Kamiya, Mitsuhiro; Ito, Tokutaka --- "Corporate Governance at the Coalface: Comparing Japan’s Complex Case Law on Hostile Takeovers and Defensive Measures" [2008] ELECD 388; in Nottage, Luke; Wolff, Leon; Anderson, Kent (eds), "Corporate Governance in the 21st Century" (Edward Elgar Publishing, 2008)

Book Title: Corporate Governance in the 21st Century

Editor(s): Nottage, Luke; Wolff, Leon; Anderson, Kent

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781847209238

Section: Chapter 8

Section Title: Corporate Governance at the Coalface: Comparing Japan’s Complex Case Law on Hostile Takeovers and Defensive Measures

Author(s): Kamiya, Mitsuhiro; Ito, Tokutaka

Number of pages: 19

Extract:

8. Corporate governance at the coalface:
comparing Japan's complex case law
on hostile takeovers and defensive
measures
Mitsuhiro Kamiya and Tokutaka Ito

1. INTRODUCTION
In Japan, corporate governance issues were not discussed seriously until quite
recently. This was primarily due to the so-called `main bank' system (intro-
duced in this volume's Chapter 4 by Puchniak) and Japanese-style cross-share-
holding (kabushiki mochiai), which predominated during the era of high-speed
economic growth achieved in post-war Japan. Main banks, highly regulated
and influenced by the Ministry of Finance (MoF) under the infamous `convoy
system' (goso sendan hoshiki, whereby banks moved at the speed of the slow-
est), effectively directed the management of the Japanese companies.1 Cross-
shareholding among business partners, including banks, reflected and
promoted strong solidarity in the Japanese business world. These two factors,
along with the lifelong employment system (introduced in Wolff's Chapter 3),
significantly contributed to Japan's unprecedented economic growth.
Understandably, as long as such economic growth continued, the non-exis-
tence of truly effective corporate governance and the `dark' side of the main
bank system and cross-shareholding were not of major concern. As long as
Japanese companies were protected by their main banks and stable sharehold-
ers, the management of such companies did not have to face corporate gover-
nance issues. One exception was when they were illegally `threatened' by
corporate racketeers (sokaiya: Milhaupt and West, 2000). Yet even this issue
tended to be treated as an issue ...