Q40: Is it better to have a board of directors or an auditor?
ringo tax corporation
Japanese Certified Public Accountant ・Tax Accountant Hiroya Aihara
Ringo Tax Corporation
A: While having a board of directors or an auditor is not mandatory, there are cases where it is advisable to have them. According to the Companies Act, it is necessary to establish at least a general meeting of shareholders and a board of directors. However, by setting up a board of directors or an auditor, it is possible to make company decisions more quickly, and the company's external credibility may increase.
Q: What are the benefits of establishing a board of directors?
A: By establishing a board of directors, company decisions can be made more swiftly. Especially when there are many shareholders and convening a general meeting of shareholders is cumbersome, having a board of directors allows for decisions on certain matters without needing to hold a shareholders' meeting, enabling efficient management.
Q: What are the benefits of establishing an auditor?
A: Establishing an auditor increases the company's external credibility. Furthermore, according to the Companies Act, auditors play a role in auditing the company's business and/or financial affairs, which improves the company's health and transparency. Additionally, companies with an auditor may be able to utilize the Companies Act's provisions for exemption from liability.
Q: What kind of companies need a board of directors or an auditor?
A: Large companies with a capital of 500 million yen or more or debts amounting to 20 billion yen or more must have an auditor and an accounting auditor. It is important to consider establishing a board of directors or an auditor depending on the company's size and nature of business.
