All Shareholders Present, Even by Proxy: When Flawed Meeting Notices Don't Invalidate Resolutions in Japan Judgment Date: December 20, 1985 Case: Action for Return of Security Deposit (Supreme Court of Japan, Second Petty Bench) This 1985 Japanese Supreme Court decision addressed a common issue in corporate governance, particularly relevant for smaller, closely-held companies: Can resolutions passed at a shareholders' meeting be considered valid if
Improper Stock Option Exercise in a Non-Public Company: Japanese Supreme Court Affirms Share Issuance Nullity Judgment Date: April 24, 2012 Case: Action for Nullity of New Share Issuance (Supreme Court of Japan, Third Petty Bench) This 2012 Japanese Supreme Court decision provides crucial clarification on the validity of shares issued by a non-public company when those shares result from the exercise of stock options (new
Lack of Public Notice for New Share Issuance: A Ground for Nullity, Japanese Supreme Court Rules Judgment Date: January 28, 1997 Case: Action for Confirmation of Non-Existence and Nullity of New Share Issuance (Supreme Court of Japan, Third Petty Bench) This 1997 Japanese Supreme Court decision addressed a critical procedural aspect of issuing new shares: What happens if a company fails to provide the legally required
When Does a Share Certificate Truly Become a "Share Certificate" in Japan? A Supreme Court Perspective Judgment Date: November 16, 1965 Case: Action for Confirmation of Shareholder Status (Supreme Court of Japan, Third Petty Bench) This 1965 Japanese Supreme Court decision addressed a foundational question in company law concerning physical share certificates: At what exact moment does a document prepared by a company to represent share
Favorable Share Issuance Without Shareholder Nod: Valid Transaction, but Directors Beware? (A 1971 Japanese Supreme Court Ruling) Judgment Date: July 16, 1971 Case: Action for Declaration of Nullity of New Share Issuance (Supreme Court of Japan, Second Petty Bench) This 1971 Japanese Supreme Court decision addressed a critical question in corporate law: If a company issues new shares to a third party at what is alleged to
Favorable Share Issuance in Non-Listed Companies: Japan's Supreme Court Sets a Standard Judgment Date: February 19, 2015 Case: Damages Claim (Supreme Court of Japan, First Petty Bench) This Japanese Supreme Court decision from 2015 provides a significant benchmark for assessing whether the issue price of new shares in a non-listed company is "especially favorable" to the recipients. Such a determination
Subsidiary's Purchase of Parent Stock: Piercing the Veil on Treasury Share Prohibitions in Japan Judgment Date: September 9, 1993 Case: Action Seeking Enforcement of Directors' Liability (Supreme Court of Japan, First Petty Bench) This influential 1993 Japanese Supreme Court decision addressed the liability of parent company directors when a wholly-owned subsidiary purchased shares of its parent company, resulting in a significant financial loss.
Employee Stock Ownership Plans and Share Repurchase Obligations: A Japanese Supreme Court Ruling Judgment Date: April 25, 1995 Case: Action for Issuance of Share Certificates (Supreme Court of Japan, Third Petty Bench) This Japanese Supreme Court decision from 1995 addresses the validity of common provisions in employee stock ownership plans (ESOPs), particularly in closely-held companies. The central issue was whether an agreement compelling
Restricted Shares, Unapproved Transfers: Valid Between Parties, Not Against the Company – A Japanese Supreme Court Ruling Judgment Date: June 15, 1973 Case: Action for Declaratory Judgment of Invalidity of Share Transfer Security Agreement (Supreme Court of Japan, Second Petty Bench) This landmark 1973 decision by the Japanese Supreme Court addressed a fundamental question concerning shares with transfer restrictions: What is the legal effect of a transfer
Individual Shareholder Notice: A Prerequisite for Exercising Certain Rights in Japan's Book-Entry Share System Decision Date: December 7, 2010 Case: Appeal Against Dismissal of Share Price Appraisal Petition (Supreme Court of Japan, Third Petty Bench) This Japanese Supreme Court decision addresses a critical procedural question arising from Japan's move to a paperless, book-entry system for shares of listed companies, fully implemented from
Unjust Enrichment from "Forgotten Shares": Valuation When Sold, a Japanese Supreme Court Decision Judgment Date: March 8, 2007 Case: Unjust Enrichment Claim (Supreme Court of Japan, First Petty Bench) This Japanese Supreme Court case tackles a common problem arising from "forgotten shares"—shares where the true owner fails to register their name in the company's shareholder records. When benefits
When the Register Lies: Company Negligence and Shareholder Rights in Japan Judgment Date: July 28, 1966 Case: Share Delivery Claim Case (Supreme Court of Japan, First Petty Bench) This case from Japan's Supreme Court delves into a critical issue in corporate law: what happens when a company, due to its own negligence, fails to update its shareholder register after
Paying for Silence: Corporate Raider Threats and Illegal Shareholder Payments in Japan Corporate governance can be severely tested when companies face aggressive corporate raiders or disruptive shareholders. In such high-stakes environments, management might be tempted to make payments or provide other benefits to neutralize perceived threats. However, Japanese company law strictly prohibits providing benefits to shareholders "in connection with the exercise
Co-Owned Shares, Company Consent, and Voting Rights: Interpreting Japan's Companies Act Article 106 Proviso When company shares are held by more than one person—a common scenario following an inheritance where shares pass to multiple heirs—Japanese company law provides a specific procedure for how shareholder rights associated with those co-owned shares are to be exercised. Generally, the co-owners must designate one person from
Majority Rules: Designating Shareholder Rights for Co-Owned Stock in Japan When an individual who owns all the shares or equity in a company passes away, their holdings typically become the joint property of their heirs. This co-ownership can lead to complex governance issues, especially if the heirs are in disagreement. Japanese company law stipulates that co-owners of shares must designate
What are "Preparatory Proceedings by Means of Documents" in Japanese Civil Litigation and How Do They Streamline Cases? Modern civil litigation, especially in complex commercial disputes, often involves intricate factual backgrounds and numerous legal issues. To ensure that trials (oral arguments) are focused, efficient, and productive, Japanese civil procedure places significant emphasis on "preparatory proceedings" designed to clarify and arrange the points of contention and the
My Japanese Business Partner is a Corporation: Who Has the Authority to Represent It in Court? When business disputes escalate to litigation in Japan, and your counterparty is a corporation (hōjin 法人), a critical preliminary question arises: who within that corporate structure has the legal authority to act on its behalf in court? A corporation, being an artificial legal person, cannot physically appear or make decisions;
Navigating "Actions for Annulment of a Fraudulent Act" (詐害行為取消訴訟) in Japan: Protecting Creditor Rights When a debtor, facing financial difficulties, attempts to diminish their assets to the detriment of their creditors—for example, by gifting property away or selling it at a suspiciously low price—it can leave creditors with little recourse to recover what they are owed. Japanese law provides a powerful remedy
How Does Japanese Law Handle Disputes Over the Authenticity of Documents ("Action for Confirmation of Authenticity of a Document")? In the commercial world, written documents—contracts, promissory notes, letters of guarantee, corporate resolutions—form the bedrock of countless transactions and legal relationships. But what happens when the very genuineness of such a critical document is called into question? If a party alleges that a signature was forged, a document
What is a "Future Performance Action" in Japan and When Can It Be Filed? In the realm of civil litigation, lawsuits typically address rights that have already matured or damages that have already been incurred. However, Japanese law recognizes that circumstances can arise where waiting for an obligation to become due before seeking judicial relief would be impractical, inefficient, or could even jeopardize a
What are "Indirect Facts" and "Auxiliary Facts" in Japanese Evidence Law, and How Do They Help Prove a Case? In any civil lawsuit in Japan, the ultimate goal of presenting evidence is to convince the court of the truth of certain "principal facts" (shuyō jijitsu 主要事実)—those core factual elements that directly establish a legal right or defense. However, direct evidence proving these principal facts is not
Understanding the Three Pillars of the "Adversarial Principle" (弁論主義) in Japanese Civil Trials In a previous overview, we introduced the "Principle of Party Presentation," or Benron-shugi (弁論主義), as a cornerstone of Japanese civil litigation, emphasizing the primary role of the litigating parties in shaping the factual and evidentiary landscape of their dispute. This principle, akin to the adversarial nature of common
What is the "Principle of Party Disposition" (処分権主義) in Japanese Civil Procedure? In the landscape of Japanese civil procedure, litigants—particularly the plaintiff—are vested with significant control over the trajectory of their lawsuit. This empowerment stems from a fundamental tenet known as the "Principle of Party Disposition," or Shobunken-shugi (処分権主義). This principle essentially dictates that the initiation of a
Defining the "Subject Matter of Litigation" (訴訟物): Why is this Concept Crucial in Japanese Lawsuits? When a lawsuit is filed in Japan, one of the most fundamental yet conceptually challenging aspects for legal professionals, especially those from different legal traditions, to grasp is the "Subject Matter of Litigation," known as Soshōbutsu (訴訟物). This is not merely a descriptive term for what the lawsuit
What is the "Principle of Good Faith and Trust" (信義則) and How Does It Impact Civil Litigation in Japan? Beyond the specific articles of procedural law that dictate deadlines, filings, and hearings, Japanese civil litigation is underpinned by a fundamental, overarching principle: the "Principle of Good Faith and Trust," commonly referred to as Shingi-soku (信義則). This doctrine, explicitly stated in Article 2 of the Code of Civil
