In Chapter 10, author and lawyer Shin Ushijima introduces Supreme Court precedent and corporate governance principles limiting the powers of managing directors.
Author and lawyer Shin Ushijima with his latest book, "Japan for Sale." (©Japan Forward)
Corporate Japan is changing, and so are the complex relationships between the business world and the individual human beings who own, manage, and make it work. Author and lawyer Shin Ushijima uses his rare talent to weave a fictional story about love, loyalty, betrayal, war and peace, and the collapse and rebirth of the protagonists as well as their country. Join us below for the next chapter in this gripping saga.
Find earlier chapters through the Table of Contents
Chapter 11: Japan for Sale!
The Destiny of the Baby Boomer Generation
"Hmm, so that's how it was," Ohki thought to himself.
"But now that Mineo has died, I'm really at a loss as to what I should do," Reiko Nishino told Ohki in his law office. "Not that I regret our past way of living or anything like that. The fact remains, however, that Midori is not Mineo's child. Eijiro is Mineo's child. If that's the case, shouldn't the assets that Mineo created belong to me, his spouse, and our only child, Eijiro? I never gave it a thought before. But maybe I've gone crazy since Mineo died. Ohki, what should I do?"
The lawyer searched his memory for Supreme Court precedents regarding the denial of legitimacy and the non-existence of parent-child relationships.
For example, one ruling stated that, even if a biological parent-child relationship does not exist, the rights of a child who is presumed to be legitimate through wedlock under civil law cannot be challenged on the grounds that a parent-child relationship does not exist. It might seem like such issues should not be happening these days. But that Supreme Court ruling was issued on July 17, 2014. That was just ten years earlier.
Under the law, the presumption of legitimacy cannot be challenged by the absence of a parent-child relationship. It can only be challenged by a lawsuit to deny legitimacy. And that lawsuit had to be filed within one year of learning of the child's birth. Even if DNA testing suggested illegitimacy, that was still the case.
"There is a Supreme Court precedent concerning such a situation."
"Precedent?"
"I mean the Supreme Court has ruled in the past on matters such as this. Unless a court rules otherwise within the first year of the child's life, then that's the end of it."
Challenging the Supreme Court
"That must be a mistake. The ruling needs to be changed."
"It's not that simple. The Supreme Court is the court of last resort, after all."
"Isn't that why I came to see you, Ohki? What are you talking about?"
Reiko smiled slightly, with the corners of her lips pulled tightly to the sides, and her cheeks and eyes adding to the effect.
"Well, actually, I believe that the Supreme Court might change this precedent. Persuasive objections were raised at that time. Firstly, in your case, even before that issue arose, Mineo probably lacked the medical ability to impregnate a woman. I have a feeling that this situation falls outside the scope of Supreme Court precedent."
"Outside the scope? Anyway, Mineo was infertile. Fujitomo knows all about that."
Reiko displayed no interest whatsoever in the Supreme Court ruling, nor in the fact that there were dissenting opinions. It seemed that she was totally committed to her own internal logic.
As far as the girl Midori was concerned, although she had asked Ohki for advice on what she should do, it sounded like she had already made up her own mind as to what needed to be done.
It was understandable. For too long she had been supporting something that was abnormal. She raised someone else's child, a child born from her husband's previous wife's infidelity, as if she were her own. It must have been a trying situation for Mineo and Reiko.
"She hasn't changed in the least," Ohki thought to himself. That was what he liked about her.
Midori's Shares
"So, the goal is to make it clear that Mineo's eldest daughter has no inheritance rights?"
"Correct."
"But the other party is certain to contest. The case is sure to go as far as the Supreme Court. The problem is that until the litigation is finally resolved, the eldest daughter will remain a shareholder in Hiroshima Kosan. She inherited a 10% share from her mother and 22.5% from Mineo, on the presumption that she was his legitimate child, for a total of 32.5%."
"However, recently I learned that a provision in our articles of incorporation would allow the company to forcibly purchase those shares."
"That's right. I think there is such a provision in the articles of incorporation. You serve as managing director of Hiroshima Kosan. Your late husband, Mineo, was the representative director and president. Are there any other directors?"
"Well, there are two others."
"What is your relationship with those individuals?"
"Why does that matter? That shouldn't be a concern."
"It could be disadvantageous. That's why I'm asking. I'm sure there's a provision in the articles of incorporation that allows the company to buy back inherited shares. The company is the party that requests such an action. And here, company means the board of directors. Not the managing director. You can't decide this on your own."
"What are you talking about? I don't understand."
"The articles of incorporation state that the company can buy back the shares of a shareholder who inherited them. The question is, who makes the decision to purchase those shares."
"Isn't it up to me to decide?"
"Lawyers don't see it that way. In this case, the company's decision is to be made by the board of directors."
Wiping Her Slate Clean
"But everyone on the board is a friend of mine. And we've been friends ever since we were in the tea ceremony club together back in high school. Those friends will go along with whatever I decide."
"I see. That's reassuring to hear."
"I don't understand what's going on. You lawyers seem to worry about things that make no sense."
"It may seem that way to you. But what do you think would happen if your friends who are on the board of directors teamed up with Midori and decided to buy the shares you inherited?"
"Such a thing is out of the question. We've been friends for 50 years now. The three of us admired our senior, who was two years older than us, and was the head of the tea ceremony club. You lawyers certainly obsess about the strangest things."
"OK. I see. But by all means continue to be friends for the next half year."
"Half year? What on earth are you saying? We'll be friends till the day we die."
"Of course. Of course. It'll be fine. After all, a 75-year-old woman can expect to live for another 20 years."
"But it seems to be an important point."
"Correct. A very important point."
"Don't worry about it."
"Midori had a 10% share in her own right, didn't she?"
"That's right. She inherited it from her mother. It's an undeniable fact that her mother gave birth to her."
"But that's perfectly fine. Owning 10% of the shares won't do her any good anyway."
"But I still want the company to buy them."
"I see. Wiping the slate clean. That's just like you."
Clouds on the Horizon
"Well, there is a way to do that. But it will probably end up in court. Either way, it seems like a trial is unavoidable."
"But I really don't want to go to court. After all, I raised her as my own child."
"That may be so. However, I once advised a mother in a dispute over shares in a privately held company that she needed to be prepared to go to court in litigation against her son."
"Did she end up in court?"
"Yes, she did. She said that she would do exactly as I advised."
"Looks like I'm like that mother. Even so, that girl, Midori-chan, won't go to court unless we ask something completely unreasonable."
"Who knows. Midori must now be around 50 years old. She has a husband and children. She might not be in the position to decide on her own. And she might well actually need the money."
"It doesn't matter either way. Because I have you on my side. If we can make a financial settlement, I'd like to do it that way. But how long does a trial usually take?"
"Case by case, I'm afraid."
"What about this case?"
"I'd say about three years."
"Hmm, really? Will it take three years?
"Well, that's right. It could take three years."
Reiko's face clouded over.
Terms of the Will
Then, Ohki followed up with more questions.
"Wait a minute. You told me before that Mineo left a will. Doesn't it specify how the inheritance shares are to be handled, meaning who gets how much?"
"Mineo wrote a will, and it not only states that Eijiro was his son, but also that he was leaving all of his property to his wife, that is, me. I know because I was there watching when Mineo wrote the will."
Follow the story as it continues.
(To read the book in Japanese, please visit the publisher's website.)
READ Other Books in English by Shin Ushijima:
Author: Shin Ushijima
Ushijima & Partners, Attorneys at Law
Translation by: John C Carroll
(Edited by Susan Komori, Japan Forward)