13 ASIAN LEGAL BUSINESS – JULY 2024 WWW.LEGALBUSINESSONLINE.COM BROUGHT TO YOU BY ATSUMI & SAKAI A conversation with Atsumi & Sakai Your firm advises foreign investors and fund managers investing in Japanese listed companies. Can you share a recent case where you helped a client navigate complex capital market regulations? We advise several financial institutions and investment funds on Japanese financial regulations, including (1) international hedge funds investing in Japan; (2) foreign companies managing assets in Japan; and (3) financial institutions selling foreign financial products to Japanese institutional investors. In recent years, we have been particularly active in advising activist funds on the Japanese market. The number of shareholder proposals made to Japanese listed companies reaches a new all-time high each year. Our legal support for activist funds includes negotiating with issuer companies and communicating with other shareholders, in addition to exercising minority shareholder rights and appraisal rights under the Japanese Companies Act. In addition, they control their market risk by short selling and derivatives trading, which requires the funds to pay attention to Japanese market regulations. Each activist has a variety of strategies to make engagement with their target companies and to make its positions. We have done our best to understand each activist’s strategy and provide the best advice on how to maximize the effectiveness of that strategy, while in addition providing legal advice that does not conflict with Japanese proxy regulations or other market regulations. When the number of shares to be acquired exceeds a certain number, it is required for investors to file a notification under the Large amendments will increase the number of foreign fund managers entering the Japanese market. Second, some notifications and filings will be followed by ongoing reporting requirements. For example, there is an exemption under the financial business registration whereby the use of a notification called “Business Operators, etc., Engaging in Specially Permitted Businesses for Qualified Institutional Investors, etc.” to collect money from Japanese investors to manage a fund can exempt the fund from the requirement to obtain a license. However, once notification is made, business reports must be submitted every year thereafter. Given your firm’s global reach and multilingual capabilities, how do you ensure effective communication and coordination when working on cross-border fund transactions involving multiple jurisdictions? We believe our strength lies in the fact that our team consists of lawyers with long-standing experience working for global financial institutions, who also understand market practices and economic perspectives. This enables us to understand investors’ strategies and support their business in Japan, not only from a legal perspective, but also in collaboration with PR firms and others professionals. In addition to having several foreign lawyers working in our head office in Tokyo, we also have overseas offices in London, New York, Frankfurt, Brussels, and elsewhere. We belong to several global networks of top-tier law firms. By leveraging these resources, we are able to provide well calibrated advice, while keeping up-to-date with the latest information. Shareholding Reporting Regulation, the Foreign Exchange and Foreign Trade Control Law and the Antitrust Law, as well as to comply with relevant tender offer regulations. We frequently assist clients on these tasks as well. In particular, the Foreign Exchange Law was substantially amended in 2019, increasing the number of situations in which filings are required prior to the acquisition of shares. We respond promptly and appropriately to these considerations, while negotiating with the authorities as necessary. When it comes to regulatory filings, including applications for licenses and filings to facilitate offerings to qualified institutional investors, what are some common pitfalls that foreign clients should be aware of when dealing with Japanese regulators? There are several pitfalls, but we would like to mention the following two points here. The first is that in Japan, registration for an investment management business requires that a company structure including human resources be in place to ensure compliance / legal observance and other middle-back office functions. Compared to other countries, it is not common in Japan to outsource middle and back office functions, and all organizational structures must be put in place. However, in order to realize its ongoing policy plan for promoting Japan as a “Leading Asset Management Center”, the Japanese government has recently made revisions to allow investment management firms to outsource middle and back office functions and to ease entry requirements for investment management firms. We expect that such Akio Kawamura, Partner, Head of Atsumi & Sakai’s Investment Fund Team Akio Kawamura, a Japanese-qualified attorney (Bengoshi) of over 40 years’ standing, leads the firm’s investment funds and asset management practice. He has extensive experience in regulatory counselling for financial institutions and fund managers, crossborder investments in Japanese companies, capital markets, together with investigations and enforcement. Yukihito Machida, Partner, Head of Atsumi & Sakai’s Venture Practice Team Yukihito Machida is a Japanese-qualified attorney (Bengoshi) with over 25 years’ experience and leads the firm’s venture capital and funds practice. He has significant experience advising both Japanese and international corporations on venture finance, asset management and investment funds. Sho Tsuzuki, Associate Sho Tsuzuki, an attorney admitted in Japan (Bengoshi) in 2014, has experience advising on asset management and investment funds, venture and acquisition finance and M&A. He co-authored a newsletter titled “Overview of Recent Policies and Measures to Attract Foreign Direct Investment into Japan”, issued by Atsumi & Sakai in June 2024. KEY PERSON BIO
RkJQdWJsaXNoZXIy MjA0NzE4Mw==