Latest updates

Whistleblowing certification regime launched
Nagashima Ohno & Tsunematsu
  • White Collar Crime
  • Japan
  • 13 May 2019

Over the past decade, a number of significant regulatory and compliance issues have affected large multinationals based in Japan. As such, the Consumer Affairs Agency recently created a certification regime for corporate whistleblowing systems, which is designed to incentivise businesses to voluntarily enhance their own whistleblowing systems and thereby gain the trust of various stakeholders, including shareholders, counterparties and consumers.

Amendments to Financial Instruments and Exchange Act
Nagashima Ohno & Tsunematsu
  • Capital Markets
  • Japan
  • 30 April 2019

Cabinet recently submitted a bill to the 198th session of the Diet to amend, among other acts, the Financial Instruments and Exchange Act and the Payment Services Act. Among other things, the amendments introduce new regulations for security-type digital tokens (ie, initial coin offerings and security token offerings) and clarify that digital tokens issued in consideration for crypto assets will be regarded as deemed securities.

Amendments to Payment Services Act
Nagashima Ohno & Tsunematsu
  • Banking
  • Japan
  • 26 April 2019

Cabinet recently submitted a bill to the 198th session of the Diet to amend, among other acts, the Payment Services Act (PSA). The PSA amendments aim to strengthen the regulation of virtual currency exchange service providers. Among other things, the changes concern crypto asset custody, the advertisement and solicitation of crypto assets and crypto asset margin transactions.

New commitment procedure under Anti-monopoly Act
Nagashima Ohno & Tsunematsu
  • Competition & Antitrust
  • Japan
  • 18 April 2019

A new commitment procedure was recently introduced to the Anti-monopoly Act (AMA), enabling enterprises to voluntarily resolve suspected violations of the AMA with the Japan Fair Trade Commission (JFTC). If a commitment is approved, the conduct of the enterprise concerned will not be considered a violation of the AMA and the enterprise will not be subject to legal penalties. The new procedure may lead to more active enforcement by the JFTC.

Recharacterisation of product risks
Nagashima Ohno & Tsunematsu
  • Product Regulation & Liability
  • Japan
  • 18 April 2019

Although product compliance has always been an important issue for manufacturers, it has historically been overshadowed by safety-related product risks, and considerations regarding product compliance have typically been integrated with other product risks. However, manufacturers' awareness of the risks associated with product compliance has grown and it is now a top priority. The catalyst for this shift in attitude was a recent spate of data falsification cases.

Amendments to regulations on working hours and paid annual leave
Nagashima Ohno & Tsunematsu
  • Employment & Benefits
  • Japan
  • 10 April 2019

A number of amendments to Japan's labour and employment laws recently took effect. Among other things, the amendments concern the monitoring of employee working hours, paid annual leave, the so-called 'highly professional system' and overtime limits. Employers should ensure that their policies and practices comply with the amendments to ensure an easy transition to Japan's new employment framework.

Determining recoverable damages following material misstatements in securities registration statements
Nagashima Ohno & Tsunematsu
  • Capital Markets
  • Japan
  • 02 April 2019

If a securities registration statement contains a material misstatement, investors that acquire securities through the relevant offering can hold the issuing company liable for related damages. However, it is unclear what level of damages is recoverable if the issuing company successfully proves that the loss incurred by the investor is at least partly attributable to an unrelated factor or circumstance. A recent Supreme Court judgment has provided some clarity in this regard.

Fixed overtime payment arrangements
Nagashima Ohno & Tsunematsu
  • Employment & Benefits
  • Japan
  • 27 March 2019

Under Japanese law, employers must – in principle – pay an allowance to employees who work more than eight hours per day or 40 hours per week. As such, from an employer's perspective, it is practical to include an employee's overtime allowance in their base salary where possible. However, for an employee's overtime allowance to be validly included in their base salary, certain requirements must be satisfied. These requirements are a hot topic in Japanese legal practice.

Kyoto District Court rules on raising of capital by third-party allotment
Nagashima Ohno & Tsunematsu
  • Capital Markets
  • Japan
  • 08 January 2019

The Kyoto District Court recently ruled in favour of a shareholder's petition that a listed issuer cease an offering of its new shares by third-party allotment on the grounds that the offering had been conducted through an 'extremely unfair method', despite having been approved by a resolution at the issuer's shareholders' meeting. The court adopted the main purpose rule in accordance with prior court rulings and concluded that the share offering's main purpose had been to reduce the petitioning shareholder's shareholding.

Bond offerings under Japanese securities law
Nagashima Ohno & Tsunematsu
  • Capital Markets
  • Japan
  • 18 December 2018

Foreign private issuers' bonds that are listed on a Japanese securities exchange, such as the Tokyo Pro-Bond Market (TPBM), are subject to both the insider trading rules and the fair disclosure rules under Japanese law, while non-listed bonds (so-called 'Samurai bonds') are not. This article provides a brief explanation of the rules that apply to offerings of Samurai bonds and bonds listed on the TPBM under Japanese securities law.

Overtime regulation bill enacted
Nagashima Ohno & Tsunematsu
  • Employment & Benefits
  • Japan
  • 17 October 2018

The National Diet recently enacted a bill relating to work style reform, which has amended the Labour Standards Act, the Industrial Safety and Health Act and relevant laws. Most amendments will come into effect on 1 April 2019. The amended Labour Standards Act stipulates that the upper limit for overtime will be, in principle, 45 hours a month and 360 hours a year. However, there are exceptions for certain business sectors.

Application of fair disclosure rule to listed bonds
Nagashima Ohno & Tsunematsu
  • Capital Markets
  • Japan
  • 09 October 2018

The newly introduced fair disclosure rule enacted under Japan's securities laws and regulation regime is most often considered to apply to issuers of listed shares. However, based on the clear wording of the rule, it is also applicable to issuers whose only listed securities are bonds. Although the majority of bonds issued in the Japanese market are unlisted, there is a market dedicated to listed bonds in Japan: the Tokyo Pro-Bond Market.

Heightened sensitivity in Japan over virtual currencies
Nagashima Ohno & Tsunematsu
  • White Collar Crime
  • Japan
  • 01 October 2018

In 2017, following consultations with representatives of the virtual currency (VC) industry, the Act on Payment and Settlement and the Act on the Prevention of Transfer of Criminal Proceeds were amended to require operators of VC exchange businesses to register with the Japanese Financial Services Agency (JFSA). Notably, the amendments reflect the JFSA's desire to implement a risk-based approach with respect to anti-money laundering and terrorist financing.

Supreme Court rules on different working conditions for employees rehired after reaching retirement age
Nagashima Ohno & Tsunematsu
  • Employment & Benefits
  • Japan
  • 26 September 2018

One of the controversial issues regarding Japan's so-called 'lifetime employment system' is whether and to what extent employers can impose different working conditions (eg, salaries, bonuses and allowances) when they rehire employees who were once non-fixed-term employees as fixed-term employees. The Supreme Court recently handed down a significant decision addressing this issue.

Insider trading rule under Financial Instruments and Exchange Act
Nagashima Ohno & Tsunematsu
  • Capital Markets
  • Japan
  • 14 August 2018

The recent amendments to the Financial Instruments and Exchange Act introduced the fair disclosure rule, preventing listed issuers from making selective disclosure of their material information in order to ensure market fairness and transparency. This rule differs to the insider trading rule, which was introduced in 1989 with a similar aim of ensuring fairness and transparency by prohibiting parties with knowledge of undisclosed material facts regarding listed issuers from trading the securities of such issuers.

Are lead managers liable for material misstatements in IPO disclosure documents?
Nagashima Ohno & Tsunematsu
  • Capital Markets
  • Japan
  • 17 July 2018

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.

Are lead managers liable for material misstatements in IPO disclosure documents?
Nagashima Ohno & Tsunematsu
  • White Collar Crime
  • Japan
  • 16 July 2018

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.

Are differences in employment conditions of fixed-term and permanent employees reasonable?
Nagashima Ohno & Tsunematsu
  • Employment & Benefits
  • Japan
  • 11 July 2018

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.

Japan Exchange Regulation publishes principles to prevent corporate scandals
Nagashima Ohno & Tsunematsu
  • White Collar Crime
  • Japan
  • 04 June 2018

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.

Employees' statutory rights to convert fixed-term contracts to indefinite term contracts
Nagashima Ohno & Tsunematsu
  • Employment & Benefits
  • Japan
  • 04 April 2018

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.