JAPAN Law and Practice Contributed by: Shinya Tago, Atsushi Fukasawa, Hiroshi Iida and Landry Guesdon, Iwata Godo Law Offices
have come to know of a Material Fact in the course of their duties; • shareholders entitled to inspect accounting books of the Listed Company who have come to know of a Material Fact during an inspection; • investors of the listed investment company or an investor of the parent investment company who are entitled to inspect the accounting books of the listed investment company, who have come to know of a Material Fact during an inspection; • persons with statutory authority over a Listed Company who have come to know of a Material Fact in the course of the exercise of such author - ity (eg, a public officer with the statutory authority to grant permissions and initiate investigations or inspections); • persons who have concluded or are negotiating a contract with the Listed Company and who have come to know of a Material Fact during the conclu - sion, negotiation or performance of the contract; • officers of a juridical person listed in the sec - ond, third and fifth items above, who have come to know of a Material Fact in the course of their duties; • persons who have ceased to be any of the persons listed above for less than a year; • persons who have received information on a Mate - rial Fact, from a person listed above; and • officers of a juridical person who have received information on a Material Fact in the course of their duties from a person referred to in the above point belonging to the same juridical person. “Material Facts” include: • decisions by the organ of the Listed Company that is responsible for making decisions on the execution of the operations of the Listed Company regarding certain important matters; • the occurrence of certain important facts in the Listed Company; • the existence of a significant difference between the latest publicised forecasts of sales, current profits, net income and dividend of the Listed Company; and • other important matters that would have a signifi - cant influence on investors’ decisions (catch-all clause).
Decisions, occurrences, differences in settlement of account information, and the matters covered by the catch-all clause (similar to the above) with respect to the subsidiaries of a Listed Company also constitute Material Facts, as do decisions and occurrences with respect to the asset management company of a listed investment company. Insider trading in connection with a tender offer (Article 167) The same punishment for insider trading by a Corpo - rate Insider is imposed on a person who has come to know of a fact concerning the launching or suspen - sion of: • a tender offer; or • the purchase of 5% or more of the voting rights of a Listed Company. Communicating information and advising on transactions (Article 167-2) A Corporate Insider aware of a Material Fact must not inform another person thereof and must not advise another person to sell or purchase stock of the subject listed company, for the purpose of allowing such other person to make profits or avoid losses, before such Material Fact is publicised. If such other person com - mits insider trading after receiving said information or advice, the person who provided information on such Material Fact or advice will be punished. Insider trading offences are not strict liability offences in terms of criminal liability; criminal intent by the per - son who has committed the offence must be estab - lished. Attempts are not punishable. Insider trading actions can be brought against individuals and cor - porate bodies. Penalties For insider trading, the punishment is imprisonment of up to five years and/or a maximum fine of JPY5 million (Article 197-2 (13), (14) and (15)). Property/earnings gained through insider trading will be confiscated, and any shortfall will be collected from the offender (Article 198-2). If insider trading is committed by a company’s representative, agent or employee, said company can be punished with a maximum fine of JPY500 million (Article 207 (1)(ii)).
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