JAPAN Law and Practice Contributed by: Raku Raku, Gen Takahashi, Yoshihiro Morisato and Taku Matsumoto, Anderson Mōri & Tomotsune
Exemptions For acquisition of a privately held company If the designated business of the Japanese company is not a core business, an exemption may apply. This exemption requires the foreign investor to refrain from participating in the business of the target company with respect to the following specific actions (“general restrictions”): • neither the foreign investor nor its related persons shall become board members or corporate audi - tors ( Kansa-yaku ) of the target; • the foreign investor shall not make shareholder proposals for the divestiture of functions or assets in the designated business in whole or in part; and • the foreign investor shall not access non-public information concerning the target’s technology in the designated business, propose any disclosure of such information, or request any changes to the target’s internal rules concerning the control of such information. For acquisition of a listed company If the foreign investor is a financial institution and undertakes the general restrictions, the investor will be exempt from the pre-closing FDI notification require - ment. If the foreign investor is not a financial institution and undertakes the general restrictions, the foreign investor will be exempt from the pre-closing FDI Noti - fication requirement subject to the following further requirements. • If the designated business of the target company qualifies as a core business, the foreign investor must accept the following additional restrictions: • the foreign investor shall not attend any meetings of the target’s executive board/committees where decision-making concerning the core business activities is discussed; and • the foreign investor shall not submit any written recommendations regarding the core business activities to any of the target’s executive board/ committees requiring action or response within a specific timeframe.
Even if the foreign investor (when not a financial insti - tution) undertakes all the applicable restrictions, no exemption will be available if the foreign investor intends to acquire a stake or voting rights of 10% or more of the outstanding shares of a target company engaging in a core business. Foreign governments or government-affiliated enti - ties are, in principle, not eligible for the exemption described above. In addition, foreign investors who are obliged to cooperate in information gathering for foreign governments are to be treated in the same manner as foreign governments, in accordance with regulatory amendments introduced in 2025. Timeline of Pre-Closing FDI Notification If a pre-closing FDI notification will be submitted, its lead time will need to be factored into the transaction schedule in consideration of the mandatory waiting period as described below. • Generally, 30 days – as a general rule, where a pre- closing notification is required, a 30-day waiting period applies from the date of the filing. • Possibility of shortened waiting period – for simple cases not requiring scrutiny, the Bank of Japan has been given authority to provide filers with a notifi - cation of acceptance within a shortened period. • Possibility of extended waiting period – the govern - ment may extend the waiting period to up to five months from the date of the filing where the gov - ernment deems that the contemplated transaction warrants particular scrutiny for its potential impact on national security or the Japanese economy. 7.2 Criteria for National Security Review In the review process, the government considers whether the contemplated transaction warrants par - ticular scrutiny for its potential impact on national security or the Japanese economy. The government may ask the foreign investor, among other things, for the following information: • basic information about the investor and related parties; • the investor’s investment activities;
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