Bill OK'd to Oblige Big Japan Firms to Have Outside Directors
Tokyo, Dec. 4 (Jiji Press)--The Diet, Japan's parliament, enacted Wednesday government-proposed legislation to oblige major firms in the nation to have outside board directors.
The House of Councillors, the upper chamber, passed the bill to amend the companies law by a majority vote at a plenary meeting on the day, with support from the ruling Liberal Democratic Party and its coalition partner, Komeito, and opposition parties, including the Constitutional Democratic Party of Japan and the Democratic Party for the People.
The bill was approved by the House of Representatives, the lower chamber, late last month. While most large companies already have outside directors on their boards, the government hopes to reinforce corporate governance by clarifying the rule in the law.
Rules related to general shareholder meetings were also changed. The revised law allows companies to send documents related to shareholder meetings in electronic data, while adding a new clause that limits the number of proposals a shareholder can submit at a general shareholder meeting to 10 in principle.
The government draft included a provision enabling companies to reject proposals amounting to abusive exercise of shareholders' right to make proposals, such as those leading to defamation and sabotage of shareholder meetings. But the provision was deleted following a complaint from the opposition side that it is difficult to judge whether proposals submitted are tantamount to abusive exercise of the right.
[Copyright The Jiji Press, Ltd.]