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Article 18
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A shareholder having controlling power over a securities firm shall comply with the following provisions:
- It shall bear a duty of good faith to other shareholders and shall not directly or indirectly cause the company to engage in transactions at other than arms' length or involve in management conduct for adverse interest.
- Its representative shall follow the rules implemented by the securities firm with respect to the exercise of rights and participation of resolution, so that at a shareholders' meeting, the representative shall exercise his/her voting right for the best interest of all shareholders and in good faith and will exercise the fiduciary duty of a director or supervisor.
- It shall comply with relevant laws, regulations and the articles of incorporation of the company in nominating directors or supervisors and shall not act beyond the authority granted by the shareholders meeting or board meeting.
- It shall not improperly intervene in corporate policy making or obstruct corporate management activities.
- It shall not restrict or impede the management of the company by methods of unfair competition.
- The corporate representative appointed by it after it was elected as director or supervisor shall have the professional qualifications required by the company, and it shall not replace the representative unless there is a good reason.
If a controlling shareholder wishes to communicate and liaise with the securities firm, it shall do so through the representative under subparagraph 6 of the preceding paragraph, and shall emphasize the following principles:
- The representative may invite a managerial officer(s) of the company to accompany him or her to communicate with the controlling shareholder when necessary, and the securities firm shall prepare a record of the communication.
- Suggestions regarding a proposal to be put to the board of directors or an operational policy shall be presented only to the board of directors or functional committee for exchange and discussion.
- With regard to any news with a material impact on the securities firm that is learnt about in the course of communication or liaison, the obligation of confidentiality shall be fulfilled until such news is publicly disclosed, and Article 157-1 of the Securities and Exchange Act regarding insider trading shall be observed.
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