Nagashima Ohno & Tsunematsu
On January 1, 2000, the law firm Nagashima & Ohno and the law firm Tsunematsu Yanase & Sekine, with full participation of all lawyers from both firms, established the Law Offices of Nagashima Ohno & Tsunematsu in order to meet the legal problems arising out of the increasingly complex global business community by combining the individual talents of the lawyers from both firms to offer legal services of the highest quality.Show more
In Japan, money lending operations are subject to certain licensing requirements. That said, it is generally understood that a registration under the Money Lending Business Act is not required to purchase existing receivables. Thus, it may be easier for non-Japanese financial institutions to acquire receivables as opposed to making loans using funds from their own accounts. However, a recent Osaka District Court judgment suggests that this may not always be the case.
Financial institutions that have no operations in Japan can readily acquire loans made to Japanese borrowers by purchasing the receivables relating to such loans. A number of requirements and considerations must be taken into account when transferring loan receivables, including with regard to novation, money lending operations, registered money lenders, perfection and the upcoming amendments to the Civil Code.
In June 2017 the Financial Instruments and Exchange Act was amended to introduce the fair disclosure rule in Japan. Subsequently, in October 2017 the Financial Services Agency (FSA) published draft legislation (comprising an implementing order and an ordinance) and guidelines for public comment, followed by final legislation in December 2017. The FSA has now published new guidelines and opinions on the public comments that it received.
In June 2017 the Financial Instruments and Exchange Act was amended to introduce the so-called 'fair disclosure' rule in Japan. The amendments address recent cases of selective disclosure of material information by issuers to sell-side analysts and investors' requests to introduce similar fair disclosure rules to those of other jurisdictions. The Financial Services Agency recently published a draft implementing order, ordinance and guidelines for public comment.
Employment & Benefits
Article 20 of the Labour Contract Act prohibits the imposition of unreasonable employment conditions on fixed-term employees in order to ensure their fair treatment. In light of two recent Supreme Court decisions on this matter, Japanese employers with both fixed-term and permanent employees should carefully review whether differences in the individual employment conditions of each type of employee are not unreasonable.
An amendment to the Labour Contracts Act states that if an employee with a fixed-term employment contract has been continuously employed by the same employer for more than five years, the employee will have the right to convert his or her fixed-term employment contract to an indefinite term employment contract. As the amendment applies only to employment contracts that commenced on or after April 1 2013, a significant number of employees became eligible to exercise this right on April 1 2018.
In September 2017 the Ministry of Health, Labour and Welfare issued the Outline of the Act for Revising Related Acts for the Promotion of Work Style Reform. Once the National Diet passes the bill in 2018 and the revised Labour Standards Act takes effect at a later date, companies will be required to implement a new scheme to manage working hours which is substantially different from the existing scheme. As such, the proposed amendment will continue to garner significant attention going forward.
In recent years, the government-established Council for the Realisation of Work Style Reform has frequently discussed how to realise the international trend of equal pay for equal work in Japan. Further, the Japanese courts have rendered some noteworthy judgments regarding the equal pay for equal work principle. As such, the government is in the process of amending the rules on equal pay for equal work, which will significantly affect Japanese employment practice.
The Council for the Realisation of Work Style Reform recently approved its action plan. To implement the plan, which the government has since adopted, certain legal amendments must be enacted. A number of related bills are expected to be tabled before the National Diet in 2017 and will likely garner significant attention.
In recent years, excessively long overtime hours have been an issue in Japan. In accordance with the Labour Standards Act, the maximum working hours are eight hours a day, 40 hours a week, and company directors who violate this article are subject to imprisonment with labour or a fine. While an employer can extend its employees working hours in certain circumstances under a so-called '36 agreement', the Ministry of Health, Labour and Welfare has set out the upper limits for such overtime work.
IT & Internet
The widely publicised amendments to the Act on the Protection of Personal Information recently came into force. In addition to changing how companies must handle personal information, the amendments reflect a significant shift in how such obligations are regulated and enforced. They also mark the establishment of the Personal Information Protection Commission, which will be the regulatory body responsible for managing and ensuring compliance with the amended act.
White Collar Crime
A recent Tokyo District Court decision was reported to be the first to hold an underwriter liable to investors that purchased shares in a company based on material misstatements in the financial information contained in the statutory disclosure document for a public offering in Japan. However, the Tokyo High Court overturned the district court decision in this regard and concluded that the lead manager was not liable to investors.
In response to the significant corporate scandals that have come to light in recent years, Japanese authorities and regulators have been working to improve compliance awareness within corporate Japan. The Japan Exchange Regulation (JPX-R) recently published the Principles for Preventing Corporate Scandals, which provide valuable insight into the views of the JPX-R and, by extension, other Japanese regulators.
The absence of attorney-client privilege protections in Japan means that regulatory investigations must be handled with particular care. Various industry parties have argued that the absence of such protections unfairly damages the interests of companies active in Japan. However, the government has refused to introduce such protections out of concern that they could limit the regulators' broad investigative powers or otherwise adversely affect the Japanese regulatory environment.
Japan's spirit of omotenashi (ie, hospitality) encompasses many aspects of Japanese culture and etiquette, including the practice of gift giving. Many Japanese companies invest heavily in nurturing long-term business partners and, as such, the practice of giving gifts to business partners is relatively common. However, a number of risks may arise in this regard under international anti-corruption legislation, particularly the US Foreign Corrupt Practices Act.
Various initiatives in recent years have set in motion a number of reforms to the Japanese criminal justice system. Of most interest to businesses operating in Japan is undoubtedly the introduction of Japan's first plea bargaining system, which will likely incentivise both Japanese and global companies in Japan to take meaningful steps to bolster corporate compliance in order to avoid the sometimes devastating consequences of serious corporate malfeasance.
In early 2016 the Japan Exchange Regulation released its Principles for Listed Companies Dealing with Corporate Malfeasance. The principles appear to be the first example of a national stock exchange setting out specific guidelines on how a corporation should behave when faced with a corporate scandal and, as such, are an example of Japan leading the way in this increasingly important area of corporate governance.
Attorney-client privilege is a well-established principle in many jurisdictions. The effective absence of this form of protection in Japan is notable for a number of reasons, but one of the most important is that it means that Japanese regulators are permitted to compel the production of or seize sensitive communications, materials and advice received from legal counsel. This is of particular concern in the context of regulatory investigations.
The Olympus accounting scandal and Toshiba's recent accounting irregularities have highlighted issues over corporate governance in Japan, including whether the country's whistleblower law regime could do more to uncover corporate malfeasance. To address these concerns, Japan has amended its Companies Act and introduced the Corporate Governance Code to bolster the integrity of the whistleblower law regime.