Ashurst Perkins Coie monthly Japanese finance regulatory update – August 2026 

Welcome to the August edition of our Japanese finance regulatory update, which aims to provide you with in-depth analysis and practical insights on select legislative updates that bring significant implications to Japanese corporates and international companies operating or investing in Japan.

We hope you find these updates useful, and we look forward to having a further discussion with you on the topics and any other regulatory issues.

Introduction

Effective May 1, 2026, Japan's tender offer (TOB) regime underwent its first comprehensive overhaul in approximately 20 years. Among other changes, the amendments lowered the mandatory tender offer threshold from more than one-third to more than 30% and brought on-market transactions within the scope of the regime. This edition summarizes the principal amendments and their practical implications for investors and prospective acquirers.

Key Amendments

• Reduction of the mandatory tender offer threshold to 30%: The threshold has been reduced from more than one-third (approximately 33.3%) to more than 30%.
• Extension of the mandatory tender offer regime to on-market transactions: On-market transactions (on-exchange purchases), which were generally exempt under the former regime, are now subject to the mandatory tender offer requirements.
• Narrowing of the scope of formal special related parties: The acquirer's relatives and officers of corporations having a special capital relationship with the acquirer have been excluded from the definition of formal special related parties.

Key changes

1. Reduction of the mandatory tender offer threshold to 30%

Under the former regime, an off-market acquisition that caused the acquirer's share ownership ratio to exceed one-third (approximately 33.3%) was subject to the mandatory tender offer requirement. Under the amended regime, the threshold has been reduced to more than 30% (the "30% Rule").*

* In addition to the newly introduced 30% Rule, other existing mandatory tender offer requirements continue to apply. One typical example is an off-market acquisition from more than 10 shareholders within a 60-day period where the acquirer's post-acquisition holdings exceed 5% of the issuer's outstanding shares.

2. Extension of the mandatory tender offer regime to on-market transactions

Under the former regime, on-market transactions (on-exchange purchases) were generally exempt from the mandatory tender offer requirements. Under the amended regime, however, such transactions fall within the scope of the regime and are subject to the 30% Rule described above. Accordingly, even large-scale acquisitions effected through a stock exchange may be required to follow the tender offer procedures.

The Rapid Acquisition Rule has consequently been abolished. Under the former regime, a tender offer was required if, within a three-month period, a person acquired more than 10% of the shares through on-market or off-market purchases or new issuances, more than 5% of which was acquired through off-market purchases or off-exchange transactions, and the resulting share ownership ratio exceeded one-third (the "Rapid Acquisition Rule"). The amended regime no longer includes this rule because the new 30% Rule applies to a broad range of transactions, including on-market transactions executed during exchange trading sessions, and therefore serves the function previously performed by the Rapid Acquisition Rule.

3. Narrowing of the scope of formal special related parties

For purposes of determining whether the mandatory tender offer requirement applies, the acquirer's voting rights ownership ratio is calculated by aggregating the acquirer's holdings with those of its "special related parties." Special related parties are divided into two categories: "substantive special related parties" and "formal special related parties." The amendments revise the definition of formal special related parties.

Under the former regime, the acquirer's relatives and officers of corporations having a special capital relationship with the acquirer (i.e., a relationship involving ownership of shares representing 20% or more of the voting rights of all shareholders) were treated as formal special related parties. Their holdings were therefore included in the calculation of the voting rights ownership ratio, potentially causing the relevant threshold to be exceeded inadvertently. Under the amended regime, these persons are no longer included in the definition of formal special related parties.

4. Other amendments

(1) Abolition of the over-50% exemption (post-acquisition ownership below two-thirds)

Under the former regime, an acquisition by a person whose share ownership ratio already exceeded 50% was exempt from the mandatory tender offer requirement under the "over-50% exemption" if the post-acquisition ownership ratio remained below two-thirds and certain conditions relating to the number of sellers were satisfied. The amended regime has abolished this exemption.

(2) Introduction of the de minimis acquisition exemption (increase of less than 0.5%)

The amendments also introduce a new exemption for "de minimis acquisitions." In broad terms, the mandatory tender offer requirement does not apply if all of the following conditions are satisfied: (i) the acquirer's share ownership ratio already exceeds 30% before the acquisition; (ii) the acquisition increases that ratio by less than 0.5%; (iii) the acquirer has made no acquisitions during the preceding six months; and (iv) the post-acquisition ratio remains below two-thirds.

5. Practical implications

Under the amended regime, investors can no longer, as a general matter, build a position above 30% through on-market purchases without conducting a tender offer. Investors and prospective acquirers should therefore assess, well before their holdings approach the 30% threshold, whether a tender offer will be required and whether their holdings must be aggregated with those of any special related parties. Early analysis should also address the availability of exemptions and the implications for acquisition financing, transaction timetables and disclosure obligations. The amendments may increase transaction costs and procedural burdens, making advance planning and timely legal advice increasingly important.

Want to know more?

• Our July edition looks into the Large Shareholding Report (tairyou hoyu houkokusho) system.
• The June edition covers cross-border collection and payment agent services (shuno daiko).

Other author: Chiharu Takatori, Associate, Tokyo