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investment in Japan. The Japanese Government prohibited direct
foreign investment unless approved by MITI.
C. Burndy-Japan
1. Formation
Burndy-US wanted to enter the Japanese market in the early
1960s. To do so, Burndy-US believed that it needed a
distribution system in Japan that was owned and operated by a
Japanese company. Furukawa and Sumitomo had sales organizations
and distribution systems for their products throughout Japan. On
September 28, 1961, Burndy-US, Furukawa, and Sumitomo agreed to
form Burndy-Japan to manufacture and sell Burndy-US products in
Japan. Burndy-US, Furukawa, and Sumitomo each became the owner
of 100,000 shares of common stock (i.e., a one-third interest) in
Burndy-Japan.
The Burndy-Japan articles of incorporation (as amended)
provide: (a) Burndy-Japan shall have not more than 15 directors
and not more than 3 auditors; (b) the board of directors shall
elect one president and may elect one chairman and some (i.e., an
unspecified number of) executive directors; (c) the chairman
shall preside over meetings of the board of directors; (d) the
president shall act for the chairman if there is no chairman or
the chairman is unable to act; (e) the president shall preside
over general meetings of shareholders; and (f) each shareholder
shall have one vote per share.
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