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BOOK SERIES | Minority Shareholders, Chapter 24: Evidence of Foul Play

Mukoujima Transport's complex story grows as Ooki's law firm finds evidence of hidden wrongdoing in Chapter 24 of Shin Ushijima's novel, Minority Shareholders.



In this chapter of Minority Shareholders, I continue the story of Norio Takano. He is not a specific person; he is a character created for my book out of some high rollers who had existed during the bubble period.

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. Ten years after the bubble popped, I started work related to corporate governance. In this book, my fictional characters tell the story of problems that persist in joint-stock corporations. What is an organization called a company? What if Norio Takano were reborn in this era?

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

Read earlier chapters of the series.

Minority Shareholders
Book cover, "Minority Shareholders" by Shin Ushijima.

CHAPTER 24: Evidence of Foul Play

Continuing from Chapter 23: Did her nephew Kensuke have the makings of the president of the company her husband built, Saori once asked her husband. [...]

Kensuke started seeing an older woman, Shino, immediately after he entered the company. Whenever Saori heard her husband and Kensuke's father, Shuichi Kajita, joyfully talking about Kensuke and Shino, she could not help feeling it was unconvincing. She suspected that the rumor of the relationship between her husband and Shino was true. If the rumor was true, she wondered what her husband kept hidden deep down in his mind. 

A Lavish Affair

The wedding party for Kensuke and Shino was organized by Mukoujima Transport. It was around 1980 when an old-world tradition still prevailed. A wedding party for the heir to a small business company was included in its annual events. 

Because Mukoujima Transport had turned into just a property management company, it no longer had important customers with whom the company had to curry favor in order to maintain its business. The wedding party was exceptionally lavish for a small company like Mukoujima Transport. It looked more like a party held at a first-class hotel in the city center with the purpose of introducing Kensuke and his wife to the local people. 

Present at the wedding party were such bigwigs as Lower House members of the Diet, and Tokyo Metropolitan Assembly members. Then there were the ward mayor and ward assembly members, the president of the local chamber of commerce, the president of the commerce and industry association, the president of the medical association, the president of the tax accountant's association, and so on.

Whoever carefully listened to the congratulatory addresses would have understood that those who attended the wedding party were there because they were connected to Sakujiro Mitsuda. Anyone would have noticed that they congratulated Sakujiro in one voice saying, "I'm glad that a wonderful woman has married into your family." There was a strange atmosphere drifting in the air of the venue.


Kensuke Kajita, the bridegroom, was oblivious to anything about that as he bubbled over with joy, surrounded by his friends from school.    

Shino's Cold Shoulder

A few decades had passed since then. As Kensuke had turned down Saori's request to buy her shares, she called on Shino at their mansion located at Hiroo 2-chome, Shibuya-ward, after confirming that Kensuke was away from home. It was an unexpected visit. 

On the doorstep, Saori said that she had come to ask Shino to buy her shares. And Shino's diplomatic smile quickly vanished. Saori said to Shino, "I think you are knowledgeable about the accounting of the company." 

Shino responded blatantly, in a clipped fashion, "I don't know anything about the company. You said that I am knowledgeable about the accounting of the company, but it was a long time ago. Now that Mr Nakagawa checks all the accounting records of the company, a laywoman like me has no role to play there."

Shino seemed annoyed with Saori.

Saori grew angry. "I understand your explanation. I'm sorry to have bothered you," she answered vehemently and turned on her heel. That was the best retort she could muster. As she opened the set of heavy, thick wooden doors and headed toward the gate, she heard the door slam behind her with a loud bang.

It was when Saori was at their monthly mahjong gathering with her classmates from elementary school that she heard Sumiyo Kawano. Kawano, a childhood friend, said proudly that she was lucky enough to sell her shares. The five wizened eighty-nine-year-olds took turns sitting at the mahjong table to play the four-player game. The bet never exceeded ¥100. They were enjoying mindless chatter for hours as though they were back in their girlhood days.  

Sumiyo's Story Finds an Audience

Saori was excited to hear Sumiyo's story. There and then, she took her smartphone out of her handbag and accessed the home page of the "Association for Family Company Governance." She found the telephone number and immediately called the association while waiting for her turn. Fortunately, she was able to speak with Norio Takano, director of the association.

Takano asked Saori Mitsuda her name and the name and address of the company and said to her in a polite tone, "I will talk with my lawyer, Mr  Ooki, immediately." His voice was low and baritone. And it lingered in her ear.

Takano called her back after a few minutes and said that he had arranged a meeting date.


Saori felt like she was dreaming.

"When you come to meet Mr Ooki, please be sure to bring the documents relating to the shareholders' meetings for the last three years. You can easily discover the documents because they are titled 'balance sheet' and 'income statement,'" Takano said to Saori intently. She sensed that the association might be able to help her out of her jam. A faint feeling of relief welled up inside her.

Upon hearing from Takano, Ooki told Nishida to gather his team and hit the ground running.

Mukoujima Transport's Shareholders

The structure of shareholders was as follows:

Saori Mitsuda owned a 12% stake in the company…a minority stake. The majority shareholder was Kensuke Kajita. Kensuke owned a 51% stake in the company in the name of another company in which he was president. It was her nephew-in-law who was the majority shareholder with a 51% stake. And Saori was, like it or not, categorized as a "family shareholder" as stated in the Inheritance Tax Law.

The other shareholders included some relatives and no more than ten companies that had built a business relationship with Mukoujima Transport when it was still a transport business. Their shares amounted to 37% in total; all of them were minority shareholders.

It was a long time since Mukoujima Transport had given up the transport business and started the real estate business. Nevertheless, the company name still carried "transport." 

Such is a business corporation. When the object of the company's business fails to change with the times, the company can dissolve itself and allot the remainder of its assets, if any, to its shareholders. But the owner of the company, trying to protect his own livelihood and the livelihood of his employees, attempts to survive even by changing the object of the company's business. Sakujiro Mitsuda had done just that.

A company like Mukoujima Transport, which owns a vast area of land, is called "a land-holding specific company" by the tax office. And the shares owned by Kensuke Kajita in the name of the company are subject to inheritance tax to be calculated based on the net assets. As assets are to be valued based on the market price, companies that own land in high-priced districts tend to be valued considerably high. Mukoujima Transport was exactly one such company.

An Urgent Late-Night Meeting

Yet the company paid a dividend of only ¥50 JPY per share per year, which had not changed for years.


Nishida's team deliberated on the matter carefully. They concluded that Saori Mitsuda should demand that the company convoke an extraordinary general shareholders' meeting on the grounds that she was a 12% stakeholder. Nishida's team suggested that she demand a dividend increase at that extraordinary general shareholders' meeting.

A shareholder of a 3% stake or more in a joint-stock corporation can demand any time that a general shareholders' meeting be convened. The company cannot turn it down. Because if a general shareholders' meeting is not convened within eight weeks after the demand, the shareholder is entitled to file an application to the court for permission to hold a general shareholders' meeting. 

The permission will be issued soon thereafter. It is a shareholder right. The court should exist to protect the right; judges believe that it is their duty to do so. 

The right to peruse the accounting records of the company is a big advantage given to shareholders. And any shareholder holding a 3% stake or more is eligible to exercise that right.

"This company is capable of rewarding its shareholders more in the form of dividends or share buyback. Kensuke is a lousy owner-president who rests on his laurels. Let's help Mrs Mitsuda exercise her right as a shareholder and demand the owner clean up his act. 

"It may be a good idea to request the company to employ outside directors. Whether she sells her shares or not is another thing to consider later. Anyway, we've got a very powerful weapon at this moment." Kousuke Momoi excitedly spoke at the in-house meeting at the law firm in the wee hours of the day.

Late Night Calls

Momoi had made a phone call to Saori Mitsuda during working hours, but could not reach her. At around midnight, Saori called him back when Momoi was sorting through reams of material and data. He took her phone call. 

"Oh, Sensei, you're still at work this late at night?" She asked in a startled tone instead of apologizing to him for calling him at such a late hour.

"Yes, I've got some work to do before dawn," Momoi said casually. In Ooki's law firm, it was quite common for clients to reach the lawyer in charge even at midnight if something urgent occurred. But Saori was not used to seeing people working late at night. And she was impressed to be having an interaction with him at such an hour. 

"The lawyers at that firm are amazing. They are committed to playing their part admirably for their clients." Having lost track of time, she could not help but call Sumiyo Kawano after her talk with Momoi. She was sure that Sumiyo was still up.


"So I told you, right?" Sumiyo said. Saori did not understand what Sumiyo meant by saying that, but Sumiyo was pleased with what Saori had said as if it had happened to her.

Momoi had wanted to talk to Saori about the accounting records of the company. The agenda for the general shareholders' meeting included the dismissal of Kensuke Kajita as a director. Saori Mitsuda would propose it as a shareholder. 

Of course, it would be done through Momoi on behalf of Saori. If the proposal were approved at the general shareholders' meeting, Kensuke would lose his position as president of the company. 

Strategizing the Shareholders Meeting

The company was required to take up the agenda item because it was stipulated by law, although it would be near impossible for the proposal to be approved because Kensuke was the president of another company that carried voting rights with a 51% stake. But at least she would be given a chance to explain her proposal for dismissal. Even if it were rejected, she could file an action for dismissal as the next step. 

It can be said that the Companies Act is carefully and elaborately produced. A case in point is Article 854. {If, notwithstanding the presence of misconduct or material facts in violation of laws and regulations or the articles of incorporation in connection with the execution of the duties of an officer, a proposal to dismiss such officer is rejected at the shareholders' meeting}, the shareholder can demand dismissal of such officer by filing an action within thirty days from the day of such shareholders' meeting.

If truth be told, the convocation of the extraordinary shareholders' meeting was just a part of the proceedings for filing an action demanding the dismissal. 

Momoi knew that Mukoujima Transport was due to hold an ordinary general shareholders' meeting in May. As such, he suggested at an in-house meeting at the firm that the agenda item be presented to the ordinary shareholders' meeting instead of demanding the convocation of an extraordinary shareholders' meeting for that purpose. 

Finding Evidence of Foul Play

His suggestion was accepted. If a shareholder demands, within eight weeks before the ordinary shareholders' meeting, that the company accept the agenda item to vote on the proposal for dismissal, the company is obligated to do so. If the company ignores it, it will be forced by the court to hold an extraordinary general shareholders' meeting; it has good reason to abide by the law. A shareholder does not have to obtain a 3% stake to submit an agenda item to an ordinary shareholders' meeting; only a 1% stake is enough. 

In any event, Saori was eligible.

Momoi went over to Mukoujima Transport to inspect the accounting records of the company. He discovered rock-solid evidence to prove foul play on the part of Kajita, the president of the company. And he urgently needed to talk to Saori Mitsuda for confirmation. That was the reason why Momoi excitedly dialed her number that day.


Momoi's voice drifted into the quiet room late at night. "So this woman by the name of Mitsue Nakano is the one you were talking about the other day?"


Momoi wanted to confirm it with Saori Mitsuda. Having laid down the receiver of the landline, Momoi pumped his right fist in the air and bolted from his office into Nishida's office. Immediately after that, a late-night meeting started at the firm.

Continues in: Minority Shareholders, Chapter 25: A Meeting of Reversed Fortune


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.

Minority Shareholders
Lawyer-Author Shin Ushijima

Author: Shin Ushijima

The founding partner of Ushijima & Partners, lawyer Shin Ushijima has an enormous wealth of experience in international transactions, mergers, and acquisitions, 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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