Minority shareholders of Japanese companies have become more active in requiring an appropriate price for their shares in the event of a "squeeze-out" on a management buy-out (MBO), and several courts, including the Supreme Court of Japan, have supported shareholders' action in such cases.

The new Companies Act allows more flexible corporate restructurings and since it became effective in 2006, some listed companies have carried out MBOs and squeezed- out minority shareholders at a price set by the company and which was favourable to the company. In some such cases, some minority shareholders objected to the MBO plan prepared by the company and the proposed price, and brought the issue to the courts.

The Tokyo High Court, the Osaka High Court and the Supreme Court of Japan have held that a company planning an MBO should set the share buyout price "fairly" and that the procedure for the MBO should be transparent to all shareholders. The Osaka High Court recently criticised a company that set the offered price at the market price on the date they announced the MBO, having driven its share price lower than during the 12 months before the announcement of the MBO.

In addition, the courts have held that in setting the offer price a listed company should add to the market price of the shares a control premium (the value that the management should pay to shareholders to obtain power to manage the company without the shareholders) and a squeeze-out premium (compensation for loss of investment opportunity for shareholders who sell shares to the management); and the courts suggested that the aggregate value of the control and squeeze premiums be 20% of the market price.

These cases demonstrate the continuing trend of increased shareholder activism in Japan and the greater willingness of the courts to intervene to ensure fairness.

It is difficult to feel pity for moneylenders most of the time, but the business of money lending in Japan has, in recent years, not been easy for those registered to engage in it. For example, on 13 January 2006, the Supreme Court of Japan set an historic precedent by holding that the debtors of registered moneylenders were entitled to be repaid amounts constituting "Gray-zone interest". So-called Gray-zone interest rates are those that exceed the interest rate cap stipulated by the Interest Restriction Act (for which no penalty applies) but which do not exceed the interest rate cap specified by the Investment Law (for which a penalty does apply).

Following the decision of the Supreme Court, registered moneylenders now face amendments proposed to be made to the Money Lending Business Law (which will fully take effect by June 2010). The gist of the amendments are to:

In the current economic crisis, many money lending businesses in Japan are facing hard times. For example, in September 2009, Aiful Corporation, a major money lending business, filed for business rehabilitation ADR procedures. As of September 2009, the number of registered money lending businesses in Japan stood at around 5,000; a dramatic decrease from the 47,000 or so registered moneylenders engaged in the business at the peak of such activity in March 1986.

Given the tougher regulation of registered moneylending business and the decrease in the number of registered moneylenders, some commentators have voiced concern that the business of moneylending could look more attractive to unregistered moneylenders, which could have the unintended effect of encouraging illegal lending and unscrupulous collection practices.

In light of these concerns, the Financial Services Agency of Japan has established a project team to research the state of money lending business in Japan and the participants in it, and compare the industry in Japan with that of foreign countries to determine the necessity of measures to ensure the smooth enactment of the amended Money Lending Business Law. The project team is expected to take a leading role in optimising the efficiency of money lending business in Japan and dealing with continuing concern regarding unlicensed moneylenders.