Disputes over who owns the shares, including shares held in another person’s name

1. Where the ownership of the shares comes into question

The question of whom the shares belong to often comes to light on a business succession or an M&A transaction. It may emerge when a buyer's due diligence calls for materials supporting the shareholding structure and the entries in the register turn out not to match the actual position, or when the death of a registered holder or of a previous owner-manager brings out conflicting accounts among the persons concerned.

The first thing to check is the basic design of the company. What follows differs according to whether the articles of incorporation provide that share certificates are to be issued, whether they require the company's approval for a transfer of shares, and whether class shares have been issued. In an older company, the content of the articles of incorporation may not match current practice.

Next comes the shareholder register and how it came to be drawn up. We check whether a shareholder register has been prepared, and when, by whom and on the basis of which materials the entries were made. There are cases in which the register has not been updated for a long time, or in which it does not agree with the entries in the documents attached to the tax return.

On that basis, the history from incorporation to the present is traced. Who the incorporators were, and who actually bore the subscription money. Where capital has been increased, what the minutes relating to the decision on the offering, the documents relating to the applications to subscribe, and the records of payment show. Where a transfer is said to have taken place, whether the agreement and materials showing the passing of the consideration survive. Where dividends were paid, who received them. Where general meetings of shareholders were held, who has exercised the voting rights. All of these materials provide indications for the assessment of ownership discussed below.

In an older company, it is not unusual for materials not to have survived. Even then, the history can sometimes be inferred from indirect materials, such as the list of shareholders and others attached to the tax return, materials submitted to financial institutions, and documents drawn up on an earlier inheritance. A shortage of materials is not in itself a reason to give up on the inquiry.

2. Whom the shares belong to

The expression "nominee shares" is used of the situation in which another person's name was used on the subscription for shares, so that the shareholder appearing on the register and the substantive subscriber are different. In the past, because a certain number of incorporators was required in order to set up a company, companies were sometimes incorporated using the names of relatives or employees. The name of a person who does not put up the funds is also sometimes used on an increase in capital.

The fact that the person who bore the subscription money and the shareholder on the register are different does not, however, by itself make this a question of nominee shares. Where the provision of the funds was a loan to the registered holder, or a gift, or was intended to give that person shares as part of their remuneration, the position may be that the registered holder is the shareholder. The starting point for the examination is therefore who is to be regarded as the substantive subscriber where the subscription was made using another person's name; and circumstances such as who actually bore the subscription money, what was understood between the parties about the use of the name, who has since exercised the rights of a shareholder and received the dividends, and how the matter has been treated for tax purposes are material for making that assessment.

Even where the subscription was a nominee subscription, if it is said that the shares were subsequently transferred by sale or gift, whether that transfer took place and whether it was effective are examined separately. In matters fought out across generations, the two are frequently mixed together.

The account given on the side of the registered holder also needs to be checked. It happens that a party who has been described as having merely lent their name in fact bore part of the subscription money, or understood that the shares had been given as part of their remuneration. Once a generation has passed, the number of people who know what happened at the time is limited, and such conflicts become harder to resolve.

The question of whom the shares belong to, and the question of whether the rights attaching to those shares can be exercised against the company, are separate matters. As the next chapter explains, a person who is substantively the shareholder may not be treated as a shareholder as against the company unless a procedure has been gone through, and the converse situation can also arise.

3. Ownership of the shares, entry in the register, and the transfer procedure

This chapter proceeds on the basis of shares that are not covered by the book-entry transfer system under the Act on Book-Entry Transfer of Corporate Bonds and Shares.

A transfer of shares cannot be asserted unless the name and other details of the acquirer are entered in the shareholder register. The point to note here is that the range of persons against whom the transfer cannot be asserted differs between a company whose articles of incorporation provide that share certificates are to be issued and a company whose articles do not. In a company that does not issue share certificates, the transfer cannot be asserted against the company or against any other third party; in a company that issues share certificates, entry in the register is what allows the transfer to be asserted against the company. Whether a company is one that issues share certificates is determined by whether the articles of incorporation provide that share certificates are to be issued, and is a separate question from whether share certificates have actually been issued.

In a company that issues share certificates, delivery of the share certificate is a requirement for a transfer to take effect. This is not merely a procedural point; it goes to the effect of the transfer itself. Where no share certificate can be found, the first thing to check is whether a share certificate was issued at all. The position where none was issued and the position where one was issued but cannot be located call for different responses.

Where a share certificate has not yet been issued, a transfer may be effective between the parties even without delivery of a certificate, but as a general rule its effect cannot be asserted against the company. Where, on the other hand, an issued share certificate has been lost, one option is to go through the procedure for having the certificate declared invalid and then to proceed.

The procedure for requesting an entry in the register also calls for care. Where a person who has acquired shares from someone other than the issuing company asks the company to rewrite the register, that request must as a general rule be made jointly with the shareholder appearing on the register or that person's general successor. Where the shareholder on the register will not cooperate, or cannot be located, this becomes an obstacle in practice.

The grounds on which a request may be made alone are laid down in Ministry of Justice ordinance. In a company that does not issue share certificates, the acquirer may obtain a final and binding judgment ordering the shareholder on the register, or that person's general successor, to make the request for the entry, and then make the request alone by providing a document or other material evidencing that judgment. In a company that issues share certificates, the acquirer may make the request alone by presenting the share certificate. The judgment referred to here is not simply a judgment confirming that the person is a shareholder, so obtaining a declaratory judgment that a person is a shareholder does not by itself fall within this ground. In addition, in a company that does not issue share certificates, a person who has acquired shares by inheritance or other general succession may make the request alone by providing a document or other material evidencing that general succession. Because the grounds on which a request may be made alone are laid down separately according to whether the company issues share certificates, the first step is to check which of the two the company is.

Where the shares are subject to a restriction on transfer, a preliminary point needs to be checked. Where the shares acquired are shares with restriction on transfer, the request to rewrite the register described above is allowed only in limited cases, such as where the company has approved the acquisition, where the person is a designated purchaser, or where the shares were acquired by general succession; otherwise it cannot as a general rule be made. Where it is allowed, what was said above about a joint request and the exceptions to it applies as it stands. Beyond that, the treatment of a transfer made without going through the approval procedure becomes an issue. There are cases in which shares have been treated between the parties as having been transferred for many years without any approval, and in those cases the position as against the company is sorted out separately from the position between the parties.

On a business succession or an M&A transaction, these points sometimes surface before the question of substantive ownership does. The sequence is that, when the buyer asks for proof that the seller is a shareholder, defects come to light in the entries in the register or in the history of approvals. Unless they are dealt with at that stage, they affect the timetable for the transaction itself. It may also become necessary to consider whether the effect of past resolutions of general meetings of shareholders, passed on the footing that a particular person was a shareholder, could later be called into question. Among the procedures for challenging the effect of a resolution, some must be brought within a short period from the date of the resolution, while for others no statutory period is laid down.

4. Death of a registered holder, inheritance, and the effect on the succession

What passes on death are the shares that belonged to the deceased. The death of a registered holder does not therefore mean that the shares standing in that person's name pass as a matter of course to that person's heirs. The question addressed in the previous chapter — whether the registered holder was the substantive subscriber or had merely lent their name — arises again at this point.

As to shares that belonged to the deceased, then except where a will provides that a particular heir is to take them, and in similar cases, the shares are held jointly by several heirs until the estate is divided. In that state, the rights attaching to the shares cannot be exercised unless one person is designated to exercise them and the company is notified. An exception is provided for where the company consents to the exercise of the rights, but the company's consent does not resolve the separate question of how the co-owners are to reach a decision among themselves. The designation is understood not to require the consent of all the co-owners; it may be decided by a majority according to the value of the interests held. Where the proportions of those interests are themselves in dispute, however, the designation and the notification may not be completed, and the running of general meetings of shareholders may be held up as a result.

Where there are many heirs, or where an heir cannot be located, more time is needed again. In a company where nominee shares are in issue, the heirs of the registered holder tend to assert that they are the shareholders while the company explains that the name was merely borrowed. Often no one remains who has direct knowledge of what happened at the time, which makes documentary support all the more important.

Where there is a will, we check its content, its validity and whether it deals with the shares. Where an agreement on the division of the estate has been reached, we check whether the terms of the agreement identify the shares and whether the documents needed for the entry in the register are available. Acquisition by inheritance is a general succession, so it should be noted that the procedure differs from that for a transfer.

The acquisition of shares by inheritance is understood not to require the company's approval, even where the shares are subject to a restriction on transfer. Separately from that, the articles of incorporation sometimes provide that the company may require a person who has acquired shares with restriction on transfer by inheritance or other general succession to sell them to the company. Where that provision is used, the company may not make the request once one year has passed from the day on which it learned of the general succession; a resolution of a general meeting of shareholders is required; and where no agreement is reached on the sale price, an application must be made to the court for the price to be determined within twenty days from the date of the request. The consequences of no application being made within that period are also laid down, so the procedure needs to be checked as a whole, together with the restrictions relating to the source of the funds. At that general meeting, the heir or other person who is to be required to sell may as a general rule not exercise voting rights. Since this can mean that an heir who has succeeded to a large number of shares is unable to vote, whether the articles of incorporation contain such a provision needs to be checked at an early stage. This is a separate regime from the one under which a special controlling shareholder may require minority shareholders to sell their shares; the requirements and the periods differ.

5. Negotiations, litigation, and taking the succession forward

Where ownership is disputed, litigation is not the only way to resolve it. Where the parties' understandings are not far apart, the matter can sometimes be sorted out by drawing up an agreement confirming to whom the shares belonged and exchanging, at the same time, the documents needed for the entry in the register. A separate approach is to pay a sum in settlement to the side of the registered holder and take a transfer of the shares. The first confirms an existing position as to ownership; the second effects a new transfer. The procedures required and the tax treatment differ, so which of the two is being used should be made clear.

Whichever approach is taken, the position as against heirs and other persons who are not parties to the agreement is not resolved as a matter of course. The shares concerned are identified, the parties and the range of matters covered by the agreement are made clear, and where there are persons who are not parties to it, how the position as against them is to be dealt with is considered separately.

Where no agreement is reached, an action seeking a declaration that a person is a shareholder, or an action seeking the rewriting of the register, may be considered. Depending on the case, where a general meeting of shareholders is due to be held, an application may be made for provisional measures concerning the exercise of voting rights. A provisional disposition is a Japanese court procedure for interim relief pending a decision on the merits. These procedures take a certain amount of time, so a judgment has to be made, in relation to the timetable for the succession or the M&A transaction, as to how much is to be settled first.

Where an M&A transaction is to proceed, the question is how to provide for the dispute over ownership in the agreement. Representations and warranties as to the ownership of the shares and the seller's power to dispose of them, indemnification if the dispute materializes, and a provision making completion conditional on the position being sorted out beforehand are among the possibilities. These, however, determine how the economic burden is to be divided between the seller and the buyer; they do not resolve the question of whom the shares belong to, or the effect of the transfer itself. They are considered as a way of providing against a third party asserting rights. Related points are covered in the guide on breach of representations and warranties in M&A and indemnity claims.

Where the position of a shareholder has been settled and the consideration payable on a reorganization or on a squeeze-out of shares is in issue, see the guide on demands for the purchase of shares, and determination of the price by the court.

On a business succession, sorting out the ownership of the shares and dealing with the owner-manager's personal guarantees frequently arise at the same time. On guarantees, see the guide on personal guarantees that remain after an M&A or business succession.

How we assist

We act for those facing difficulties over nominee shares and the ownership of shares. We check the relevant materials and the sequence of events, and assist with considering the rights and obligations arising under the agreements and the applicable legislation and the approach to be taken, both in sorting the position out and in dealing with a dispute. To the extent instructed, we conduct negotiations with the other party, act in court and other proceedings, and work with other professionals where needed. When you contact us, please let us know, so far as you are able, the current situation, whether any notice has been received from the other party, and any deadlines you are aware of. You are welcome to contact us before the documents have been gathered.

Whether we are able to accept instructions, and the scope of any assistance, are confirmed individually after checking for conflicts of interest and related matters.

Related pages

• Personal guarantees that remain after an M&A or business succession — release from, and disputes about, personal guarantees that remain in place after an M&A or a business succession, including the discussions about release, what to do where a demand is received, and reimbursement after payment.

• Demands for the purchase of shares, and determination of the price by the court — the procedure, the time limits and the factors bearing on price in purchase demands and price determinations arising from share consolidations and corporate reorganizations.

• M&A and business succession (practice area) — planning M&A structures, legal due diligence, drafting and negotiating agreements, support at completion, post-merger integration, and business succession.

Key legislation and official sources

English translations of legislation are provided for reference. The Japanese texts are authoritative.

Where it appears	Legislation	Source type
Entry in the shareholder register as the requirement for asserting a transfer, and the difference between a company that issues share certificates and one that does not; the meaning of a company that issues share certificates	Companies Act（会社法）	Japanese legislation
Delivery of the share certificate as a requirement for a transfer to take effect; transfers made before a share certificate is issued; the procedure for having a lost share certificate declared invalid; abolition of the provision that share certificates are to be issued	Companies Act（会社法）	Japanese legislation
Joint request for the entry in the shareholder register, and requests relating to shares with restriction on transfer	Companies Act（会社法）	Japanese legislation
Grounds on which the entry in the shareholder register may be requested alone	Regulations for Enforcement of the Companies Act（会社法施行規則）	Japanese legislation
Shares covered by the book-entry transfer system	Act on Book-Entry Transfer of Corporate Bonds and Shares（社債、株式等の振替に関する法律）	Japanese legislation
Designation and notification of the person who is to exercise the rights attaching to jointly held shares, and consent by the company	Companies Act（会社法）	Japanese legislation
Request that an heir or other general successor sell shares with restriction on transfer: the provision in the articles of incorporation, the resolution of a general meeting, the one-year period, application to the court for the price to be determined within twenty days, and the restrictions relating to the source of funds	Companies Act（会社法）	Japanese legislation
Request by a special controlling shareholder that shares be sold	Companies Act（会社法）	Japanese legislation
Actions challenging the effect of a resolution of a general meeting of shareholders, and the periods within which they must be brought	Companies Act（会社法）	Japanese legislation
Joint ownership of an estate before division, wills, and the division of the estate	Civil Code（民法）	Japanese legislation

Legal information reviewed: 2026-09-18

Frequently asked questions

Contact

Questions over who owns the shares

On sorting out who owns the shares, including shares held in another person's name, and on dealing with disputes about this, we check the relevant materials and the sequence of events, and assist with considering the rights and obligations arising under the agreements and the applicable legislation and the approach to be taken. To the extent instructed, we conduct negotiations with the other party, act in court and other proceedings, and work with other professionals where needed. When you contact us, please let us know through the inquiry form, so far as you are able, the current situation, whether any notice has been received from the other party, and any deadlines you are aware of. You are welcome to contact us before the documents have been gathered.

Contact us about who owns the shares

Whether we are able to act, and the scope of our work, are confirmed individually after a conflict check.

Related Pages

Related Pages

Personal guarantees that remain after an M&A or business succession

A legal guide to personal guarantees that remain in place after an M&A or business succession, covering discussions about release, what to do where a demand has been received, and reimbursement after payment.

Demands for the purchase of shares, and determination of the price by the court

A legal guide to demands for the purchase of shares and determination of the price in connection with a consolidation of shares or a corporate reorganization, covering the procedure, the deadlines and the factors bearing on the price.

M&A and business succession (practice area)

An overview of our work on structuring M&A transactions, legal due diligence, the preparation and negotiation of contracts, support at closing, post-merger integration, and business succession.

This article is provided for general informational purposes only and does not constitute legal advice on any specific matter. Please consult us regarding your specific situation. The content is based on the laws and regulations in effect as of the date of the last update.