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Book Review | 'Minority Shareholders' by Shin Ushijima

"Minority Shareholders," the first serialized novel on JAPAN Forward, is a Cinderella story about the challenges facing Japan's small businesses. 



Minority Shareholders
"Minority Shareholders" by Shin Ushijima (Japanese bookcover)

Launching February 4 on JAPAN Forward: Join our mailing list below for Shin Ushijima's novel Minority Shareholders for access on your own schedule as each installment is published every Saturday morning beginning February 4. 

The book, Minority Shareholders was serialized in Japan In-depth, an Internet website that I head up. We ran it in Japanese during the period from October 2016 to June 2017 under the title Nihon Kaito Hoan Taiko (日本解凍法案大綱, literally, "Outline of a Law to Unfreeze Japan"). The preface to the Japanese novel started as follows:

It is a story of Cinderella, who changed a minority stake in a family company into a staggering windfall of cash.

Cinderella, who appears in this story, could be of any age or of any sex. That is, you could be Cinderella in this story.

In Japan, there are 2.5 million joint-stock corporations, most of which are unlisted. That means they are not listed on any stock exchange. The minority shareholders of such companies have nowhere to derive benefit from. Meanwhile, the owners of their companies have their own way, while minority shareholders are ignored.


But they have seen their situation totally change thanks to the commitment of a "hotshot lawyer."

Originally, the law is set as it is. Lawyers are unread, and you are uninformed.

In reality, you could be a candidate for Cinderella.

Now it is time to rush out before the bell strikes twelve midnight.

First Meeting with Shin Ushijima

The author, Shin Ushijima, is a lawyer, not a professional writer. He is a lawyer with exceptional talent, who has written a number of books focusing attention on the business world.

It was during my tenure at Fuji Television Network, Inc. that I met Mr Ushijima for the first time. He was invited as a guest to a political talk show called "Shin Hodo 2001" (新報道2001) that was broadcast every Sunday from 7:30-8:25 AM. 

Shin Ushijima
Lawyer and popular novelist Shin Ushijima. (Photo provided by Ushijima & Partners)

Often I was on the crew for the show, which gave me a chance to talk to the guests in a green room before and after the broadcast. Few of the guests were interesting enough to follow them further, however. Among them, Mr Ushijima is the only person that I have kept in touch with since leaving Fuji Television. 

I thought about why, and realized that the biggest reason is his unmatched "inquisitive mind." 

Not So Simple Corporate Governance

Nowadays, we hear about lots of data falsification scandals by corporations. There is the Olympus scandal for accounting fraud. And the Toshiba scandal for improper accounting. We see no sign that the number of corporate scandals will decrease. 

Why doesn't corporate governance work? As a journalist, I have focused on this. 

One day, I asked Mr Ushijima that very question. "Why do you think these scandals haven't been removed from our society?," I queried. "Isn't corporate governance working properly? Why can’t corporate scandals be prevented?"

Many business corporations should have outside directors. So why, I wondered, do scandals frequently happen nonetheless? To such questions, his answer was surprisingly simple.

"Mr Abe," he said, "If the head of a company and the accounting officer collude in cooking the books, how could outside directors find out?" 


A World of Imperfect Humans

Business corporations are operated by humans. Even companies with proper nominating committees, which are intended to encourage responsible governance, cannot function to totally prevent wrongdoing. No matter what scheme we concoct, human activities cannot be completely controlled. 

The thought of it often makes me depressed. Nevertheless, corporate scandals happen for a reason and will continue happening down the road. "The banality of evil" as introduced by Hannah Arendt sneaks out of nowhere into organizations = humans, and eats them away. It is unavoidable human karma.

Even as he thinks so, Mr Ushijima never loses hope. That makes him what he is and shows his true value. 

And he keeps questioning:  "What do ‘people’ work for?" 

There is no life of smooth sailing. Most people desperately fight against the muddy stream called fate so as not to be washed away. And they come up to the surface, gasping for air. 

Yet, people work. They continue working. Why? Mr Ushijima keeps questioning.


To work means to live. And that willfulness makes life what it is. I think this is the message Shin Ushijima would like to convey to the readers: 

Even if you confront a painful reality, do not lose hope. But just brave it out and keep pressing forward.

With this underlying philosophy, he casts gentle eyes at people facing difficulties and tries to reassure them with his books. 

Freeing Minority Shareholders, 'Unfreezing Japan'

I remember being overwhelmed by how big the scale was when I first learned about the plot of the novel, "Minority Shareholders." 

First of all, the protagonist of the novel is a minority shareholder of a family-owned company. According to Mr Ushijima, the minority shareholders were being treated unjustly. When he explained it to me, at first I did not follow him at all. 

And he said that he would title the novel Nihon kaito hoan taiko (literally, "Outline of law to unfreeze Japan"). It was an astounding title. I had heard that it was a story about "unfreezing Japan," in other words, "restarting the Japanese economy."


Does the question whether or not the Japanese economy will regenerate arouse our interest? Is it even possible?

Minority Shareholders

About 'Minority Shareholders'

Let me give a brief explanation of the novel. It is an important story, especially for minority shareholders of unlisted family companies.

There are three problems with unlisted family companies: 

  • First, corporate governance is not working. 
  • Second, under Japan's current corporate law, minority shareholders of unlisted family companies are trapped. They cannot demand that the companies buy back their shares. 
  • Third, the method of valuing shares for inheritance tax is inflexible.

Let me take these points one at a time.

Corporate Governance

Regarding an unlisted family company, it is often the case that the controlling shareholder is the owner of the company. Moreover, that person is less likely to be enthusiastic about managing the company for the interests of minority shareholders. 

Such a company is disposed to allocate profits mainly for remuneration of directors. However, it seldom distributes profits to shareholders as dividends. 

As a result, minority shareholders who are not involved in management hardly ever derive any benefit from economic profits of their company. In this example, it is also clear that corporate governance is not working in the company.

Minority Shareholders are Trapped

The second problem is that minority shareholders of unlisted family companies cannot sell their shares. 


As a matter of law, shares of unlisted companies may be traded only if a purchaser comes forward. But one can hardly benefit from becoming a shareholder of an unlisted company. It is therefore next to impossible to find a prospective purchaser. 

Even though a shareholder asks the company to buy his shares, the company is not obligated to do so. Eventually, the shareholder has no option but to let go of his shares for an unjustly low price.

Unjust Valuation in Cases of Inheritance

If a shareholder dies, his estate runs into the third problem. When the shares in the estate are of an unlisted family company, the tax office assesses the value of the shares in order to calculate the amount of inheritance tax. 

If a cognate (a spouse or blood relative within the sixth degree of kinship, or a person within the third degree of matrimonial relationship) owns more than 30% of the company’s voting shares, the cognate is included in the category of "family shareholder." And if that "family shareholder" inherits some shares, as a matter of principle the tax office imposes inheritance tax as a shareholder with a controlling interest ー even though the person inheriting has no involvement in management. 

In fact, chances are that the tax office imposes a huge amount of inheritance tax on him or her. And the inheritor likely turns white upon seeing the tax bill handed to them thereafter.

Hiroyuki Abe Minority Shareholders Japan In-depth
Hiroyuki Abe

Finding Solutions for Minority Shareholders?

If the problem of making the minority shares marketable were solved, third-party shareholders could participate in the company's management. Then, corporate governance in the management of unlisted family companies would thereby improve. Moreover, large internal reserves and frozen assets would be liquidated. 

If this were to become possible, it would translate into a resurgence of the Japanese economy.


This is what Mr Ushijima calls "Unfreezing Japan." Restarting the Japanese economy ー what a dynamic idea!

The story is told through Norio Takano, the protagonist and a hero of Japan's bubble period. In brief, he tries to save minority shareholders in cooperation with his close confidant, Tadashi Ooki. Auntie Sumida, to whom Takano owes a lot, is the consultee. Others also appear. 

What on earth drives Takano to work so hard to save minority shareholders? The answer to this question will lead you to the key to this novel. And to the author's philosophy interwoven throughout the novel.

 What do "people" work for? 

Have you found the answer?

 (A Journalist)


This story is a work of fiction. Any resemblance to actual characters or organizations is entirely coincidental and unintentional.

Read "Minority Shareholders" on JAPAN Forward.


Author:Hiroyuki Abe

(Read the article in Japanese.)



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