JAPAN Law and Practice Contributed by: Hiroshi Mitoma, Tomohiko Iwasaki, Kosuke Hamaguchi and Akira Komatsu, Nagashima Ohno & Tsunematsu
5.4 Global Anti-Money Laundering Financial institutions and certain designated business operators are subject to statutory reporting obligations to file Suspicious Transaction Reports (STRs). These entities are required to establish systems for detect - ing, monitoring and analysing suspicious customers and transactions through a risk-based approach tai - lored to their business activities, utilising IT systems, internal manuals and other resources. When a trans - action is determined to be suspicious, an STR must be filed promptly. Other corporations are not subject to statutory STR filing obligations. However, depending on the specific circumstances, it is advisable for such corporations to consider contacting or consulting with the relevant authorities. Directors of financial institutions, etc subject to the aforementioned statutory reporting obligations are generally expected to undertake the following meas - ures: • treat AML as an important management priority, appoint a designated AML officer, and establish a framework whereby such officer receives timely and appropriate reports and can provide explana - tions regarding AML matters; • allocate appropriate resources, including special - ised personnel and budget, to the department in charge of AML and establish a co-ordination framework with other relevant departments; and • ensure that the board of directors approves the for - mulation and revision of AML plans, and receives regular and ad hoc reports on their implementation status. If directors of such financial institutions, etc fail to implement the AML measures described above and the company consequently suffers damages due to substantial penalties or reputational harm, such direc - tors may be held personally liable for monetary com - pensation for damages incurred by the company on the grounds of breach of their fiduciary duties.
Publicly traded companies also need to disclose in annual securities reports certain information regarding corporate governance. In addition, the TSE Regulations require that each listed company submit a corporate governance report based on the Corporate Governance Code. In the cor - porate governance report, each listed company must explain, among other matters: • its basic policy on matters included in the Corpo - rate Governance Code established by the Tokyo stock exchange; • the reasons for non-compliance with any of the principles of the Corporate Governance Code (if applicable); • any disclosures required under the Corporate Gov - ernance Code; • the composition of shareholders (eg, foreign share - holders, top ten largest shareholders, controlling shareholders, if any); • the measures for protection of minority sharehold - ers and group management policy where a listed company has a listed subsidiary, parent company, listed downstream affiliate or upstream affiliate; • its corporate governance system, including appointment of outside directors; • the initiatives with respect to shareholders or other stakeholders; and • its internal control system. 5.3 Incorporation and Registration A joint stock company is required to file certain mat - ters in a commercial registry, which is administered by the legal affairs bureau, upon incorporation and whenever any change to such matters arises. Matters registered in the commercial registry are pub - licly available, while the filings made to the legal affairs bureau are not. The legal affairs bureau is tasked with review of the application to confirm if the filings com - ply with the statutory requirements for the matters required to be registered and it may reject the appli - cation if the statutory requirements are not satisfied. A failure to file a required commercial registry may result in a civil penalty not exceeding JPY1 million.
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