Introduction
On 4 July 2025, Japan’s Financial Services Agency (FSA) published the results of public consultations and released finalised Cabinet Orders and Cabinet Office Orders to implement the 2024 amendments to the Financial Instruments and Exchange Act (FIEA) and the Act on Investment Trusts and Investment Corporations (Act No. 32 of 2024). These changes, effective from 1 May 2026, aim to modernise Japan’s capital markets and enhance transparency and investor confidence.
Key Regulatory Reforms
Review of Tender Offer System
- Under the “30% Rule”, small-scale purchases increasing shareholding by less than 0.5% are now exempt from a Tender Offer Bid (TOB), provided no acquisitions occurred in the previous six months.
- Certain market transactions are excluded from TOB rules, and specific entities – such as relatives or capital-related firms – are excluded from the “deemed affiliates” category.
- TOB offer prices may be reduced during the offer period if the target company declares dividends.
- TOB documentation requirements have been updated, including clearer guidance on how to describe the “purpose of acquisition”.
- Filing forms have been revised to improve transparency and consistency.
Large Shareholding Reporting Regime (5% Rule)
- Promoting Dialogue: New rules clarify that investors collaborating with companies or each other on specific issues (not broad control) are not required to report as “joint holders”, facilitating routine engagement.
- Including Cash-Settled Derivatives: Reporting obligations now extend to cash-settled equity derivatives and similar transactions. A standardised method for converting derivative rights into equivalent shareholdings will be introduced.
- Clarifying Reporting Obligations: The amendments define who must file large shareholding reports, how to handle complex relationships (e.g. joint funding or joint proposals), and what disclosures are required.
- Improved Report Format: Updates will clarify required items in the ‘Purpose of Holding’ and ‘Important Contracts’ sections. The calculation of shareholding ratios for joint holders with delivery rights will be simplified, and the report format will be modernised.
Compliance Date
The Cabinet Office Ordinances and related regulations were promulgated on Tuesday, 1 July 2025. They will come into force and apply from Friday, 1 May 2026.
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