VII - Japan

Summary

Chapter VII tackles the intriguing puzzle of Japan. Until relatively recently, shareholders and members of Japan’s close corporations had no access to withdrawal under the law, as neither of Japan’s then-dominant close corporation forms offered this. By revealing how shareholders in Japan responded to the absence of withdrawal, I show how Japan’s experience serves as a historical counterfactual that powerfully demonstrates the demand for and importance of withdrawal remedies in practice. More recently, withdrawal remedies at law became available in Japan, for the first time and for a true close corporation form – by semi-accident. The Godo Kaisha (GK), the new and American-inspired close corporation form, offers withdrawal remedies unprecedented even by comparative law standards, but numerous challenges lie ahead. While the GK’s withdrawal regime has yet to establish itself as an integral part of the corporate law landscape, Japan demonstrates the potential pitfalls involved in introducing close corporation withdrawal by legislation.