099 Public comment on the exposure draft of revised Company Act
The Ministry of Justice announced on April 18 a progress of a discussion on “corporate governance” at a meeting of Subcommittee Legislative Council of the Company Act.
This discussion took place after they had collected till January public comments about “the interim expoure draft on revision of the Company Act”.
In terms of accounting auditors, “remuneration of the accounting auditors” is on the discussion table. (Please refer to previous column of ours about the problem of the current system.)
Public comments collected this time is the followings:
– Decision on the remuneration of the accounting auditors should be under control of directors who are in charge of directing companies.
– There is an apprehension of higher audit fees if company’s auditors have authority to decide the audit fees.
This is an issue because company’s auditors who are not responsible for the company’s performance have authority to make a decision on an action that causes a company’s cost.
On the other hand, committee’s opinion is to make the rule the same as the corporate accounting advisors and auditors, which is to say, to give accounting auditors a right to say their opinions in shareholders’ meetings (Company Act 379, 387).
According to the committee, this could be a solution to the problem. It also says, however, that there is a room for more consideration about to whom or to which function of the company to give a right to propose an agenda to shareholders’ meetings
Independency of the accounting auditors is quite important because it could ruin the effectiveness of the auditing. We would like to keep a close eye on this matter.
