UT Soft Law Review

UT Soft Law Review No.2 2010hostile takeovers in Japan has greatly changed.First, early in the 1990s, there were not many cases of corporate acquisitions includingfriendly takeovers, there were not many people who were capable of conducting corporateacquisitions, and the understanding about corporate acquisitions was not sufficient. TheJapanese TOB regulation was significantly amended in 1990 to create the framework of thecurrent structure. Prior to this amendment, there were only three TOB cases and even afterthe amendment the TOB was not used for four to five years. After that, the number of TOBcases started increasing dramatically. Also, during the bubble economy in the 1980’s, the term“acquisition” sometimes conveyed a negative impression, such as greenmailers, or “takeovers”by stock speculators; therefore, many business managers hesitated to use it, and society itselfhad some hesitation to accept it as well. Moreover, prior to the collapse of Japan’s bubbleeconomy in early 1990, cross-shareholdings were significantly more common than now, whichmade hostile takeovers difficult to conclude.However, after collapse of bubble economy, efficient corporate acquisitions started to bepositively considered as a measure to get out of the economic slump. As the legal system topromote corporate acquisitions was streamlined and implemented, corporate acquisitionsbecame widely recognized as a management option. Also, many corporations, mainly banks,stopped cross-shareholdings, and, consequently, stocks became increasingly liquid.As a result of such movement, an easy environment to conduct hostile takeovers wasgradually established, while participants of hostile takeover, such as activist funds, emergedwith the globalization of the market. Consequently, hostile takeover cases started to be seen.While some of the current hostile takeovers still have the characteristics of a greenmailer,others are to increase the corporate value. If such hostile takeovers with the “right” purposestart to become successful, other acquirers of hostile takeovers will follow, and hostiletakeovers will take root in Japan.Fujita: Thank you.II Current situation of the hedge against acquisition:laws and practicesRecent Decisions on Takeover DefenseFujita: Next, let us overview the current situation of legal rules surrounding takeoverdefense in Japan. Recently, the validity of a takeover defense has been brought to courts, andvarious rulings have been issued. Many of you might already know, but we would like to haveProfessor Yamada to introduce major precedents.Yamada: Hello everyone, my name is Yamada. Today, I would like to introduce recent fivejudicial precedents briefly. As you know, Nippon Broadcasting System Case(Tokyo high courtjudgment of March 23, 2005, Hanrei-jiho No. 1899, p. 56:),Japan Engineering Consultants41