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METI Formulates Guidelines for Corporate Takeovers

August 31, 2023

In light of the results of the discussions by the Fair Acquisition Study Group and other information, the Ministry of Economy, Trade and Industry (METI) has formulated Guidelines for Corporate Takeovers.

1. Background and purpose

With the objective of encouraging acquisitions that are favorable for the economy and society to occur in a healthily functioning fair M&A market, METI launched the Fair Acquisition Study Group (Chairperson: Hideki Kanda, Professor, Gakushuin University Law School) in November 2022. Its aim is to improve predictability and present best practices both for parties involved in acquisitions and for capital market participants. 

The study group has been discussing how parties should behave in relation to acquisitions of Japanese companies from the perspective of further developing the conduct of M&A transactions in Japan in a sound manner, taking into account legal systems and practices of other countries and comments provided by interested parties in Japan and abroad.

Based on the discussions by the Fair Acquisition Study Group, METI has newly formulated Guidelines for Corporate Takeovers as fair rules regarding M&A transactions that should be shared among those participating in the Japanese economy and society.

2. Overview of the Guidelines for Corporate Takeovers

The purpose of the Guidelines is to present principles and best practices that should be shared throughout the economy to develop fair rules regarding M&A transactions, with a focus on how parties should behave in the context of acquiring corporate control of a listed company.

Chapter 1 of the Guidelines outlines their position, scope, and so forth. Chapter 2, titled “Principles and Basic Perspectives,” clarifies three principles that should be respected in acquisitions of corporate control of listed companies in general.
Chapter 3, titled “Code of Conduct for Directors and Boards of Directors regarding Acquisition Proposals,” uses a phase-based approach to guide the code of conduct for each director and the board of directors regarding acquisition proposals to acquire corporate control.
Chapter 4, titled “Increased Transparency Regarding Acquisitions,” presents how transparency in acquisitions should be improved from the perspective of both the acquiring party and the target company.
Chapter 5, titled “Takeover Response Policies and Countermeasures,” presents an overview of this topic.
In addition, further details are provided in the Appendices of the Guidelines.

3. Results of the Public Comment Process

From June 8 (Thu.) to August 6 (Sun.), 2023 (60 days), METI broadly opened a call for public comments on the draft of the Guidelines for Corporate Takeovers.
As a result of the call, METI received comments from 50 individuals and associations both in Japan and abroad. METI highly appreciates the contributions of these people and their cooperation.
For the outline of the major opinions and METI’s approaches to them, see Appendix 3, titled “Results of the Public Comment Process.”

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Corporate System Division, Economic and Industrial Policy Bureau