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Facilitating business restructuring - shifting management resources to higher productivity sectors

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Business restructuring is a broad concept, which includes not only streamlining of business by scrapping production facility, but also expansion of 'core business', exploitation of new market and introduction of new business process by way of mergers, transferring goodwill and assets, joint venture etc.

The following measures are to be made available to the firm whose Business Restructuring Plan is approved by the government.

Exemptions of Commercial Law requirements in regard to administrative procedure associated with divestiture and goodwill transferring

- Simplification of inspector requirements in case of investment in-kind

- Introduction of the system for transferring debt in a package

- Simplification of goodwill acquisition procedures

Raising the upper limit to the amount of preferred stocks in case of debt equity swap

Support to Management Buy-Out and Employee Buy-Out by facilitating stock purchase by managers or employees

Financial measures such as low interest loan and guarantee

Tax incentives such as longer period of carry forward of loss (5 yrs -> 7 yrs), reduction of Registration and License Tax, and accelerating depreciation allowances (18% - 30%)

Policies Taken So Far

Removal of the ban on holding company (revision of Anti Monopoly Law (1997))

Introduction of the stock swap system (revision of Commercial Law, under examination in the current Diet session)

Policies to be Introduced

The system of corporate split ups (to be presented to the next regular Diet session)

Revision of bankruptcy law (to be presented to the next Diet session)

Consolidated taxation system (2001FY)

Harmonization of accounting system with International Accounting Standards

- consolidated base disclosure (1999FY)

- integration of pension fund accounting and evaluation of financial assets at market price (2000FY)

- evaluation of cross-holding stocks at market price (2001FY)

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Employment measures - facilitating labor mobility and human capital development by training

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Emergency Employment Measures (June 11)

Revision of Employment Security Law and Dispatched Worker Law

Special assistance program for enhancing labor mobility

Increasing training courses and developing more training institutions by private firms and universities

Policies Taken So Far

Introduction of the individual educational retraining benefit scheme (1998)

Extended unemployment payment scheme combined with retraining (1998)

Introducing the subsidy scheme for hiring middle-aged workers (1998)

Policies to be Introduced

Introduction of the defined contribution pension plan (2000FY)

Regulatory Reform for Job Creation and Industrial Competitiveness (decision made on July 13)

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Technological innovation and its transfer to industry

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Allowing firms to own the intellectual property rights gained through government funded research (Japanese Bayh-Dole Act)

Reducing patent fees for TLO (Technology Licensing Organization)

Policies Taken So Far

Law for Promoting University-Industry Technology Transfer (1998): Establishment of TLO

Improvement of the Deduction System of Incremental R&D Tax Credits (From 1999)

Small and Medium-size Business Innovation Research System (Japanese SBIR) (December 1998)

Pro-patent intellectual property right policy (revision of Patent Law, 1998 and 1999)

Policies to be Introduced

Establishing national industrial technology strategy which leads to the revision of the Science and Technology Basic Plan (2001)

Introduction of accreditation system of university education for engineers

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Creation of new business and venture business

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Extending assistance to business start-ups

- no collateral credit insurance

- no interest loan

Expanding assistance to venture type small medium enterprises

- expansion of insurance coverage by the credit guarantee system

- expansion of no interest loan program

Policies Taken So Far

Law on Temporary Measures to Facilitate Specific New Businesses (1989) : stock-options, debt guarantee, investment

Temporary Law concerning Measures for the Promotion of the Creative Business Activities of Small and Medium Enterprises (1995) : establishing prefectural venture funds, investment, debt guarantee

Limited Partnership Act for Venture Capital Investment (1998)

Law for Facilitating the Creation of New Business (December 1998) : support to business creation by individuals, SBIR (Small and Medium Business Innovation Research System)

New business creation campaign, new business creation seminars

Policies to be Introduced

Regulatory Reform for Job Creation and Industrial Competitiveness (decision made on July 13)

Revision of bankruptcy law to facilitate of corporate reconstruction

Expansion of tax allowance for capital gains by individual investors

Reform of the OTC market