para 6 ) 2017 49 Representative Directors Optional for companies without board of directors For companies with board of directors (except companies with nominating committee etc.), directors must appoint among them one or more Representative Director(s) (Art.362 para 3) but for companies with audit etc. committee, Representative Director(s) is/are to be appointed from those directors who are not members of the audit etc. committee (Art.399-13 para 3) The company is bound as against third person in good faith by the acts of Director with such title as president, vice president, or such other title as implying representative authority, no matter whether or not he/she is a Representative Director (Art.354) 50 2017 Representative Directors Not possible for companies with nominating committee etc. For companies with nominating committee etc., directors in principle cannot execute the business of the company (Art.415) (to be executed by executive officer(s) appointed by the board of directors) (Art.418) BUT directors can concurrently be directors and executive officers (Art.402 para 6) (except when the director(s) is/are member(s) of the audit committee (Art.400 para 4) ) 51 2017 Execution of the business of the company 3. Companies with nominating committee etc. The board of directors must appoint one or more executive officer(s) (Art.402 paras 1 and 2) Execution of business of the company: by the executive officer(s) and representative executive officer(s) Decision on execution of business by the board BUT the board can delegate to the executive officers decision-making power EXCEPT for items specified (Art.416 para 4) , such as: approval on transfer of shares that are subject to transfer restrictions appointment and dismissal of executive officers appointment and removal of representative executive officer(s) exemption on director’s or executive officer’s liability contents of agenda for shareholders’ general meetings (except matter concerning the appointment or dismissal of directors, accounting counsellor and accounting auditor or non-re-appointment of accounting auditor) etc. 52 2017 14 Executive Officers ( shikkôyaku 執行役 ) Appointed and removed by the Board of Directors in companies with nominating committee etc. (Arts.402 para 2 & 403 para 1) Executive officers must be individual persons (not juridical persons) (Art. 402 para 4 applying Art.331 para 1) Term: one year (Arts.402 para 7) To conduct the business of the company and to make business decision on such matter as designated by the Board of Directors (Art.418) Art.419 para 2 applying the directors’ duty of loyalty under Art.355 to executive officers Executive officers have duty of care towards the company (Art.402 para 3 Companies Act + Art.644 Civil Code ) 53 2017 Executive Officers ( shikkôyaku 執行役 ) An executive officer can be a director concurrently (Art. 402 para 6) EXCEPT that an executive officer cannot be a director who is a member of the audit committee (Art.400 para 4) When there are more than one Executive Officers, the BOD needs to appoint Representative Executive Officer(s) (Art.420 para 1) When there is only one Executive Officer, he/she will be the Representative Executive Officer (Art.420 para 1) Similar to the situation with Representative Director, the company is bound as against a third party in good faith (/without knowledge) by the acts of an Executive Officer with such title as president, vice president, and such other title as implying representative authority, no matter whether or not he/she is a Representative Executive Officer (Art.421) 54 2017 Reference list Keiko Hashimoto, Katsuya Natori and John C. Roebuck, ‘Corporations’ in Gerald Paul McAlinn (ed) Japanese Business Law (The Netherlands, Kluwer, 2007). Japan Economic Division, JETRO, ‘Reforms under the new Company Law: Will it be a catalyst for business and industrial revitalization?’ (2005) 17 Japan Economic Monthly 46. ‘Japan Law Digest: Corporations’ in Martindale-Hubbell International Law Digest 2006 , available from LexisNexis. Kawamoto, Ichiro, Kishida, Masao, Morita, Akira, and Kawaguchi, Yasuhiro. Nihon no Kaisha Hô (Company Law of Japan) , Tokyo: Shojihomu 2006. Kodate, Hiroki and Takeuchi, Norifumi. ‘Japan’ International Financial Law Review 2005 Corporate Governance , 51. Oda, Hiroshi. Japanese Law (3 rd Edition) Nakano, Yusuke. ‘ Atarashii jidai no kôporêto gabanansu to konpuraiansu: daiikkai kaishahô niokeru kikansekkei (Corporate governance and compliance in the new era: 1: organisational design under the Company Law)’ (2006) 1 Lexis Kigyouhômu 19. The above slides were (unless otherwise stated) prepared with use of information from the sources listed below: 55 2017 Reference list Takahashi, Eiji and Shimizu, Madoka. ‘The future of Japanese corporate governance: the 2005 reform’ (2005) 10 (19) Journal of Japanese Law (Zeitschrift für Japanisches Recht) 35. Takehara, Takanobu, and Nihei, Takafumi. ‘Corporate governance enters a new era’ The International Financial Law Review Guide to Japan January 2006, 45. Takehara, Takanobu, and Nihei, Takafumi. ‘Japan’ in PLC Cross-Border Corporate Governance and Directors’ Duties Handbook 2007 , pp.97-106. Takehara, Takanobu, and Nihei, Takafumi. ‘Legal flexibility allows for simple structures’ (2007) January Supplement Vol.26, The International Financial Law Review , 57. Yamada, Tsuyoshi, Ota, Yo, and Masuda, Kenichi. Atarashii Bijinesu Hô (New Business Law) , Tokyo: Koubundou 2006. Anderson Mōri & Tomotsune, Introduction to Japanese Business Law & Practice 2nd edition, Tokyo: LexisNexis 2014. Hamabe, Yoichiro. 『 平成26年改正対応 図解新会社法のしくみ 第3版 』 , Tokyo: Toyo Keizai Inc., 2015. The above slides were (unless otherwise stated) prepared with use of information from the sources listed below: 56 2017
