Newsletter
ONLY BOARD CAN DISMISS CHAIRPERSON AND MANAGERS
In the course of a company's business operation, some matters must be determined by resolution of a shareholders' meeting, and some by resolu-tion of the board of directors. The Company Act provides that all matters of a company's business, except for those that the Act or the company's Articles of Incorporation require to be decided by resolution of a shareholders' meeting, should be decided by resolution of the board of directors. The purpose of this provision is to distinguish the powers of the shareholders from those of the board, and to give the directors adequate powers to conduct business. Therefore, all matters that the Company Act or a company's Articles of Incorporation do not expressly require to be de-cided by resolution of a shareholders' meeting, should be within the powers of the board of di-rectors.
The Company Act provides that the power to appoint a company's chairperson lies with the board of directors or with the managing directors. But the Act contains no provisions as to the method for dismissing a chairperson. In an in-terpretation issued on 2 August 2005, the Min-istry of Economic Affairs stated that unless a company's Articles of Incorporation provide otherwise, the most reasonable interpretation of the law would appear to be that the dismissal of a chairperson should be done by resolution of the board or the managing directors, as the method that originally appointed the chairperson. The quorum and method of resolution for dismissing a chairperson can be based on those prescribed by the Company Act for appointing a chairper-son. In addition, a chairperson may be auto-matically removed from office if his/her direc-torship is dismissed by resolution of a share-holders' meeting in accordance with the provi-sions of the Company Act.
Similarly, the Company Act provides that unless the Articles of Incorporation provide otherwise, the appointment and dismissal of managers of a company limited by shares shall be resolved by a majority vote at a board meeting attended by more than half the directors. Thus the appoint-ment and dismissal of managers of a company limited by shares lies within the exclusive power of the board, and may only be done by a board resolution. Therefore, according to an MOEA interpretation dated 27 May 2005, if a share-holders' meeting passes a resolution to appoint or dismiss a manager, such a resolution is not binding.
However, it should be noted that the Company Act also provides that a company's board of di-rectors should conduct the company's business in accordance with the law, the company's Articles of Incorporation, and resolutions of shareholders' meetings. On that basis, except in the case of matters that are exclusively within the power of the board, if a shareholders' meeting passes a resolution on a matter, the board must act in ac-cordance with such resolution, and may not de-cide to act otherwise by a resolution of its own.