JAPAN Law and Practice Contributed by: Tsuyoshi Ikeda, Aya Yasui, Takuya Ohata and Kohei Kohara, Ikeda & Someya
by the target business of another of the company groups exceeds JPY3 billion. When any of the parties to the transaction transfers its entire business to a new company, different (higher) thresholds will apply – see the JFTC website. All sectors are necessarily subject to these jurisdic - tional thresholds. Nevertheless, it is worth noting that the AMA prohibits a bank and an insurance company from acquiring or possessing more than 5% and 10%, respectively, of voting rights in another domestic com - pany (except for an acquisition of a bank by another bank or an acquisition of an insurance company by another insurance company), in principle. The acqui - sition or possession will be permitted when one of the exemptions under the AMA applies, or if the party obtains prior approval from the JFTC. 2.6 Calculations of Jurisdictional Thresholds The total price of goods and services supplied in Japan during the latest fiscal year is regarded as domestic turnover, from which the thresholds are cal - culated. In addition to direct sales within and outside the country, indirect sales in Japan will be included in domestic turnover if the party recognises that the goods and services will be shipped to Japan by the direct purchaser at the time of entering into the con - tract, without changing their nature and characteris - tics. The intra-group company sales amount within the same group is to be excluded from the domestic sales. Sales made in a foreign currency should be converted into Japanese yen using the conversion rate applied for account settlement. If such an exchange rate is not available, the average telegraphic transfer rate is used. 2.7 Businesses/Corporate Entities Relevant for the Calculation of Jurisdictional Thresholds In a share acquisition, the total domestic sales amount of the acquiring company, for the purpose of the notification thresholds, includes the domestic sales amount of the acquiring company, its subsidiaries and its ultimate parent company (and direct and indirect subsidiaries thereof). The ultimate parent company
must be included in the relevant entities only if it is in the form of a “company”. On the other hand, the total domestic sales amount of the target company group includes the domestic sales amount of the target company and its subsidi - aries but does not include the sales amounts of the seller (ie, the parent company of the target company) and its affiliates. It should be noted that not all the subsidiaries need to be in the form of a “company”, which means a part - nership can be considered as a subsidiary. A company is deemed to be a subsidiary if another company holds the majority of the voting rights of that company. In addition, when 40–50% of the vot - ing rights of a company are held directly or indirectly by another company, the former company can be considered as a subsidiary of the latter company, by taking into account various factors such as board rep - resentation and loans provided by the latter company. The scope of the group companies (a parent compa - ny, the ultimate parent company and its subsidiaries) is defined at the time of the closing of the proposed transaction. Changes in the business during the ref - erence period have to be reflected in general. For instance, for calculation of the total domestic sales amount of an acquiring company that consummated a separate share acquisition transaction resulting in more than 50% of the voting rights in another com - pany (Company A) being obtained after the end of the last fiscal year, the domestic sales of Company A for the last fiscal year must be included in the calculation of the total domestic sales amount of the acquiring company group. 2.8 Foreign-to-Foreign Transactions Foreign-to-foreign transactions are subject to pre- notification and merger control examination under the AMA, as long as the thresholds – which apply equally to foreign-to-foreign transactions and domestic trans - actions – are met. There is no local effect test; a local presence does not always trigger the notification requirement. How - ever, any transaction that meets any of the notification
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