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BOOK SERIES | Minority Shareholders, Chapter 1: A Goodly Sense of Unease

Minority Shareholders, Chapter 1 introduces the storyline and characters in this first weekly installment of Shin Ushijima's novel about family-owned companies.



A long time ago, during the bubble period, I met Norio Takano. He is not a specific person; he is a character created for my book on minority shareholders out of some high rollers who had existed during the bubble period. Some of them joined the majority. 

As a young lawyer, I witnessed the generation of enormous wealth from scratch. A minority shareholder of a family company brought an action to the court and succeeded in taking hundreds and thousands of yen. I saw it firsthand. It was made through reconciliation with the court involved. I was on the opposite side, on the side of the owner shareholder. 

Ten years after the bubble popped, I started work related to corporate governance. In the course of time, I came to realize that corporate governance should function not only for listed companies, but also for unlisted companies. I am sure about this from my experience working for unlisted family companies. 

In a nutshell, problems persist in joint-stock corporations, not in individuals. The thing is, what is an organization called a company? What if Norio Takano were reborn in this era?

The story Minority Shareholders is a work of fiction. Any resemblance to actual characters or organizations is entirely coincidental and unintentional. ー Shin Ushijima

Minority Shareholders
'Minority Shareholders' by Shin Ushijima

Chapter 1: A Goodly Sense of Unease

"Sorry to trouble you. I know you are busy, but I need to speak with you. I've been asked to buy some shares of an unlisted family company. Just a small number of shares, though…less than 10%. It's a so-called minority stake or something like that, I am not certain. It has no bearing on the management, but I feel something uneasy about it."

Norio Takano revealed his concern to Mr Ooki, a lawyer. Takano had a lean face with a golf tan and thick eyebrows, which made him stick out like a sore thumb.


It was at the law firm of Tadashi Ooki, located at 2-11-1 Nagata-cho, Chiyoda-ku. They were sitting across from each other at a table for four people in a small meeting room. On the light beige oak table sat two steaming cups of tea. Ooki, facing the window, looked up at the ceiling and then turned to Takano. 

Ooki was seated in a dark green leather swivel chair moving it right and left in small motions. He was fairly well-built, though a bit chubby. He had a round face with two narrow but winsome eyes.

"Unlisted? You mean, not listed on the stock exchange?" Ooki asked.

Norio Takano owned a lot of real estate, including golf courses and buildings, and lived on the income from those. He had phoned Ooki on the morning of that day and visited him at his office in the early afternoon to have a private word. They had been on good terms since high school; born in 1949, both of them were age sixty-eight.

"Yeah, I mean that."

'Unlisted Companies'

"What is that minority stake for? Hmm, I bet it has to do with inheritance, right?" Ooki proudly voiced the idea he hit upon, looking far beyond Takano. Outside the window was a view of the Capitol Hotel Tokyu. 

Fact: Companies not listed on the stock exchange are called unlisted companies, and 99.8% of joint-stock corporations in Japan are unlisted


"Unlike listed shares, you cannot sell nor buy unlisted shares on the market. If you acquire unlisted shares without much knowledge about how to avoid the pitfalls, you may be in for a lot of trouble. In fact, unlisted shares can be ruinous. They can turn out to be plagues."

Intrigued by Ooki's straightforward expression, Takano leaned forward. Ooki went on speaking.

"Let me tell you about a bizarre trial that actually happened. 

"The price of a minority stake in an unlisted company can change unfathomably. The same share will fetch many different prices. A guy owned some unlisted shares. He estimated the value of his shares at ¥4.65 million JPY ($36,140 USD), but it was actually ¥160 million JPY ($1.24 million USD) — nearly 34 times as much. Crazy, isn't it? 

"Taxation is another tricky problem. This poor guy calculated his inheritance tax at ¥2.56 million JPY ($19,900 USD). But to his great surprise he was actually charged as much as ¥100 million JPY ($777,000 USD). I really feel sorry for him. He was in no way convinced by the explanation from the tax office, so he decided to file suit as a last resort and slug it out in court. He couldn't swallow that enormous amount of inheritance tax."

See You in Tax Court

"How in the world could you beat the tax office in a legal battle? You'd be destined to fail."

"No, not necessarily! Recently, a foreign-affiliated company won a lawsuit against the tax office relating to tax amounting to ¥140 billion JPY (1.1 million USD). But this poor man, in a catch-22 situation, unsuccessfully tried to bring the suit to the Supreme Court, the highest court in Japan. Unfortunately it became the last nail in his coffin. The case happened in 1999, not so long ago."


"Well, I don't quite understand. What is that all about?"

Upon Takano's question, Ooki repositioned himself, which was a habit of his when he was determined to start off a long talk.

Ensconced comfortably in his chair, Takano was poised to listen to Ooki attentively.

"That man had just inherited a minority stake in Dainihon Jochugiku, only to be forced to pay tax amounting to \100 million. It sounds implausible, but it's a true story."

"You said Dainihon Jochugiku? Is that the company selling Kincho mosquito coils?" Takano raised his voice in surprise.

"Yeah, that Kincho. So what?" Ooki responded offhandedly as he felt put-off being interrupted in the middle of talking.

"Oh, sorry! I was just taken aback at that household name, Kincho."


"Oh, come on, I am talking about taxation. It doesn't matter whether the company is Kincho or not. It chanced to be a family company selling mosquito coils, and one of the shareholders was involved in an inheritance issue with a disastrous result. It has nothing to do with the business nature of the company."

"Well, if you say so, I'm sorry."

"I do say so."

Shocking Tax Consequences

Ooki clearly showed signs of frustration with the interruption, but Takano shrugged it off nonchalantly as he would always respond to Ooki's irritation that way.

"But the tax of ¥100 million JPY… those shares must have been valued at quite a lot? Or, they produced huge profits every year, or the company owned a lot of lucrative real estate, no?"

"Hey, you are no stranger to this world. It was about an unlisted family company. Even though the company generates profits, the profits do not always filter down to the shareholders. No matter how much real estate the company owns, it's not required to give any portion of it to a 5% shareholder."

"I see, but he may have been provided with a lot of dividends, no?"


"No, not that, but even if he had received large dividends, the tax couldn't have run up to ¥100 million. Anyway, the man reckoned the tax to be ¥2.56 million JPY ($19,900 USD) because he had received dividends of only ¥465,000 JPY ($3,600 USD) from 9,300 shares. 

"He thought that his shares were worth ¥4.65 million at most, but the tax office imposed the tax of ¥100 million on him. They insisted that the shares were worth ¥160 million JPY, hence the tax of ¥100 million. If he hadn't paid the tax, they would've moved on to auction off his house. He didn't want to let that happen, so he had no choice but to sell his house on his own to pay the tax."

"What! He was driven that far, selling his own house to pay the tax? That's incredible!"

Continues in: Minority Shareholders, Chapter 2: An Expensive Inheritance


Minority Shareholders is a work of fiction and any similarity to real characters, companies and cases is purely coincidental and unintentional. Sign up to join our mailing list and look for the next chapter every Saturday on JAPAN Forward.

Author: Shin Ushijima

The founding partner of Ushijima & Partners, lawyer Shin Ushijima has an enormous wealth of experience in international transactions, merger and acquisition, dispute resolution, system development, anti-monopoly law, labor, and tax law. Concurrently, he heads an NPO called the "Japan Corporate Governance Network." And in his leisure moments, he writes fiction. Additional details on Shin Ushijima's career, awards, publications and more are available at his website: Ushijima & Partners, Attorneys-at-Law.



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