Japan: Easing gun-jumping restrictions

Kyohei Mizukoshi

The Financial Services Agency of Japan (JFSA) published the amendment to the Guidelines for the Disclosure of Corporate Affairs (Disclosure Guidelines) on August 27 2014. The Disclosure Guidelines do not constitute statutory laws of Japan, but provide matters to be considered in applying the laws and regulations concerning corporate disclosure, including the Financial Instruments and Exchange Act of Japan (FIEA). This amendment abolishes the waiting period for the securities registration for certain 'well-known companies' and clarifies which acts do not constitute a 'pre-filing offer'.

Generally, where a listed company conducts a public offering, it must file a securities registration statement (SRS), then wait for seven days before it can issue its securities to investors. This waiting period is designed to give investors time to decide, based on the information disclosed, whether to acquire and purchase the securities. Under the amended Disclosure Guidelines, only in cases involving the filing of an SRS by certain well-known companies, the SRS becomes effective on the date of filing and such companies can issue their securities to investors from the filing date. This exemption is available to certain types of equity offerings by well-known companies whose shares are listed on a stock exchange in Japan and whose market capitalisation is ¥10 billion ($93 million) or above. Additionally, this exemption is available to a non-Japanese company which meets these requirements.

Under the FIEA, it is prohibited to begin solicitation of an offer to buy or subscribe for securities to investors before an SRS has been filed (so-called pre-filing offer). Although there is no precise definition of 'solicitation' under the FIEA, it is generally understood that any activity to induce the investors to be interested in the securities which are the subject of the offering would be deemed a solicitation. The amended Disclosure Guidelines clarify the acts that do not constitute a pre-filing offer in order to ensure as many opportunities as possible for investors to receive corporate information concerning companies raising capital before the filing of an SRS. For example, the Disclosure Guidelines clarify that the following do not constitute a pre-filing offer: (i) a pre-hearing conducted by an issuer or an underwriter; (ii) distributing corporate information at least one month before the filing of an SRS without reference to the offering; (iii) certain methods of publishing analyst reports concerning listed companies; and (iv) certain other acts.

Kyohei Mizukoshi

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