Support the Strong against the Weak - A Legal Profession Who Forgot Legal Interpretation?
It is no exaggeration to say that major theme of postwar corporate law was the history of legal interpretation and theory of judicial precedents to fill the spaces that were left because small-sized closed public companies could not abide corporate law.
For example, the contract is valid in this case even though it needs approval by the board of directors or shareholder's meeting, or the transfer of stock is valid in that case even though it needs the issuance of stock certificate.
The doctrine of piercing the corporate veil has been shaped as a major doctrine although its legal ground is only abuse of the right of the Civil Code.
They are too numerous to mention. The theory of director's legal accountability to the third party was the theory of the disposal of failed small and middle-sized companies, which was also called as a creation of law.
Here, there were legal professions who filled up the deficiency of corporate law, which was unsuitable for closed companies, with legal interpretation, and on the other hand, filled up the deficiency of law with a creation of law, and then, made a legal interpretation to admit responsibility at the place where the control existed.
It is quite significant to note that there were two distinguished commercial law scholars, Jiro Matsuda and Kenichiro Osumi, in the Supreme Court in 1969 when the court approved the doctrine of piercing the corporate veil and the theory of legal accountability.
Time has changed and a public company is expected to be full-fledged enough to make use of capital markets. At this moment, legal professions seem to forget legal interpretation and a creation of law.
A publicly-held company cannot be established unless the rule of capital markets is well maintained. Liberalization and deregulation have been too rapid and excessive to be accompanied with appropriate discipline accordingly.
As a result, the legal professions have been losing the stance of legal interpretation to correct the wrongs on the spot. To respond problems, immediate law revisions have took place again and again although it is not against the law under existing legislation.
The laws are not working well at this moment. Recently there have been many incidents in the market including Livedoor's off-hours trading, stock splits, and massive buyback of own shares through an investment fund.
Murakami Fund purchased more than one-third of shares through off-market and on-market trading but did not submit a large holding report because the purchase did not seek control while Murakami purchased 45% of the shares and proposed replacing directors.
All those activities were regarded as legal at the point they occurred. Obviously, many scholars who take a neutral stance, especially many among young legal professions, have tendency to get done everything with using formal logic instead of considering legal interpretation.
That means the wrongdoing is always overlooked at first even if it uses a poor strategy. It is equal to leave spread of corruption and market distortion unattended.
My understanding was that an evasion of the law means illegal. But recently it is used as "not illegal". That also explains the recent tendency to forget the importance of legal interpretation.
If flexible legal interpretation or a creation of law is presented for a small-sized closed company, old buddies in small and medium-sized companies do not care much about it anyway.
However, in the age of a large-scaled public company, legal professions cannot demonstrate legal interpretation or a creation of law unless they are fully prepared to deal with many big figures like large companies, large financial institutions, or Financial Service Agencies.
There is a strong tendency to blindly obey the FSA's legal interpretation although it is the age of rule-type or judicial-type.
Carefree stance of legal professions in the age when everything was prohibited in principle has to be changed to the stance to say no to the things business people take for granted.
Otherwise, legal professions cannot complete their mission. It is necessary to do bold legal interpretation and a creation of law in the era of a large-scaled public company, the era when maximum freedom is allowed.
Otherwise, there is no turning back once something wrong happens. Delays in legal administration leave unlawful securities markets uncontrolled, distort a public company system, reinforce an easy bubble, and lead to serious problems in the future.
The stance to apply formal logic to public companies and capital market, and apply material logic to small and medium-sized companies mean to preserve the legal profession who support the strong against the weak.
This kind of awareness of the issues should be completely shared in the essential part of legal education at law schools. What is the reality?
There is no doubt that the social mission cannot be fulfilled at the law schools where only practices and experiences are influential in teaching for some reason.
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It is no exaggeration to say that major theme of postwar corporate law was the history of legal interpretation and theory of judicial precedents to fill the spaces that were left because small-sized closed public companies could not abide corporate law.
For example, the contract is valid in this case even though it needs approval by the board of directors or shareholder's meeting, or the transfer of stock is valid in that case even though it needs the issuance of stock certificate.
The doctrine of piercing the corporate veil has been shaped as a major doctrine although its legal ground is only abuse of the right of the Civil Code.
They are too numerous to mention. The theory of director's legal accountability to the third party was the theory of the disposal of failed small and middle-sized companies, which was also called as a creation of law.
Here, there were legal professions who filled up the deficiency of corporate law, which was unsuitable for closed companies, with legal interpretation, and on the other hand, filled up the deficiency of law with a creation of law, and then, made a legal interpretation to admit responsibility at the place where the control existed.
It is quite significant to note that there were two distinguished commercial law scholars, Jiro Matsuda and Kenichiro Osumi, in the Supreme Court in 1969 when the court approved the doctrine of piercing the corporate veil and the theory of legal accountability.