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1989 (O) 573

1990.12.04
1989 (O) 573
Minshu Vol. 44, No. 9
Judgment concerning the joint successor of shares with respect to whom the designation and notice prescribed in Article 203, paragraph (2) of the Commercial Code have not been made and the standing to sue in an action seeking a declaratory judgment of absence of a resolution of a shareholders meeting
Case seeking a declaratory judgment of absence of a resolution of a shareholders meeting
Judgment of the Third Petty Bench, dismissed
Nagoya High Court, Judgment of January 30, 1989
1. When the designation of "a person who should exercise the shareholders' rights" as prescribed in Article 203, paragraph (2) of the Commercial Code and the notice of such designation to a company have not been made with respect to a joint successor who has come to hold a quasi-co-ownership in shares as a result of succession, unless there are special circumstances, such joint successor does not have the standing to sue in an action seeking a declaratory judgment of absence of a resolution of a shareholders meeting.

2. Even if a designation of "a person who should exercise the shareholders' rights" as prescribed in Article 203, paragraph (2) of the Commercial Code and a notice of such designation to a company have not been made with respect to joint successors who hold quasi-co-ownership in shares as a result of succession, if the abovementioned shares are equivalent to all of the issued shares of the company and a registration has been made to the effect that a resolution of a shareholder's meeting has been adopted to appoint one of the joint successors as a director, the other joint successors have the standing to sue in an action seeking a declaratory judgment of absence of the abovementioned resolution.
Article 203, paragraph (2) and Article 252 of the Commercial Code



Commercial Code

Article 203, paragraph (2)

(2) When shares are co-owned by two or more persons, the co-owners must designate one person who should exercise the shareholders' rights.



Article 252 The provisions of Article 88, Article 105, paragraphs (3) and (4), Article 109, Article 249 and Article 250 apply mutatis mutandis to an action seeking a declaratory judgment of absence of a resolution of a general meeting and an action seeking a declaratory judgment of the invalidity of a resolution on the grounds that the content of the resolution is in violation of laws and regulations.
The final appeal is dismissed.

The costs of the final appeal shall be borne by the appellant of final appeal.
Reasons 1 and 2 for a final appeal stated by the counsels for final appeal, and Reasons 2 and 3 for a final appeal stated by the counsel for the supporting intervener of final appeal

The findings and determinations made by the court of prior instance regarding the arguments can be accepted as being lawful in light of the evidence indicated in the judgment in prior instance and no illegality as argued by the counsels can be found in the process of making such findings and determinations. The arguments are only criticizing the selection of evidence and findings of facts made by the court of prior instance under its exclusive power, and thus are not acceptable.

2. Reason 3 for a final appeal stated by the counsels for final appeal, and Reason 1 for a final appeal stated by the counsel for the supporting intervener of final appeal

A joint successor who has come to hold a quasi-co-ownership in shares as a result of succession is required to designate "one person who is to exercise the shareholders' rights" with respect to the abovementioned shares (hereinafter referred to as the "person who is to exercise rights") and notify such designation to the company and further have the person who is to exercise rights exercise the shareholders' rights (the judgment of the First Petty Bench of the Supreme Court of January 22, 1970, 1967 (O) No. 867, Minshu Vol. 24, No. 1 at 1). Even in the case where the abovementioned joint successor is to file an action seeking a declaratory judgment of absence of a resolution of a shareholders meeting based on the status as a quasi-shareholder, the same logic as that mentioned above would apply. Thus, it is appropriate to interpret that when the joint successor has failed to notify the company after being designated as the person who is to exercise rights, the joint successor does not have the standing to sue, unless there are special circumstances.

However, even if a designation of the person who is to exercise rights or notice of such designation to the company has not been made with respect to the joint successors who have quasi-co-ownerships in shares, if the shares are all of the issued shares of the company and a registration is made to the effect that a resolution of a shareholders meeting has been adopted to appoint one of the joint successors as a director, as in this case, it should be said that there are special circumstances as prescribed above and the other joint successors have the standing to sue in an action seeking a declaratory judgment of absence of the abovementioned resolution. Article 203, paragraph (2) of the Commercial Code is a provision stipulated by taking into consideration the company's convenience in administrative affairs with respect to the relationship between the company and shareholders. Under circumstances such as those observed in this case, the company should have made allegations and shown proof in the abovementioned action that a shareholders meeting has been held and a resolution has been adopted at the meeting based on an assumption that the designation of a person who is to exercise rights and the notice to the company have been performed by the joint successors who hold quasi-co-ownership in all of the issued shares. Nevertheless, the company alleged defects in the abovementioned procedures and disputed the standing to sue of the joint successor(s) who filed an action. This is nothing but a proof that the company is admitting the defects in the abovementioned shareholders meeting and denying its position in the primary suit; the company is arbitrarily arguing the purport of the abovementioned provision in different ways in a single litigation and such argument cannot be allowed on the grounds of abusing the right of defense in litigations and substantially violating the principles of goods faith.

According to records, the following facts can be found: [i] the appellee has filed the action in question for a declaratory judgment of absence of the resolution in question against the appellant company based on the following allegations: [a] D, who held all of the issued shares of the appellant company (7,000 shares; hereinafter referred to as the "Shares"), passed away on March 24, 1982, and thus his wife E and the appellee (first son), representative of appellant company A (second son) and supporting intervener of final appeal C (third son) as well as four other children jointly succeeded to the Shares, but on February 23, 1985, E also passed away and thus the appellee and six other persons jointly succeeded to E's shares; [b] a registration was made in the commercial registry on March 11, 1985, to the effect that a resolution (hereinafter referred to as the "Resolution") was adopted to appoint F and G in addition to A as directors and to appoint C as the auditor in a shareholders meeting of the appellant company that was held on February 24, 1985; and [c] however, there is no fact that the abovementioned shareholders meeting was held and that the Resolution was adopted; and [ii] in response to the appellee's allegations mentioned above, the appellant company is disputing the interests to sue or the standing to sue of the appellee based on an allegation that the division of estate of the Shares is yet to be completed and that the procedures to designate the person who is to exercise rights with respect to the abovementioned shares and to notify such designation to the appellant company have not been carried out. As such, in light of the explanations given above, it should be said that there are special circumstances under which the appellee may file an action seeking a declaratory judgment of absence of the Resolution in this case, and the determination made by the court of prior instance which affirmed the appellee's standing to sue may be accepted in its conclusion. The arguments are only alleging the illegality of the judgment in prior instance based on opinions different from those described above or by focusing on the parts which do not affect the conclusion of the judgment in prior instance, and thus are not acceptable.

Accordingly, in accordance with Articles 401, 95 and 89 of the Code of Civil Procedure, the Court unanimously decides as set forth in the main text.
Justice SONOBE Itsuo

Justice SAKAUE Toshio

Justice SATO Shoichiro

Justice KABE Tsuneo
(This translation is provisional and subject to revision.)