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Consequently, if it’s recognized that the Guidelines that METI has produced are an effort to account for a lack of fair rules in Japan, I think the Guidelines are easy to understand.  

JETRO: Although there have been significant changes in the Commercial Code, the recent litigation between Yumeshin and Japan Engineering Consultants shows there is still a lot of gray area in interpretation of the Commercial Code in relation to M&A.

Kusakabe: I think there are two impressions about the takeover battle between Yumeshin and Japan Engineering Consultants. One is that the takeover bid rule system in Japan isn’t well developed.  METI sees this as a bad situation in itself, so we have joined with the LDP and have already developed an outline for the reform of the takeover bid system. This systematic reform we plan to enact consists of defensive stances weakening through an acceptance of a flexible downward adjustment if a stock split is declared during a takeover bidding period.

The second implication is heightened expectations of judicial decisions concerning the validity of defensive measures. The Tokyo District Court threw out Yumeshin’s attempt to get an injunction. I anticipate that through an accumulation of judgments concerning these issues, the validity of checkpoints like those written in METI’s guidelines will be proven.   For example, the issue of whether there is a system put in place for rescinding defensive measures through a general shareholder meeting, and the issue of whether establishing objective criteria for lifting defensive measures will make takeover bids more legally predictable.

JETRO: What message do you want to give to the U.S. investors looking for opportunities in Japan?

Kusakabe: I would like to restate that the Japanese corporate environment, consisting of the management side and the rule-making government administration side, is fundamentally pro-M&A.  By becoming more open through the inclusion of foreign capital in the Japanese corporate environment, corporate reform will continue in Japan, stakeholder value will rise, and market value will rise. METI anticipates satisfying all interested parties and will spare no effort to do so. If people observe actions that seem to go against these ideas, I encourage people to take these issues up with METI at anytime.