Facts

X became a shareholder of Y Bank Co., Inc. (1,920,000,000 shares with a face value of Y50 issued and outstanding at the time this litigation was initiated) by acquiring 1,000 shares in a single share certificate and applying for a name change thereon. Shortly thereafter, X asked that his single 1,000 share certificate be exchanged for 1,000 one share certificates but was refused by the bank, which said that his request to divide the shares was an abuse of his rights as a shareholder. At that point, X stated that "regarding shareholder rights, as a general rule, the abuse of those rights does not become a problem at the shareholder's rights acquisition stage, rather it is enough to say it is a problem at the exercise of shareholder's rights stage" and, adding that "it is illegal for the acquisition purpose itself to be against public policy and good customs, and, if an illegal purpose is expressed at the time of acquisition, then it can be said that the purpose is the premise of the acquisition and constitutes the content of the transaction," claimed that there is no room in the concept of abuse of rights for such an exceptional case. He went on to say that the free transferability of shares is established in Commercial Code Art. 204 and is, fundamentally, an absolute requirement of that provision and that, accordingly, his request for separation of the shares into single share certificates is reasonable. He has brought this action to compel Y Ban to honor his request to separate the shares.

Gist

Claim dismissed.

"Because the rights of shareholders can be recognized as both individual and community rights for the purpose of profits to the shareholder himself, actions in pursuit of profits by the shareholder are not forbidden; however, because shareholders' rights are rights acquired from a body created by capitalization by members to for a group know as a company, while the shareholder can be expected to act for his own profit, if actions are taken pursuant to shareholders' rights in spite of lack of justification or profit and infringe on the company's profits and, consequently, the profits of the shareholders as a whole, those actions cannot be said to be just and must be said to be violations of the shareholders rights." In the instant case, it is unlikely that an ordinary person would understand the reasons or motivation behind X's request for separation of shares. Further, there is no economic practicality to the proposed separation, and it is safe to assume that the heavy burden placed on the bank by the undertaking of the appropriate fees and procedures, as well as the nature of the relationship between X and Y Bank up to the request, and the details of the request itself, has resulted in the creation of extreme bad feelings between X and Y bank. At any rate, it is difficult to perceive the share separation request in this case as being pursuant to a just profit for the shareholder himself, but rather, there is no profit or purpose to the request except tp mischievously cause difficulty for Y Bank. Because it is clear that this activity would infringe on the profits of the company, the request for separation of the shares in the instant case cannot be said to be a just exercise of shareholder's rights and must be said to be a violation of those rights."

(translation by Vicki L. Beyer)

Temple University Japan