Newsletter
BOARD MEETINGS TAKE AT LEAST TWO DIRECTORS
The Company Act requires that if one third of the directorships of a company become vacant, the board of directors must convene a special shareholders' meeting to elect directors to fill the vacancies. Because such a shareholders' meeting has to be convened by the board, on 2 December 2004, the Ministry of Economic Affairs issued an interpretation stating that a meeting takes at least two persons, so if for any reason only two directors of a company are able to perform their duties, the calculation of the quorum for a board meeting may be based on the number of directors actually still in office and able to attend. The directors attending the board meeting should then, in the board's name, call a special share-holders' meeting to elect further directors to fill the vacant positions, in order to continue the operation of the company.
Another MOEA interpretation dated 1 Novem-ber 2004 also clearly states that the total number of directors should be calculated as the number of lawfully elected directors who are actually still in office and able to attend meetings. Ac-cordingly, if a directorship becomes vacant due to a director's automatic statutory removal from office, his directorship should be subtracted from the total number of directors before calculating the quorum for a board meeting. However, if a company's chairperson is removed from office as a director and this brings the number of vacant directorships to one third, the Company Act makes no provision as to whether a board meet-ing should first be called to elect a new chair-person, or a shareholders' meeting should first be called to elect new directors. Thus this is a matter of corporate self-governance, which the company may decide for itself.
According to another MOEA interpretation dated 12 November 2004, when the number of vacant directorships reaches one third, the issue of whether elections should be held for the va-cant directorships, or early new elections should be held for the entire board, is also a matter of corporate self-governance, which the company may decide for itself.