The takeover defence, the majority-of-minority vote, and Iwatani (2023)

What the majority-of-minority line left behind

The core of this episode was the legitimacy of the line drawn by a majority-of-minority vote that excluded the acquirer from the count. To separate a build-up approaching control from the interests of general shareholders, Cosmo chose a vote without the acquirer and rested the resolution’s passage on a figure of 59.54% in favour. Yet recast as an ordinary resolution of all shareholders, support falls to roughly 46%. Whether the stronger case belonged to management protecting itself or to general shareholders at risk of being denied time to decide is a question whose answer changes with how the tally is framed.

The resolution itself came not from triggering the defence but from the appearance of a third party. With Iwatani emerging as a friendly acquirer, Cosmo replaced its largest shareholder without a showdown at a general meeting, and folded the defence away. A takeover defence measure can be seen less as a device that stops an acquisition than as one that buys time to find a more agreeable counterparty. The question of whether the majority-of-minority vote was proper outlived the settlement, and how far an acquirer’s voting rights may be restricted in an emergency has been handed on to later practice as a precedent.