JAPAN Trends and Developments Contributed by: Yoshitaka Sakamoto, Tsunemichi Nakano, Michi Yamagami and Hideo Tsukamoto, Anderson Mori & Tomotsune
Introduction Following on from 2024, activist investors show no signs of slowing down in Japan as 2025 unfolds, with a variety of approaches being taken towards listed companies, ranging from behind-the-scenes requests for interviews, pub - lic campaigns using white papers, exercise of shareholder proposal rights, demand for con - vocation of shareholders’ meetings, and even making acquisition proposals. As a result, facing activists in the correct way has emerged as an urgent imperative for listed companies. Activists, however, are often not the sharehold - ers listed in the shareholder register (the statu - tory document in which to check who the current shareholders are under Japanese law) – that is, those who are listed in the shareholder register are nominal shareholders, such as asset man - agement banks that are entrusted by activists to manage the activists’ shareholder rights. It has been pointed out that it is difficult for a company to identify those who are behind the nominal shareholder as beneficial sharehold - ers, holding the authority for giving instructions on, for example, the exercise of voting rights. In practice, companies have no viable alternative but to request an investigation from trust banks or other specialised institutions to determine their beneficial shareholders, imposing costs and burdens on listed companies. In response to this, the Financial Services Agency now plans to revise the Stewardship Code to include pro - visions that, among others, require institutional investors to explain the scale of their sharehold - ings in the investee company when requested by the investee company. In addition, based on similar concerns, discus - sions are underway in relation to an amend- ment to the Companies Act, which highlights the establishment of a system allowing for the
identification of beneficial shareholders. On 10 February 2025, the Minister of Justice consult - ed the Legislative Council on the revision of the Companies Act. While the deliberations at the Legislative Council Subcommittee on the Com - panies Act are set to continue, in February 2025, the Japan Institute of Business Law (the “Insti- tute” ) moved ahead by releasing its “Report of the Study Group on Companies Act Legislation” . Given that the report will serve as a starting point for the forthcoming deliberations at the Legisla - tive Council on the potential amendment to the Companies Act and offers a valuable insight into what direction the amendment might actually take, details of the report are introduced below in “Outline of the Report of the Study Group on Companies Act Legislation” . In response to the Guidelines for Corporate Takeovers (the “Guidelines” ) published by the Ministry of Economy, Trade and Industry (METI) in August 2023, the number of cases of so- called “acquisitions without consent” continues to grow. The Guidelines were formulated follow - ing discussions by the council of experts estab - lished at the METI with the purpose of present - ing principles and best practices that should be shared throughout the economy to develop fair rules regarding M&A transactions, with a focus on how parties should behave in the context of acquiring corporate control of a listed compa - ny, and they have greatly affected the board of directors’ code of conduct in M&A transactions. One of the most notable impacts the Guidelines have had on the Japanese market has been the increase in acquisitions without consent. (An acquisition without consent is one that is con - ducted without prior consultation with the target company. Formerly known as “hostile takeover” or “hostile acquisition” , the Guidelines proposed renaming it as an acquisition without consent
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