The Commercial Code was revised Wednesday to make it easier for firms to limit the damages corporate executives must pay in lawsuits brought by shareholders.
A bill to revise the code and its special provision law was approved by a majority vote at the House of Councilors.
The bill resulted from growing calls from the business community to limit executive liability after shareholders launched an increasing number of damages suits after the Commercial Code was revised in 1993 to lower the mandatory filing fees to an affordable 8,200 yen.
Under the newly revised code, which excludes deliberate or serious damage, the maximum liability may be limited to six years of remuneration for directors with the right to represent the company, four years for directors with no executive rights and two years for outside directors.
To enforce the limits, a resolution must be passed at a shareholders' meeting or board meeting and has to be approved by all auditors.
A resolution passed by a board meeting may be rescinded if disputed by at least 3 percent of all share holders.
Previously, the consent of all shareholders was required, making it almost impossible to implement such a
With your current subscription plan you can comment on stories. However, before writing your first comment, please create a display name in the Profile section of your subscriber account page.