February 5, 2021
A cabinet decision was made on the Bill for Partially Amending Industrial Competitiveness Enhancement Act and other related acts. The bill will be submitted to the 204th ordinary session of the Diet.
Purport of the bill
To take measures to promote (i) a shift to “Green Society,” (ii) responses to digitalization, (iii) reconstruction of businesses toward the “New Normal,” and (iv) strengthening of the foundations of SMEs, all of which will be sources for growth in the post-corona era, with the aim of making preemptive actions toward the “New Normal” and supporting companies’ reform from a long-term perspective, while properly responding to short- to mid- and long-term changes in socioeconomic circumstances such as the impact of COVID-19 infection and rapid population decreases.
Outline of the bill
(1) Industrial Competitiveness Enhancement Act
- Shift to “Green Society” Competent ministers authorize companies’ plans towards achieving a carbon-neutral economy, and the government (i) introduces a new taxation system for capital investment in facilities to promote decarbonization, such as facilities and processes to manufacture products highly effective in decarbonization, and (ii) provide financial support including interest subsidies.
- Responses to digitalization Competent ministers authorize companies’ plans for overall reform of their business models through utilization of digital technologies, and the government (i) introduces a new taxation system for promoting DX investment, and (ii) provides low-interest loans using funds under its fiscal investment and loan program.
- Reconstruction of businesses toward the “New Normal” Competent ministers authorize companies’ plans for business restructuring toward the “New Normal,” and the government (i) raises the upper limit for deduction of loss carried forward for companies as long as they are making efforts for carbon-neutrality, DX, and business restructuring, and (ii) provides low-interest loans using funds under its fiscal investment and loan program.
- Special provisions for achieving virtual-only shareholders meetings
Holding of virtual-only shareholders meetings is exceptionally made permissible. - Support for the growth of venture businesses
The government establishes a debt guarantee system for private loans to large-scale venture businesses. - Facilitation of corporate revival
The government facilitates a shift from turnaround ADR or other out-of-court procedures to legal procedures. - Perpetuation of the regulatory sandbox
The government transfers the regulatory sandbox to the coverage of the Act on Strengthening Industrial Competitiveness from that of the Act on Special Measures for Productivity Improvement.
(2) Small and Medium-sized Enterprises Business Enhancement Act
- In order to promote the expansion of SMEs’ businesses, a group of companies growing from SMEs to middle-ranking companies is added to targets for support measures with regard to their management innovation plans and management ability enhancement plans.
- Practices such as due diligence prior to business succession are to be included in companies’ management ability enhancement plans, and the government introduces a new taxation system for integrating SMEs’ management resources (M&A taxation; to promote efforts for ensuring reserves of funds for possible risks after M&A, capital investment, and securing employment).
- Targeting middle-ranking companies that are endeavoring to enhance their strength to continue business together with SMEs, the government offers financial support for funds necessary therefor.
- The government transfers the installation plans for cutting-edge equipment, etc. to the coverage of Small and Medium-sized Enterprises Business Enhancement Act from that of the Act on Special Measures for Productivity Improvement.
(3) Act on Fortifying the Foundation for Regional Growth and Development by Promoting Regional Economy Advancement Projects
In order to promote the expansion of SMEs’ businesses, a group of companies growing from SMEs to middle-ranking companies is added to targets for support measures with regard to financial support pertaining to plans for regional economy advancement projects.
(4) Act on Facilitation of Succession of Management of Small and Medium Sized Enterprises
With regard to SMEs which have obtained certification to the effect that they face difficulties in business succession because part of the shareholders cannot be located, the period required for the procedures for purchasing shares from missing shareholders is shortened from five years to one year.
(5) Act on the Promotion of Subcontracting Small and Medium-sized Enterprises
- Types of transactions that had not been covered under the Act are newly added to its coverage.
- New provisions on investigations by the national government are established and the delivery of ordering documents is promoted.
- The government sets up a system to acknowledge businesses that go between SMEs and their clients to create transaction opportunities taking advantage of the strengths of SMEs, and offers financial support, etc. to them.
(6) Act on the Organization for Small & Medium Enterprises and Regional Innovation, Japan, Independent Administrative Agency
Aid services targeting businesses that are renovating their management are added as duties of the Organization.
