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| TITLE | Supreme Court Decision 2017Da222368 Decided November 11, 2021 【Companyrelated Lawsuits】 [full Text] |
|---|---|
| Summary | |
| 【Main Issues and Holdings】 [1] Where a representative director neglects another director in violation of a duty to monitor another director due to bad faith or negligence thereof even though there exist reasonable grounds to doubt that the execution of business by another director is illegal, whether the representative director is liable for damage caused to the company resulting therefrom (affirmative) [2] On the sole basis of the circumstance that a representative director and directors in charge of each business of a large company have no choice but to handle each professional field exclusively in accordance with the internal division of affairs, whether they can be exonerated from a duty to monitor the execution of business of other directors (negative in principle) and the form of an internal control system that can be constructed in such a case Where a representative director makes no effort to construct an internal control system related thereto and make it work properly or does not prevent other directors, etc. from carrying out unlawful execution of business by intentionally disregarding the performance of the duty of inspection and supervision through the above system even though a high legal risk is expected in light of the purpose or size of the company, the nature of business thereof, regulations by the statutes that can be applied thereto, etc., whether he/she can be seen to have neglected his/her duty to inspect the whole business of the company as a representative director (affirmative) | |
