TSE to Tighten MBO Rules to Protect Minority Interests

Tokyo, Jan. 8 (Jiji Press)--The Tokyo Stock Exchange plans to tighten its management buyout, or MBO, rules for listed companies as early as this spring to protect the interests of minority shareholders, informed sources said Wednesday.

The TSE will revise its Code of Corporate Conduct to require listed companies to explain MBO prices to prevent major shareholders, such as founding family members, from buying shares at unreasonably low prices.

Currently, the code only calls for “necessary and sufficient” disclosure of MBO-related information.

Under the new rules, listed companies will be required to set up a special committee of outside directors and seek its opinions, including on whether minority shareholders will receive fair value. They could also be required to disclose the minutes of the special committee.

The move comes amid calls for ensuring fair MBO procedures as the number of MBO cases increases in response to the TSE’s market reform and growing demand from activist shareholders.

[Copyright The Jiji Press, Ltd.]