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1990 (O) 701

1990.11.26
1990 (O) 701
Minshu Vol. 44, No. 8
Judgment concerning the case wherein no illegality was found in the provisions of bylaws allowing the attendance on behalf of a director in a council of an incorporated management association prescribed in Article 47, paragraph (2) of the Act on Building Unit Ownership, etc.
Case seeking a declaratory judgment of invalidity of the resolution of a general meeting
Judgment of the Second Petty Bench, dismissed
Osaka High Court, Judgment of December 27, 1989
A provision of the bylaws of an incorporated management association as prescribed in Article 47, paragraph (2) of the Act on Building Unit Ownership, etc. which stipulates that, when any accident has happened to a director and the director cannot attend the council, only the director's spouse or relative of the first degree of kinship may attend the council on behalf of the director, is not illegal.
Article 55 of the Civil Code, Articles 30, 47 and 49 of the Act on Building Unit Ownership, etc.



Civil Code

(Delegation of Director's Authority)

Article 55 A director may delegate his/her authority on a specific act to other person(s) only in cases such delegation is not prohibited by the applicable articles of incorporation, act of endowment, or resolution of the general meeting of the members.



Act on Building Unit Ownership, etc.

Article 30 (1) Matters among the unit owners concerning the management or use of a building or its grounds or ancillary facilities may be provided for in the bylaws, in addition to what is provided for in this Act.

(2) Any matters concerning a partial common element that do not affect the interests of all of the unit owners may be provided for in the bylaws of the unit owners who should have common use of that element, except where these are provided for in the bylaws of all of the unit owners.

(3) In the cases referred to in the preceding two paragraphs, the bylaws may not prejudice the rights of any persons other than unit owners.



Article 47 (1) The association referred to in Article 3 whose number of unit owners is not less than 30 becomes a corporation by specifying to the effect that it is becoming a corporation due to a meeting resolution adopted by at least a three-fourths majority of the unit owners and a three-fourths majority of the votes, by specifying its name and office, and by registering in the locality of its principal office.

(2) The corporation under the preceding paragraph is called an "incorporated management association."

(3) In addition to what is provided for in this Act, the matters necessary for the registration of an incorporated management association are specified by Cabinet Order.

(4) The matters that must be registered in regard to an incorporated management association may not be duly asserted against a third party until after such matters have been registered.

(5) The meeting resolutions, the bylaws, and the acts engaged in within the scope of the duties of a manager before the establishment of an incorporated management association, are effective against the incorporated management association.

(6) An incorporated management association may claim and receive insurance monies based on a casualty insurance contract pursuant to the provisions of Article 18, paragraph (4) (including the cases where applied mutatis mutandis pursuant to Article 21) on behalf of unit owners.

(7) The provisions of Articles 43, 44, 50 and 51 of the Civil Code apply mutatis mutandis to an incorporated management association, and the provisions of Article 127, paragraph (2) of the Bankruptcy Act (Act No. 71 of 1922) apply mutatis mutandis to an existing incorporated management association.

(8) The provisions of Section 4 and the proviso to Article 33, paragraph (1) (including the cases where applied mutatis mutandis pursuant to Article 42, paragraph (3) and Article 45, paragraph (2)) do not apply to an incorporated management association.

(9) With regard to an incorporated management association, where the provisions of the main clause of Article 33, paragraph (1) (including the cases where applied mutatis mutandis pursuant to Article 42, paragraph (3) and Article 45, paragraph (2); hereinafter the same applies in this paragraph) apply, the phrase "by the manager" in the main clause of Article 33, paragraph (1) is deemed to be replaced with "by the director at the office of the incorporated management association," and in cases where the provisions of Article 34, paragraphs (1) through (3) and paragraph (5), Article 35, paragraph (3), Article 41, and Article 43 apply, the term "manager" in these provisions is deemed to be replaced with "director."

(10) With regard to the application of the provisions of the Corporation Tax Act (Act No. 34 of 1965) and other laws and regulations related to corporation tax, an incorporated management association is deemed to be a corporation in the public interest, etc. as prescribed in Article 2, item (vi) of that Act. In this case, where the provisions of Article 37 of that Act apply, the term "corporation in the public interest, etc." in Article 37, paragraphs (3) and (4) of that Act is deemed to be replaced with "corporation in the public interest, etc. (excluding an incorporated management association)" and where the provisions of Article 66 of that Act apply, the term "ordinary corporation" in Article 66, paragraphs (1) and (2) of that Act is deemed to be replaced with "ordinary corporation (including an incorporated management association)," and the term "corporation in the public interest, etc." in Article 66, paragraph (3) of that Act is deemed to be replaced with "corporation in the public interest (excluding an incorporated management association)".

(11) With regard to the application of the provisions of the Consumption Tax Act (Act No. 108 of 1988) and other laws and regulations related to consumption tax, an incorporated management association is deemed to be a corporation as set forth in Appended Table 3 of that Act.



Article 49 (1) An incorporated management association shall have a director.

(2) The director shall represent the incorporated management association.

(3) When there are multiple directors, each director shall represent the incorporated management association.

(4) The provisions of the preceding paragraph shall not preclude an incorporated management association from designating a director to represent the incorporated management association or providing to the effect that multiple directors are to jointly represent the incorporated management association in its bylaws or by resolution at a meeting, or from specifying that the director who will represent the incorporated management association is to be chosen by the election of a director from among the directors themselves under the provisions of the bylaws.

(5) The director's term of office shall be two years; however, when the bylaws specify a different period of not longer than three years, such period shall be the director's term of office.

(6) Where there is any vacancy in the office of a director, or a shortfall in the number of directors as specified in the bylaws, a director(s) who has retired due to the expiration of his/her term of office or resignation shall perform his/her duties until a newly appointed director assumes office.

(7) The provisions of Article 25, the provisions of Article 52, paragraph (2) and Articles 54 through 56 of the Civil Code, and the provisions of Article 35, paragraph (1) of the Non-Contentious Case Procedures Act (Act No. 14 of 1898) apply mutatis mutandis to a director.
The final appeal is dismissed.

The costs of the final appeal shall be borne by the appellant of final appeal.
Reasons for a final appeal stated by the counsels for final appeal, KINOMIYA Keizo, TAKII Shigeo, NAKATA Takaaki and SHIGEYOSHI Masami

I. It is reasonable to consider that when an incorporated management association prescribed in Article 47, paragraph (2) of the Act on Building Unit Ownership, etc. (hereinafter simply referred to as the "management association" and the "Act," respectively) has appointed more than one director in addition to the director with an authority of representation and established a council pursuant to its bylaws, the provision of the bylaws stipulating that "when an accident has happened to a director and the director cannot attend the council, only the director's spouse or relative of the first degree of kinship may attend the council on behalf of the director" (hereinafter referred to as the "Provision") is not in violation of Article 55 of the Civil Code as applied mutatis mutandis to directors of a management association pursuant to the provisions of Article 49, paragraph (7) of the Act and there are no other reasons to find the Provision to be illegal.

II. In other words, a director of a corporation represents (acts on behalf of) the corporation with respect to the corporation's business in general but if a director must execute all of the business by him/herself, this would not always be easy to do. On the other hand, if comprehensive delegation of a corporation's authority to a third party is allowed, the fiduciary relationship between a director and the corporation: which had appointed the director, would be impaired, and thus, the provisions of Article 55 of the Civil Code have prohibited such comprehensive delegation of authority, while allowing a director to delegate the corporation's authority on a specific act to other person(s) only in cases where such delegation is not prohibited by the applicable articles of incorporation, act of endowment, or resolution of the general meeting of the members; the provisions of Article 55 of the Civil Code do not directly stipulate concerning such matters as the attendance in and the exercise of voting rights at a council in the case where more than one director is appointed and a council is established. Accordingly, articles of incorporation or an act of endowment allowing delegation of authority for the attendance in and the exercise of voting rights at a council would not immediately be illegal based on the provisions of that Article.

III. The issue of whether or not the attendance and exercise of voting rights in an internal conference body for a corporation's decision-making is adaptable to the system of delegation of authority should be determined based on whether or not such delegation of authority is consistent with the purport of delegation of authority to a corporation's director, in light of the purpose of establishing a conference body in the corporation and the content of business delegated to the conference body.

When this finding is applied to a management association, according to the Act, the business of a management association must be implemented based on meeting resolutions, in principle, and matters that affect the content of the unit ownership should be determined by bylaws or meeting resolutions. Matters which may be delegated to directors or other officers based on bylaws are limited (Article 52, paragraph (1) of the Act), and the provisions of Article 52, paragraph (2) of the Civil Code, which stipulate that decisions are to be made by the majority in the case where there is more than one director, are applied mutatis mutandis. However, it is reasonable to consider that the Act has left the decisions on the following to be made in bylaws, which are autonomous rules: whether or not to have more than one director or a director with no authority of representation (Article 49, paragraph (4) of the Act), whether or not to make decisions at a council when there is more than one director, and further the necessity of attendance and methods of exercising voting rights in the case where a council is established. In other words, the following matters may be specified in bylaws: [i] to appoint a director who has an authority of representation; [ii] to appoint another director who has no authority of representation to support and supervise the execution of business by the former; [iii] to establish a council consisting of such directors; and [iv] to specify the possibility of delegation of authority for the exercise of voting rights at a council, the requirements thereof and the scope of persons to be appointed.

The Provision may be construed to have allowed delegation of authority not only for the attendance in a council but also for the exercise of voting rights at a council. Moreover, it allows only the attendance on behalf of a director in a council based on the appointment of the director by limiting the scope of persons to be appointed to the director's spouse or relative of the first degree of kinship only when an accident has occurred with respect to the director; the Provision cannot be found to impair the fiduciary relationship between the management association and such director.

IV. As such, the determination made by the court of prior instance which dismissed the appellant's claims on the grounds that the Provision is lawful can be accepted for being legal and the judgment in prior instance contains no illegality as argued by the counsels. The arguments are only criticizing the judgment in prior instance based on the counsels' own opinions or by focusing on the inappropriateness in the wordings used in the judgment in prior instance, and thus are not acceptable.

Accordingly, in accordance with Articles 401, 95 and 89 of the Code of Civil Procedure, the Court unanimously decides as set forth in the main text.
Justice NAKAJIMA Toshijiro

Justice FUJISHIMA Akira

Justice KAGAWA Yasukazu

Justice KIZAKI Ryouhei
(This translation is provisional and subject to revision.)