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.
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?
