JAPAN Law and Practice Contributed by: Hajime Tanahashi, Takayuki Kihira, Kenichi Sekiguchi and Akira Matsushita, Mori Hamada
excess of certain thresholds provided in the FIEA. These current rules have been amended and the amendments will take effect in the near future (see 6.2 Mandatory Offer Threshold for a discussion of the current and amended rules). A share acquisition may also be made by “share exchange” , one of the statutory business com - binations, whereby an acquiring company can acquire 100% of the shares of a target company upon a two-thirds shareholder vote. An acquir - ing company can also acquire all or a part of the shares of a target company by use of a statutory “share delivery” mechanism. An alternative is a subscription of shares issued by a target company. Generally, a listed compa - ny can issue shares by a board resolution unless the issue price is a significant discount from the market price or the total outstanding shares after the issuance will exceed the authorised number of shares provided for in the articles of incorpo - ration. Even if the board approves an issuance that results in an acquirer holding a majority of the shares of a target company, the acquirer is not required to offer to purchase shares from A business (asset) acquisition is generally con - ducted through a contractual buy-sell agree - ment or a statutory company split (or demerger), which is a statutory spin-off procedure. Third- party consents are required to effect a contrac - tual business acquisition: for example, consents from counterparties to transferred contracts and transferred employees are required. However, these consents are not statutorily required in the case of a company split. Instead, the Companies Act requires the parties to a minority shareholders. Business Acquisition
company split to comply with various proce - dures, including the ones for creditor protection. 2.2 Primary Regulators The Financial Services Agency (FSA) administers securities regulations under the FIEA, including regulations involving tender offers, public offer - ings and proxy solicitations. The Ministry of Finance (MOF), the Ministry of Economy, Trade and Industry (METI) and other relevant minis - tries regulate cross-border transactions under the Foreign Exchange and Foreign Trade Act (FEFTA), including inward/outward investments. The Japan Fair Trade Commission (JFTC) reg - ulates transactions that substantially restrain competition under the Act on Prohibition of Pri - vate Monopolisation and Maintenance of Fair Trade (the “Anti-monopoly Act” ). Tokyo Stock Exchange, Inc (TSE) and other stock exchanges oversee transactions involving a listed company. 2.3 Restrictions on Foreign Investments Under the FEFTA, a foreign investor is required to file prior notification with the MOF and the competent ministers and wait a certain period (in principle 30 days, which may be extended up to five months, or shortened if the ministers determine there is no need for further examina- tion) if the foreign investor intends to acquire: shares of a private company (except an acquisi - tion of shares of a private company from another foreign investor, unless the acquisition may have potential risk of harming national security) or 1% or more of shares or voting rights of a listed company; and such target company engages in the restricted businesses regarding national security, public order, public safety or smooth management of the Japanese economy identi - fied in the FEFTA. The FEFTA also provides a post-acquisition notification requirement for for - eign investors.
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