Nagashima Ohno & Tsunematsu updates
Kyoto District Court rules on raising of capital by third-party allotment
Nagashima Ohno & Tsunematsu- Capital Markets
- Japan
- 08 January 2019
The Kyoto District Court recently ruled in favour of a shareholder's petition that a listed issuer cease an offering of its new shares by third-party allotment on the grounds that the offering had been conducted through an 'extremely unfair method', despite having been approved by a resolution at the issuer's shareholders' meeting. The court adopted the main purpose rule in accordance with prior court rulings and concluded that the share offering's main purpose had been to reduce the petitioning shareholder's shareholding.
Bond offerings under Japanese securities law
Nagashima Ohno & Tsunematsu- Capital Markets
- Japan
- 18 December 2018
Foreign private issuers' bonds that are listed on a Japanese securities exchange, such as the Tokyo Pro-Bond Market (TPBM), are subject to both the insider trading rules and the fair disclosure rules under Japanese law, while non-listed bonds (so-called 'Samurai bonds') are not. This article provides a brief explanation of the rules that apply to offerings of Samurai bonds and bonds listed on the TPBM under Japanese securities law.
Overtime regulation bill enacted
Nagashima Ohno & Tsunematsu- Employment & Benefits
- Japan
- 17 October 2018
The National Diet recently enacted a bill relating to work style reform, which has amended the Labour Standards Act, the Industrial Safety and Health Act and relevant laws. Most amendments will come into effect on 1 April 2019. The amended Labour Standards Act stipulates that the upper limit for overtime will be, in principle, 45 hours a month and 360 hours a year. However, there are exceptions for certain business sectors.
Application of fair disclosure rule to listed bonds
Nagashima Ohno & Tsunematsu- Capital Markets
- Japan
- 09 October 2018
The newly introduced fair disclosure rule enacted under Japan's securities laws and regulation regime is most often considered to apply to issuers of listed shares. However, based on the clear wording of the rule, it is also applicable to issuers whose only listed securities are bonds. Although the majority of bonds issued in the Japanese market are unlisted, there is a market dedicated to listed bonds in Japan: the Tokyo Pro-Bond Market.
Heightened sensitivity in Japan over virtual currencies
Nagashima Ohno & Tsunematsu- White Collar Crime
- Japan
- 01 October 2018
In 2017, following consultations with representatives of the virtual currency (VC) industry, the Act on Payment and Settlement and the Act on the Prevention of Transfer of Criminal Proceeds were amended to require operators of VC exchange businesses to register with the Japanese Financial Services Agency (JFSA). Notably, the amendments reflect the JFSA's desire to implement a risk-based approach with respect to anti-money laundering and terrorist financing.
Supreme Court rules on different working conditions for employees rehired after reaching retirement age
Nagashima Ohno & Tsunematsu- Employment & Benefits
- Japan
- 26 September 2018
One of the controversial issues regarding Japan's so-called 'lifetime employment system' is whether and to what extent employers can impose different working conditions (eg, salaries, bonuses and allowances) when they rehire employees who were once non-fixed-term employees as fixed-term employees. The Supreme Court recently handed down a significant decision addressing this issue.
Insider trading rule under Financial Instruments and Exchange Act
Nagashima Ohno & Tsunematsu- Capital Markets
- Japan
- 14 August 2018
The recent amendments to the Financial Instruments and Exchange Act introduced the fair disclosure rule, preventing listed issuers from making selective disclosure of their material information in order to ensure market fairness and transparency. This rule differs to the insider trading rule, which was introduced in 1989 with a similar aim of ensuring fairness and transparency by prohibiting parties with knowledge of undisclosed material facts regarding listed issuers from trading the securities of such issuers.
Are lead managers liable for material misstatements in IPO disclosure documents?
Nagashima Ohno & Tsunematsu- Capital Markets
- Japan
- 17 July 2018
A recent Tokyo District Court decision was reported to be the first to hold an underwriter liable to investors that purchased shares in a company based on material misstatements in the financial information contained in the statutory disclosure document for a public offering in Japan. However, the Tokyo High Court overturned the district court decision in this regard and concluded that the lead manager was not liable to investors.
Are lead managers liable for material misstatements in IPO disclosure documents?
Nagashima Ohno & Tsunematsu- White Collar Crime
- Japan
- 16 July 2018
A recent Tokyo District Court decision was reported to be the first to hold an underwriter liable to investors that purchased shares in a company based on material misstatements in the financial information contained in the statutory disclosure document for a public offering in Japan. However, the Tokyo High Court overturned the district court decision in this regard and concluded that the lead manager was not liable to investors.
Are differences in employment conditions of fixed-term and permanent employees reasonable?
Nagashima Ohno & Tsunematsu- Employment & Benefits
- Japan
- 11 July 2018
Article 20 of the Labour Contract Act prohibits the imposition of unreasonable employment conditions on fixed-term employees in order to ensure their fair treatment. In light of two recent Supreme Court decisions on this matter, Japanese employers with both fixed-term and permanent employees should carefully review whether differences in the individual employment conditions of each type of employee are not unreasonable.
Japan Exchange Regulation publishes principles to prevent corporate scandals
Nagashima Ohno & Tsunematsu- White Collar Crime
- Japan
- 04 June 2018
In response to the significant corporate scandals that have come to light in recent years, Japanese authorities and regulators have been working to improve compliance awareness within corporate Japan. The Japan Exchange Regulation (JPX-R) recently published the Principles for Preventing Corporate Scandals, which provide valuable insight into the views of the JPX-R and, by extension, other Japanese regulators.
Employees' statutory rights to convert fixed-term contracts to indefinite term contracts
Nagashima Ohno & Tsunematsu- Employment & Benefits
- Japan
- 04 April 2018
An amendment to the Labour Contracts Act states that if an employee with a fixed-term employment contract has been continuously employed by the same employer for more than five years, the employee will have the right to convert his or her fixed-term employment contract to an indefinite term employment contract. As the amendment applies only to employment contracts that commenced on or after April 1 2013, a significant number of employees became eligible to exercise this right on April 1 2018.
Finalisation of fair disclosure rule under securities law
Nagashima Ohno & Tsunematsu- Capital Markets
- Japan
- 03 April 2018
In June 2017 the Financial Instruments and Exchange Act was amended to introduce the fair disclosure rule in Japan. Subsequently, in October 2017 the Financial Services Agency (FSA) published draft legislation (comprising an implementing order and an ordinance) and guidelines for public comment, followed by final legislation in December 2017. The FSA has now published new guidelines and opinions on the public comments that it received.
Are privilege protections coming to Japan?
Nagashima Ohno & Tsunematsu- White Collar Crime
- Japan
- 26 March 2018
The absence of attorney-client privilege protections in Japan means that regulatory investigations must be handled with particular care. Various industry parties have argued that the absence of such protections unfairly damages the interests of companies active in Japan. However, the government has refused to introduce such protections out of concern that they could limit the regulators' broad investigative powers or otherwise adversely affect the Japanese regulatory environment.
Overtime regulation bill to undergo deliberation
Nagashima Ohno & Tsunematsu- Employment & Benefits
- Japan
- 31 January 2018
In September 2017 the Ministry of Health, Labour and Welfare issued the Outline of the Act for Revising Related Acts for the Promotion of Work Style Reform. Once the National Diet passes the bill in 2018 and the revised Labour Standards Act takes effect at a later date, companies will be required to implement a new scheme to manage working hours which is substantially different from the existing scheme. As such, the proposed amendment will continue to garner significant attention going forward.
Does factoring require a lending licence?
Nagashima Ohno & Tsunematsu- Banking
- Japan
- 12 January 2018
In Japan, money lending operations are subject to certain licensing requirements. That said, it is generally understood that a registration under the Money Lending Business Act is not required to purchase existing receivables. Thus, it may be easier for non-Japanese financial institutions to acquire receivables as opposed to making loans using funds from their own accounts. However, a recent Osaka District Court judgment suggests that this may not always be the case.
Fair disclosure rule under securities law
Nagashima Ohno & Tsunematsu- Capital Markets
- Japan
- 21 November 2017
In June 2017 the Financial Instruments and Exchange Act was amended to introduce the so-called 'fair disclosure' rule in Japan. The amendments address recent cases of selective disclosure of material information by issuers to sell-side analysts and investors' requests to introduce similar fair disclosure rules to those of other jurisdictions. The Financial Services Agency recently published a draft implementing order, ordinance and guidelines for public comment.
Gift giving in corporate Japan: US Foreign Corrupt Practices Act considerations
Nagashima Ohno & Tsunematsu- White Collar Crime
- Japan
- 20 November 2017
Japan's spirit of omotenashi (ie, hospitality) encompasses many aspects of Japanese culture and etiquette, including the practice of gift giving. Many Japanese companies invest heavily in nurturing long-term business partners and, as such, the practice of giving gifts to business partners is relatively common. However, a number of risks may arise in this regard under international anti-corruption legislation, particularly the US Foreign Corrupt Practices Act.
Equal pay for equal work: recent trends
Nagashima Ohno & Tsunematsu- Employment & Benefits
- Japan
- 01 November 2017
In recent years, the government-established Council for the Realisation of Work Style Reform has frequently discussed how to realise the international trend of equal pay for equal work in Japan. Further, the Japanese courts have rendered some noteworthy judgments regarding the equal pay for equal work principle. As such, the government is in the process of amending the rules on equal pay for equal work, which will significantly affect Japanese employment practice.
Acquisition of Japanese loans by non-Japanese financial institutions
Nagashima Ohno & Tsunematsu- Banking
- Japan
- 15 September 2017
Financial institutions that have no operations in Japan can readily acquire loans made to Japanese borrowers by purchasing the receivables relating to such loans. A number of requirements and considerations must be taken into account when transferring loan receivables, including with regard to novation, money lending operations, registered money lenders, perfection and the upcoming amendments to the Civil Code.
