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Still, the current level of interest is actually less than the huge potential opportunity that exists for both sides.  So over the next year, I'm hoping even more people will wake up to some of the flexibilities and advantages of the new law. 

Could you give an example of a major advantage?

Benes: For Japanese owner-managers, one of the major advantages is to sell one's interest in a company, while ensuring that there is a strategic buyer (a new owner) which has the ability and desire to grow it faster, while also receiving part of the upside in the form of new stock so you can participate in that growth.  Since it's a liquid company with listed shares--stock of which you'd be receiving--you'd be able to ensure that you can sell the stock later on, hopefully after it has appreciated. 

How was the situation different before?

Benes: That kind of advantage had not been considered here in Japan before because there is no tax deferral.  So in general, engaging in a transaction like this from the Japanese seller side was extremely painful, immediately.  The Japanese shareholders would have to pay lots of tax upfront and experience a net cash outflow - receiving nothing on a cash basis at the outset, only paying! It doesn’t sound like a “sale”, does it?  In the worse case they would have to dump the new stock in the market at a bad price just to foot the tax bill.  

So almost nobody would consider such a transaction in that environment, and that's not surprising.  But hopefully when the new law comes through and is implemented next year, there will be tax deferral for Japanese sellers.

What seems to be the perception of this new law on the ground over there in Japan?

Benes: On balance, it's positive.  There is nothing that is unsupportable about the law, and that's why METI has supported this change.  There is a growing realization that the triangular mergers are a completely friendly device that is completely unrelated to any professed need for takeover defenses.