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

1. When a notice about an acquisition of shares or a corporate reorganization arrives

A shareholder may receive a notice of the calling of a general meeting of shareholders, a notice concerning a consolidation of shares, a notice concerning a merger or a share exchange, or a notice sent by the target company concerning a demand by a special controlling shareholder that the other shareholders sell their shares and any other relevant securities. In the last of these, the notice is given by the target company, and the giving of that notice is treated as the demand for sale having been made by the special controlling shareholder. The party on the other side in the subsequent procedure for determining the price, and the party under the obligation to pay the consideration, is nonetheless the special controlling shareholder. Who sent the document and who the procedure is conducted against do not necessarily coincide.

A notice of this kind carries with it the deadlines laid down for the particular procedure, and once a deadline has passed the steps available are limited. The first thing to do is to identify which procedure the document that has arrived relates to.

The matters to check are the structure proposed, whether a resolution of a general meeting of shareholders is required, the date on which that resolution is expected, the day on which the transaction takes effect or the day on which the shares are acquired, and what the shareholder needs to do and by when. For some procedures, unless the shareholder has notified the company before the general meeting that it opposes the transaction, the later procedure is no longer available to it.

Whether the shareholder is one that can exercise voting rights is also checked. For shareholders who are unable to exercise voting rights, some of these procedures do not require a notice before the meeting or opposition at the meeting. Conversely, where a shareholder who can exercise voting rights fails to give the notice before the meeting, it may lose the ability to make the later demand.

The materials attached to the notice are checked as well. They may set out the basis on which the consideration was calculated, who carried out the calculation, and the materials referred to, and these form the starting point for the later negotiations and procedures. In a company that issues share certificates, submission of the certificates may be required, so where they are held is also checked.

Where a deadline is close, the decision to be taken first is whether to make the procedural notification required, before the examination of whether the consideration is appropriate has been completed.

2. Transaction structures, demands for the purchase of shares, and determination of the price

The statutory demands for the purchase of shares and determinations of the price dealt with on this page, which arise in connection with corporate reorganizations and the concentration of shareholdings, are procedures available in the cases laid down by law. Being a minority shareholder does not in itself give a statutory right to demand that the company purchase the shares.

The procedures laid down by law fall broadly into two groups. In the first, the shareholder first demands that the company purchase the shares, the price is then negotiated, and, where the negotiations do not reach agreement, an application is made to the court. This applies where a corporate reorganization such as a merger, a company split, a share exchange or a share transfer is carried out, where a share delivery is carried out, where a transfer of business or a similar transaction is carried out, and where certain amendments are made to the articles of incorporation. In those cases a dissenting shareholder is entitled to demand that the company purchase the shares it holds at a fair price. In the case of a share delivery, the demand is made against the share delivery parent company.

A mechanism following the same course is provided for a consolidation of shares, but what it covers is different. What may be the subject of a purchase demand is the whole of the shares held that would become a fraction of less than one share. It is not a system under which the shareholder can require the whole of its shareholding to be purchased at will.

In the second group, the shareholder does not go through a demand that the company purchase the shares, but applies directly to the court for a determination of the price. This applies where shares subject to class-wide call, which are a class of shares that the company may acquire in their entirety under a provision in its articles of incorporation, are acquired, and where a special controlling shareholder makes a demand for the sale of shares and any other relevant securities. In both, the application is to be filed during the period from the day twenty days before the acquisition date to the day before the acquisition date. In the case of the shares subject to class-wide call, however, a shareholder who can exercise voting rights must notify the company before the general meeting of shareholders that it opposes the acquisition, and must also oppose it at the meeting. That an application can be made directly does not mean that no prior steps are required. On this point the position differs from that under a demand for the sale of shares and any other relevant securities, where no such prior opposition is required.

Nor is it the case that a purchase demand is always available when a corporate reorganization is carried out. Whether a demand can be made turns on such points as which of the companies the shareholder holds shares in, the class of the shares concerned, and whether the case is one in which no resolution of a general meeting of shareholders is required because a simplified procedure is used.

In actual matters, several procedures may be used in sequence, as where a consolidation of shares or a demand for the sale of shares and any other relevant securities follows a tender offer. If time passes without working out which procedure is available at which stage, the shareholder may become unable to take the steps required within the deadlines.

3. Deadlines for notifying opposition, making a demand and filing an application

To make a demand for the purchase of shares, some procedures require the shareholder to notify the company before the general meeting of shareholders that it opposes the transaction, and also to oppose it at the meeting. What the statutory provision requires is notice "before the meeting", so indicating opposition at the meeting itself is not sufficient. When the notice reached the company may later be in issue, so the method of giving it and the way a record is kept are considered as well. For shareholders who are unable to exercise voting rights, this notice and opposition at the meeting are not required.

The demand itself is also subject to a period, and here the structures differ considerably. Where an existing company takes over the business or the shares, as in an absorption-type merger, an absorption-type company split or a share exchange, and in the case of a share delivery, a transfer of business or a similar transaction, a consolidation of shares, or certain amendments to the articles of incorporation, the company is to give notice not later than twenty days before the day on which the transaction takes effect, and the shareholder is to make its purchase demand during the period from the day twenty days before that day to the day before it, specifying the number of shares to be purchased.

By contrast, where a new company is incorporated, as in a consolidation-type merger, an incorporation-type company split or a share transfer, the company is to give notice within two weeks from the date of the resolution of the general meeting of shareholders, and the shareholder is to make its purchase demand within twenty days from the date on which the notice or the public notice was given. Both the point from which time runs and the length of the period differ, so applying the periods described in the preceding paragraph to a reorganization that incorporates a new company leads to the demand being made at the wrong time.

In some cases the company may give public notice in place of notice to shareholders. This is not, however, common to every procedure. Under the Companies Act, the notice that a target company gives to the selling shareholders in relation to a demand by a special controlling shareholder for the sale of shares and any other relevant securities may not be replaced by public notice. For shares covered by the book-entry transfer system, on the other hand, there is a special rule, under which the matters to be notified are to be publicly notified in place of notice to shareholders. Whether public notice is sufficient, or whether public notice is what is required, has to be checked for each procedure and for each class of share.

As a general rule, a purchase demand once made may be withdrawn only with the consent of the company. Where the demand concerns shares for which share certificates have been issued, submission of the certificates is required. An exception is laid down, however, for a person who has applied for registration of the loss of a share certificate.

How matters stand where the negotiations on the price do not reach agreement is also laid down. Where an existing company takes over the business or the shares, and in the case of a consolidation of shares and similar situations, if no agreement is reached within thirty days from the day on which the transaction takes effect, the shareholder or the company may apply to the court for a determination of the price within thirty days after the day on which that period expires. Where agreement is reached, payment is to be made within sixty days from the day on which the transaction takes effect. Where the price is not agreed and neither the shareholder nor the company applies within the period for applications, this price determination procedure ceases to be available. Negotiations can continue, but after the period for applications has expired the shareholder may, by way of exception to the general rule, withdraw the purchase demand without the consent of the company. Withdrawal does not, however, change the effect of the reorganization or of the consolidation of shares itself, and the shareholder does not necessarily return to its former position. The position is the same for a reorganization that incorporates a new company.

Where a new company is incorporated, these periods run from the day on which the incorporated company is formed. That is, where no agreement is reached within thirty days from the day on which the incorporated company is formed, the application is to be filed within thirty days after the day on which that period expires, so the periods are counted in two stages. Where agreement on the price is reached, payment is likewise to be made within sixty days from the day on which the incorporated company is formed.

The purchase of the shares to which a purchase demand relates takes effect on the day on which the transaction takes effect, or, in a reorganization that incorporates a new company, on the day on which the incorporated company is formed. Even at a stage when the price has not been settled, the shares transfer at that point, so it is necessary to consider in advance until when rights as a shareholder can be exercised, and by when the company's materials should be obtained.

For shares covered by the book-entry transfer system, such as the shares of a listed company, separate procedures are laid down: in making a purchase demand, the shareholder is to apply for a transfer into a purchase account opened by the company, among other requirements. In addition, where rights as a minority shareholder are exercised, an individual shareholder notice given through a securities company or other institution may be required, so whether one is needed, and when, is also checked.

Where shares subject to class-wide call, or a demand for the sale of shares and any other relevant securities, are in issue, as described in the preceding chapter, the mechanism is that an application is made to the court by the day before the acquisition date without any negotiation stage, and the periods are worked out differently again. That a different structure means different deadlines is the point in this field that calls for the greatest care.

The purchase of shares with restriction on transfer where the company has refused its approval is a separate mechanism from these. An application may be made to the court for a determination of the sale price within twenty days from the day on which notice of the purchase was given by the company or by the designated purchaser. Where there is neither agreement on the price nor an application within that period, the sale price is the prescribed net asset value per share multiplied by the number of shares concerned.

4. Factors bearing on the price, and working with valuation experts

What the law lays down for a dissenting shareholder's purchase demand is the standard of a fair price; it does not lay down a specific method of calculation. For the acquisition of shares subject to class-wide call, and for a demand for the sale of shares and any other relevant securities, both the statutory wording and the structure of the procedure differ, so what falls to be determined is checked for each of these mechanisms.

In assessing the price, the matters examined, according to the transaction structure and the facts of the matter, include the date as at which the shares are valued, the value the shares would have had if the transaction had not taken place, any increase in value brought about by the transaction and how it is shared, and the fairness of the procedure by which the consideration was decided. The place of each of these factors differs according to the mechanism and the content of the transaction.

For the shares of a listed company, the prices established in the market may be referred to. Where a tender offer has been made, however, the tender offer price does not necessarily become the price determined by the court, and a determination below the tender offer price is also possible. On the other hand, where the procedure is assessed as having been fair, the price decided in the tender offer may be given significant weight.

For the shares of an unlisted company there are several approaches, including those that look to net assets, to future earnings, to dividends, and to comparisons with similar companies, and they are used differently according to the facts of the matter. Which approach is used, whether more than one is used together, and how they are weighted differ according to the size of the company, the nature of its business and the position of the shares concerned.

The fairness of the procedure is also examined. As to how measures to secure the independence of decision-making and measures to provide shareholders with sufficient information are to be taken in a transaction where there is a structural conflict of interest between the acquiring side and the target company, the Ministry of Economy, Trade and Industry has published the Fair M&A Guidelines. Those guidelines are directed mainly at acquisitions by management and at acquisitions of a controlled company by a controlling shareholder, and they do not apply uniformly to every transaction. Nor is it the case that the price in court proceedings follows directly from the fact that measures in line with the guidelines have been taken.

We do not ourselves carry out valuations of enterprise value, business value or share value. Where a valuation is needed, we work with certified public accountants and valuation experts, and we take on the checking of the facts on which the valuation is based, the setting out of how the procedure was carried out, and the examination of what needs to be proved in support of the case put forward. The court is not bound by the amount an expert has calculated.

5. Negotiations, court procedures, and the position of the company and the acquirer

A procedure for the determination of the price is conducted as a procedure that differs from ordinary litigation. Exchanges of written submissions are central to it, but for the determination of the price the court must hold a hearing date and hear the statements of the applicant and of the other party, except where it dismisses the application because it is clear that the application is unlawful or is without grounds. It is not a procedure in which a hearing is held only where the court considers one necessary. There are also points in the procedure at which the production of materials held by the company is sought, and it is important to set out which materials are needed and on what grounds.

Interest is to be paid together with the price determined by the court, but the point from which it runs differs according to the structure. For a dissenting shareholder's purchase demand, it runs from after the day on which the period for payment where agreement is reached expires, that is, the period of sixty days from the day on which the transaction takes effect or, in a reorganization that incorporates a new company, from the day on which the incorporated company is formed. By contrast, for the acquisition of class shares that the company may acquire in their entirety, and for a demand for the sale of shares and any other relevant securities, it runs from after the acquisition date.

There are also provisions under which the company or the acquirer may, before the price is determined, pay in advance the amount it considers to be fair. Where this mechanism is used, the interest to be borne changes according to the amount paid, and the difference from the price finally determined is settled afterwards, so the decision is taken together with the cash position.

For the company and the acquirer, the starting point is to carry out correctly the procedures laid down by law, such as the notices and public notices and the preparation of the documents to be kept available in advance. Where there are defects in the procedure, room is left for the validity of the transaction itself to be challenged, separately from the question of the price. Where a purchase demand is made, the company checks whether the requirements for the demand are met, and then manages how the negotiations are taken forward and the deadlines that apply.

The procedure for contesting the price and the procedure for contesting the transaction itself are separate. There are provisions under which, where a consolidation of shares or a corporate reorganization violates laws and regulations or the articles of incorporation and shareholders are likely to suffer disadvantage, the shareholders are entitled to demand that it be stopped. For some structures, the consideration being extremely unfair is laid down as a ground for such a demand.

The procedures for contesting a transaction are not confined to this. The procedure for seeking an injunction before the transaction takes effect, the procedure for challenging the validity of a resolution of a general meeting of shareholders, and the procedure for challenging the validity of the transaction or the acquisition itself after it has taken effect each differ in their requirements, in the range of persons who may make the application or bring the action, and in the periods that apply. Applying for a determination of the price does not stop the transaction being carried out. Which procedure to use is decided in the light of the outcome sought and the deadlines.

Where the shareholder's status itself is in dispute, that point has to be settled first; see the guide on disputes over who owns the shares, including shares held in another person's name.

How we assist

For those considering a demand for the purchase of shares or a determination of the price

On demands for the purchase of shares and price determination procedures, we check the relevant materials and the sequence of events, and we assist with examining the rights and obligations arising under the contract and under the applicable legislation and the approach to be taken. According to the scope of the engagement, we conduct negotiations with the other side, act in court and other proceedings, and work with the experts required. 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 side, and any deadlines you are aware of. You can contact us at a stage when the materials are not yet complete.

Whether we are able to accept instructions, and the scope of the support we provide, are addressed individually after checking for conflicts of interest and related points.

Related pages

• Disputes over who owns the shares, including shares held in another person's name — investigating cases where the shareholder registry and the actual rights do not match, procedures concerning the registry and share certificates, and negotiations and litigation.

• Personal guarantees that remain after an M&A or business succession — negotiations for release from a personal guarantee that remains after an M&A transaction or a business succession, responding to a demand under the guarantee, and reimbursement after payment.

• M&A and business succession (practice area) — structuring M&A transactions, legal due diligence, drafting and negotiating agreements, support at closing, 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
Notices and public notices to shareholders in corporate reorganizations, a share delivery, a transfer of business, amendments to the articles of incorporation and a consolidation of shares; documents to be kept available in advance	Companies Act（会社法）	Japanese legislation
Dissenting shareholders' demands for the purchase of shares and the fair price standard; notification of opposition before the general meeting of shareholders and opposition at the meeting; shareholders unable to exercise voting rights	Companies Act（会社法）	Japanese legislation
Demands for the purchase of shares that become a fraction of less than one share on a consolidation of shares	Companies Act（会社法）	Japanese legislation
Periods for purchase demands; withdrawal of a demand; submission of share certificates and the exception for registration of the loss of a share certificate; the time at which the purchase takes effect	Companies Act（会社法）	Japanese legislation
Negotiations on the price, the period for applying to the court for a determination of the price, the period for payment, and interest	Companies Act（会社法）	Japanese legislation
Acquisition of shares subject to class-wide call, and applications for a determination of the acquisition price	Companies Act（会社法）	Japanese legislation
Demands by a special controlling shareholder for the sale of shares and any other relevant securities; notice by the target company; applications for a determination of the price	Companies Act（会社法）	Japanese legislation
Advance payment of the amount the company or the acquirer considers to be fair	Companies Act（会社法）	Japanese legislation
Hearing dates and the hearing of statements in procedures for the determination of the price	Companies Act（会社法）	Japanese legislation
Purchase of shares with restriction on transfer where approval is refused; the designated purchaser; determination of the sale price and the net asset value per share	Companies Act（会社法）	Japanese legislation
Demands that a consolidation of shares or a corporate reorganization be stopped; actions challenging resolutions of a general meeting of shareholders; actions challenging the validity of a reorganization	Companies Act（会社法）	Japanese legislation
Transfer into a purchase account on a purchase demand; individual shareholder notice; public notice in place of notice to shareholders for 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
Measures to secure the independence of decision-making and to provide shareholders with information in transactions involving a structural conflict of interest	Fair M&A Guidelines — Enhancing Corporate Value and Securing Shareholders' Interests（公正なM&Aの在り方に関する指針）	Official guidance

Legal information reviewed: 2026-09-18

Frequently asked questions

Contact

Considering a demand for the purchase of shares or a determination of the price

On demands for the purchase of shares and procedures for the determination of the price, 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 a demand for the purchase of shares or the price

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

Related Pages

Related Pages

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

A legal guide to cases where the entries in the register of shareholders do not match the rights as they actually stand, covering how this is investigated, the procedures relating to the register and to share certificates, and the handling of negotiations and litigation.

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.

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.