UT Soft Law Review

UT Soft Law Review No.2 2010shareholders meeting”The Corporate Value Study Group’s New Report (June 2008) outlines the past judicialprecedents, especially concentrating on the point whether takeover defense would improvethe common interest of the shareholders. The summary is as follows:Whether or not takeover defense will enhance the shareholders’ interests will differ ineach case, depending on their objectives and contents and on the characteristics of thetakeovers. Bearing this in mind, in order to deal with the issue of legality of takeover defense,it would be necessary to examine judicial decisions on the past cases, by focusing on theobjectives of takeover defense and how they are operated. As a result of such examination,takeover defense can be broadly categorized as follows:(1) Cases where adequate time and information is necessary for shareholders toappropriately decide whether or not to support the takeover, and opportunities fornegotiation between the acquirers and the target companies are ensured by takeoverdefense : Japan Engineering Consultants, Co., Ltd. Case (Tokyo High Court, July 29,2005)(2) Cases where takeover defense are implemented to stop the takeover based on thesubstantive judgment in view of the contents of the takeover’s proposal.Generally deterring takeovers by implementing takeover defense deprives shareholdersin favor of the takeover of the opportunities to sell their shares to the acquirers.Therefore, the implementation of takeover defense based on the substantive judgmentin view of the contents of the takeover proposals should, in principle, be limited. Basedon the examination of past judicial decisions, cases where such implementation wouldbe permitted would be categorized into the following two typical cases in accordancewith the characteristics of the acquirers and their behavior:(a) Cases where takeover defense are implemented against abusive takeovers, whichare clearly detrimental to the shareholders’ interest;Nippon Broadcasting System Inc. Case (Tokyo High Court, March 23, 2005)(b) Cases where takeover defense are implemented based on the substantivejudgment that the takeover proposals are detrimental to the shareholders’interest.Bull-Dog Source Case (Supreme Court, August 7, 2007)The group’s report evaluates each case in detail to see what procedure was taken toimplement the defense measure, or if the financial benefits is necessary or not. For detailedinformation, please see the Corporate Value Study Group’s New Report (June 2008).That’s all from me.Fujita: Thank you for your precise and concise summary. We will discuss the categories oftakeover defense measures in more detail later.Now, why this kind of report was released in this timing? Professor Kanda, can you give usyour comment as the chairperson of the Corporate Value Study Group, if you do not mind?50