This content is from: Local Insights

Japan

The Japanese government promulgated laws on April 9 2003 to facilitate industrial revitalization. The laws temporarily introduce and extend a number of special measures for certain types of revitalization plans and introduce a special corporation to assist certain revitalizing companies. There are companies in Japan that have accumulated large debts and retained excess productive capacities. As a result, they have been facing economic difficulties. The new measures are expected to help these companies.

The new system provides a number of benefits relating to flexible corporate actions, tax benefits and financial support for revitalizing companies. A company may generally benefit from these measures if the relevant authority approves its revitalization plan. There are four types of revitalization plans: a business restructuring plan; a joint business restructuring plan; a reapplication of business resources plan; and an introduction of innovative facilities plan. The relevant authority assesses plans that are submitted and admits plans that meet the requirements for each type.

The special measures available for the first three types of plan are different from those available for the fourth. For the first three types of plan a company may: issue shares for non-monetary consideration without conducting a valuation verification procedure, which is otherwise required under the Commercial Code of Japan; restructure its business by way of a merger, share exchange, corporate split and certain other methods without shareholder approval in an increased number of situations; distribute certain subsidiary's shares to shareholders as dividends; and, if approved by the relevant authority, distribute money or certain third party company's shares including a foreign company's shares to the target company's shareholders in a merger, share exchange or a certain type of corporate split.

Meanwhile, the Industrial Revitalization Corporation of Japan (IRCJ) has been established. The main purposes of the IRCJ are to purchase monetary claims against companies with revitalizing potential from financial institutions and to help those companies to restructure their debts.

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