company (e.g. its board of directors or a shareholders' meeting, as defined in the articles of incorporation) must approve any transfer of shares between shareholders; this designation must be made in the articles of incorporation. The articles must be sealed by the incorporator(s) and notarized by a civil law notary, then filed with the Legal Affairs Bureau in the jurisdiction where the company will have its head office. Receipt of capital In a direct incorporation, each incorporator receives a specified amount of stock as designated in the articles of incorporation. Each incorporator must then promptly pay its share of the starting capital of the company, and if no directors have been designated in the articles of incorporation, meet to determine the initial directors and other officers. The other method is an "incorporation by offering," in which each incorporator becomes the stock underwriter of a specified number of shares (at least one each), and the other shares are offered to other investors. As in a direct incorporation, the incorporators must then hold an organizational meeting to appoint the initial directors and other officers. Any person wishing to receive shares must submit an application to the incorporator, and then make payment for his or her shares by a date specified by the incorporator(s). Capital must be received in a commercial bank account designated by the incorporator(s), and the bank must provide certification that payment has been made. Once the capital has been received and certified, the incorporation may be registered at the Legal Affairs Bureau. Structure Board of directors Under present law, a K.K. must have a consisting of at least three individuals. Directors have a statutory term of office of two years, and auditors have a term of four years. Small companies can exist with only one or two directors, with no statutory term of office, and . In such companies, decisions are made via shareholder meeting and the decision-making power of the directors is relatively limited. As soon as a third director is designated such companies must form a board. At least one director is designated as a , holds the corporate seal and is empowered to represent the company in transactions. The Representative Director must "report" to the board of directors every three months; the exact meaning of this statutory provision is unclear, but some legal scholars interpret it to mean that the board must meet every three months.