Shareholders Lawsuit against Directors of Apamanshop Holdings Co., Ltd.
N&A obtained a judgment of the Supreme Court in which it reversed the Tokyo High Court judgment and held that the directors were not liable, applying the business judgment rule for the first time in the Supreme Court in a shareholders’ derivative action.
Apamanshop Holdings Co., Ltd (ASH) bought shares of its group company from minority shareholders for 50,000 Yen per share to increase ASH’s shareholding ratio in the group company as much as possible in order to facilitate the restructuring of ASH’s group companies. A few shareholders filed a shareholders derivative lawsuit claiming that the actual value of a share of the group company was 10,000 Yen and that the directors of ASH are liable for damages amounting to the difference between the amount actually paid (50,000 Yen) and the alleged actual value (10,000 Yen).
The Court of First Instance ruled that the directors were not liable, applying the business judgment rule.
However, the court of second instance ruled that the directors were liable because the decision process was materially unreasonable by recognizing the fact that the actual value of a share of the group company was 10,000 Yen considering the information acquired by the directors at that time, and the fact that ASH did not negotiate with the minority shareholders to explore the possibility of buying the shares at a lower price.
N&A attorneys represented the directors of ASH only in the Supreme Court. The Supreme Court reversed the court of second instance’s judgment and ruled that the ruling by the court of first instance dismissing the shareholders’ claim should be upheld. The Supreme Court held that the directors were not liable applying the business judgment rule under which it recognized a broad discretion of directors in restructuring group companies. This is the first Supreme Court decision clarifying the standard for review of board’s business decision.
People
Masako Yajima
- Partner
- Tokyo
In addition to corporate disputes such as shareholder derivative actions and share purchase demands, she has numerous experiences in technology disputes related to plant accidents, product accidents, patent infringement, system development troubles, etc., soil contamination disputes, insurance disputes including reinsurance, labor disputes, and consumer disputes. Her main publications include "International Arbitration and Corporate Strategy: Bridging Theory and Practice" (Auther, Yuhikaku, 2014), "Current Status of Litigation Procedures and Defense Practice Issues Associated with Corporate Activities in the United States" (co-author, Jurist No. 1474, December 2014), "Overview of Intellectual Property Law (5th Edition)" (co-editor, Kobundo, 2013), "Judgments Concerning M&A, etc. and Directors' Duty of Care in Good Faith" (Jurist supplement, May 2013), "M Judgment on M&A, etc. and Director's Duty of Care" (Juristo, May 2013 issue, "Selection of M&A Reorganization Precedents Effective in Practice"), "Commentary on Appeal Court Decision in Fukuoka Fish Market Shareholders' Representative Suit Case - Parent Company Director's Responsibility for Subsidiary Management and Relief" (co-author, Junkan Shoji Homu No. 1970, July 5, 2012 issue), etc. No. 1970, July 5, 2012), etc.
Hiroyuki heads our international dispute resolution practice. He specializes in international commercial litigation, arbitration, and mediation. He has represented many international clients, including multi-national manufacturers, banking and securities firms, insurance companies, and news media in disputes involving M&A, antitrust laws, corporate governance, insurance laws, intellectual property, defamation, joint ventures, licensing, construction, and other commercial matters, as well as international bankruptcy. He has been involved in a number of international arbitrations as counsel, sole arbitrator, and co-arbitrator (including chair) before the ICC, JCAA, AAA-ICDR, VIAC, KCAB, and SIAC.
Hiroyuki serves as Vice President of the Japan Association of Arbitrators and as Chief Director of the Japan International Mediation Center in Kyoto, was Vice Chair of the Arbitration Committee of the IBA Legal Practice Division, and was Co-Chair of the Dispute Resolution and Arbitration Committee at the IPBA from 2016 to 2020. From 2013 to 2016, he taught international arbitration and international dispute resolution at the University of Tokyo, School of Law as a visiting professor. Since 2013, he has been a member of the SIAC’s Court of Arbitration. He is also a member of the International Court of Arbitration of the ICC, and since 2018, he has been a Council member of the ICC Institute of World Business Law.