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On June 28, 2019, the Ministry of Economy, Trade and Industry（METI）released the “Fair M&A Guidelines”（“Guidelines”）. The Guideline proposes various practical measures, called “Fairness Ensuring Measures,” which are intended to ensure the substantive fairness of MBOs by encouraging parties to MBOs to adopt them and ensuring that MBOs are conducted through fair procedures. In the case of MBOs, the most important measure proposed by the Guidelines is the market check, because the effectiveness of ensuring the fairness of MBOs may vary greatly depending on how the market check is conducted. The Guidelines classify market checks into three categories: pre-signing market checks, post-signing go-shops, and post-signing indirect markets. In the case of MBOs, post-signing market checks are ineffective because the MBO acquirer is in a structurally advantageous position. Since pre-signing market checks are theoretically superior as a method of legal discipline for MBOs and are the most effective in ensuring fairness in MBOs, the implementation of pre-signing market checks should be encouraged. To this end, when examining whether or not an MBO is procedurally fair, the court should, in principle, consider that the MBO is not conducted through fair procedures if the pre-signing market check is not effectively conducted.

On June 28, 2019, the Ministry of Economy, Trade and Industry（METI）formulated the “Fair M&A Guidelines : Enhancing Corporate Value and Securing Shareholders’ Interests”（“Guidelines”）. The substantive law in Japan applied to freezeout transactions does not sufficiently protect the interests of the minority shareholders of the target corporations. The Guidelines are formulated to improve their interests in freezeout transactions by supplementing the deficiencies of Japanese substantive law in the freezeout context with various practical and procedural measures, which are called “Practical Specific Measures（Measures to Ensure Transaction Fairness）” and voluntarily adopted by the parties of the transactions. The measures proposed by the Guidelines would not be sufficient to secure substantive fairness of the transactions, because their measures are designed to solve controlling shareholders’ conflict of interests in that context by resorting to the efforts of independent outside directors of the target corporations and special committees composed of them, not restricting the controlling power of controlling shareholders. The proposal of the Guidelines has structural difficulties and the productive outcome could hardly be expected. Judicial and/or legislative restrictions on controlling shareholders, including fiduciary duty of controlling shareholders, should be required to ensure substantive fairness of freezeout transactions.

This article analyzes the function of injunctive relief in the case of conflicted M&A transactions. Injunctive relief could facilitate the accomplishment of the goals of M&A jurisprudence: efficient allocation of the business resources of the target corporations and fair distribution of the value that would be created by the transactions. The conflict of interests of the directors of the target corporations would deter the achievement of allocational efficiency and distributional fairness because their decisions would be distorted by their pursuit of self-interests. Courts could redress the undesirable result caused by their distorted decisions by reviewing the transaction and granting various remedies after it has been consummated. Because ex post judicial remedies would be far from perfect and because ex post reallocation and redistribution would be insufficient, earlier judicial intervention is needed to attain the goals of M&A jurisprudence. By monitoring the conflict of interests of the directors of the target corporation in the process of the motion for temporary injunction and by enforcing the duties of the directors before the consummation of the transaction, efficient allocation of the target resources and fair distribution of the value created by the transaction could be accomplished.

This article analyzes the function of injunctive relief in the case of conflicted M&A transactions. Injunctive relief could facilitate the accomplishment of the goals of M&A jurisprudence : efficient allocation of the business resources of the target corporations and fair distribution of the value that would be created by the transactions. The conflict of interests of the directors of the target corporations would deter the achievement of allocational efficiency and distributional fairness because their decisions would be distorted by their pursuit of self-interests. Courts could redress the undesirable result caused by their distorted decisions by reviewing the transaction and granting various remedies after it has been consummated. Because ex post judicial remedies would be far from perfect and because ex post reallocation and redistribution would be insufficient, earlier judicial intervention is needed to attain the goals of M&A jurisprudence. By monitoring the conflict of interests of the directors of the target corporation in the process of the motion for temporary injunction and by enforcing the duties of the directors before the consummation of the transaction, efficient allocation of the target resources and fair distribution of the value created by the transaction could be accomplished.