Newsletter
NO DIFFERENTIAL OR DE-FERRED COMPENSATION FOR DIRECTORS AND SUPERVISORS
In response to the question whether a company's articles of incorporation may define different rates of compensation for independent and non-independent directors and supervisors, the Ministry of Economic Affairs stated in an inter-pretation dated 9 March 2004 that as the Com-pany Act does not draw a distinction between independent and non-independent directors and supervisors, a company's articles of incorpora-tion may not set different rates of compensation for independent directors and supervisors.
As for whether directors' and supervisors' com-pensation not distributed in a particular year may be made up in later years, the MOEA stated in an interpretation dated 18 March 2004 that this was not permissible. If, for the year in question, the combined balance of the after-tax net income remaining after allocations to legal reserve, plus accumulated retained earnings, was insufficient to cover the share dividends provided for by the articles of incorporation, a shareholders' meeting could resolve to use all or part of that balance to distribute share dividends. Therefore, directors' and supervisors' compensation or shareholders' bonuses not distributed in the year in question could not be made up in subsequent years.