A is an official found in Japan

Japan

Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...

ese kabushiki kaisha

Kabushiki kaisha

is a type of business defined under Japanese law.-Usage in language:Both kabushiki kaisha and the rendaku form kabushiki gaisha are used. The "K" spelling is much more common in the names of companies and in English-language legal literature, whereas the "G" pronunciation is dominant in...

(business corporations).

Statutory auditors are elected by shareholders and hold a position in the hierarchy alongside the board of directors

Board of directors

A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...

. A kabushiki kaisha must have at least one statutory auditor, unless the transfer of shares is restricted in the articles of incorporation

Articles of Incorporation

The Articles of Incorporation are the primary rules governing the management of a corporation in the United States and Canada, and are filed with a state or other regulatory agency.An equivalent term for LLCs in the United States is the Articles of Organization...

. If the company is classified as a "large" company (i.e. with more than ¥500 million in paid-in capital or ¥20 billion in liabilities), it must have three statutory auditors, or an audit, compensation and nominating committee

Nominating committee

A nominating committee is a group formed usually from inside the membership of an organization for the purpose of nominating candidates for office within the organization...

 system similar to that used by public companies in the US.

Statutory auditors have several functions:

1. They initiate derivative suit
   Derivative suit
   A shareholder derivative suit is a lawsuit brought by a shareholder on behalf of a corporation against a third party. Often, the third party is an insider of the corporation, such as an executive officer or director. Shareholder derivative suits are unique because under traditional corporate law,...
   
   s against the board of directors
   Board of directors
   A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...
   
    on behalf of the shareholder
   Shareholder
   A shareholder or stockholder is an individual or institution that legally owns one or more shares of stock in a public or private corporation. Shareholders own the stock, but not the corporation itself ....
   
   s, and represent the company in those suits. This right was once reserved for the auditor; however, following precedent from a recent lawsuit against Daiwa Bank, groups of shareholders can now file suits themselves without going through the auditor.
2. In "mid-size" and "large" companies (i.e. with more than ¥100 million of paid-in capital), they have the right to attend board meetings to monitor the directors' actions.
3. In "mid-size" companies, they audit the financial reports submitted by the company.
4. In "large" companies, they oversee auditing performed by external certified public accountant
   Certified Public Accountant
   Certified Public Accountant is the statutory title of qualified accountants in the United States who have passed the Uniform Certified Public Accountant Examination and have met additional state education and experience requirements for certification as a CPA...
   
   s, i.e. external auditors.

Statutory auditors are often selected from among the senior management of the company, or are former directors of related companies (such as suppliers or keiretsu

Keiretsu

A is a set of companies with interlocking business relationships and shareholdings. It is a type of business group. The keiretsu has maintained dominance over the Japanese economy for the greater half of the twentieth century....

partners).