JAPAN Law and Practice Contributed by: Yusuke Murakami, Nobuhiko Suzuki, Yuma Ito and Masataka Hayano, Mori Hamada & Matsumoto
4.14 Timing of the Takeover Offer The tender offeror can extend the tender offer period up to 60 business days if regulatory/antitrust approv- als will not likely be obtained prior to the end of the tender offer period. If obtaining antitrust clearance is expected to take a significant amount of time, a pre-announcement type of tender offer is typically used. In cases where the clearance process is expected to be short and proce- dural, it is common to obtain the clearance after the tender offer has commenced. 4.15 Privately Held Companies In Japan, acquisitions of privately held companies are most commonly carried out through share purchases. However, if the buyer wishes to acquire only a spe- cific part of the target’s business or to avoid taking on potential liabilities, an asset sale may be preferred. In such cases, the transaction is structured as an asset sale rather than a share purchase. An asset sale is generally implemented either through a simple transfer of assets or by way of a statutory company split ( kaisha bunkatsu ) pursuant to the Com- panies Act. In both approaches, the specific assets to be transferred and liabilities to be assumed can be clearly designated, and both methods are equally effective in isolating liabilities. 5. Overview of Regulatory Requirements 5.1 Regulations Applicable to Energy and Infrastructure Companies Business in the electricity sphere in Japan is regulated depending on its type of business, and the business is roughly divided into three categories: (i) power gen- eration; (ii) power transmission and distribution; and (iii) retail. • Power generation is regulated through a filing sys- tem, meaning that businesses can operate as long as the necessary information is filed. • Power transmission and distribution are regulated by a licensing system and are operated as regional monopolies, with Japan divided into ten regions.
and regulations, this agreement may allow the tender offeror to dispatch directors to the target and grant the tender offeror certain veto rights (such as matters requiring prior approval by the tender offeror). 4.12 Irrevocable Commitments Typically, an offeror will enter into a tender offer agree- ment with the principal shareholder when announcing the tender offer. The irrevocable commitment under the tender offer agreement is considered a contractual obligation. Depending on the cases, it is relatively common for an out clause to be stipulated under the tender offer agreement. 4.13 Securities Regulator’s or Stock Exchange Process The FIEA requires that a party launching a tender offer submit a tender offer registration statement ( koukai kaitsuke todokede-sho , or TORS) and relevant docu- ments to the Kanto Local Finance Bureau (KLFB). Although the FIEA does not expressly require the bidder to obtain approval from the KLFB before com- mencing a tender offer, it is standard practice to con- sult with the KLFB, have the TORS reviewed by it, and obtain a sign-off of the KLFB before commencing a tender offer. Although it is usually the KLFB with which bidders directly communicate, the Financial Services Agency (FSA) works together with the KLFB (often behind the scenes) and is also involved in the pre- consultation process. Under the FIEA, the tender offer period can be set between 20 to 60 business days. The tender offer period would typically be 30 business days (although the statutory minimum is 20 business days, it is cus- tomary to open the tender offer for 30 days for take- private transactions). An extension of the preceding tender offer period is possible. For example, if the price is changed within ten business days before the end of the tender offer period, the FIEA requires the submission of an amend- ed registration statement and an extension of the ten- der offer period.
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