JAPAN Trends and Developments Contributed by: Yoshitaka Sakamoto, Tsunemichi Nakano, Michi Yamagami and Hideo Tsukamoto, Anderson Mori & Tomotsune
since it is not necessarily hostile, and the new term quickly gained widespread traction after the Guidelines were established.) The Guide - lines provide that, even in the absence of prior approval of the target company, the latter’s board of directors must give proper consideration to a deal proposal if a bona fide offer has been made. Since the publication of the Guidelines, acquisitions without consent have also been on the rise in Japan, but what stands out the most in the recent trend is the proposal for acquisi - tions without consent from non-Japanese com - panies targeting corporate giants representing Japan. The evolving landscape carries signifi - cant implications from a corporate governance perspective for directors and other officers of listed companies, as it demands them to steer their organisations with heightened urgency in anticipation of potential acquisition proposals from foreign players of considerable scale and financial strength. Outline of the Report of the Study Group on Companies Act Legislation The Institute has discussed various issues including: • the free distribution of shares to employees; • revisions to the share distribution system; • revisions to the regulations on in-kind contri - butions, virtual shareholders’ meetings and virtual bondholders’ meetings; • revisions to the requirements for the number of voting rights for shareholder proposals; • revisions to the system for companies with nominating committees and other commit - tees; and • revisions to the liability of officers. The following, however, presents an outline of the deliberations regarding the establishment of a system allowing for the identification of benefi -
cial shareholders, which is deemed the highlight of the proposed amendments to the Companies Act and which is considered to deserve attention in the context of corporate governance. Establishment of a system allowing for the identification of beneficial shareholders Background Under the current system, except where the large shareholding reporting system applies (ie, shareholding over 5%), there is no system in place for stock companies or other sharehold - ers to identify those who are behind the nomi- nal shareholders, holding the authority for giv - ing instructions on, for example, the exercise of voting rights. In recent years, while it has been regarded as important for stock companies to promote constructive dialogue with their share - holders in order to increase corporate value over the medium to long term, in light of cases where a nominal shareholder is not always the best counterpart for a dialogue (such as cases where those who hold the authority to instruct on the exercise of voting rights are hiding behind the nominal shareholder), the report indicated the directionality to consider the establishment of a system under the Companies Act that ena - bles stock companies to identify the so-called beneficial shareholders, thereby promoting con - structive dialogue between the stock companies and their shareholders. Meanwhile, the report also raises the possibil - ity of framing the system’s purpose not only as the promotion of constructive dialogue between stock companies and their shareholders, but also as the protection of the common inter - ests of shareholders. To be specific, the report positions the system as a means to promote dialogue between stock companies and their shareholders, and at the same time a safeguard
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