M&A deals in Japan

The year 2021 is marked to host another M&A forum in Japan. A series of interactive panel discussions is planned for September, but we can discuss Japanese M&A already now. Let’s take a closer look at the procedure of mergers and acquisitions and how they are done in Japan.

Typically, the process contains the following stages:

  • Signing an NDA
  • Processing the due diligence of a target company and assets
  • Optional conclusion of an MOU
  • Negotiating and signing a final agreement.

Depending on the size, structure, and complexity of the deal, the timing of the procedure may vary. Normally though, it takes about three to six months. More time can be required if the transfer involves share exchange, business transfer, or corporate divestiture.

Regulation of M&A

In Japan, the Companies Law is the main piece of legislation applicable to company acquisition. Potentially, purchasers also need to comply with other regulations:

  • AMA
  • BRA
  • FEFTA.

It is also important to mention that all documentation including acquisition agreements must comply with the local Japanese laws. In fact, business transfer agreements or purchasing of shares can be ruled by laws of other jurisdictions, yet they are typically regulated by the Japanese one.

Ownership acquisition

It is typical of buyers to purchase the whole ownership of shares and assets issued by the company. In case certificates of shares are issued by the company, issuing share certificates becomes the way of transferring shares. Alternatively, shares can be transferred through a transferring agreement between buyers and sellers. This kind of agreement requires the consent of counterparties and creditors, which is what makes it different from the acquisition agreement.

Purchasing shares

When a company sells its shares, the shareholders must agree with it. Sometimes minority shareholders can disagree with such a decision. In this case, majority stakeholders can repurchase their shares. However, it must be added that this action has to be approved by the BoD and should not happen without notifying the minority stakeholders. In Japan, the whole process of forcing minority stakeholders cannot exceed a twenty-day period.

COREDO would be honored to assist you with the M&A procedures taking place in Japan. We will help with planning and carrying out all needed transactions.