Quorum
The minimum number of attendees required for a meeting or a resolution to be valid.
A quorum is the minimum number of attendees required for a deliberative body to conduct proceedings validly and pass resolutions. It comes from a Latin word meaning “of whom,” and it is a system for guaranteeing the legitimacy of legal decision-making. Resolutions passed at a meeting that does not meet the quorum may be legally invalid.
Quorums under Japan’s Companies Act
| Body | Quorum (attendance requirement) | Legal basis |
|---|---|---|
| Shareholders’ meeting (ordinary resolution) | Attendance of shareholders holding a majority of voting rights | Companies Act Article 309, Paragraph 1 |
| Shareholders’ meeting (special resolution) | Attendance of shareholders holding a majority of voting rights | Companies Act Article 309, Paragraph 2 |
| Board of directors | Attendance of a majority of directors | Companies Act Article 369, Paragraph 1 |
| Board of company auditors | No attendance quorum provision (a resolution passes with the approval of a majority of the auditors) | Companies Act Article 393, Paragraph 1 |
Only the board of company auditors is treated differently. Article 393, Paragraph 1 of the Companies Act only states that “resolutions of the board of company auditors are made by a majority of the company auditors,” and sets no lower limit on the number of attendees (an attendance quorum). Whereas the board of directors has a two-tier structure of “attendance of a majority of directors + approval by a majority of those present,” for the board of company auditors the denominator of the approval count is not those present but all the auditors. In a company with 3 auditors, a resolution does not pass without the approval of 2.
Considering quorums in scheduling
Even for meetings that are not legal bodies, if you decide, for example, that a meeting with 10 participants “will be held once the 5 people needed for the decision are present,” the days when those 5 people are free become the candidates.
In scheduling large groups, one approach is to clearly distinguish required attendees (the members who make up the quorum) from optional attendees and narrow the candidate dates by prioritizing the required attendees’ schedules.
Points to watch when scheduling statutory meetings
For statutory bodies such as a board of directors, one approach is to build the candidates starting from the calendar of the member whose schedule is hardest to secure (such as an outside director), and to extend the invitation to the other participants once the attendance of enough people to make up the quorum is settled. Another way to set it up, to guard against the risk of falling below the quorum because of a sudden absence on the day, is to choose the date with expected attendance that leaves a margin of one person rather than the bare minimum.