As an individual and not representing any organization, I submitted the public comment in the link below to METI’s Fair Acquisition Study Group.
Nicholas Benes – Public Comment to the METI Fair Acquisition Study Group-03.15.2023
(click to download)
My conclusion at the end:
“Instead, I believe that the study group should seriously consider proposing that Japan adopt the UK model for takeovers and similar transfers of control or substantial influence, and the UK’s rules for collective engagement. These rules fit much better with Japan’s systemic and corporate governance realities. Were this to be done, the following policies should be implemented:
(a) per the FIEA, if a bidder is interested in shares carrying 30% or more of the target’s voting share rights, the bidder would be required to make a mandatory offer in cash at no less than the highest price it paid during the preceding 12 months, in any transaction;
(b) per the exchange listing rules, takeover defenses for all companies listed on public stock exchanges would not be permitted for exchange-traded companies (such rule to be phased in over a period of two years);
(c) bidders and other de-facto acquirers would be required to include in their offer documents (or other relevant public documents) post-offer “intention statements”, and post offer “undertaking statements”, which would be policed by the FSA and which would (inter alia) refer to intentions related to employment, redeployment of assets, and strategic plans, etc.;
(d) to ensure oversight and compliance, the FSA would set up its own version of a “Takeover Panel”; and
(e) the FSA would amend its rules regarding collective engagement so that burdensome filings separate from the ordinary system for large holder reports are no longer necessary (as long as the group has a clear “opt-out” policy), except in the case where the collective group plans to make a joint takeover or take its aggregate holdings percentage over 30%, whereupon the TOB rules would take effect.”
Nicholas Benes (writing his personal opinion and not representing any organization).
PS: It is interesting to note that Professor Kotaro Inoue of Tokyo Institute of Technology, member of the committee, gave a presentation in January to it where he referred to worldwide academic studies of poison pills. His basic conclusion was that poison-pill have both positive and negative effects, but they seem to have more negative impacts in Japan because most firms attempt to use it to steadfastly defend themselves from takeover attempts instead of using them to negotiate to obtain better terms (price etc. ). See: https://www.meti.go.jp/shingikai/economy/kosei_baishu/pdf/004_04_00.pdf This is similar to the point that I made in my public comment: that I do not believe their are any cases where a pill was used to successfully improve the price or terms of a TOB in Japan.