2017.02.21

2016 (Kyo) 24

Minshu Vol. 71, No. 2

Decision on the effect of provisions of the articles of incorporation of a private company with board of directors to the effect that the representative director may be appointed not only by a resolution of the board of directors but also by a resolution of the shareholders meeting

Case of appeal with permission against the ruling to dismiss an appeal against the ruling to dismiss a petition for a provisional disposition order to suspend performance of duties and to appoint a deputy

Decision of the Third Petty Bench, dismissed

Tokyo High Court, Decision of March 10, 2016

Provisions of the articles of incorporation of a private company with board of directors to the effect that the representative director may be appointed not only by a resolution of the board of directors but also by a resolution of the shareholders meeting are valid.

Article 295, paragraph (2) and Article 362, paragraph (2), item (iii) of the Companies Act



Companies Act

Article 295

(2) Notwithstanding the provisions of the preceding paragraph, for a Company with Board of Directors, a shareholders meeting may resolve only the matters provided for in this Act and the matters provided for in the articles of incorporation.

Article 362

(2) Board of directors shall perform the following duties:

(iii) Appointing and removing Representative Directors.

The appeal is dismissed.

The cost of the appeal shall be borne by the appellant.

Reasons for the Appeal Filed by the Counsel for the Appeal, MIYAKE Shunji



1. In this case, the appellant, who was the representative director of appellee Y1 (hereinafter, the “Appellee Company”), claimed, among others, the invalidity of the resolution for appointing appellee Y2 as a director and designating appellee Y2 as the representative director of the Appellee Company passed at the Appellee Company’s shareholders meeting held on September 30, 2015, and filed a petition against the appellees for a provisional disposition order to suspend performance of duties by appellee Y2 as a director and the representative director and to appoint a deputy to perform such duties in the place of appellee Y2. The Appellee Company is a company with board of directors and is a stock company which is not a Public Company as defined in Article 2, item (v) of the Companies Act (hereinafter, the “Act”) (hereinafter, a “Private Company”). The articles of incorporation of the Appellee Company contain provisions to the effect that its representative director shall be appointed by a resolution of the board of directors but may be appointed by a resolution of the shareholders meeting if necessary (hereinafter, the “Provisions”), and the validity of these Provisions is in dispute.

2. The appellant argues that the Provisions are invalid because, in a company with board of directors, the board of director’s authority to supervise the representative director’s performance of his/her duties is undermined if the company’s articles of incorporation allow the representative director to be appointed by a resolution of the shareholders meeting as well as by a resolution of the board of directors.

3. If a Private Company, which is not necessarily required to have a board of directors (see Article 327, paragraph (1), item (i) of the Act), does have one at its discretion, its shareholders meeting will be allowed to resolve only the matters provided for in the Act and the matters provided for in the articles of incorporation (Article 295, paragraph (2) of the Act); however, there are no express provisions limiting these matters that may be so provided for in the articles of incorporation. While the Act is understood as positioning the board of directors as an organ for supervising the representative director’s performance of his/her duties, allowing the representative director of a Private Company with board of directors to be appointed not only by a resolution of the board of directors but also by a resolution of the shareholders meeting does not deny the board of directors’ authority to appoint and dismiss the representative director (Article 362, paragraph (2), item (iii) of the Act) and does not thus result in a loss of the effectiveness of the board of directors’ supervisory authority.

For the above reasons, it is reasonable to understand that provisions of the articles of incorporation of a private company with board of directors to the effect that the representative director may be appointed not only by a resolution of the board of directors but also by a resolution of the shareholders meeting are valid.

4. The decision by the original court regarding the appellant’s argument can be approved as being in line with the above point. The appellant’s argument is not acceptable.

Accordingly, the decision is unanimously rendered as described in the main text.

Justice YAMASAKI Toshimitsu

Justice OKABE Kiyoko

Justice OTANI Takehiko

Justice OHASHI Masaharu

Justice KIUCHI Michiyoshi