JAPAN Law and Practice Contributed by: Tsuyoshi Ikeda, Aya Yasui, Hiroko Fukushima and Kohei Kohara, Ikeda & Someya
2.3 Types of Transactions Please note that the thresholds for notification vary in accordance with the following types of transactions: • share acquisitions; • mergers; • joint incorporation-type or absorption-type company splits (demergers); • joint share transfers (as defined by the Com - panies Act); and • acquisitions of businesses or assets. Interlocking directorships (one type of business combination) are subject to merger review by the JFTC but are not subject to mandatory notifica - tion obligation. More specifically, the above-mentioned acquisi - tions of businesses or assets include: • accepting assignment of the whole or a substantial part of the business of another company; • accepting assignment of the whole or a sub - stantial part of the fixed assets used for the business of another company; • taking on a lease of the whole or a substantial part of the business of another company; • undertaking the management of the whole or a substantial part of the business of another company; and • entering into a contract that provides for a joint profit and loss account for business with another company. Internal restructurings or reorganisations with - in the same company group are not subject to notifications in general. The AMA does not technically require notification regarding opera - tions that do not involve the transfer of shares or assets (eg, shareholders’ agreements or chang -
own initiative or through a voluntary consultation with the merging party or parties. Specifically, in the Merger Review Policies revised in 2019, the JFTC recommends that parties whose domestic sales amounts fall under the thresholds of the notification have a voluntary consultation prior to the notification process when the total consid - eration for the acquisition (transaction value) will exceed JPY40 billion and the scheduled trans - action is deemed to affect domestic consumers, satisfying one of the following: • the business base or research and devel - opment base of the acquired company is located in Japan; • the acquired company conducts sales activi - ties targeting domestic consumers, such as creating a Japanese website or using a bro - chure in Japanese; or • the total domestic sales of the acquired com - pany exceed JPY100 million. In practice, the targeted parties typically consult with the JFTC voluntarily prior to filing a notifica - tion, as described in 3.9 Pre-notification Dis - cussions With Authorities . Without the volun - tary consultation, the parties could be requested to provide further related information. 2.2 Failure to Notify If a party obliged to notify fails to make/file a notification, it is subject to a criminal fine of up to JPY2 million. No such penalty has yet been imposed on any party, but in June 2016 the JFTC issued a warning on a “warehousing” case; see 2.13 Penalties for the Implementation of a Transaction Before Clearance for further details.
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