Newsletter
MOEA INTERPRETATIONS ON SHAREHOLDER'S MOTION
Artile 172-1 of the Company Act provides that a shareholder holding at least 1% of a company's total issued shares may submit in writing a single motion for consideration by an ordinary share-holders' meeting. But if a shareholder submits more than one motion, none of the motions shall be put on the agenda. The Ministry of Economic Affairs, by three interpretations dated 1 June 2006, provided guidelines as to how sharehold-ers motions should be handled.
Test of A Single Motion
In response to doubts as to whether a motion, submitted to a company in writing by a share-holder holding at least 1% of the company's total issued shares, and calling for legal proceedings to be filed against three of the company's direc-tors, should be regarded as a single motion or multiple motions, the MOEA interpretation stated that if the matters to be considered in re-spect of each director are based on the same facts, then the motion should be regarded as a single motion, regardless of the number of persons against whom it is directed and the number of times the resolution was voted on. The same would apply to a motion regarding multiple di-rectors who participated in the discussion of and voted on a particular resolution at a board of di-rectors meeting.
Replacement of Directors and Supervisors
In response to doubts over a situation in which a shareholder holding at least 1% of a company's total issued shares submits, for consideration by an ordinary shareholders' meeting, a motion for the dismissal of all the company's directors and supervisors, together with a conditional motion for the immediate election of directors and su-pervisors, the MOEA interpretation stated that since a motion for dismissal is a matter that may be decided by resolution of a shareholders' meeting, if the motion complies with the rules for accepting shareholder motions then the company should include the motion in the agenda for the shareholders' meeting, as stated in the notice of meeting, and the motion should be put to a vote at the meeting. If the motion for dismissal is carried, then the condition for holding elections is fulfilled, and the company should conduct full elections of all directors and supervisors at the same meeting. However, this does not apply to a company that has adopted a system of prior nomination of candidates for election as directors and supervisors, because it is not possible for the nomination procedures to be completed at the same shareholders' meeting.
Late Submission of Motions
In yet another interpretation, the MOEA stated that questions of whether a particular shareholder holds at least 1% of a company's issued shares, and of whether a motion proposed by a share-holder has been submitted after the final deadline set by the company for accepting motions, must be presented to the board of directors for review; however, the board may attach a resolution stating: "Following this review of shareholder motions by the board of directors, if any share-holder submits a motion after the final deadline for acceptance of motions as announced by the company, the motion shall not be placed on the agenda of the shareholders' meeting and need not be presented to the board for review." None-theless, before the date on which notice of the shareholders' meeting is sent out, the company should inform those shareholders who have pro-posed motions of the outcome of the board's de-liberations, and at the shareholders' meeting the board should state the reasons for any share-holder motions not being included in the agenda.
Responsible officers of a company who violate the above provisions will be subject to adminis-trative fines. The issue of whether a company has violated the above provisions must be de-termined according to the facts of each individ-ual case.