〈中部経済新聞 「中経論壇」平成26年8 月26日掲載 池田桂子〉
Management Decisions and the Transfer of Corporate Value
Some businesses are in a good positive condition economically, while other businesses are in a bad negative economic condition. I think that both sides are clearly visible and quite separated now. It is a controversial issue as to whether the outcome of Abenomix which is the coined phrase of the economic policies put into place by the Japanese Prime Minister Shinzo Abe will result in the proposed, and desired effect it was intended to produce. I guess at this point there are quite a few CEOs thinking about reorganization and restructuring of their group companies.
Company directors make management decisions
on a daily basis, and in particular a director can make decisions in the form of a favor-oppose to the resolution proposal to the Board of Directors. Unless directors who have opposed a resolution stop their objections in order o make a record into the company minutes, then it means that it is presumed to have been agreed to the resolution, and may be held responsible as long as you do not raise a rebuttal.
There was a case with regard to the decision making process and specifically a consideration of the Board of Directors that in the past, the company minutes had not been recorded and or agreed to any resolutions, therefore that interfered with proof in litigation activities of the company.
We can see multiple cases that have been questioned about either the presence or absence of a necessary duty by company directors, in the course of the restructuring of Group companies, cases of financial transactions, or the sale of stock, or cases such as retrieving certain types of shares in a few years. Courts show the business judgment rule, the contents of the judgment and the process of judgment.
The judgment of the directors who hit the missions of an agreement of transfer ratios in the transfer of shares, the court has focused on the recognition process of fact which is a prerequisite of management decisions. Or, “if there is a careless error of the analysis and review of the information collection”, or “whether there is a point to clearly and unreasonably make a determination of corporate management’s content and process of the decision-making” of whether it demonstrates and specifically shows the criteria (as in the case of Apaman-Shop Holding Company Inc.).
Even in cases that were contested as to whether a company sold shares unfairly of its affiliates of the company with a small fee, a similar decision had been made.
As far as the judgment of these courts, it can be said that the scope of the discretion of the Board of Directors is extremely wide, however, unless the decision is based that the company assess materials fairly, it will be interpreted to be a responsibility of the Board of Directors to do so.
In addition, in making decisions of a MBO to acquire shares of companies, management should improve the corporate value that will serve the director himself in (management buy-outs), the shareholders must try to respond to a tender offer. Is that appropriate?
There is also a court case where it was determined to be a reasonable assumption to think that it had an obligation to disclose all of the information (Rex HD damages incident).
Not only by corporate restructuring, for example, concerning a capital alliance, under such situations in the real transfer of a corporate value is accompanied. It attracts the interest of shareholders quite a bit, and you may see scoop news at times. As a manager, it can be said that we need to be careful tht all issues be carried out properly as well as to disclose all relevant information.
<Keiko Ikeda published August 26, 2014 Chubu Keizai Shinbun “Chu-Kei Rondan”>