Authority of the Board of Directors

Plain-language explanation

This article defines who sits on the board of directors and what the board must decide for companies that have a board of directors (取締役会設置会社). The board consists of all directors collectively, and it has three core functions: (1) making decisions on important business execution matters, (2) supervising how directors perform their duties, and (3) appointing and removing the representative director (the person with legal authority to act on the company's behalf, e.g., the CEO/President). Crucially, only the board — not a single director or shareholder — can appoint or dismiss the representative director, and that appointment must come from among the sitting directors.

Paragraph 4 is the most operationally important part: it lists specific matters that the board is legally prohibited from delegating to individual directors or officers, no matter how much the board might want to streamline decision-making. These include disposing of or acquiring significant company assets, taking on large debts/loans, hiring or firing key managers (like a general manager or branch manager), establishing or closing branches or other major organizational units, key matters related to soliciting corporate bond subscribers, and building the internal control system (compliance and risk management structure) for the company and its subsidiary group. For "large companies" (large capital or large liabilities), the board is affirmatively required to decide on the internal control system — skipping this can expose directors to liability claims.

In practice, this article is the key test for "does this decision need a formal board resolution, or can a single executive sign off?" Companies often get into legal trouble when a major asset sale, large loan, or branch closure is approved only through an internal approval routing (ringi) process without an actual board resolution — this can render the transaction vulnerable to challenge and expose the responsible directors to personal liability for breaching their duty of care.

日本語での解説

Common scenarios

• ▸会社が本社ビルや工場など重要な不動産を売却・購入する際、取締役会決議が必要かを確認する場面
• ▸多額の銀行借入や社債発行を行う際に、担当役員限りの決裁で済ませてよいか判断する場面
• ▸支店・営業所の新設や統廃合を計画する際の意思決定プロセスの適法性を確認する場面
• ▸社長交代や代表取締役の追加選任を行う際の手続き（取締役会決議の要否)を確認する場面
• ▸内部統制システム（コンプライアンス体制）の整備方針を取締役会で決議すべきかどうかを検討する場面(特に大会社の場合)