JAPAN Law and Practice Contributed by: Hiroshi Mitoma, Tomohiko Iwasaki, Kosuke Hamaguchi and Akira Komatsu, Nagashima Ohno & Tsunematsu
3. Directors and Officers 3.1 Board Structure
If a company has a board of directors, the authority of a shareholder meeting is more limited. In this case, the shareholder meeting may adopt only such matters as provided under the Companies Act or the articles of incorporation. A board of directors typically delegates to the representative director and other executive directors the authority to decide the execution of the company’s operation except for the matters specifi - cally prescribed under the Companies Act. Monitoring Model Approach However, in the case of a company with nominating and other committees, a board of directors may del - egate to the executive officer the broader authority to decide the execution of the company’s operation, and the matters that the board of directors is required to decide are fairly limited as compared to other types of companies. In this sense, the corporate governance of a company with nominating and other committees is designed as a monitoring model. Likewise, a company with an audit and supervisory committee may take a similar approach if: • a majority of its directors consist of outside direc - tors; or • it is so provided in the articles of incorporation. 2.3 Decision-Making Processes At the board level, unless otherwise provided in the articles of incorporation, a decision by a board of directors is made by a majority of the directors pre - sent at a board meeting, as long as a majority of the directors who are entitled to participate in the vote are present. Directors who have a special interest in the resolution may not participate in the vote. A board meeting may be held through a video-conference or conference call system. If so provided in the articles of incorporation, a board resolution may be made without holding a physical meeting if all directors who are entitled to participate in the vote agree in writing (whether physically or elec - tronically) to a proposal submitted by a director. That being said, circulation of board minutes to the board members together with their signatures on the min - utes is not deemed to be a board resolution.
A board of directors consists of three or more directors and is required to appoint one or more representative directors. In the case of a joint stock company with an audit and supervisory committee or nominating and other committees, a majority of each committee’s members must be outside directors. In the case of a company with nominating and other committees, members of each committee may serve as members of other committees. 3.2 Board Members The board members are, in general, divided into the following categories: • representative directors; • other executive directors; and • outside directors. Representative Directors The role of the representative director is to execute the company’s operation and represent the company. The authority of the representative director extends to all actions (whether judicial or non-judicial) in connec - tion with the company’s operation. The representative director may also decide the company’s operation to the extent permitted by law as long as the board of directors authorises them to do so. Other Executive Directors Other executive directors may not represent the com - pany without a delegation from the representative director but may decide and execute the company’s operation, as is the case with a representative director subject to the same condition. However, in the case of a company with nominating and other committees, directors (other than executive officers) are not gen - erally allowed to decide and execute the company’s operation because such functions are carried out by
an executive officer. Outside Directors
Outside directors are expected to supervise the man - agement of the company from an independent point of view.
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