Japan updates
Banking
Contributed by Nagashima Ohno & TsunematsuPublic consultation on appropriate choice and use of Japanese yen interest rate benchmarks
- Japan
- 01 November 2019
To address the risk that the London Interbank Offered Rate may be discontinued, the Cross-Industry Committee on Japanese Yen Interest Rate Benchmarks was established to recommend the appropriate choice and use of Japanese yen interest rate benchmarks depending on the type of financial transaction involved and develop transition plans for a new framework enabling the use of Japanese yen interest rate benchmarks. The committee recently published a consultation paper in this regard.
Amendments to Payment Services Act
- Japan
- 26 April 2019
Cabinet recently submitted a bill to the 198th session of the Diet to amend, among other acts, the Payment Services Act (PSA). The PSA amendments aim to strengthen the regulation of virtual currency exchange service providers. Among other things, the changes concern crypto asset custody, the advertisement and solicitation of crypto assets and crypto asset margin transactions.
Does factoring require a lending licence?
- 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.
Acquisition of Japanese loans by non-Japanese financial institutions
- 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.
Capital Markets
Contributed by Nagashima Ohno & TsunematsuDoes Interest Rate Restriction Act apply to corporate bonds?
- Japan
- 10 December 2019
Interest rates applicable to loans made in Japan are subject to the Interest Rate Restriction Act, which is Japan's usury law. For decades, legal experts and others questioned whether this regulation also applied to corporate bonds, thereby affording bond issuers the same protections against high interest rates as those enjoyed by borrowers. This longstanding question appears to have been resolved by a recent Tokyo District Court judgment.
Public consultation on appropriate choice and use of Japanese yen interest rate benchmarks
- Japan
- 29 October 2019
To address the risk that the London Interbank Offered Rate may be discontinued, the Cross-Industry Committee on Japanese Yen Interest Rate Benchmarks was established to recommend the appropriate choice and use of Japanese yen interest rate benchmarks depending on the type of financial transaction involved and develop transition plans for a new framework enabling the use of Japanese yen interest rate benchmarks. The committee recently published a consultation paper in this regard.
Amendments to Financial Instruments and Exchange Act
- Japan
- 30 April 2019
Cabinet recently submitted a bill to the 198th session of the Diet to amend, among other acts, the Financial Instruments and Exchange Act and the Payment Services Act. Among other things, the amendments introduce new regulations for security-type digital tokens (ie, initial coin offerings and security token offerings) and clarify that digital tokens issued in consideration for crypto assets will be regarded as deemed securities.
Determining recoverable damages following material misstatements in securities registration statements
- Japan
- 02 April 2019
If a securities registration statement contains a material misstatement, investors that acquire securities through the relevant offering can hold the issuing company liable for related damages. However, it is unclear what level of damages is recoverable if the issuing company successfully proves that the loss incurred by the investor is at least partly attributable to an unrelated factor or circumstance. A recent Supreme Court judgment has provided some clarity in this regard.
Kyoto District Court rules on raising of capital by third-party allotment
- 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.
Competition & Antitrust
Contributed by Nagashima Ohno & TsunematsuRecent developments regarding attorney-client privilege
- Japan
- 17 October 2019
According to the Organisation for Economic Cooperation and Development (OECD), Japan is one of only three OECD jurisdictions to not recognise attorney-client privilege. In response to discussions and lobbying, the Diet has announced amendments to the Anti-monopoly Law which will partially introduce attorney-client privilege in administrative investigations pursuant to ordinances under the law or certain prescribed guidelines.
New protection for Big Data under Unfair Competition Prevention Act
- Japan
- 05 September 2019
The Unfair Competition Prevention Act was recently amended to afford new legal protection to Big Data. Although this new legal protection is expected to increase data use, in order to qualify as protected data, data must be managed accordingly. Thus, all parties which use Big Data in their business should review their management systems, internal rules and agreements regarding the handling of data in order to ensure that such data can fall under the definition of protected data set out in the act.
New commitment procedure under Anti-monopoly Act
- Japan
- 18 April 2019
A new commitment procedure was recently introduced to the Anti-monopoly Act (AMA), enabling enterprises to voluntarily resolve suspected violations of the AMA with the Japan Fair Trade Commission (JFTC). If a commitment is approved, the conduct of the enterprise concerned will not be considered a violation of the AMA and the enterprise will not be subject to legal penalties. The new procedure may lead to more active enforcement by the JFTC.
Employment & Benefits
Contributed by Nagashima Ohno & TsunematsuAmendments to regulations on working hours and paid annual leave
- Japan
- 10 April 2019
A number of amendments to Japan's labour and employment laws recently took effect. Among other things, the amendments concern the monitoring of employee working hours, paid annual leave, the so-called 'highly professional system' and overtime limits. Employers should ensure that their policies and practices comply with the amendments to ensure an easy transition to Japan's new employment framework.
Fixed overtime payment arrangements
- Japan
- 27 March 2019
Under Japanese law, employers must – in principle – pay an allowance to employees who work more than eight hours per day or 40 hours per week. As such, from an employer's perspective, it is practical to include an employee's overtime allowance in their base salary where possible. However, for an employee's overtime allowance to be validly included in their base salary, certain requirements must be satisfied. These requirements are a hot topic in Japanese legal practice.
Overtime regulation bill enacted
- 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.
Supreme Court rules on different working conditions for employees rehired after reaching retirement age
- 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.
Are differences in employment conditions of fixed-term and permanent employees reasonable?
- 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.
Energy & Natural Resources
Contributed by Nishimura & AsahiNew law aims to facilitate offshore renewable projects
- Japan
- 11 November 2019
Although Japan has significant offshore renewable energy output potential, a number of issues – both systemic and technological – have hindered efforts to develop its offshore renewable market. With the introduction of the Act on Promoting the Use of Marine Areas for the Development of Marine Renewable Energy Generation Facilities, the government aims to develop such offshore renewable energy capacity and encourage and facilitate the development of offshore renewable projects in Japan.
