JAPAN Law and Practice Contributed by: Hajime Tanahashi, Takayuki Kihira, Kenichi Sekiguchi and Akira Matsushita, Mori Hamada
Acquisitions of Shares or Voting Rights The threshold for the prior notification require - ment with respect to acquisitions of shares or voting rights in listed companies was lowered from 10% to 1% by an amendment to the FEFTA in 2020. However, the amendment also estab - lished exemptions from the prior notification requirement. Under the current rules, the blanket exemption may be available for foreign financial institutions, and the regular exemption may be available for general investors (excluding state- owned enterprises) and certain sovereign wealth funds (SWFs) accredited by the authorities. Both exemptions are conditioned on compli - ance with the conditions with respect to pas - sive investments. Under the blanket exemp - tion, foreign investors are exempted from the prior notification requirement. Under the regular exemption, foreign investors are exempted from the prior notification requirement for investments in a company engaging in the restricted busi - nesses other than the core sectors that relate to national security listed in the public notice, and if foreign investors being eligible for the regular exemption comply with the heightened condi - tions with respect to passive investments, the threshold is increased from 1% to 10% even for investments in a company engaging in such core sectors. There are also some restrictions on the holding of shares by a foreign investor in a company engaging in certain types of businesses, such as airline and broadcasting businesses. 2.4 Antitrust Regulations The Anti-monopoly Act prohibits any acquisition that substantially restrains competition in a par - ticular field of trade or that would be conducted by using unfair trade practices.
Potential acquisitions that would exceed certain thresholds require prior notification to the JFTC. In particular, if a company with domestic sales (aggregated with domestic sales of its group companies) of more than JPY20 billion intends to acquire shares in a target company with domes - tic sales (aggregated with domestic sales of its subsidiaries) of more than JPY5 billion and that acquisition results in holding more than 20% or 50% of the voting rights in the target company, the acquiring company must file prior notifica - tion of the plan of acquisition at least 30 days prior to the closing of acquisition (the waiting period may be shortened if the permission of the JFTC is obtained). If the JFTC determines, during this 30-day peri - od (the first phase review), that a more exten - sive review is necessary, it proceeds to a sec - ond phase review. This review is up to 120 days from the prior notification or 90 days from the acceptance by the JFTC of all information that it requests the acquiring company to provide, whichever is the later. If the JFTC determines that an acquisition vio - lates the Anti-monopoly Act, the JFTC may order the party to take measures to eliminate the antitrust concerns, including a disposition of shares and assets. Similar filing require - ments and subsequent procedures pursuant to the Anti-monopoly Act apply to other means of acquisition of a target company or its business, such as a merger, company split, share transfer and business/asset transfer. 2.5 Labour Law Regulations The Japanese labour law regulations of primary concern to an acquirer are restrictions on the ability of an employer to terminate employment agreements. An “at-will” employment agreement is not legally permitted in Japan. Rather, a dis -
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