Japan’s Proposed Shareholder Reporting Reform - Call for Inputs

Published: 01 December 2023

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The Japanese government has proposed the implementation of reforms concerning Japan's shareholding reporting, with areas including (i) several amendments to the large shareholding reporting requirement, and (ii) a new mechanism to provide transparency around beneficial owners even when the position of a beneficial owner does not reach 5% of outstanding shares and the large shareholding reporting is triggered.

 
Currently, the following matters are considered at the Financial Council, a government advisory body which makes policy recommendations:
  • Amendments to the large shareholding reporting rule:
    • Disclosure should be required with respect to long positions in equity derivatives such as total return swaps and CfDs, whose underlying assets are covered shares, even if settlement by delivery of shares is not expected;
    • The scope of “joint holders,” which include other holders with whom a holder has agreed to jointly exercise voting rights and other rights, should be narrowed to allow investors to participate in collective or collaborative engagement along with other investors; and
    • While, currently, certain exempt reporting regime is available when certain conditions are met, including the purpose of shareholding not being to engage in an “act of making material proposal,” the scope of “act of making material proposal” should be narrowed to allow effective engagement.
  • Introduction of new beneficial ownership transparency:  the Financial Council is considering three proposals:
    • US model: Form 13F filing
    • UK model: Company’s right to inquire beneficial owners under Section 793 of the UK company law
    • Amending the Japan Stewardship Code to encourage voluntary disclosure of beneficial ownership and ownership ratio.
AIMA and AIMA Japan working group members are looking to submit a letter to the Japan Financial Services Agency (JFSA) to share concerns and other industry perspectives. For more information, you may view our recent AIMA APAC Roundtable: Japan Shareholding Reforms.  
 
If you have any questions, or feedback to offer, or would like to contribute to a possible AIMA response, please contact Kanako Someya and Kher Sheng Lee.