JAPAN Law and Practice Contributed by: Tsuyoshi Ikeda, Aya Yasui, Hiroko Fukushima and Kohei Kohara, Ikeda & Someya
sales amounts of the seller (ie, a parent company of the target company) and its affiliates. It should be noted that not all the subsidiaries need to be in the form of a “company”, which means a partnership can be considered as a subsidiary. A company is deemed to be a subsidiary if another company holds the majority of the vot - ing rights of that company. In addition, when 40–50% of the voting rights of a company are held directly or indirectly by another company, the former company can be considered as a subsidiary of the latter company, by taking into account various factors such as board represen - tation and loans provided by the latter company. The scope of the group companies (a parent company, the ultimate parent company and its subsidiaries) is defined at the time of the clos - ing of the proposed transaction. Changes in the business during the reference period have to be reflected in general. For instance, for calcula - tion of the total domestic sales amount of an acquiring company that consummated a sepa - rate share acquisition transaction resulting in more than 50% of the voting rights in another company (Company A) being obtained after the end of the last fiscal year, the domestic sales of Company A for the last fiscal year must be included in the calculation of the total domestic sales amount of the acquiring company group. 2.8 Foreign-to-Foreign Transactions Foreign-to-foreign transactions are subject to pre-notification and merger control examina - tion under the AMA, as long as the thresholds – which apply equally to foreign-to-foreign trans - actions and domestic transactions – are met.
There is no local effect test; a local presence does not always trigger the notification require - ment. However, any transaction that meets any of the notification thresholds is considered by the JFTC to have a local effect. A party without any sales exceeding the thresh - olds within or outside Japan is not required to file a notification. Nevertheless, the JFTC may recommend that a party to the transaction vol - untarily has a consultation prior to the notifica - tion process if the amount of the transaction exceeds JPY40 billion and the attempted busi - ness combination is found to affect domestic customers. That is to say, even without sales in Japan, according to the Merger Review Poli - cies referred to in 2.1 Notification , the business combination could affect domestic customers if: • the party has its business or research base in Japan; • the acquired company conducts sales activi - ties targeting domestic consumers; or • the total domestic sales of the acquired com - pany exceed JPY100 million. 2.9 Market Share Jurisdictional Threshold The AMA does not define any market share juris - dictional thresholds. 2.10 Joint Ventures Due to the absence of the concept of “joint control”, the JFTC does not apply any special rules to joint ventures regarding filing require - ments under the AMA; instead, joint ventures are regulated by the same principle as the jurisdic - tional thresholds mentioned in 2.5 Jurisdictional Thresholds .
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