Nishimura & Asahi – Nuances of Conducting a Corporate Internal Investigation in Japan

A global company with operations in Japan should remain vigilant in understanding how to effectively conduct an internal investigation associated with a corporate crisis emanating from or linked with Japan.

A global company operating in Japan may need to initiate a corporate internal investigation following allegations that a Japan-based employee engaged in local conduct (sometimes even permissible local conduct) thatresulted in a violation of the laws of the parent company’s home jurisdiction. U.S. and European anti-bribery laws, export/ import regulations, financial reporting requirements and competition laws are examples of rules and regulations that can apply outside the home market, thereby providing fertile ground for unwitting local missteps that can dearly harm an overseas parent company.

Similarly, a Japan-based employee may engage in local misconduct that requires not only the attention of local management, but of the overseas parent company as well due to the parent company's ownership interest in the local subsidiary and the inclusion of the subsidiary's financial results in the reports of the parent company. The foregoing can be compounded if the parent company is subject to real-time disclosure requirements associated with having its securities trading over a stock exchange, as the parent company often will need to act swiftly to reduce the likelihood of the controversy becoming subject to public scrutiny and negatively impacting its stock’s trading price….

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byStephen D. Bohrer Counsel – Cross-Border Transactions Group Leader
03-5562-8648
s_bohrer@jurists.co.jp

Daisuke Morimoto, Partner
03-5562-8374
d_morimoto@jurists.co.jp

The Board Director Training Institute (BDTI) is a "public interest" nonprofit in Japan dedicated to training about directorship, corporate governance, and related management techniques. It is certified by the Japanese government to conduct these activities as a regulated nonprofit. Read a summary about BDTI here, and see a menu of its services for both corporations and investors here.

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