UT Soft Law Review

UT Soft Law Review No.2 2010was mobilized to respond to a new type of economic activity. In Japan (so far) as in theUnited States, the courts have taken on—or been forced to play--the role of the ultimatedecider in contests for corporate control. In both countries, the courts had to create new legalstandards to resolve the cases. But you are absolutely right, your last comment was that theDelaware system is quite different from that which is been adopted so far in Japan.I would like to make two general points about the process of creating new takeover policyin Japan. First, throughout its history Japan has made major institutional changes whennecessary, so I am not very concerned about the fact that moving to the UK system (or the USsystem) would be a drastic change. The drastic nature of change in and of itself has neverbeen much of barrier to institutional change in Japan. It is remarkable the degree of studyand the depth of analysis of foreign systems that Japanese people undertake before making achange. This conference is a good example of that process. The end result may be based ona foreign model, but Japanese are masterful at adapting foreign models to fit their own needs.I expect that the same will be true of Japanese takeover policy.My final comment, or caution, on the process of creating a new takeover policy is aninsight from comparative corporate governance scholarship: institutions are complimentary,that is, they fit together in ways that increase their overall utility. It is very difficult to changejust one piece of an institutional structure, and the system as a whole may be worse offbecause of piecemeal change. Newly added elements need to fit together with pre-existingelements. So I think the main point, as Japan goes through this process of developing a newset of institutions for hostile takeover, is that whatever foreign model you adopt, or if youcreate completely novel institutions, is to be conscious of how the pieces fit together withJapan’s existinginstitutions and culture.Fujita: Thank you.Kanda: Let me point out a few things. First, I would like to explore a new scheme, if anexperiment is allowed. For example, I would definitely like to try something like the Britishsystem for four to five years, for instance. However, such experiment may be difficult to try.Second, as you realized from the discussion on whether the bidder should be financiallycompensated, common sense in Japan is often not acceptable in the rest of the world,whether it is good or bad. Therefore, in this unique country, Japan, even if a British-likesystem is introduced, it will follow its own path. Specifically, for example, in the U.K., it is veryrare to go to court challenging a Takeover Panel’s decision. However, in Japan, even ifsomething like the panel is established, people would still go to court, I think. Also, in theU.K., the existence of the panel makes the board of directors to be neutral and indeedprohibits it from employing takeover defenses. However, in the U.K. a decision of theshareholders’ meeting is respected even after the hostile bid is initiated. In Japan, even if thepanel is implemented, probably the shareholders’ meeting would often decide and triggerdefense measures. And finally, how should the panel be structured in Japan? In Japan, itwould probably be a special group of some kind of a government council. Taking these into69