The Lower House gave its approval Friday to a bill intended to encourage much-needed corporate realignment through mergers and acquisitions.
The bill, which is to revise the Commercial Code, was sent to the Upper House the same day for further debate. It is expected to be enacted before the Aug. 13 close of the current Diet session and implemented within the year.
The bill calls for implementing the so-called equity-swap system, which would allow companies planning to acquire subsidiaries to accept shares of the units in exchange for allocations of new shares of their own to shareholders of the unit.
Equity swapping is being sought as a way to encourage industrial consolidation and corporate restructuring via mergers and acquisitions by holding companies. Consolidation and restructuring are deemed vital for Japan to regain industrial competitiveness.
The measure, if implemented, is expected to substantially simplify procedures for corporate buyouts, as even opposing shareholders will be required to accept parent companies' requests for such equity swaps.
Currently, holding companies must negotiate with each shareholder in a company they are buying, a procedure that tends to be tedious and time-consuming.
To protect the interests of concerned shareholders, the bill calls for greater transparency in disclosing information about subsidiaries.
It also calls for improving companies' international competitiveness by evaluating their monetary claims, such as loans and the right to receive insurance money, based on market values.