Newsletter
RESOLUTION REQUIRED FOR EARLY REPLACEMENT OF DI-RECTORS
The Company Act provides that if before the terms of office of directors have expired, a shareholders' meeting adopts a resolution to elect an entire new board of directors without stating that the existing directors are not to be dis-charged until their terms of office expire, then the resolution has the effect of an early dismissal of the board. As for what mode of resolution is required for the election of a new board, the Ministry of Economic Affairs stated in an inter-pretation dated 21 September 2004 that such resolution must be adopted by a shareholders' meeting attended by shareholders representing a simple majority of the company's total issued shares, and must comply with the procedure for the election of directors prescribed by the Company Act, or by the company's Articles of Incorporation, if different. The Company Act provides for cumulative voting; the Articles of Incorporation may provide for a different system, but must still comply with the related provisions of the Company Act.
It should be noted that under the Company Act, a proposal to elect a director should be listed in the agenda of a shareholders' meeting, and cannot be tabled as a motion. This equally applies to an early election of an entire new board.