JAPAN Trends and Developments Contributed by: Raku Raku, Gen Takahashi, Yoshihiro Morisato and Taku Matsumoto, Anderson Mōri & Tomotsune
The Guidelines for Corporate Takeovers are not intended to be a soft-law statement of principles or best practices, or to be legally binding or punitive in any way. However, in practice, they would have a sig - nificant impact not only as a code of conduct dur - ing the takeover phase, but also as a guideline for interpretation in court, etc. For foreign investors, the Guidelines for Corporate Takeovers would be help - ful as they contribute to predictability in the takeover phase of listed companies. New Takeover Bid Regulations On 15 May 2024, certain amendments to the Finan - cial Instruments and Exchange Act (“the FIEA”) were enacted. The amendments were related to the regula - tions on takeover bids (TOBs) (“the TOB Regulations”) in Japan, which have not been amended since 2006. Based on the announcement on 4 July 2025 made by the Financial Services Agency, it has been clari - fied that the amendments to the TOB Regulations will come into force, with some exceptions, on 1 May 2026. Although there is still some time before the effective date, the impact of the amendments should be care - fully examined. The key areas of the amendments include the follow - ing. • Change in thresholds of mandatory TOB process: Currently, the TOB Regulations mandate, where off-market transactions result in the acquirer’s shareholding ratio exceeding one-third in a listed company, implementation of a TOB process in acquiring the additional shares. After the amend - ments, the threshold will be lowered to 30%. • Applicability to on-market deals: As mentioned above, the TOB Regulations are only appliable to off-market transactions, with certain exceptions. After the amendments, the TOB Regulations will be generally applicable to on-market transactions. • Other ancillary amendments: In addition to the above, some of the material concepts in the TOB Regulations will be clarified, abolished or revised by the amendments (eg, the amendment of the definition of persons with a “special relationship”,
and the abolishment of the “rapid acquisition rule”). The procedures of the TOB will be relaxed to some extent, to address the practical hurdles under the current regime. The aim of the amendments is to ensure and enhance the transparency and fairness of securities transac - tions. After the amendments take effect, the thresh - olds of the TOB Regulations will become analogous to those in other jurisdictions to a certain extent. Recent Investment Trends The following provides an overview of some of the trends in the Japanese M&A market that were observed in 2025, most of which are a continuation of trends observed in 2024. Shareholder activism and the increase in takeovers without consent A trend has been observed whereby activist share - holders are increasingly proactive and aggressive in their proposals to Japanese listed companies, mainly based on the belief that such companies still maintain capital reserves that they do not use effectively, with said shareholders continuing to request appropriate and sufficient returns be made. That said, proposals made by many activist shareholders after 2021 were reported to be relatively modest and more sophisti - cated compared to those of prior years. For example, rather than simply seeking greater dividends or share buybacks, activist shareholders have made more con - structive proposals, such as for the implementation of measures to improve governance structures and capital productivity. Another reason for this increased activism is that, fol - lowing the introduction of the Corporate Governance Code in 2015, Japanese listed companies are required to maintain stronger corporate governance standards. Despite this, many listed companies have failed to establish appropriate internal corporate governance systems to date, thus providing a strong opportunity for activist funds should they seek to take advantage of it. The rise in activist funds has also led to an increase in the number of takeovers without consent. The Japa - nese market has historically been very conservative,
359 CHAMBERS.COM
Powered by FlippingBook