Labor union’s veto over company split

In Japan, according to Companies Act and Act on the Succession to Labor Contracts upon Company Split, companies may effect company split without the agreement of labors who will be transferred.

Sotetsu is one of major railway company and their management is in crisis, so they are planning to effect company split which means railway business will be divided.

But Sotetsu Labor Union, one of labor union of Sotetsu, insists that they have a veto power over company split and plans to strike.

Basis of their claims is union contract.

Union contract between Sotetsu and Sotetsu labor union has prior consultation clause which demand company to have a discussion when company plans to change working condition.

The union’s claim seems unreasonable because prior consultation clause does not mean veto power. It only demands to have a discussion.  

7-eleven to pay 15% of franchisees’ expired food costs

June 23, 7-eleven announced that they are going to pay 15% of their franchisees’ costs of expired food.

According to their contract, the costs of expired food are franchisees’ charge.

So, 7-eleven's discount banning is imposing a huge costs of expired food on franchisees.

This means 7-eleven admitted part of their doings are unfair, but  JFTC’s order is threat to their business because JFTC orders to cease discount banning entirely, so they may appeal to JFTC.

JFTC ordered 7-eleven to cease discount banning

June 22, JFTC ordered 7-eleven to stop prohibiting its franchise stores from offering discounts.

According to JFTC’s release, though franchisee may price their items in 7-eleven’s  franchise contract, 7-eleven controls the price of franchise stores in fact.

JFTC said it was abusing franchiser’s position of superiority and illegal.

Shareholders’ rights after stocks became paperless

This January, stocks became paperless in Japan.

After that, the perfection of transfer of shares was changed from shareholders registry in the company to the registry of Japan Securities Depository Center.

So, shareholders need to ask securities company send the shareholders’ certification  to the company when shareholders submit proposals at the shareholders meeting.

But this change was not well known so quantity of shareholders proposals are less than usual this year because of complexity of procedure.  

Demotion after maternity and child care leave

June 16, a woman worker who returned to work after maternity and child care leave filed a suit for the wages which her company reduced and  declaratory judgment which says her company’s treatments were illegal.

The company which she is working for is Konami Digital Entertainment Co., Ltd. ,one of major videogame maker in Japan.

Konami Digital Entertainment demoted  her from international business to domestic business after maternity and child care leave. As a result her wages were reduced.

Konami Digital Entertainment says they reduced her work for her child care.

Aderans abandoned takeover defence

June 18, Aderans’ board of directors resolved to abandon their takeover defence.

After Shareholders’ meeting, Steel Partners dominated Aderans’ management, previously, Steel said Aderans should abandon takeover defence because it damaged the corporate value.  

So board of directors responded to the demand.  

NIPPONKOA’s oppression

June 12, NIPPONKOA Insurance Company, Limited announced that they will not file an action for pursuing the liability of their directors.

One of their share holders who is former NIPPONKOA’s director demanded them to file the action.

He said present directors intentionally did not pay the insurance and  padded the profit of the company.

But NIPPONKOA said such facts are not and rejected the demand.

According to Companies Act, after company’s reject, shareholder may file an action on behalf of the company, so, in this case, he will file an action.

NIPPONKOA is planning to be merged with Sompo Japan Insurance Inc. , major insurance company in Japan.

This may be an obstacle to the merger.

Surprising MBO

Chairman of Nippon RAD Inc. , a system developing company, suddenly announced stock tender offer to shareholders of Nippon RAD without contact with other board of directors.

The chairman, RYUICHI OTSUKA, is going to retire at shareholders’ meeting this month.

He said tender offer is for progressing the new project.

But the other directors are very confusing because it was too sudden.

Regression to "Company with Auditors"

May 29, CHARLE CO., LTD., women’s underwear company, announced that they will change themselves from "Company with Committees" to "Company with Auditors".

"Company with Auditors" is Japanese traditional company whose outside directors are optional.

"Company with Committees" is American style company which has to have outside directors occupying majority of board of directors.

Generally in Japan, it is thought that "Company with Committees" is more suitable for corporate governance than "Company with Auditors".

But according to Companies Act, outside director is neither an Executive Director nor an executive officer, nor an employee, including a manager, of such Stock Company or any of its Subsidiaries, and who has neither ever served in the past as an executive director nor executive officer, nor as an employee, including a manager, of such Stock Company or any of its Subsidiaries.

Former CHARLE’s outside directors are founding families and CEO from founding families gave a tender offer to shareholders for going private.

The CEO did conflict of interest act then and outside directors were useless because they had a common interest with the CEO.

So, they thought "Company with Auditors" is suit for them.

Antitrust Law amended

June 3, Act on Prohibition of Private Monopolization and Maintenance of Fair Trade, antitrust law in Japan, was amended in the Diet.

By the amended law, FTC is able to impose a surcharge in case of dumping, private monopolization and abusing their position of superiority in addition to the bid-rigging and cartel.

False annual report to be deleted

In Japan, annual reports are published on the public website named EDINET.

Last year,  Teramento Corporation established within only one month submitted annual report which means Teramento bought SONY, TOYOTA, NTT and so on.

It needed 20 trillion yen to buy them, but Teramento’s capital was only 1000 yen.

FSA thought it was false and ordered Teramento to amend the annual report, but Teramento did not.

According to Financial Instruments and Exchange Act, which is Securities Act in Japan, FSA was only able to order to amend false annual report, not to delete it.

So Financial Instruments and Exchange Act  was amended and granted the Prime Minister authority to delete false annual report.

May 29, finally, FSA announced that they deleted the false annual report from EDINET. 

Aderans’s outside director resigned

June 1, one of Aderans’s outside director, Genichi Tamatsuka, resigned.

He was a nominee  recommended by company and elected shareholder’s meeting on May 28.

But all Steel Partners’ nominees also elected and came to occupied majority of board of directors of Aderans.

Takeover defence boom was gone

May 31, according to Nihon Keizai Shimbun, the number of a new takeover defence introducing company is one-ninth that of last year.

The company which discontinued takeover defence also appeared.

Many Japanese company outgrows the takeover crisis by activist funds because of the recent financial crisis.