The court concluded that the main purpose of the new share issue plan cannot be considered unjustifiable.

The founding family opposes the company's planned merger with Showa Shell Sekiyu K.K. . A decrease in the family's stake in Idemitsu will make it easier to realize the integration plan.

The family immediately appealed to Tokyo High Court.

The new share plan is designed to put the management at an advantage, the district court said, viewing as unreasonable the company's claim that it hopes to procure funds for investment for growth.

Meanwhile, the court concluded that the new share issue cannot be considered extremely unjust, because it is obvious that the company needs funds to repay debts falling due in the coming months.

Idemitsu plans to issue new shares on Thursday to procure up to 118.5 billion yen. At present, the founding family holds a 33.92 pct stake.

Following the issuance, the family's stake is likely to fall below one-third in terms of voting rights, the minimum necessary to veto a special resolution for a merger at a general shareholder meeting.

The family filed the petition on July 4, claiming that the new share issue is aimed at maintaining the current management's control over Idemitsu. (Jiji Press)