[ Nippon Keidanren ] [ Policy ]

Further Revision of M&A Legislation is Needed


December 12, 2006
Nippon Keidanren

I. Need for Revision of M&A Legislation

II. Current M&A Legal Systems in Europe and the US



III. Prompt Provision of M&A Legal System

Legislative Provision from the Perspectives of Shareholder Protection and Preventing M&As that Undermine Corporate Value

  1. 1. Strengthening Rules for Greater Flexibility in Compensation for Mergers
    To tighten the requirements for the resolution of a merger with compensation other than cash or negotiable securities of Japan-listed firm (or equivalent negotiable securities that meet Japanese listing standards). A possible treatment is to obligate a strict resolution (two-thirds of voting rights and that of more than half shareholders).
    To enhance disclosure and accountability of executive officers.
  2. 2. Establishing Legislation on Regulations for Business Combinations
    To restrict mergers by hostile acquirers, as under US state laws.
  3. 3. Revision of Takeover Bid System
    To require acquirers to offer shareholders the option of cash, as in Europe, when compensation in a takeover bid is other than cash or negotiable securities of a Japan-listed firm.
  4. 4. Revision of Listing Regulations
    To allow diverse classes of shares and the use of various defensive measures.

Legislative Provision from the Perspective of Preventing the Outflow of Technology Related to National Security

  1. 5. Strengthening of Foreign Exchange and Foreign Trade Control Law, etc.
    Review promptly the scope of the production and technological areas that need to be subject to the regulation.

Legislative Provision in the Taxation System Relating to Corporate Reorganization from the Perspective of Fairness

  1. 6. Maintenance of Tax Qualification Requirements
    To maintain the current tax system, and not to allow tax deferments related to paper companies.
    (Furthermore, in order to encourage direct investment in Japan, the comprehensive establishment of an attractive business environment through radical reforms to corporate taxation, including the lowering of the effective tax rate, is most important.)

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