Appraisal Rights in Japanese Company Law – Can They Be Used as Modern Weapons for Minority Shareholders?

Our honoree, Professor Mestmäcker, in applying Albert 0. Hirschmann's formularization of “exit” and “voice” to company law, places “exit” as a compensation claim under such law (Anspruch auf Abfindung), and clearly points out the difference between the function of public and close companies. Although Japanese company law does not expressly state as much, “exit” means the repayment of one's holdings. As such, in principle, it is impermissible from the standpoint of protecting company creditors. However, in certain circumstances, small shareholders opposing a majority decision may require the company, for their protection, to buy back its shares so they can leave that company (appraisal rights).