Reappraising the Role of Appraisal Remedy

Abstract

When the Companies Act of Japan (“Companies Act”), came into effect on May 1, 2006, it enhanced the role of appraisal remedy in Japan by empowering the courts to distribute synergies arising from mergers to minority shareholders who exercised the appraisal right. Since then, the number of appraisal cases coming before the Japanese courts has continued to increase. A re-examination of the appraisal right and related issues is therefore warranted. In the U.S., a number of scholars have discussed the role of the appraisal remedy. Not enough attention, however, has been paid to the problems of distributing synergies in an appraisal in order to protect minority shareholders. This article tries to fill this gap and explores the central question the law of mergers in Japan is facing: Is the current appraisal remedy under the Companies Act the ideal method of regulating the conflicts arising from mergers?

Keywords: appraisal right, corporate governance, mergers and acquisitions