Japan's New Merger Provisions - A Bermuda Perspective

Peter Ch'ng • Posted 02/07/2008 • Under Articles

JAPAN'S MERGER/TAKEOVER PROVISIONS UNDER THE NEW CORPORATION LAW: A BERMUDA (TRIANGULAR) PERSPECTIVE

Japan’s new Corporation Law (kaisha-hou) came into force on 1 May, 2006 representing the most revolutionary change in Japanese corporate law since 1899 with far reaching impact and consequences on corporate governances and transactions in Japan.

One of the most debated changes is the provisions dealing with mergers and acquisitions between Japanese and foreign companies and the concept of “triangular mergers” (sankakku gappei) or “triangular share exchanges” (kabushiki-koukan) which came into force on 1 May, 2007, after a one-year moratorium imposed at the behest of the Japanese Business Federation (Nippon Keidanren). These new provisions enable a foreign company to use its own shares as consideration for the takeover of a Japanese target company by a Japanese subsidiary of a foreign company and the subsequent merger of the Japanese subsidiary and the target.