Despite 17 revisions in nearly two decades to its corporate governance and public takeover guidelines. The previous version, published in 2005, generally supported the adoption of takeover defense measures. In contrast, the revised guidelines now promote openness to M&A as a strategic solution and emphasize the importance of shareholder interests in corporate decision-making. This regulatory evolution reflects a broader trend toward stronger corporate governance in Japan. Over the past decade, there has been a marked increase in the number of Japanese companies with independent directors who play an active role in key strategic decisions. Additionally, the rise of shareholder activism has placed further pressure on management to enhance shareholder value. This is often cited as leading to increased proposals for spin-offs, carve-outs of non-core assets, and even sales of the company itself. Further, financing conditions continue to be favorable in Japan, with interest rates remaining relatively low compared to other major markets. This supports both domestic and cross-border transaction activity. We think that these legal reforms, shifts to corporate governance, and favorable market conditions will continue to lead Japan towards an even more robust and active M&A environment. Longstanding cultural and structural barriers are shifting, and the regulatory framework and environment continues to adapt to prioritize transparency and shareholder value. We are optimistic that Japan presents a compelling landscape for strategic global investment.”
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