Newsletter
CERTAIN SHARE ISSUANCE DECISIONS MAY BE DELEGATED TO CHAIRPERSON
In company registrations practice, at one time all procedures relating to a company's issuance of new shares required a special resolution of the company's board of directors. Later, because the number of new shares to be issued by a public-issuing company required the approval of the regulatory authority, in order to prevent a situation where permission was granted by the regulator only after the share issuance record date set by the company's board had passed, public-issuing companies were allowed to delegate the power to set the record date for a new share issuance to the chairperson.
In an interpretation issued on 18 December 2002, the Ministry of Economic Affairs (MOEA) further stated that if a company were required to convene a board meeting solely to decide the record date for a new share issuance, this might create great inconvenience for the company; accordingly, based on practical needs, the boards of both public-issuing and non-public-issuing companies could delegate the power to set the record date for a new share issuance to the managing directors or to the chairperson.
In response to hopes for greater flexibility in practice, at a conference held on 31 March 2008 to discuss proposed amendments to the Company Act and other matters, the MOEA adopted a resolution that if, with regard to procedures for an issuance of new shares, a company's board has already determined a specific range for matters such as the number of shares and the subscription price, then the board may, by resolution, authorize the chairperson to set the precise figures within that range. Furthermore, the power to set other record dates that are determinable by board resolution, such as the record date for a merger or acquisition or for a capital reduction, may also be delegated to the chairperson.