Publication of the draft amendments to the „Cabinet Office Order on Disclosure of Corporate Affairs“ and other relevant and applicable cabinet office orders (in regard to important contracts) for public consultation

The FSA has proposed amendments to the „Cabinet Office Order on Disclosure of Corporate Affairs. The revisions aim to enhance appropriate disclosure by specifying the types of contracts that should be disclosed and the required content for „important contracts“ in various sectors.
One of the main revisions focuses on the agreement between companies and shareholders. If a company submitting annual securities reports, including its subsidiaries (except for minor ones, if the submitting company is a holding company), has agreements with shareholders that may impact governance, disclosure of the agreement’s outline, purpose, and governance impact is required. These agreements include the right to nominate director candidates, binding voting rights, and agreements on prior consent matters. Similar disclosure is required for agreements with shareholders related to the disposal of shares, such as agreements prohibiting share transfers, additional purchases, maintaining shareholding ratios, and demanding the sale of held shares upon contract termination.
Regarding loan agreements and financial special covenants attached to bonds, if the company’s loan agreement or bond issuance with financial covenants exceeds 3% of consolidated net asset value, an extraordinary report must be submitted, detailing the contract’s outline, counterparty, principal amount, collateral, etc. If there are changes or conflicts with financial special agreements, a report describing the details and reasons for conflict is required.
The effective date of the revised regulations will be the date of promulgation, with different application dates for specific revisions. The disclosure requirements for „important contracts“ in securities reports will apply to business years ending on or after 31 March 2025. The submission of extraordinary reports for financial special agreements will apply to reports submitted on or after 1 April 2025.
Stakeholders can provide feedback on the proposal via mail, fax, or the e-Gov website until 10 August 2023, by noon, providing their name, occupation, contact information, and reasons for their opinions, but not through phone communication.