Newsletter
RESOLUTIONS OF IMPROPERLY CHAIRED SHAREHOLDERS' MEETING REMAIN EFFECTIVE UNLESS REVOKED BY COURT
A flaw in a resolution of a shareholders' meeting may cause the resolution to be invalid, void or revocable. A resolution that is invalid or void has no effect ab initio; but a resolution that is revocable remains effective until it is revoked by the court. The Company Act provides that if the content of a resolution of a shareholders' meeting violates laws, regulations or the company's Articles of Incorporation, the resolution is void. On the other hand, if the procedure by which a shareholders meeting is convened, or the method by which a resolution is passed, violates laws, regulations, or the company's Articles of Incor-poration, a shareholder may bring an action to the court for the revocation of the resolution.
In an interpretation dated 19 October 2004, the Ministry of Economic Affairs stated that under the provisions of the Company Act, the chairperson of a company's board of directors presides over shareholders' meetings, board meetings, and meetings of the managing directors, and represents the company for all the corporate matters. If the chairperson is on leave or is unable to perform his duties of office, the deputy chairperson should perform such duties; if there is no deputy chairperson or the deputy chairperson is also on leave or unable to perform his/her duties, the chairperson should designate a managing director to act as the deputy; if the company has no managing directors, the chairperson should designate a director as deputy; if the chairperson has not designated a deputy, the managing directors or directors should elect one of themselves as deputy. Thus if a shareholders' meeting is lawfully convened by the company's board of directors, the chairperson of the meeting must be a director.
If a company breaks the above rules by allowing a non-director to chair a shareholders' meeting, it is questionable whether the resolutions passed by such a meeting would be valid or not. According to the MOEA interpretation, the tasks of the chairperson of a shareholders' meeting are to enable the shareholders to successfully conduct discussions and vote on resolutions, and to guide the keeping of minutes. Thus if a meeting is chaired by an ineligible person, a resolution adopted by the meeting should be considered merely to be procedurally flawed, and under the provisions of the Company Act, the shareholders may file an application with the court for the revocation of such a flawed resolution. But until the court revokes the resolution, it remains valid and effective.