JAPAN Trends and Developments Contributed by: Raku Raku, Gen Takahashi, Yoshihiro Morisato and Taku Matsumoto, Anderson Mōri & Tomotsune
promote other international standards among com - panies. As with Section II of the Guiding Principles, the Guide - lines mainly consist of three sections: • the establishment of human rights policy; • the implementation of human rights due diligence (HRDD); and • remedies. With respect to the establishment of human rights pol - icy (item (i)), companies are encouraged to express, both internally and externally, their commitment in ful - filling their responsibility to respect human rights. The Guidelines also recommend that companies engage and hold discussions among their internal depart - ments as well as with external stakeholders and oth- ers concerned. With respect to the implementation of HRDD (item (ii)), companies are encouraged to take four steps: • identify adverse human rights effect on the com - pany, its suppliers, and others concerned; • prevent and mitigate adverse human rights effects; • assess the effectiveness of such efforts; and • explain and disclose information on how to address adverse impacts. It is noteworthy that the Guidelines do not oblige companies to address all adverse impacts identified but, instead, require them to prioritise adverse human rights effects based on their severity, as tackling every adverse impact would be impractical. Finally, regarding remedies (item (iii)), to promptly deal with grievances over adverse human rights effects and provide relief directly to victims, companies are encouraged to either establish a regime to deal with grievances concerning the company and its stake - holders or to participate in a grievance mechanism established by an industry organisation or equivalent. When a foreign party decides to invest in a Japanese company, one of the critical factors to be considered is whether the Japanese company in question properly complies with the above and other related guidelines.
On 31 January 2023, the relevant disclosure regula - tions for listed and other companies were amended to require the disclosure of information regarding sustain - ability in their annual securities reports. Effective from March 2023, listed companies have been required to disclose their approach and initiatives regarding sus - tainability in a new section of their annual securities reports. This amendment is expected to promote the disclosure of information on sustainability by listed companies. New Guidelines for M&A On 31 August 2023, the Ministry of Economy, Trade and Industry (METI) released the “Guidelines for Con - duct in Corporate Takeovers – Toward Enhancing Cor - porate Value and Ensuring Shareholder Returns” (“the Guidelines for Corporate Takeovers”). The purpose of the Guidelines for Corporate Takeovers is to present principles and best practices that should be shared by the economic community towards the formation of fair rules for M&A, with a focus on how parties should behave in acquiring management control of a listed company. Although the Guidelines for Corporate Takeovers cov - er a wide range of issues, the following three principles are suggested as principles that should be respected in general acquisitions of management control of a listed company. Principle 1: Corporate value and the common inter- ests of shareholders – whether an acquisition is desir - able or not should be judged based on whether it will secure or enhance corporate value and, in turn, the common interests of shareholders. Principle 2: Shareholders’ intent – the reasonable intentions of shareholders should be relied upon in matters involving control of the management of the company. Principle 3: Transparency – information that is useful to shareholders in making decisions should be provided appropriately and proactively by the acquirer and the target company. To this end, the acquirer and the tar - get company should ensure transparency regarding the acquisition through, for example, compliance with laws and regulations related to the acquisition.
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