JAPAN Law and Practice Contributed by: Rintaro Hirano, Yutaro Fujimoto, Yurika Masakane and Yutaro Kato, Nagashima Ohno & Tsunematsu
1.4 Sale of Power Industry Assets The Electricity Business Act regulates the sale of an entire business, an amalgamation or merger and a corporate split (collectively “business transfer”), made by an operator of an electricity business. Under the Electricity Business Act, an operator of an Electricity Generation Business, Specified Electricity Wholesale Business, Specified Elec- tricity Transmission and Distribution Business, or Electricity Retail Business may implement a business transfer at its own discretion. However, an operator of a General Electricity Transmission and Distribution Business, an Electricity Distri- bution Business or an Electricity Transmission Business may not implement a business trans- fer without the prior written approval of METI, without which the business transfer cannot take effect. Further, the Electricity Business Act requires an operator of a General Electricity Transmission and Distribution Business, an Electricity Distri- bution Business or an Electricity Transmission Business to submit prior written notification to METI if the operator sells or disposes of the facility used to conduct that business. If METI considers that such sale or disposition adversely affects the operation of that business, METI may issue an order to change the terms of, or pro- hibit, such sale or disposition. Under the Electricity Business Act, a person who has acquired facilities used to conduct an elec- tricity business must submit a written notifica-
ity Transmission Business, Electricity Generation Business which owns a power plant or battery energy storage system with a maximum capacity of 50,000 kW or more, and Specified Electricity Wholesale Businesses in which the total output of electricity aggregated from power sources is 50,000 kW or more; “non-core sectors” are sim- ply those that are not core sectors. Other requirements for prior written notice Further, under the Foreign Exchange and For- eign Trade Act, a foreign investor is also required to give prior written notice through the BOJ to MOF and METI if it proposes and consents to transfer the company’s business or dissolve the company’s business, or if it consents to appoint itself or a closely related person as a director or other material officer required to be appointed at a shareholders’ meeting. Warnings and Orders If, during the waiting period, MOF or METI decides that the investment may undermine national security, public order or public safety, or adversely affect the national economy, MOF and METI may issue a warning to change the terms of, or cancel, the investment. If the foreign inves- tor does not adequately respond to the warning or the foreign investor expresses an intention to disobey the warning, MOF and METI may issue an order to change the terms of, or cancel, the investment. At the time of writing, the only examples of a warning to cancel an investment and an order to cancel an investment were those issued by MOF and METI against the Children’s Invest- ment Fund in 2008 when it attempted to increase its shareholding in J-Power from 9.9% to 20%.
tion after the acquisition to METI. Renewable Energy Power Plant
With regard to the sale of renewable energy power plants subject to the feed-in tariff regime (“FIT Regime”) or feed-in premium regime (”FIP
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