Designing a New Takeover Regime for Japan: Suggestions from the European Takeover Rules

Abstract

This article discusses the possible implications of the European takeover rules on a prospective new takeover regime in Japan. In the first part of the article, the author identifies doubts over and problems with such measures currently in force in Japan, including the legality of rights plans, and the role of the tender offer system as such. In the second part, takeover bid rules in European countries are analyzed: There is generally a strong consensus for the concept of “shareholder decision making”, which has to be distinguished from the idea of “worker protection”. “Moderate mandatory offer rules” are adopted in most European countries, whereas “strict mandatory offer rules” are preferred in some jurisdictions, including the UK. After touching – inter alia – equity derivatives transactions and the question whether it is difficult and necessary for Japan to have a takeover regulatory organization, the author draws up a future vision for Japan’s takeover rules.

The issues discussed in this article are as follows.

I. Doubts and Problems Regarding Takeover-Defensive Measures
1. Doubts over Takeover-Defensive Measures
2. Problems with Takeover-Defensive Measures Currently in Force
3. Legality of Rights Plans and the Role of the Tender Offer System
4. Increasing Attention to the European-style Takeover Regulations

II. Suggestions from the European Takeover Rules

1. Large Gap Between Statutory Rules and Practices

2. “Shareholder Decision-making” in Takeovers in Europe

3. Distinction Between “Shareholder Decision-making” and
“Worker Protection”

4. “Balance” and “Cushion” Regarding Takeover Rules

5. “Moderate Mandatory Offer Rule” as a Basic Type in Europe

6. “Strict Mandatory Offer Rule” in Some Jurisdictions

7. Difference Between European Countries and Japan in Terms
of the Stance to Set the “Threshold”

8. Hidden Ownership Acquired Through the Use of Equity Derivatives

9. Position of the Takeover Rules in the System of Law

10. Is it True that “It is difficult for Japan, which lacks the tradition
of self-regulation like ‘the City,’ to have a takeover regulatory
organization”?

11. Necessity of a Takeover Regulatory Organization that is Capable
of Enforcing Prompt and Consultation-based Regulations

12. Conclusion: Future Vision for Japan’s Takeover Rules

Keywords: Takeover, Tender Offer, Japan, Europe, US, Defensive Measures, Rights Plan, Mandatory Offer, Threshold, Shareholder Decision-Making, Worker Protection, Hidden Ownership, UK, City, Self-Regulation, Consultation-Based Regulations, Takeover Panel

JEL Classification: G28, G34, G38, K23, K42