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Concluding an M&A deal in Japan, even the most insignificant one, requires performing thorough DD. The scope of DD usually covers the following areas:

  • corporate structure, including incorporation documents & other internal rules;
  • validity of shares & blocks of shares;
  • transactions with subsidiaries;
  • financing mechanisms;
  • assets, including intellectual property;
  • employees;
  • agreements;
  • licenses and permits;
  • compliance with laws; 
  • disputes.

Responsibility for Statements

Prior to performing DD of an M&A deal in Japan, sellers are to prepare a DD report for potential buyers. Sellers may be held responsible for making any misleading statements preceding the signing of an M&A contract in Japan. However, such liability may be excluded from an M&A agreement.

Publicly Available Information

Those seeking to register a private company in Japan should keep in mind that publicly available information is:

  • names of directors/auditors;
  • number & types of shares;
  • amount of capital;
  • share certificates;
  • approval for the transfer of shares;
  • registration date.

Also, prior to conducting legal DD of an M&A transaction in Japan, buyers may look for information regarding a target company's IP & immovable property in an online database compiled & maintained by the Patent Office.

Important

Performing DD of a Japanese company is absolutely vital for correctly assessing and preventing existing & potential risks of M&A transactions in Japan.

Alleged vs Actual Knowledge

The buyer's actual knowledge excludes the possibility of filing a lawsuit for breach of warranties in Japan.

Looking to acquire a company in Japan? Need professional advice on M&A regulation in Japan? Why not contact IQ Decision UK?