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A company's manager or director competes with the company wishing to take actions which compete with the company in similar business and are his/her or another's interest must obtain approval from the company or its shareholders, as applicable (Article 32 and Paragraph 1, Article 209 of the Company Act). The purpose of such provisions is to prevent conflict of interest, violation of the fiduciary duty of a manager or director, and damage to the company's rights and interest.
Notwithstanding the above, if a company's manager or director, without approval from the company or its shareholders, serves simultaneously another company which is in similar business but is its 100% parent company or subsidiary, it will not constitute a violation of Article 32 (for managers) or Paragraph 1, Article 209 (for directors) of the Company Act because the companies are within the same group and there is conflict of interest. The Ministry of Economic Affairs issued a ruling stating such opinion on 11 October 2012.
