TOKYO, March 8 (Reuters) - Activist fund Oasis Management is considering legal action over Taisho Pharmaceutical's $5 billion management buyout - Japan's largest to date - arguing that it was deeply unfair to minority shareholders.

Taisho's founding family gained 73% of the company in a tender offer in January for 8,620 yen per share - a 55% premium to Taisho's share price before the offer was announced but which was still below book value.

Seth Fischer, Oasis's founder and chief investment officer, told Reuters that the Hong Kong-based fund could ask a court to determine the fair value of Taisho's stock in a so-called appraisal process. Or it could sue Taisho's board of directors for breach of duty.

Oasis has previously gone to court to seek higher prices for its shares in buyouts as it did when Japanese trading house Itochu acquired convenience store operator FamilyMart in 2020. The court decided in favour of Oasis. FamilyMart has appealed the decision as has Oasis which is contesting how the share price was calculated.

Fischer said there had been "an extreme conflict of interest" in the Taisho deal given that the founding family had owned more than a third of the company prior to the buyout.

Taisho is holding a shareholder vote on March 18 on a reverse stock split that would consolidate Taisho's shares - a vote it is sure to win as it commands more than the two-thirds of the vote needed to secure approval. It would then be delisted in April.

Taisho's board has said the transaction is fair to minority shareholders.

Fischer called for Japan to adopt stronger protections for minority shareholders in management buyouts.

He said that when considering deals, companies should have a truly independent special committee, seek an independent fairness opinion, solicit alternative offers and use so-called majority-of-the-minority votes where a controlling shareholder is excluded.

"I'm not against MBOs in general. I want MBOs to be fair. I want the buyers to be fair," he said.

Oasis has not disclosed its stake in Taisho but has said it has been a shareholder for a long time.

Amid increasing pressure from regulators and shareholders to improve corporate returns, Japan has seen a surge in MBOs. It had 29 MBOs last year, according to LSEG data as of Dec 6.

(Reporting by Makiko Yamazaki; Editing by Edwina Gibbs)