Effective April 6, 2011, the Financial Instruments and Exchange Act of Japan was revised to expand the scope of an exemption from the requirement for an issuer to file a Securities Registration Statement ("SRS") (Form 7-2) in connection with a stock option grant.
The law now provides that if all grantees of stock options in Japan are directors, officers, or employees of any of the following companies, the issuer will be exempt from filing an SRS with respect to the stock option grant:
- direct, wholly owned subsidiaries (i.e., a first-tier subsidiary);
- direct, wholly owned subsidiary of a direct, wholly owned subsidiary (i.e., a second-tier subsidiary); or
- subsidiaries, all of the shares of which are directly owned by companies that are direct, wholly owned subsidiaries (e.g., 50% of the shares of such company are directly owned by the company and the remaining 50% are directly owned by its direct, wholly owned subsidiary).
Prior to the effective date, the exemption applied only if the grantees were directors, officers, or employees of the parent company or one of its first-tier subsidiaries.
Please note, however, that the expanded exemption will not apply if (a) there are grantees at third or more tier subsidiaries, or (b) there is at least one grantee at one of the permissible entities listed above that is not a director, officer, or employee.