JAPAN Law and Practice Contributed by: Yusuke Murakami, Nobuhiko Suzuki, Yuma Ito and Masataka Hayano, Mori Hamada & Matsumoto
5.5 Antitrust Regulations Under the Act on Prohibition of Private Monopoliza- tion and Maintenance of Fair Trade (AMA), the parties must file a notification to the Japan Fair Trade Com- mission (JFTC) and obtain the clearance prior to the closing for certain M&A transactions. The thresholds for the filing requirement are different according to the types of transaction structures, but in the case of an acquisition of shares, an acquisition of more than 20% or 50% of the target’s voting rights will trigger the prior notification obligation if an acquirer group has aggregated domestic sales of more than JPY20 billion and a target company group has aggregated domestic sales of more than JPY5 billion. If JFTC finds no issues from the competition law perspective, it will give a clearance notice during the 30-day waiting period. If it requires a more detailed review, a second-phase review will commence. The maximum period for the second-phase review is either (i) 120 days or (ii) 90 days from the completion of the submission of all additional materials requested by the JFTC, which- ever is the longest. In May 2023, JFTC published “Guidelines concerning the Activities of Enterprises toward the Realization of a Green Society under the AMA”, which is based on the concept that the corporate activities toward the reali- sation of a green society are unlikely to pose issues under the competition law in many cases. In terms of the antitrust filing, these guidelines show supposed cases involving M&As or business alliances regard- ing businesses aiming at reduction of greenhouse gas as examples not causing substantial issues from the competition law viewpoint even if such transactions do not meet the safe harbour criteria that are used in the review process by JFTC. As a part of JFTC’s con- tinuous review, in 2024, JFTC revised these guidelines to further clarify the application of competition law to corporate initiatives for decarbonisation. The amend- ments include: (i) more detailed guidance on collabo- rative activities, such as joint disposal of facilities and joint procurement; (ii) the methods for measuring and evaluating the effects of decarbonisation; and (iii) new illustrative examples and explanations that reflect the practical needs of businesses, aiming to provide more concrete support for companies seeking to engage in environmentally friendly collaborations.
5.6 Labour Law Regulations Doctrine of Anti Abuse of Employee Dismissal Under Japanese labour law, an employer may not dismiss its employees unless there is an objectively reasonable ground and the dismissal is considered appropriate in general societal terms. Whether the dis- missal is valid depends on concrete circumstances in each individual case, but a purchaser should note that employee dismissals are generally difficult in Japan and employee dismissals upon M&A transactions may be invalid under this doctrine. Labour Union Although there is no legal system equivalent to the works council in Japan, employees of a company may form a labour union. If a labour union has executed a collective agreement with the company, the purchaser should examine whether the union has a pre-consul- tation right or any other provisions that may affect the successful implementation of the contemplated transaction. Company Split and Labour Contracts Succession Act In a company split transaction, the contracts, includ- ing employment contracts, specified in the company split agreement will be automatically transferred to the succeeding company under the operation of law without the counterparties’ individual consent. How- ever, even if the parties agree to transfer the employ- ment contracts of employees who mainly engage in the businesses that will remain in the split company after the company split, such employees may object to the transfer of their contracts in the company split to stay their status as employees in the split com- pany. The Labor Contracts Succession Act of Japan requires a split company to explain certain details of the company split and make notification to its employ- ees regarding such objection procedure. 5.7 Currency Control/Central Bank Approval There is no requirement for approval by a central bank (other than payment reporting which is normally handled by banks) that applies to M&A transactions. As discussed in 7.3 Restrictions on Foreign Invest- ments , there is a requirement for pre-transaction and post-transaction reporting in relation to foreign invest- ment that needs to be made via the Bank of Japan.
250 CHAMBERS.COM
Powered by FlippingBook