Shareholder Litigation in Japan: Calculating Claim Values in Derivative and Other Corporate Lawsuits

Company-related litigation in Japan encompasses a variety of legal actions that shareholders or other stakeholders might initiate. A critical procedural aspect of these lawsuits is the determination of the "Sogaku" (訴額), or the value of the subject matter of the action. This valuation is pivotal as it dictates which court will have jurisdiction and, significantly, forms the basis for calculating the initial court filing fees. The method for calculating "Sogaku" in corporate lawsuits is not uniform; it varies considerably depending on the specific nature of the claim, with shareholder derivative suits receiving unique treatment. This article will delve into how "Sogaku" is assessed for key types of shareholder and corporate litigation in Japan.

The "Sogaku" Framework in Corporate Disputes

As with other civil actions in Japan, the calculation of "Sogaku" in corporate litigation hinges on whether the claim is classified as one "concerning property rights" (zaisanken-jō no seikyū) or "not concerning property rights" (hi-zaisanken-jō no seikyū). The former is valued based on its objective economic worth, while the latter, due to its intangible nature, is assigned a deemed value for procedural purposes. This distinction becomes particularly nuanced within the spectrum of corporate legal actions.

Shareholder Derivative Suits (株主代表訴訟 - Kabunushi Daihyō Soshō): A Special "Sogaku" Regime

Shareholder derivative suits are a prominent feature of corporate governance, allowing shareholders to sue, on behalf of the company, typically against directors or other officers for breaches of duty that have harmed the company. In Japan, these actions are principally governed by provisions such as Article 847 and subsequent articles of the Companies Act (会社法 - Kaishahō, Act No. 86 of 2005).

"Sogaku" Treatment: Deemed Non-Monetary

Despite often seeking the recovery of substantial monetary damages for the company, shareholder derivative suits in Japan receive special treatment for "Sogaku" calculation concerning court fees. For this specific purpose, they are generally treated as if they are claims not concerning property rights.

Consequently, such suits are typically assigned a deemed "Sogaku" of 950,000 yen. This valuation is based on Article 4, Paragraph 2 of the Act on Costs of Civil Procedure (Minji Soshō Hiyō tō ni Kansuru Hōritsu, "Costs Act"), which applies to claims not concerning property rights. While the Companies Act itself doesn't directly stipulate this "Sogaku" for fee purposes, this treatment evolved from earlier Commercial Code provisions (e.g., former Article 267, Paragraph 4) and the understanding that applying the full claimed amount (which could be enormous) as the "Sogaku" for fee calculation would be prohibitively expensive for individual shareholders. This, in turn, would stifle the use of derivative suits as a tool for corporate accountability.

Rationale and Historical Context

The policy rationale behind this special treatment is primarily to promote corporate governance and ensure access to justice for shareholders. If filing fees were based on the often massive sums sought for the company (e.g., damages from major mismanagement), individual shareholders would rarely be able to afford to initiate such actions. By assigning a modest deemed value, the system lowers the initial financial barrier.

Historically, there was considerable debate regarding the appropriate "Sogaku" for derivative suits. One view was that the "Sogaku" should be the full amount of damages claimed for the company. Another perspective suggested it should reflect the individual plaintiff-shareholder's often minimal direct financial stake, or that the benefit was simply too difficult to calculate objectively from the plaintiff's individual standpoint. Legislative revisions, notably the 1993 amendment to the Commercial Code, provided a clearer legal basis for treating such claims as effectively non-monetary for fee valuation purposes, a view that practical considerations and the desire to make derivative suits a viable remedy had long supported. The aim was to balance the company's potential recovery with the individual shareholder's ability to bring the action.

Implications for Multiple Plaintiffs

If several shareholders jointly file a derivative suit, the "Sogaku" generally remains a single 950,000 yen. This is because the claim is fundamentally one action brought on behalf of the company, addressing a singular alleged harm to the corporation, regardless of the number of shareholders initiating it. The economic interest being protected is that of the company itself.

Actions for Injunction Against Unlawful Acts of Directors (取締役等の違法行為の差止請求 - Torishimariyaku-tō no Ihō Kōi no Sashitome Seikyū)

Shareholders may also seek to prevent directors from engaging in acts that are outside the company's lawful scope of business or that violate laws or the articles of incorporation (e.g., under Article 360 of the Companies Act). These are actions for injunctive relief.

"Sogaku" Treatment

Similar to derivative suits seeking monetary recovery, actions for injunctions against alleged unlawful conduct by directors are also typically subject to a special "Sogaku" valuation. The direct economic benefit to the plaintiff shareholder from obtaining such an injunction is often intangible and extremely difficult to quantify in precise monetary terms at the outset of the litigation.

Therefore, these claims are generally treated as ones where the "Sogaku" is extremely difficult to calculate, or they are considered analogous to claims not concerning property rights for fee calculation purposes. As a result, they too are commonly assigned the deemed "Sogaku" of 950,000 yen under the Costs Act, by applying Article 8, Paragraph 2 of the Code of Civil Procedure. This practical approach ensures that shareholders are not deterred by potentially high and speculative "Sogaku" calculations when seeking to prevent ongoing or imminent harm to the company.

"Sogaku" for Other Types of Company-Related Litigation

Beyond derivative suits and direct injunctive actions against directors, a range of other corporate lawsuits exist, and their "Sogaku" calculation follows more standard principles, primarily hinging on the distinction between property-related and non-property-related claims.

A. Claims Not Concerning Property Rights (Typically Deemed "Sogaku" of 950,000 yen)

A significant number of corporate actions are considered "claims not concerning property rights," and thus their "Sogaku" is deemed to be 950,000 yen for fee calculation purposes. These often involve challenges to the status, structure, or fundamental decisions of the company, where the primary relief sought is not a direct monetary award to the plaintiff. Examples include:

• Actions to Nullify Company Incorporation (Kaisha Setsuritsu Mukō no Uttae): These suits challenge the very legal existence of the company.
• Actions to Rescind or Nullify Shareholder or Director Resolutions (Kabunushi Sōkai Ketsugi Torikeshi / Mukō Kakunin no Uttae): For example, an action to void a resolution passed at a general meeting of shareholders due to procedural flaws or substantive violations.
• Actions to Confirm the Non-Existence of a Resolution (Ketsugi Fusonzai Kakunin no Uttae): Where it is alleged that a purported resolution was never actually made.
• Actions for the Removal of a Director (Torishimariyaku Kainin no Uttae): Seeking a court order to remove a director from office.
• Actions for the Dissolution of a Company (Kaisha Kaisan no Uttae): Seeking a court order to dissolve the company.
• Actions to Confirm Director Status (or lack thereof) (Torishimariyaku no Chii Kakunin): Disputes over whether an individual validly holds the position of director.

If multiple such non-monetary claims are joined—for instance, challenging several distinct shareholder resolutions in one lawsuit—each distinct challenge might theoretically constitute a separate non-monetary claim. In such scenarios, the deemed value of 950,000 yen could potentially be aggregated for each resolution challenged. However, if the various claims are deeply interconnected and effectively address a single underlying dispute (e.g., an action to nullify a resolution appointing specific directors joined with an action to confirm that those same individuals lack director status), the principle of "common economic interest" might apply, leading to a single deemed "Sogaku" of 950,000 yen for the combined issues.

B. Claims Concerning Property Rights (Valued Based on Economic Interest)

Other corporate actions directly concern quantifiable economic or property interests of the plaintiff shareholder. For these, the "Sogaku" is calculated based on that economic interest.

• Actions for Confirmation of Shareholder Rights (Kabunushiken no Kakunin) or Alteration of the Shareholder Register (Kabunushi Meibo Kakikae Seikyū):
  • When a plaintiff seeks confirmation of their status as a shareholder or an order to have their name correctly entered (or an incorrect entry removed) in the shareholder register, the "Sogaku" is generally the market value of the shares in question at the time the lawsuit is filed. Shareholder rights are inherently a form of property with economic value.
  • If the shares are not publicly listed and a clear market value is not readily ascertainable, the par value of the shares (if they have one) or, for no-par shares, the minimum issue price at the time of their issuance, may be used as the basis for valuation.
  • If a plaintiff seeks both confirmation of their shareholder rights and an order for the alteration of the shareholder register concerning the same shares, these are typically viewed as pursuing a single, indivisible economic interest (i.e., the full recognition and exercise of rights associated with those shares). Therefore, the "Sogaku" would be the value of the shares, and the values would not be aggregated.
• Actions for Inspection of the Shareholder Register or Other Company Books and Records (Kabunushi Meibo tō no Etsuran Seikyū):
  • A shareholder's right to inspect company records (e.g., shareholder register under Article 125 of the Companies Act, or accounting books under Article 433) is an important tool for monitoring management and protecting their investment.
  • While such a right is ancillary to the shareholder's property interest in their shares, and access to information can certainly lead to economic benefit or the prevention of loss, the direct economic value of the act of inspection itself is considered extremely difficult to calculate objectively.
  • Historically, various approaches to valuing such claims were debated, including using the value of a single share, a fraction of the company's capital, or other metrics. An old Supreme Court judgment of June 6, 1938 (Daishin'in Hanrei Minji Vol. 17, p. 1207), under previous legal frameworks, treated such a claim as non-monetary. While the legal reasoning has evolved, particularly with a Supreme Court judgment of February 5, 1975 (Minshu Vol. 28, No. 1, p. 27) refining the approach to "difficult to calculate" property claims, the practical outcome for inspection rights remains similar.
  • The prevailing approach today is to apply the rule for property claims where calculation is extremely difficult (Article 8, Paragraph 2 of the Code of Civil Procedure). This results in the application of the deemed "Sogaku" of 950,000 yen under Article 4, Paragraph 2 of the Costs Act. This applies not only to the shareholder register but generally also to requests to inspect other statutory company books like accounting records.
  • The rationale is that while the right to inspect is crucial and linked to the shareholder's property interest, the immediate, quantifiable economic benefit derived solely from the act of inspection is often speculative and not amenable to precise calculation at the lawsuit's commencement.

Summary of "Sogaku" Treatment in Key Corporate Actions

To provide a clearer overview, the typical "Sogaku" treatment for these common types of company-related litigation in Japan can be summarized as follows:

(Note: The 950,000 yen figure is based on current provisions related to Article 4, Paragraph 2 of the Costs Act and Article 8, Paragraph 2 of the Code of Civil Procedure. Always verify against the latest official fee schedules and legal provisions.)

Conclusion: Navigating Nuances in Corporate "Sogaku"

The calculation of "Sogaku" in Japanese company-related litigation presents a nuanced landscape. The special, policy-driven treatment of shareholder derivative suits and certain injunctive actions—assigning them a relatively low deemed value for fee purposes—plays a significant role in facilitating shareholder oversight and corporate accountability by mitigating prohibitive upfront litigation costs.

For other types of corporate actions, the determination of "Sogaku" adheres more closely to the general dichotomy: claims directly asserting quantifiable property rights are valued based on that economic interest (such as the value of shares), while those primarily concerning corporate status or where the economic value is exceptionally difficult to ascertain often fall under rules that assign a deemed value.

A precise assessment of "Sogaku" is fundamental. It not only determines the initial filing fees and the competent court but also forms part of the broader strategic considerations in any corporate dispute. Given the complexities and the specific rules applicable to different types of corporate claims, obtaining advice from legal professionals well-versed in Japanese corporate and procedural law is crucial for any party contemplating or involved in such litigation. This ensures that the "Sogaku" is correctly determined, providing a solid foundation for the ensuing legal process.