Conflicts of interest means that one profit becomes disadvantage of the other. “A conflict of interests” is a transaction in which the interests of the directors and the company conflict, such as cases where the company makes joint debits of the directors’ obligations, or when the director deals with the company for themselves or a third party say. In conflict of interest transactions, since the director may use the position of himself / herself or the third party to gain the benefit of the third party, the company may be damaged, so in order to prevent damaging the company’s interests, , The directors must obtain approval for conducting such transactions at the Board of Directors or general meeting of shareholders (Article 356, 365, 595 of the Companies Act). In the case of M & A, this problem typically surfaced during M & A intermediation transactions or MBO. On M & A, the seller is obliged to give the shareholders the opportunity to sell as high as possible when deciding to sell the company, but the acquisition side wants to buy as cheaply as possible as much as possible. In this way conflicts of interest become apparent.
M & A should ask the advisor instead of mediation
M & A personnel, in particular the management team of the company will be in the position to know the company’s internal circumstances the best, so it will naturally also cause inequality in information between trading partners and general investors. So in order to ensure that one profit will not be detrimental to the other in each position, securing fairness and transparency in trading is an important issue. Consideration of conflict of interest is indispensable when M & A is done in this way, but in M & A in Japan, M & A intermediary company and related securities company of main bank are often appointed as advisor of debtor side. Although the advisor is in a position to be neutral, if there is involvement in such a position, it is doubtful if we consider whether the interests of the debtor can be judged in preference to the interests of the creditors. Conflicts of interest conflicts tend to arise in the Japanese M & A market, and there are few independent M & A advisors who are professional as individuals because there are few independent M & A advisers with no interests. There are only a few independent farms that can deal with large projects, and even advisors companies are sending projects to some extent. For M & A, please contact an independent advisor such as New-Japan Solicitor Office, not mediation player or broker.