Since IFLR published the first edition of The IFLR Guide to
Japan a year ago, economic realities in the country have forced
lawmakers and regulators to take a more flexible approach. In
turn, new and more sophisticated deal structures are
Perhaps the most noticeable change is the shift in business
culture. Companies have succumbed to the need to restructure
their organizations. Financial institutions, plagued by the
burden of bad debt, could no longer keep tied relationships
intact and have had to sell non-performing loans through the
securitization and distressed debt markets. Shareholders are
exerting more control and asking searching questions of
Lawyers and bankers have used changes in policy and ethos to
find new ways to make money and, at the same time, to help
revitalize the economy. Leveraged finance transactions, private
equity deals, squeeze-outs of minority shareholders, real
estate investment trusts and corporate reorganizations through
mergers and acquisitions are all becoming more common.
Yet good financial health is still a long way off for Japan.
The banking system, as UBS' Fumitaka Eshima tells IFLR on page
6, needs stabilizing. The likely effectiveness of the new
Industrial Revitalization Corporation of Japan is in question.
The large pension fund deficit poses risk for foreign investors
looking long-term at the country.
In January 2003, prime minister Koizumi announced the
government's policy goal to double foreign direct investment in
five years. But so far only half measures and makeshift
policies have materialized to encourage merger and acquisition
activity, which is the best way for the government to realize
its objective. Far-reaching reforms are needed. For instance,
foreign companies should be allowed to enter into cross-border
stock-for-stock transfers or triangular mergers.
It is in the context of the many legal challenges Japan
still faces that IFLR publishes this guide. The changing yet
complex legislative and regulatory environment can make it
difficult for counsel and other market participants to keep
track of developments that affect their business
Specialist practitioners from Japanese and foreign law firms
provide detailed analysis on the latest trends in regulation
and the law and why they matter. We hope you will find the
guide a useful tool and one that you will refer to often.