JAPAN Law and Practice Contributed by: Hajime Tanahashi, Takayuki Kihira, Kenichi Sekiguchi and Akira Matsushita, Mori Hamada
7.2 Type of Disclosure Required When an acquisition is made by a statutory busi - ness combination (ie, merger, corporate split, share exchange or share transfer) or share delivery mech - anism, whereby an acquirer’s shares are issued as consideration, the filing of a security registration state - ment by the acquirer is required if there are at least 50 shareholders of a target company and the target company is a reporting company under the FIEA, and no security registration statement has already been filed in relation to the same class of shares as the acquirer’s shares to be issued upon such a statutory business combination or a share delivery mechanism. For example, if a foreign purchaser acquires a Japa - nese listed company by way of a triangular merger and issues the shares of the foreign purchaser as con - sideration of the merger, the foreign purchaser will be required to file a security registration statement unless it has already become a reporting company in Japan under the FIEA. 7.3 Producing Financial Statements For a tender offer, the bidder must disclose in the tender offer registration statement its financial state - ments, prepared in accordance with Japanese Gener - ally Accepted Accounting Principles (GAAP) for the lat - est fiscal year, together with any quarterly or half-year financial statement after the date of the most recent full-year financial statement. If the bidder is a foreign entity, it may provide financial statements prepared in accordance with the generally accepted account - ing principles of its home country, with explanatory notes as necessary, to explain certain differences from Japanese GAAP, in lieu of Japanese GAAP financial statements. When a business combination requires the filing of a security registration statement, the offeror must dis - close, in the security registration statement, its finan - cial statements for the last two fiscal years, together with any quarterly updates, prepared in accordance with Japanese GAAP. However, a foreign offeror may produce financial statements prepared in accordance with the accounting standards of its home country or any other country in each case with the specific approval from the Minister for Financial Services of Japan.
Whether this type of commitment agreement includes a clause that would permit the principal shareholder to refuse to tender in the event that a competing bid is made by a third party at an offer price higher than the tender offer price varies, depending on the type of principal shareholder (eg, a founder, senior man - agement, a private company, a listed company) and other factors. This is a matter of negotiation and may be incorporated in the commitment, particularly if the deal did not involve an auction process or proactive market check and the principal shareholder is inter - ested only in the financial aspects of the transaction. If an acquisition is made by a tender offer to the share - holders of a listed company, a bidder must publicly announce the bid at the beginning of the tender offer by: • a press release; Bullet points two and three are required pursuant to the FIEA and are to be made or filed on the tender offer commencement date. As the press release is only required by the stock exchange regulations, if the bidder is not a listed company, the bidder is not required to issue a press release, although the target listed company is required to issue a press release immediately after it has formed an opinion (regarding its endorsement or not) of the tender offer. 7. Disclosure 7.1 Making a Bid Public • public notice of the tender offer; and • a tender offer registration statement. If a bidder’s press release is required, it is usually made one business day before the tender offer com - mencement date (simultaneously with the target company’s press release unless the bid is unsolic - ited). However, in certain exceptional situations, a bid is publicly announced by the bidder and the target company in advance of the commencement of the tender offer, such as when earlier public disclosure would be required to obtain merger clearance in cer - tain jurisdictions.
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