Corporate Governance Reform (3) -Private Placement-
Private placement under review to protect shareholders from dilution
March 11, 2009
Summary
◆Japan’s Ministry of Economy, Trade and Industry (METI), Financial Services Agency (FSA), and the Tokyo Stock Exchange (TSE) have set up investigative committees to examine the corporate governance of listed companies.
◆Decisions regarding private placement of new shares and stock warrants generally fall under the sole authority of boards of directors. However, some observers have pointed out a need for greater regulation, given that private placement can dilute the ownership of existing shareholders.
◆This report outlines private placement under existing legislation and discussions regarding its problems by the investigative committees.
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