Japan: takeover defences

In 2005 the Ministry of Economy, Trade and Industry and the Ministry of Justice published “Guidelines Regarding Takeover Defense for the Purposes of Protection and Enhancement of Corporate Value and Shareholders’ Common Interests”. The Guidelines explain (at p. 2):

... in Japan, there is no common code of conduct in the business community with regard to what constitutes a non-abusive takeover and what constitutes a reasonable defensive measure, partly because Japan has had less experience with hostile takeovers unlike the United States and EU. Defensive measures against hostile takeovers, if they are used properly, can help enhance corporate value and shareholders’ common interests. But at the same time, there is a risk that defensive measures, if they are improperly structured, may be used to entrench corporate management, preserving intact inefficient management. Therefore, if left as is, this absence of rules could encourage repeated surprise attacks and excessive defensive tactics, making it difficult for takeovers to fully demonstrate their effectiveness as a mechanism to enhance corporate value. The purpose of the Guidelines is to promote the establishment of fair rules concerning takeovers by proposing legitimate, reasonable takeover defense measures".

A report considering the Guidelines and recent case law was published in Japanese earlier this year. Titled "Takeover Defense Measures in Light of Recent Environmental Changes", a copy is now available in English: see here.  The report notes that since the publication of the Guidelines, over 500 Japanese companies have adopted takeover defenses.