Companies that have previously filed a registration statement on Form 7 are considered "continuous disclosure" companies and subject to various ongoing (onerous) filing requirements. These requirements persist even if the company no longer grants new awards in Japan.
Until now, a possible exemption from the ongoing filing requirements was available for non-Japanese companies only where the company's total shareholder count in Japan decreased to less than 25.
Effective November 5, 2013, depending on when the first and last Form 7 registration statement was filed, a non-Japanese company may now petition for release from the continuous disclosure requirements if:
- The number of shareholders in Japan at the end of each of the five most recent fiscal years is fewer than 300; and/or
- If the number of stock option or ESPP right holders at the end of each of the five most recent fiscal years is fewer than 25.
If the Japanese securities authorities approve the petition, the company will no longer have any filing obligations. However, the exemption becomes void if, at the end of any future fiscal year, the number of shareholders in Japan equals or exceeds 1,000.