4.Contract Drafting, Review and Negotiation

Q7 (Anti-Social Forces Provisions)

If we are requested by the other party to include a provision in a contract regarding the absence of influence from anti-social forces, what does that mean?

In light of several scandals involving so-called “anti-social forces” (such as organized crime), the securities exchanges have implemented a regulation that prohibits the involvement of anti-social forces in publicly listed companies. In the IPO application process, one of the points considered is “whether or not the applicant has in place a system to prevent the involvement of anti-social forces in the management activities of its group, including whether or not in fact the system is working, and whether or not the actual situation is deemed to be suitable from the standpoint of the protection of the public and investors” (Guidelines Concerning Listing Examination, etc. II6).

In addition, under the recently enacted [Tokyo Metropolitan Ordinance for Eliminating Organized Crime Groups ], any association with any organized crime group is prohibited. All parties subject to the ordinance are required to make efforts to include in each contract a specified anti-organized crime provision.

(Posted: January 27, 2012)