JAPAN Law and Practice Contributed by: Hajime Tanahashi, Takayuki Kihira, Kenichi Sekiguchi and Akira Matsushita, Mori Hamada
the articles, dissolution), which requires approval by two thirds of the voting rights present at the relevant shareholders’ meeting – ie, ownership exceeding one third of the voting rights will effectively grant a shareholder a veto right over any special resolution of the shareholders at a shareholders’ meeting. However, the 2024 FIEA Amendments introduced the 30% threshold because (i) 30% is adopted in many other juris - dictions and (ii) taking into account actual prac - tice, a 30% voting right would in many cases be sufficient to block a special resolution and could also have a significant impact on ordinary reso - lutions requiring a simple majority of the votes cast. Under the 2024 FIEA Amendments, subject to certain limited exceptions, an acquirer must conduct a tender offer if the “total shareholding ratio” ( kabukentou shoyu wariai ) of the acquirer exceeds 30% after the purchase and the pur - chase is made in off-market trading, on-market trading or off-floor trading (ie, trade-sale-type market trading). A purchase in on-market trad - ing is not subject to the mandatory offer require - ment under the Current One-Third Rule; how - ever, there are recent cases where the control of a listed company is materially impacted by bidders who acquire a large volume of the listed company’s shares through on-market trading in a short timeframe and hence on-market trading will be added to the mandatory offer requirement under the 2024 FIEA Amendments to ensure transparency and fairness of dealings in securi - ties that have a significant impact on the control of listed companies. The total shareholding ratio is defined in detail in the FIEA and the calculation generally includes the aggregate voting rights of the target com - pany held by the acquirer and certain special affiliated parties ( tokubetsu kankeisha ) of the
acquirer (on an as exercised and as converted to common stock basis). In addition to the Current One-Third Rule, there are a few other situations where a mandatory tender offer is required. However, the Rapid Buy- Up Rule and the Counter Tender Offer Rule will be abolished under the 2024 FIEA Amendments and hence only the 5% Rule will remain. 5% Rule A mandatory tender offer is required if the total shareholding ratio of an acquirer exceeds 5% as a result of an off-market purchase. An excep - tion applies to the 5% Rule if the acquirer has not purchased shares in off-market trading from more than ten sellers in aggregate during the 60 days before the day of the purchase on which the threshold is crossed (ie, during a 61-day peri - od including the date of the threshold-crossing purchase). Rapid Buy-Up Rule Under the Current One-Third Rule, a mandatory tender offer is required if the total shareholding ratio of the acquirer exceeds one third as a result of the acquisition of shares within a three-month period, whereby the acquirer accumulates more than a 10% shareholding through on-market trading, off-market trading and subscription of newly issued shares from the company, and that accumulation includes an accumulation of more than 5% through off-market and off-floor trading (ie, trade-sale-type market trading). The Rapid Buy-Up Rule was introduced in 2006 with the primary aim of capturing a combina - tion of on-market and off-market trading or a combination of off-market trading and new share issuances, which in each case would result in an acquirer holding more than a one-third total shareholding ratio. This effectively means that,
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