JAPAN Law and Practice Contributed by: Hajime Tanahashi, Takayuki Kihira, Kenichi Sekiguchi and Akira Matsushita, Mori Hamada
under the FEFTA (see 2. Overview of Regula- tory Field ). Acquisitions In an acquisition involving a tender offer, the ten - der offer period must be set between 20 and 60 business days. If the acquisition is effected through a two-step process, where the tender offer is followed by a second-step squeeze-out of the remaining minority shareholders who did not participate in the tender offer, the process of the second step will depend on the level of shareholding that the acquirer owns after the first-step tender offer. If an acquirer owns 90% of the voting rights of a target company, the acquirer can complete the second step rather quickly (typically around one month) by exercising the Squeeze-Out Right (see 6.10 Squeeze-Out Mechanisms ). Where the acquirer is unable to achieve the 90% threshold in the first-step tender offer, the second step will usually take a few months. In those cases, the second step will require the target company to convene a shareholders’ meeting and to com - plete the court permission procedures (see 6.10 Squeeze-Out Mechanisms ). 6.2 Mandatory Offer Threshold The mandatory tender offer requirement under the FIEA is currently under overhaul (see 3.2 Significant Changes to Takeover Law ). Cur - rently, the primary threshold for a mandatory tender offer is one third of the voting rights of a target company (the “Current One-Third Rule” ) however, under the 2024 FIEA Amendments, the primary threshold will be 30% of the voting rights of a target company (the “New 30% Rule” ). The Current One-Third Rule is derived in part from the requirement under the Companies Act for a special resolution of the shareholders for cer - tain important actions (ie, merger, amendment to
It is also common, immediately prior to the launch of a tender offer, for a buyer and prin - cipal shareholder of a target company to enter into an agreement where the shareholder agrees to tender its shares in the contemplated tender offer (see 6.11 Irrevocable Commitments ). 6. Structuring 6.1 Length of Process for Acquisition/ Sale The length of the process for acquiring or selling a business can vary, depending on a number of factors, including the size and type of assets being acquired or sold, the type of target com - pany (whether public or private), the level of due diligence required and the length of time needed to obtain required regulatory approvals. Auctions An auction will normally be structured as a two- phase process. In phase one, the seller will usu - ally require the potential buyers to submit a non- binding offer letter typically addressing, among other things, the indicative offer price, proposed deal structure, possible conditions that the buyer may seek and necessary regulatory approvals. In phase two, a few selected buyers will be giv - en access to the data room for due diligence and will be required to submit their binding bid, together with a mark-up of the draft transaction agreement circulated by the seller. After bind - ing bids are submitted, the seller will seek to negotiate and finalise the transaction agreement quickly so that the signing can occur as soon as practically possible. After the signing, the parties will seek any applicable regulatory approvals or clearances for the transaction, such as antitrust clearance and any required prior notification
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