Mergers & Acquisitions

Foreign Direct Investment (FDI) in Japan is comparatively low by international standards. In 2012, its contribution to Japan’s GDP was less than 1%. One of the reasons is that, under the Corporation Law, direct mergers in Japan can only be conducted between Japanese companies. However, business opportunities for foreign investors are likely to increase in the future as the Japanese government took a series of regulatory measures to attract foreign direct investment and improve EU-Japan trade relations.

OECD, Foreign Direct Investment Flows As a Percentage of GDP, 2013
White & Case, Cross-Border Merger Taxation in Japan, 2012

It is worth noting that in Japan, the Corporation Law defines the procedures for corporate mergers whilst the Japan Fair Trade Commission (JFTC) is responsible for mergers’ approval.  JFTC is also responsible for the Anti-Monopoly Law governing mergers. Since May 2007, a series of regulatory changes in both these laws as well as changes in the Foreign Exchange and Foreign Trade Law (FEFTL), which regulates foreign investments in Japanese companies, have made M&A transactions easier for foreign investors.

Deloitte, International Tax and Business Guide, 2.5. Mergers and Acquisitions, 2010
IFLR, Japan: Less Regulation, 2008

Furthermore, the re-election of Prime Minister Shinzo Abe in September 2012 could be what Japan needs to revive its economy. Mr Abe has pledged to boost Japan’s long-term economic performance with his set of economic reforms know as Abenomics. Abenomics and its “three arrows” consist of fiscal stimulus, tax reductions and structural reforms. The third arrow is particularly interesting for foreign investors as it aims to achieve economic growth by stimulating private investment and increasing labour mobility.

Forbes, The Abe Three Economic Arrows, 2013

Table of Contents

  • Overview of inward FDI and attractive sectors in Japan
  • New Corporation Law: Triangular Mergers and Triangular Share Exchanges
  • Case Studies: Inward FDI in Japan
    • Triangular Share Exchange: Citigroup/Nikko Cordial
    • Cross-Shareholding Alliance: Renault/Nissan 
  • Particularities: Business Culture and Corporate Governance in Japan; Keiretsu
  • Organisations Providing Support
  • Annual Report