JAPAN Trends and Developments Contributed by: Keiji Tonomura, Minh Thi Cao Koike, Akira Komatsu and Yuki Matsumiya, Nagashima Ohno & Tsunematsu
governance and, for overseas investors, it would be one of the factors to be considered for invest - ment decisions in Japanese VCs. Amendments to taxation of tax-qualified stock options In Japan, even if the market price of granted stocks exceeds the price required for exercise of tax-qualified stock options, taxation on such dif - ference would be deferred at the time of exercis - ing tax-qualified stock options. There are several requirements for tax-qualified stock options, one of which is the maximum amount that can be exercised in a year. Before the amendments to the Income Tax Act, such maximum amount was JPY12 million. On 28 March 2024, the amend - ments to the Income Tax Act were enacted and the maximum amount has changed to JPY24 million (less than five years since establish - ment of the company issuing stock options) and JPY36 million (more than five years since establishment). Such amendments would pro - vide more incentives for managers and employ - ees in start-ups. Japan’s Current State of Social Media Content Moderation Since the advent of the internet in Japan, illegal postings on online bulletin boards have been rec - ognised as a persistent problem. More recently, with the surge in popularity of social networking sites, problems have arisen not only with content that violates individual rights, but also with the dissemination of false and misleading informa - tion, fake advertising, and impersonation. The Provider Liability Limitation Act (PLLA), enacted in 2002, exempts service providers from liability for damages to affected individu - als and users for alleged infringement if certain conditions are met. This exemption applies to information posted on bulletin boards or social
networking sites. The PLLA also allows those whose rights have been infringed to request that providers disclose sender information, and it establishes judicial procedures to facilitate such requests. However, the PLLA does not impose direct obligations on platform operators to mod - erate content – for example, it does not require the removal of unlawful postings. In recent years, whereas online defamation on social networking sites has become increas - ingly severe, there has been criticism that arbi - trary or excessive takedowns by platforms may stifle freedom of expression. In light of this, the PLLA was amended in May 2024 (to take effect within a year) and renamed the Informa - tion Distribution Platform Countermeasures Act (IDPCA). This amendment introduces an explicit framework to encourage platforms to proac - tively moderate content. Under the amend - ment, certain large platforms will be required to establish and disclose procedures for han - dling user takedown requests alleging infringe - ment, develop and publish removal standards, designate dedicated personnel to handle these requests, make timely decisions and notify users of removals within specified timeframes, notify original posters when their content is removed, and publish periodic reports on the status of the above measures. While these provisions create procedural responsibilities, they do not require platforms to proactively monitor all content or remove unlaw - ful or harmful content. The primary reason for this is that Japan’s Constitution provides strong protections for freedom of expression, and such mandated obligations could unduly restrict that freedom. However, a report released in Septem - ber 2024 by the “Study Group on Ensuring the Soundness of Information Distribution in Digital Space”, established by the Ministry of Internal
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