091 Interim draft on revision of the Company Act
They have started to collect public comments on “Interim draft on revision of the Company Act” made by Board of Enactment of the Company Act which belongs to the Ministry of Justice.
Since it would be too long to explain this topic fully in this blog, we would like to take matters that relates to accounting auditors.
One of them is the “Proposals on appointment and dismissal of accounting auditors and decisions on their remunerations”, which is located on the part “Functions of the second auditors”,
According to the current Act, proposals on appointment and dismissal of accounting auditors and decisions on their remunerations are made by company’s directors. And these proposals and decisions should be ratified by company’s auditors so as to assure an independency of the accounting auditors (Company Act 344.1, 399).
In another word, by letting company’s auditors own the rights described above they intend to offset the paradox that accounting auditors who audits company’s financial statements prepared by company’s directors are actually under directors’ control in a sense that their dismissal and remunerations are largely influenced by directors’s decision.
The issued interim draft points out that they should give company’s auditors more power, concretely speaking to give them rights to decide, in order to reinforce the supervision to the directors.
We expect various comments on whether this draft really accomplishes an intended purpose, so we look forward to them.
