Lawyer Shin Ushijima uses Chapter 13 to explore what happens with minority stakes, succession, and other shareholder obligations after a business owner's death.
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 13: Japan for Sale!
The Destiny of the Baby Boomer Generation
Ohki thought he saw a faint smile play on Reiko Nishino's face. Then, reconsidering, the lawyer thought it might have just been an illusion.
"Still, Ohki, even if all the shares of Hiroshima Kosan become mine, when I die they will then belong to Yuichiro and Eijiro. If those two die, Hiroshima Kosan's assets will be passed on to their wives and children, right?"
"That's quite a long-term perspective. But that's exactly what would happen. "Do Yuichiro and Eijiro have any children?"
"Yes, two each."
"Well, that's how it is. But why?"
"With both Yuichiro and Eijiro, the children belong to their spouses. It was only after Mineo's death that I finally understood. Yes, people cherish their own children. But their children are not theirs. So, in the end, the entire company will end up belonging to others, won't it?"
"How old are Yuichiro and Eijiro?"
"Fifty-one and thirty-nine."
"I assume they are both still in good health."
"You're quite slapdash, you lawyers, aren't you? You never know what's going to happen with people. My first husband died suddenly, so I can't be that carefree. I worry about such things."
"Probably so. Be that as it may."
"What I am worrying about is who will have the controlling interest in Hiroshima Kosan. The company itself is in fine shape. For me, the more important problem concerns the shares the company holds in publicly traded companies.
Hiroshima Kosan's Minority Shares
Reiko went on. "Our company is a minority shareholder in various publicly traded companies, and I'd like to ask you to help resolve that issue. Mineo always said that subsidiary companies listed along with the parent company are the ones to target. Therefore, Hiroshima Kosan, as a company, holds minority shares in many such parent and subsidiary listed companies. Lots and lots. I want to make the most of them. That's what I want to do.
"Our employees will keep Hiroshima Kosan running smoothly. Regardless of who the president is, it does just fine. That will continue to hold true in the future as well. Given its scale, listing on a stock exchange is definitely an option as well. But I feel it's my duty to personally address the issue of the minority shares that the company holds in those parent-subsidiary listed companies."
"Duty? Duty to whom? Do you see it as your duty to see this thing through as a fulfillment of Mineo-san's ambitions or aspirations?"
Another complication involving Mineo-san? At the very moment that this thought arose in Ohki's mind, Reiko said, "Myself. I feel I have a duty to myself to see this through."
"Really? It seems like there's some deeper reason for you wanting to accomplish this."
"Actually, it's about Mineo. He complained about being put through the wringer many times."
"I see. That I can understand very well, because parent-subsidiary listings are the Achilles' heel of corporate governance. There's a positive side to them. But there is also a negative side to them. When the negative aspects emerge, it becomes uncontrollable for minority shareholders."
"Mineo would fulminate about how he was going to take them to court, but he never did."
"Why not?"
"Apparently, he didn't trust the courts."
"Hmm."
Legal Ethics
"What do you think?"
"I'm not optimistic, but I'm not entirely pessimistic either. In such a case, the court doesn't know anything about the individual companies themselves. It is the attorney's job to try to get it to understand. That is all one can do."
"So, what is the best thing to do in this situation? You have to let me know. I came to consult with you to create a new world for the benefit of society."
"I see. So it's a duty to yourself. As well as a battle to avenge Mineo. Oh, forgive me. But I'm astonished. What you have in mind is certainly impressive."
However, there could be all kinds of complications, Ohki muttered silently under his breath.
Ohki himself, as a lawyer, represented several publicly listed companies. If the interests of Hiroshima Kosan as a minority shareholder directly conflicted with those of the company that issued the minority shares, or of a parent company represented by Ohki, then the interests of the minority shareholder and the company would be in direct conflict.
In such a case, the professional ethics of an attorney dictated that he obtain his clients' consent. These ethics amounted to a constitutional mandate for lawyers. They were now called the Basic Rules on the Duties of Practicing Attorneys, but were essentially the same thing.
However, it was inconceivable that both sides in a dispute would agree to Ohki representing both of them. Ohki also believed that this would simply be unacceptable from a lawyer's perspective. In his career as a lawyer, he had always acted with extreme caution regarding conflicts of interest.
The Minority Stake Question
In principle, the CEO of a company that he was representing was merely a salaried employee of that company. Stock market trends directly impacted whether or not he retained his job. That is why CEOs of listed companies despise activist investors, also known as carping shareholders.
Of course, that is not because they are concerned solely about keeping their jobs. They honestly believe that they are acting in the best interest of their companies. People do not work for their own profit alone. Such a person could never become the head of a publicly listed company. It's also for the sake of his fellow employees. He might even be referred to as the head of the "executive & management cooperative."
If Reiko's company held a minority stake in a company that Ohki was already serving as an advisor, then it was clear that Ohki could not act as Reiko's representative.
Ohki sought the particulars.
"I don't remember all of them. There are so many. I have a long list. But this is something that Mineo left unfinished. So it's something I want to do as my own responsibility as the owner of Hiroshima Kosan. That's why I need your help. There is also another person whom I would like to ask for help."
"An attorney?"
Ohki felt a little relieved when he asked that question.
"No. I have a lawyer sitting here in front of me, don't I? He's not a lawyer; he's somebody from the business world. I got to thinking about who I could ask for help. I don't know whether he would be willing to help since we're just a tiny company. But I do have someone in mind. It's just my own idea that he might be willing to help."
Undefined Emotion
Ohki did not delve further on that score.
"I see. In any event, I'll do everything I can for you as an attorney. It'll be my pleasure."
Upon hearing Ohki's words, Reiko placed her petite hands, with their dark blue veins clearly visible, precisely on the table and bowed deeply. Her nails were their natural flesh color, having not been painted with fingernail polish. The hair on her lowered head was parted to the left and right and neatly gathered at the back. Just a tiny bit, less than 0.5 millimeters, of gray hair was peeking out from the scalp where the part was.
(Oh, of course, she is 75 years old after all.)
Suddenly, Ohki felt an overwhelming desire to embrace Reiko.
(We've both been through a lot in these 75 years, haven't we? It's been 63 years since you came by our home in Kami-Noboricho, way back then.)
The emotion that he was feeling was definitely not the usual sexual passion between the two sexes. Or so Ohki thought.
Put On the Spot
"Nonetheless, you see, as a lawyer I do a lot of similar work. That means I have to make sure there are no conflicts of interest."
"What kinds of conflicts?"
"The same lawyer is not allowed to represent both the plaintiff and the defendant."
"I would think that would make things go faster and ensure a better outcome."
"Oh my. You're putting me on the spot."
"Since I've come all the way from Hiroshima, please don't refuse my request."
That was the kind of line Reiko had probably already used often enough in her past business dealings. She said it in a persistent, coaxing tone of voice.
"Well then, I'll do whatever I can for you. If I can't, I'll immediately say I can't. Also, you said you had something else important to discuss with me. I imagine it might have to do with that certain person who you would like to be able to rely on."
Later, Ohki realized that was the very moment when an immense burden had been placed on his shoulders.
"I'll tell you over dinner," Reiko responded.
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)