Companies Act

If the executive officers, directors, accounting advisors or financial auditors have notified all committee members of matters that are to be reported to a nominating committee, etc. meeting, it is unnecessary to report relevant matters to a nominating committee, etc. meeting.

Directors of a company with nominating committee, etc. may not execute the operations of the company with nominating committee, etc. unless otherwise provided in this Act or any order under this Act.

The board of directors of a company with nominating committee, etc. performs the following duties notwithstanding the provisions of Article 362:

deciding on the following matters and on the execution of other operations of the company with nominating committee, etc.:

basic management policy;

the matters prescribed by Ministry of Justice Order as those necessary for the execution of the duties of the audit committee;

if there are two or more executive officers, matters regarding the interrelationship between executive officers including the division of duties between executive officers and hierarchy of commands of executive officers;

the directors to receive requests for the calling of board of directors meeting pursuant to the provisions of paragraph (2) of the following Article; or

the development of systems necessary to ensure that the execution of duties by executive officers complies with laws and regulations and the articles of incorporation, and other systems prescribed by Ministry of Justice Order as systems necessary to ensure the properness of operations of a stock company and of operations of a group of enterprises consisting of the stock company and its subsidiary companies;

the supervision of the execution of duties by executive officers, etc.

The board of directors of a company with nominating committee, etc. must decide the matters set forth in item (i), (a) through item (i), (e) of the preceding paragraph.

The board of directors of a company with nominating committee, etc. may not delegate the execution of the duties set forth in each item of paragraph (1) to directors.

The board of directors of a company with nominating committee, etc. may delegate decisions on the execution of the operations of the company with nominating committee, etc. to executive officers by its resolution; provided, however, that this does not apply to the following matters:

decisions under Article 136 or Article 137, paragraph (1), and the designation under the provisions of Article 140, paragraph (4);

decisions on the matters set forth in each item of Article 156, paragraph (1) applied pursuant to Article 165, paragraph (3) following the deemed replacement of terms;

decisions under Article 262 or Article 263, paragraph (1);

decisions on the matters set forth in each item of Article 298, paragraph (1);

decisions on the contents of proposals to be submitted to a shareholders meeting (excluding those regarding the election and dismissal of directors, accounting advisors and financial auditors and the refusal to reelect financial auditors);

delegation pursuant to the provisions of Article 348-2, paragraph (2);

approval under Article 356, paragraph (1) applied pursuant to Article 365, paragraph (1) following the deemed replacement of terms (including as applied mutatis mutandis pursuant to Article 419, paragraph (2) following the deemed replacement of terms);

designation of the directors to call the board of directors meeting pursuant to the provisions of the proviso to Article 366, paragraph (1);

appointment of the committee members pursuant to the provisions of Article 400, paragraph (2) and removal of committee members pursuant to the provisions of Article 401, paragraph (1);

election of executive officers pursuant to the provisions of Article 402, paragraph (2) and dismissal of executive officers pursuant to the provisions of Article 403, paragraph (1);

designation of a person to represent the company with nominating committee, etc. pursuant to the provisions of Article 408, paragraph (1), item (i);

appointment of representative executive officers pursuant to the provisions of the first sentence of Article 420, paragraph (1) and removal of representative executive officers pursuant to the provisions of paragraph (2) of the same Article;

exemption from liability under Article 423, paragraph (1) pursuant to the provisions of the articles of incorporation under the provisions of Article 426, paragraph (1);

decisions on the contents of indemnity agreements;

decisions on the contents of officer indemnification insurance policies ;

approvals under Article 436, paragraph (3), Article 441, paragraph (3) and Article 444, paragraph (5);

decisions on the matters to be decided pursuant to the provisions of Article 454, paragraph (1) applied pursuant to paragraph (5) of the same Article following the deemed replacement of terms;

decisions on the contents of contracts relating to the acts set forth in each item of Article 467, paragraph (1) (excluding those which do not require approval by a resolution at a shareholders meeting of the company with nominating committee, etc.);

decisions on the contents of merger agreements (excluding those which do not require approval by a resolution at a shareholders meeting of relevant company with nominating committee, etc.);

decisions on the contents of absorption-type company split agreements (excluding those which do not require approval by a resolution at a shareholders meeting of relevant company with nominating committee, etc.);

decisions on the contents of incorporation-type company split plans (excluding those which do not require approval by a resolution at a shareholders meeting of relevant company with nominating committee, etc.);

decisions on the contents of share exchange agreements (excluding those which do not require approval by a resolution at a shareholders meeting of relevant company with nominating committee, etc.);

decisions on the contents of share transfer plans; and

decisions on the content of partial share exchange plans (excluding those which do not require approval by a resolution at a shareholders meeting of the company with nominating committee, etc.).

At a company with nominating committee, etc., even if there are provisions for a convenor, persons appointed by the nominating committee, etc. from among their committee members may call the board of directors meeting.

Executive officers may demand that the directors under paragraph (1), item (i), (d) of the preceding Article call the board of directors meeting by indicating to those directors the matters that are the purpose of the board of directors meeting. In these cases, if a notice of calling of the board of directors meeting which designates as the day of the board of directors meeting a day falling within two weeks from the day of the demand is not dispatched within five days from the day of relevant demand, relevant executive officers may call the board of directors meeting.

The persons appointed by the nominating committee, etc. from among the committee members must report the status of the execution of the duties of relevant nominating committee, etc. to the board of directors meeting without delay.

The executive officers must report the status of the execution of their duties to the board of directors meeting at least once every three months. In these cases, executive officers may submit relevant reports through their agents (limited to other executive officers).

If requested by the board of directors, executive officers must attend the board of directors meeting and provide explanations on the matters requested by the board of directors.

Executive officers perform the following duties:

deciding on the execution of the operations of the company with nominating committee, etc. that were delegated to the executive officers by a resolution at the board of directors meeting pursuant to the provisions of Article 416, paragraph (4); and

the execution of the operations of the company with nominating committee, etc.

If executive officers detect any fact likely to cause substantial detriment to the company with nominating committee, etc., they must immediately report that fact to the audit committee members.

The provisions of Article 355, Article 356 and Article 365, paragraph (2) apply mutatis mutandis to executive officers. In these cases, the term "shareholders meeting" in Article 356, paragraph (1) is deemed to be replaced with "board of directors meeting" and the phrase "At a company with board of directors, a director who has engaged in transactions under each item of Article 356, paragraph (1)" in Article 365, paragraph (2) is deemed to be replaced with "An executive officer who has engaged in transactions under each item of Article 356, paragraph (1)".

The provisions of Article 357 do not apply to companies with nominating committee, etc.

Board of directors must appoint representative executive officers from among the executive officers. In these cases, if there is only one executive officer, that person is to be regarded as having been appointed as the representative executive officer.

A representative executive officer may be removed at any time by a resolution at the board of directors meeting.

The provisions of Article 349, paragraphs (4) and (5) apply mutatis mutandis to representative executive officers, the provisions of Article 352 apply mutatis mutandis to a person appointed by a provisional disposition order provided for in Article 56 of the Civil Provisional Remedies Act to perform the duties of executive officers or representative executive officers on behalf of the same, and the provisions of Article 401, paragraphs (2) through (4) apply mutatis mutandis to the cases where there are no representative executive officers in office, or where there is a vacancy which results in a shortfall in the number of executive officers prescribed in the articles of incorporation, respectively.

If a company with nominating committee, etc. gives the title of president, vice president or other title regarded as having authority to represent the company with nominating committee, etc. to an executive officer who is not a representative executive officer, the company with committees is liable to third parties in good faith for the acts of the executive officer.

If an executive officer engages, or is likely to engage, in an act outside the scope of the purpose of a company with nominating committee, etc., or other acts in violation of laws and regulations or the articles of incorporation, if that act is likely to cause irreparable damage to the company with nominating committee, etc., shareholders having the shares consecutively for the preceding six months or more (or, if a shorter period is prescribed in the articles of incorporation, that period or more) may demand that the executive officer cease that act.

For the purpose of the application of the provisions of the preceding paragraph to a company with nominating committee, etc. which is not a public company, the phrase "shareholders having the shares consecutively for the preceding six months or more (or, if a shorter period is prescribed in the articles of incorporation, that period or more)" in that paragraph is deemed to be replaced with "shareholders".