JAPAN Law and Practice Contributed by: Raku Raku, Gen Takahashi, Yoshihiro Morisato and Taku Matsumoto, Anderson Mōri & Tomotsune
rights of the shares in a public company. Other than the information disclosure requirements mentioned in 3.1 Transaction Structures , certain rules for conduct are also stipulated under the FIEA, which include that: • the TOB period shall be, in principle, 20 to 60 busi - ness days; • the terms of the TOB should be applied equally to all the shareholders throughout the TOB period; • the purchaser must not, in principle, change the terms of the offer in a way that is unfavourable to the shareholders; and • in principle, the purchaser cannot cancel or with - draw the TOB. 4. Corporate Governance and Disclosure/Reporting 4.1 Corporate Governance Framework Under the Japanese Companies Act, there are four types of business vehicle: • a stock company ( Kabushiki Kaisha ); • a limited liability company ( Godo Kaisha ); • a general partnership company ( Gomei Kaisha ); and • a limited partnership company ( Goshi Kaisha ). The main business vehicle used in Japan is a stock company. All public companies are stock companies. Furthermore, most private companies are also stock companies. For tax reasons, a limited liability com - pany ( Godo Kaisha ) may be more advantageous to overseas investors on some occasions (for example, limited liability companies can be deemed as pass- through entities under US tax laws), but, as it is a rela - tively new form of legal entity, it is sometimes deemed as lacking legal stability compared to a stock com - pany. For overseas investors who seek to have a flex - ible governance structure, however, a limited liability company still seems an attractive choice. The most common corporate governance structure with respect to a private stock company is a board of directors and corporate auditor(s). While it is possible for a private stock company to not have a board of directors that makes decisions concerning the organi -
sation, operations and management via director(s) or the shareholder meetings, many private stock companies do. The corporate auditor(s) is a unique governance body, the role of which is to supervise, monitoring the management decisions and business operations of the directors. As regards public stock companies, it is common to have a board of directors and a board of at least three corporate auditors. Currently, in order to strengthen the corporate governance structure, a certain number of public stock companies have shifted to: (i) compa - nies with three committees (namely, audit and super - visory committee, nominating committee and remu - neration committee), all of which consist of at least three directors, with the majority as outside directors; or (ii) companies with an audit and supervisory com - mittee only, which consists of at least three directors, with the majority as outside directors. In 2013, a corporate governance reform was posi - tioned as a key policy to promote foreign investment in Japan. This led to the establishment of the Steward - ship Code as a code of conduct for institutional inves - tors in 2014, and the Corporate Governance Code as a code of conduct for public companies in 2015. 4.2 Relationship Between Companies and Minority Investors The general principle under the Companies Act is to treat all shareholders equally. Cumulative voting for appointing directors is allowed in Japan unless the articles of incorporation state otherwise. Therefore, even minority shareholders have the opportunity of appointing director(s). The Companies Act also stipu - lates that certain types of companies can issue shares of different classes and can let shareholders of those different classes elect their own directors. Accord - ingly, if minority shareholders can obtain a majority of votes within their share class, they have the opportu - nity to appoint a director to the board. Further, under the Companies Act, minority sharehold - ers are granted certain rights against the company and directors including, without limitation, the rights to:
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