JAPAN Law and Practice Contributed by: Yohsuke Higashi, Nobuhiko Suzuki and Hiroko Kasama, Mori Hamada & Matsumoto
and Transactions (‘Foreign Investment Regulations’)). The EU FSR regime is obviously not a major concern with respect to a Japanese target (unless it has opera - tions in the EU). Aside from the regulations under the Anti-Monopoly Act and the FEFTA, going-private transactions must comply with security regulations governed by the FSA, including the mandatory tender offer and disclosure requirements (see 7. Takeovers ), and the listing rules of the Tokyo Stock Exchange. In response to the global trend of respect for human rights in corporate activities, METI released the ‘Guide - lines on Respect for Human Rights in Responsible Supply Chains’ in 2022. While global private equity players have already applied global human rights diligence requirements in their activities in Japan, the adoption of the Guidelines may require private equity investors in Japan to pay closer attention to the sup - ply chain management of the targets of Japanese companies. Following the start of the war in Ukraine, the Japanese government adopted economic sanctions against Russia and Belarus, like many other countries. These sanctions and countersanctions on Russia are put - ting Japanese companies with Russian operations in a very difficult situation, which may in turn present the same difficult questions to private equity buyers when considering the acquisition of such companies. An acquirer typically conducts a due diligence inves - tigation with the assistance of legal counsel and other advisers, and it usually covers business, legal, finance and tax matters. Of course, if the acquisition is made by way of an unsolicited offer, the acquirer would need to rely on annual reports and publicly available infor - mation on the target. However, it should be noted that Japan does not have a public database for litigation or lien searches, which limits the ability to conduct due diligence without the co-operation of the target. 4. Due Diligence 4.1 General Information
• the aggregate consideration of the transaction exceeds JPY40 billion; • the thresholds for mandatory pre-transaction noti - fication are met, except for the threshold pertain - ing to the consolidated domestic turnover of the target; and • the transaction will likely affect domestic consum - ers – eg, if any one of the following conditions is met: (a) the target has offices, R&D facilities or other business operations in Japan; (b) the target conducts sales activities target - ing domestic consumers (eg, by maintaining a Japanese website or using Japanese bro - chures); or (c) the target’s consolidated domestic turnover exceeds JPY100 million. As described in 2.1 Impact of Legal Developments on Funds and Transactions (‘Foreign Investment Regulations’), the jurisdiction of the FEFTA (which regulates foreign inward investments in Japan) is now very broad following its amendment. A wide range of investments may be subject to the prior notification requirement. Furthermore, post facto reporting will be required in many cases, even if the relevant investments are not subject to the prior noti - fication requirement, including when a foreign investor relies on the exemption from the prior notification. Both the prior notification and post facto reporting will be submitted to the Bank of Japan, and will be circulated for review by the Ministry of Finance and other ministries supervising the industries in which the target engages. A statutory waiting period of 30 days will apply for a prior notification, which can be extended up to five months, but may be shortened if the investment does not relate to national security. A post facto reporting must be made within 45 days of the investment. The FEFTA does not provide a standalone screening programme applicable solely to state-owned or sov - ereign wealth investors, but exemptions which may be available for other investors are not generally avail - able for state-owned or sovereign wealth investors (see 2.1 Impact of Legal Developments on Funds
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