Japan Law Express

Ones, Inc. failed to change the Articles of Incorporation

2010-08-04T10:20:00.000+09:00

In Japan, to estabulish the article of restriction of transfer of shares requires a special resolution of the shareholders meeting.

To approve a special resolution, the approval of more than half shareholder population and two thirds of voting rights is needed.

Ones, Inc. ,which is registered in the Green Sheet(OTC), tried to provide a limited transfer of shares, but the number of shareholder presented or voted in writing is not go to the majority, so, they failed.

This is a simplified versionof Japanese law blog “JAPAN LAW EXPRESS(Japanese)”.

To see more details, click JAPAN LAW EXPRESS in English powered by Google Translate.

93.6% of listed company have “independent officer”

2010-07-26T12:39:00.000+09:00

July 21, TSE announced that 93.6% of TSE’s listed company became to have “independent officer” by July 16.

According to TSE, three quater of all “indepandent officer” are outside auditor,thus,outside director is minor.

But, in large company whose aggregate market value is over 1 trillon yen(about 120 billion dollars), outside directors and outside auditors are half and harf.

Outside directors in board are steadily increasing in large companies in Japan.

Fujitsu auditors refused to sue their directors

2010-05-23T18:12:00.000+09:00

Fujitsu, one of the major computer manufacturer in Japan, is in internal conflict now.

Fujitsu director Nozoe, former CEO, said some directors forced him to resign CEO.

But,directors mentioned by Nozoe denied his claim and insisted that Nozoe had a relationship to anti-socials.

On the other hand, Nozoe demanded of their auditors that they sue directors for damages because Nozoe’s dismissal caused damages to Fujitsu.

Of course, Fujitsu auditors refused to sue their directors.

Fujitsu’s internal conflict is entirely dragged into the mud.

10% of listed companies have no “Independent Officers”

2010-05-20T10:00:00.000+09:00

In Japan, “Outside director” doesn not mean true outsiders.

According to company act in Japan, “outside director” includes the officer from the parent company.

Many practitioners have criticized the lack of independent of outside directors.

So, TSE desided to require that the listed companies have “independent” officers.

“Indepandent officer” is expected to be appointed ture independent outside directors and true outside auditors.

But the end of this March, 243 of TSE’s listed companies(10% of all listed companies) did not report their independent officers to TSE.

International jurisdiction Legislative Council Legislative Committee put together an outline of the international jurisdiction law

2010-01-19T00:23:00.000+09:00

Japan's current civil procedure law does not have the provision for international jurisdiction.

Japanese court in the issue of international jurisdiction, applies by analogy the provisions of Code of Civil Procedure of Japan.

This situation was criticized as unclear.

Therefore lawmakers decided to make law on internaional jurisdiction.

This time International jurisdiction Legislative Council Legislative Committee made the outline of the Law.

Cross shareholdings is back

2009-08-22T15:38:00.000+09:00

Nowadays, in Japan, listed companies’ cross shareholdings is back.

According to Nihon Keizaishinbun, the purpose of this cross shareholdings is not to avoid takeover but to strengthen the relationship to corporate clients.

A few years ago, some listed companies began to hold shares each other again for takeover defense.

But cross shareholdings is bad custom from the viewpoint of corporate governance because cross shareholders are never opposed.

So, the moves are criticized by other shareholders.

A few 7-eleven owners formed a labor union

2009-08-05T18:31:00.001+09:00

Aug 4, a few 7-eleven’s franchise owners formed a labor union and expressed their wish to bargain collectively with 7-eleven Japan about pricing and rate of royalties.

The number of the owners is 230. 7-eleven Japan’s stores are over 12000.

7-eleven Japan says franchise owner is not worker and their “labor union” is not legal labor union.

In Japan franchise law does not exist. The owners insists on acts protecting franchise owners.

7-Eleven to accept JFTC’s order

2009-07-29T17:10:00.000+09:00

July 28, according to Nihon Keizai Shinbun, Seven-Eleven Japan is set to accept JFTC’s order to cease discount banning and allow its franchise stores sell food products close to their expiry at discount prices.

Seven-Eleven is biggest convenience store in Japan, so the decision will affect rivals.

Hitachi to plan to buyout minority shareholders in listed units

2009-07-28T10:01:00.000+09:00

July 27, according to broadcasting, Hitachi plans to buyout minority shareholders in five listed subsidiaries.

In Japan, listed parent-subsidiaries are practice and Hitachi is not an exception. Hitachi has 16 listed subsidiaries.

The practice is criticized because it means lax corporate governance.

Hitachi is one of the biggest traditional Japanese company, so the plan could influence other Japanese company to follow.

Singaporean fund “Effissimo” sued Nissan Shatai to stop loans to a controlling company

2009-07-21T11:43:00.001+09:00

Singaporean investment fund Effissimo Capital Management Pte. has filed a legal complaint against Nissan Shatai Co. which is Nissan Motor Co. group firm and loans to group firms with low interest.

Effissimo is major shareholder of Nissan Shatai.

In Japan, to list controlled company is not uncommon, so it is said that minor shareholders’ interest are deprived by controlling company in such listed controlled company.

It seems that Effissimo’s sue is revolt of minor shareholders.

Honda won trademark suit in China

2009-07-14T11:11:00.000+09:00

July 10(JST), Honda Motor Co. won major Chinese motorcycle maker Chongqing Lifan Industry Group Co. in Beijing district court.

Chinese firm’s trademark is “Hongda”.

The pronunciation of “Hongda” is almost the same to “Honda”.

But Kanji character of Hongda is completely different.

So Chinese government committee had rejected Honda’s claim.

The court acknowledged that Hongda is confusing with emphasizing the similarity of pronunciation.

Labor union’s veto over company split

2009-06-25T10:26:00.000+09:00

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

2009-06-24T18:19:00.000+09:00

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

2009-06-23T16:02:00.000+09:00

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

2009-06-22T09:56:00.000+09:00

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

2009-06-21T10:51:00.000+09:00

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

2009-06-20T16:35:00.001+09:00

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

2009-06-14T17:48:00.000+09:00

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

2009-06-10T08:40:00.000+09:00

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"

2009-06-06T15:19:00.000+09:00

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

2009-06-04T19:19:00.000+09:00

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

2009-06-03T10:37:00.000+09:00

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

2009-06-02T16:23:00.000+09:00

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

2009-06-01T09:19:00.000+09:00

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.

Rex’s appeal was dismissed

2009-05-31T15:28:00.000+09:00

May 29, the appeal with permission of Rex Holdings Inc. was dismissed by Supreme Court of Japan.

Rex is a holdings company which have restaurants and stores.

In 2006, Rex’s manager made a tender offer and amended in Articles of Incorporation, finally Rex went private.

The dissenting shareholders demanded their stocks Rex purchase at the fair price rely on Companies Act.

The agreement about the price was not reached, so the shareholders filed a petition to the court for a determination of the fair price.

Tokyo High Court decided 330 thousand yen to one share, it is higher than that of Tokyo District Court.

Rex was dissatisfied with the price, and filed a appeal with Supreme Court, but it was dismissed.

JFTC to order 7-Eleven to cease discount banning

2009-05-30T14:47:00.000+09:00

May 29, according to Nihon Keizai Shimbun, JFTC decided to order Seven-Eleven Japan Co.,Ltd. to cease to ban their franchisees from discounting.

JFTC thinks the banning discount is abused franchiser’s position of superiority which is unfair trade practice that Act on Prohibition of Private Monopolization and Maintenance of Fair Trade prohibits.

Almost all franchise stores are banning discount, so this is not only 7-eleven’s problem, affects the whole franchise stores industry.

Steel Partners won Unison Capital

2009-05-29T10:53:00.000+09:00

May 28, shareholder’s meeting of Aderans Holdings Co., Ltd was held.

All Steel Partners’ nominees elected to board of directors. In contrast, all nominees of Unison Capital which proposed a tender offer to shareholders of Aderans were not accepted.

Some activist funds and individual shareholders supported Steel because the offering price is too cheap.

According to broadcasting, Unison seems to withdraw from Aderans.

Online medicine sellers brought a suit against the government

2009-05-28T08:07:00.000+09:00

May 25, online medicine sellers, Kenko.com. Inc. and Wellnet,Inc. brought a suit against government of Japan because MHLW enacted Pharmaceutical Affairs Law Enforcement Order which prohibits selling medicine except counter selling.

Online sellers insists that the Order is illegal because it infringes the freedom of business guaranteed in the Constitution and it’s beyond the scope of the mandate of Pharmaceutical Affairs Law.

Truly, the Law doesn’t provide for counter selling doctrine. But nowadays, some people overdose on online selling medicines and fall sick.

MHLW thinks the cause of the overdose is online selling is too easy to purchase, so they enacted the order trough the council.

But online sellers were not allowed to participate in the council.

METI abandoned obligating outside directors

2009-05-27T08:59:00.000+09:00

May 26, Ministry of Economy, Trade and Industry abandoned obligating the outside director's installation to the listed company.

In Japan,according to Companies Act, Company with Committees, which means american governnance model company, is obliged to have outside directors.

But majority of Japanese companies are not Company with Committees. For them, it is optional to have outside directors.

METI considered to obligating all listed companies to have outside directors for years. But Japan Business Federation is opposed. They say the effects of introduction is unknown.So, METI abandoned finally.

Unison changed the conditons of concerning the Tender Offer for the Shares of Aderans

2009-05-26T19:57:00.001+09:00

May 25, Unison Capital Group changed the offer price concerning the tender offer for the shares of Aderans Holdings Co., Ltd, one of the Japan’s top hair piece maker.

Unison raised from 1000 yen to 1200 yen per one share.

The top share holder of Aderanse is Steel Partners Japan Strategic Fund (Offshore), L.P.

Steel criticized Unison for their offering , which is too cheap.

Canon won recycled ink

2006-02-10T20:31:00.000+09:00

Jan, 31, Canon won recycle maker Recycle Assist Co.,ltd. at Intellectual Property High Court.

Recycle Assist gathers empty inktanks of Canon, EPSON, HP, and all that, supplies ink and sells them at cheaper price than genuine ones in Japan.

Canon sued Recycle Assist for patent violation.
Tokyo District Court rejected Dec, 8, 2004.
Canon appealed and come-from-behind won.

High Court regard supplying ink to empty inktank as infringement oh the patent, opposite to District Court.
District Court said it was a fixing of inktank.

Recycle Assist says they consider appealing to the Supreme Court.