JAPAN Law and Practice Contributed by: Hironori Nishikino and Koji Kanazawa, Chuo Sogo LPC
of foreign investors, one month) to the FSA (Share- holders with Large Voting Rights in Insurance Com- pany; Article 271-3-1 of the Insurance Business Act). The shareholder has to submit a report if the shareholder’s percentage of voting rights changes by 1% or more (either as an increase or decrease). The FSA may take administrative dispositions against shareholders with large voting rights in an insurance company if the FSA finds the report sub- mitted includes false information or lacks important or necessary information, thus causing potential misunderstanding. Mergers A merger with an insurance company requires approv- al by the FSA. Article 167-2 of the Insurance Business Act provides the following standards/checkpoints that the FSA could use in determining whether to give an approval: • the merger is appropriate in light of the protection of policyholders; • the merger will not hinder fair competition among insurance companies; and • it is certain that the surviving insurance company after the merger will be capable of operating the insurance business appropriately, fairly and effec- tively. Sale and Purchase The sale and purchase of an insurance business also requires approval from the FSA, pursuant to Article 142 of the Insurance Business Act. Purchasers of insurance businesses must be licensed insurance companies. Such sale and purchase also requires a separate approval to transfer insurance contracts from the FSA, pursuant to Article 139 of the Insurance Business Act. Petitions for approval to transfer insur- ance contracts are reviewed according to the follow- ing standards/checkpoints: • the transfer of insurance contracts is appropriate in light of the protection of policyholders; • it is certain that the transferee will be capable of operating the insurance business precisely, fairly and effectively; and • the transfer does not unjustly affect the benefit of the creditors of the transferor.
The Insurance Business Act does not require policy- holders’ approvals for transfers of insurance contracts to another insurance company. Instead, the transferor must issue a public notice, notify each policyholder, and provide them an opportunity to object to the transfer. 5. Distribution 5.1 Distribution of Insurance and Reinsurance Products Unless otherwise allowed by any other law, the Insur- ance Business Act prohibits any person from acting as an agent or intermediary to conclude insurance contracts, an activity that falls within the definition of “insurance solicitation” under this Act. In the case of a life insurance company, only regis- tered life insurance agents (officers and employees of a life insurer; life insurance agencies (agents) as well as their officers, employees and other personnel) may conduct “insurance solicitation.” A long-standing characteristic feature of Japanese selling channels is for life insurance companies to utilise a large number of salespeople who belong to those companies and are hence categorised as “employees of a life insurer” described above (mostly female employees known as Sei-ho ladies) among their overall sales staff. Put simply, every person selling insurance contracts has to be registered to do so. In principle, in the current legal system, life insurance agents may deal with insurance products of only one insurance company. In other words, they operate within the so-called one- company exclusive system. However, by fulfilling the prescribed legal requirements (such as enrolling two or more life insurance agents), it is possible to deal with insurance products of multiple insurance com- panies – in fact, many independent agencies currently do this. Non-Life Insurance Companies The situation involving non-life insurance companies (including a reinsurance company) is as follows. • It is recognised that officers (other than auditors) and employees of a non-life insurer may engage in “insurance solicitation”, not only without being reg-
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