Policy Toward Large-Scale Purchases of GMO Shares (Takeover Defense Measures)｜経営方針｜投資家情報

1.Objectives of the Large-Scale Purchase Rules

GMO’s Board of Directors believes that because GMO is a public company and GMO shares are freely traded, trading in GMO shares should be left in the hands of markets, and any decision concerning the acceptability of a Large-Scale Purchase*1 by a Large-Scale Purchaser*2 among a Certain Group*3 should ultimately be left to GMO shareholders who own GMO shares.

Should a Large-Scale Purchase be contemplated, we believe that it is indispensable that, in order to allow our shareholders to decide on the acceptability of the Large-Scale Purchase, not only the information provided in a one-sided manner by the Large-Scale Purchaser, but also information from GMO’s Board of Directors, which is entrusted with the company’s operations and information including assessments and opinions of GMO’s Board of Directors with respect to the Large-Scale Purchase should be provided.

The GMO Group focuses its business resources on the Internet market with high growth potential, under the corporate slogan “Internet for Everyone.” The GMO Group has been providing a full range of Internet-related services, chiefly in the following four areas:

(1) Internet Infrastructure business;
(2) Internet Finance business;
(3) Online Advertising & Media business; and
(4) Cryptoassets business.

These operations are not independent, but rather function as one, mutually and organically, and exert synergies that allow for the creation of greater corporate value. Internet-related technologies develop at an extremely rapid pace and, accordingly, industry standards and customer needs also change rapidly. GMO believes that, with respect to GMO’s management, it is indispensable for such management to understand: the specialized nature of its operations described above, management know-how based on a high degree of expertise related to its Internet-related services, as well as the relationships among the stakeholders, such as GMO’s personnel who have the techniques and skills necessary to cope with technical innovations, the entities of GMO group that carry out their business within the company group, united as one, organically, its trading partners and clients.

We believe that without such an understanding of GMO’s operations, it will become difficult to grasp the corporate value of GMO fully, and, it is extremely important that for purposes of our shareholders evaluating a Large-Scale Purchase by a Large-Scale Purchaser, our shareholders not only be given information by the Large-Scale Purchaser, but also the assessments and opinions of GMO’s Board of Directors—which fully understands the specialized nature of GMO’s operations—concerning the proposed Large-Scale Purchase.

Operating along the lines of this thinking, GMO’s Board of Directors believes that it will contribute to the common interests of GMO shareholders to draw up a set of rules concerning Large-Scale Purchases of GMO shares (hereinafter referred to as the “Large-Scale Purchase Rules”), to collect and provide information that is necessary and sufficient for our shareholders to assess the Large-Scale Purchase, and thereafter to formulate and disclose the opinion of the Board of Directors after assessing and reviewing such information. GMO’s Board of Directors will require any prospective Large-Scale Purchaser to comply with the Large-Scale Purchase Rules. In a case where a Large-Scale Purchaser does not comply with the Large-Scale Purchase Rules, or a case where it is judged that a Large-Scale Purchase carried out pursuant to the Large-Scale Purchase Rules would have the effect of seriously harming the common interests of GMO shareholders, GMO’s Board of Directors will be in a position to take certain countermeasures that it judges to be appropriate at that point.

The effective period of the Policy shall be until the close of the initial GMO’s Board of Directors’ meeting, held after the Annual General Shareholders Meeting for the business year to which the date of the GMO’s Board of Directors’ meeting that decided to continue the Policy belongs.
GMO’s articles of incorporation stipulate that Directors’ term of office shall continue until the end of the Annual General Shareholders Meeting relating to the final accounting period ending within one year from the time of their election. Continuation, revision, or abolition of the Policy is determined at a meeting of the Board of Directors, which is comprised of the Directors who are elected by GMO shareholders at the Annual General Shareholders Meeting every year.

GMO’s Board of Directors will continue to revise the Policy if necessary in order to maintain and increase the common interests of GMO shareholders and GMO’s corporate value. We will notify GMO shareholders promptly of changes to the Policy.

The ratio of the number of shares owned by Masatoshi Kumagai Office, Inc., the largest shareholder of GMO, is 31.54% as of December 31, 2019. The ratio of the number of shares owned by Masatoshi Kumagai, one of our large shareholders, is 10.11% as of that the same date. These shareholders are building a good relationship with GMO as stable shareholders. As of now, they are not subject to the Policy. However, there are no contracts, etc., for these shareholders to continue to hold the GMO shares, so the possibility cannot be denied that the ratio of the number of shares owned by these shareholders may decline and the liquidity of GMO shares may increase in the future due to circumstances relating to these shareholders or GMO’s capital policy, etc. There are no other significant large shareholders, and GMO shares are widely distributed and held by institutional investors, financial institutions, individuals, etc. We believe that the Policy is necessary because a Large-Scale Purchase may occur in the future that could significantly impair the common interests of GMO shareholders and GMO’s corporate value.

2.Outline of the Large-Scale Purchase Rules

The Large-Scale Purchase Rules require that before carrying out a Large-Scale Purchase, a Large-Scale Purchaser provide necessary and sufficient information to GMO’s Board of Directors, and that a Large-Scale Purchaser be permitted to commence a Large-Scale Purchase only after a period that has been set aside for GMO’s Board of Directors to assess and evaluate the Large-Scale Purchase based on the information above. The outline of the Large-Scale Purchase Rules is as described below.

（1）The Providing of Information

Before commencing with a Large-Scale Purchase, a Large-Scale Purchaser will be required to provide the Board of Directors with necessary and sufficient information to allow GMO shareholders to judge the Large-Scale Purchase, and to allow the Board of Directors to assess and evaluate the Large-Scale Purchase (hereinafter referred to as the “Large-Scale Purchase Information”).

Because the details of the Large-Scale Purchase Information may vary according to the scope and format of each Large-Scale Purchase, GMO’s Board of Directors will first require a Large-Scale Purchaser to submit to GMO a letter of intent to conduct a Large-Scale Purchase in compliance with the Large-Scale Purchase Rules. The letter shall include the following:

1) The name and address of the Large-Scale Purchaser
2) The governing law of the incorporation of the Large-Scale Purchaser
3) The name of the representative of the Large-Scale Purchaser
4) Contact details in Japan for the Large-Scale Purchaser
5) An outline of the proposed Large-Scale Purchase
6) An affirmation of intent to comply with the Large-Scale Purchase Rules

Within five business days after the receipt of the letter of intent (with the first day not being counted) that includes all of the items enumerated in items 1) through 6), GMO will deliver to the Large-Scale Purchaser a list of the Large-Scale Purchase Information to be initially provided by the Large-Scale Purchaser. If the information that has been provided initially is judged to be insufficient to serve as Large-Scale Purchase Information, GMO may require the submission of additional information. Irrespective of the scope and format of the Large-Scale Purchase that is being contemplated, the Large-Scale Purchase Information must include the following:

1) An outline of the Large-Scale Purchaser and its group
2) The purposes, methods, and conditions of the Large-Scale Purchase
3) An indication as to whether the Large-Scale Purchaser has been communicating with third parties with respect to the Large-Scale purchase and, if such communications have been taking place, their content
4) The basis for determining the purchase price and the funds for the purchase
5) An outline of the party or parties that will be providing the funds for the purchase to the Large-Scale Purchaser, including the parties’ names and other defining characteristics
6) Management policies and operating plans for GMO or the GMO group that the Large-Scale Purchaser intends to adopt after completing the Large-Scale Purchase
7) The measures that the Large-Scale Purchaser intends to adopt after completing the Large-Scale Purchase for sustaining stable increases in the corporate value of GMO and the GMO group, and the basis of such measures increasing the corporate value of GMO and the GMO group
8) Changes, if any, that will be made after the Large-Scale Purchase with respect to the relationships between the stakeholders, including staff, trading partners, clients, local society, and GMO and the GMO group.

GMO’s Board of Directors will disclose all or any part of the fact that the proposal for a Large-Scale Purchase has been made and the Large-Scale Purchase Information provided to GMO’s Board of Directors, if such disclosure is considered necessary for GMO shareholders to make decisions.

（2）Assessment and evaluation on the part of GMO’s Board of Directors

GMO’s Board of Directors believes that after completion of the work to provide the Large-Scale Purchase Information, GMO’s Board of Directors should be granted a period of time to assess, evaluate, negotiate, form opinions, and draft alternatives (hereinafter referred to as the “Assessment Period”), the length of which will vary according to the level of difficulty of the assessment work. In the event of a purchase of all GMO share certificates and other securities to be conducted via a tender offer with cash-only consideration in yen, the Assessment Period shall be 60 days (with the first day not being counted); for all other Large-Scale Purchases, the Assessment Period shall be 90 days (with the first day not being counted). During the Assessment Period, GMO’s Board of Directors will thoroughly assess and evaluate the Large-Scale Purchase Information that has been provided, with advice from outside experts and other sources as appropriate, and will formulate and disclose its opinion with respect to the proposed Large-Scale Purchase. GMO’s Board of Directors may negotiate with the Large-Scale Purchaser to improve the terms of the Large-Scale Purchase, or offer alternative plans to GMO shareholders, as necessary.

The Large-Scale Purchase may commence only after the Assessment Period has elapsed.

3.Measures to be taken upon the occurrence of a Large-Scale Purchase

（1）Measures to be taken in the event of non-compliance with the Large-Scale Purchase Rules by a Large-Scale Purchaser

In the event a Large-Scale Purchaser does not comply with the Large-Scale Purchase Rules, GMO’s Board of Directors may, irrespective of the actual conditions of the proposed purchase, implement countermeasures to protect the common interests of GMO shareholders and GMO’s corporate value. Such countermeasures may include measures that the Board of Directors is permitted to take under the Companies Act of Japan or other laws and regulations, and GMO’s Articles of Incorporation (such countermeasures to be hereinafter referred to as “Countermeasures”). In principle, GMO’s Board of Directors will adopt the allotment of share options without contribution as Countermeasures; however, it may adopt any other measures that it deems appropriate at the time in question.

If GMO’s Board of Directors chooses allotment of share options without contribution as the Countermeasures, the allotment shall be conducted according to the outline listed in “Summary of the Share Options.” If GMO’s Board of Directors chooses allotment of share options without contribution, it may determine the exercise period and the exercise conditions after considering their effectiveness as a Countermeasure, including conditions barring a Certain Group, including the Large-Scale Purchaser, from exercising the share options.

Summary of the Share Options.

1. Shareholders who are entitled to receive share options, and the conditions of the issuance of such share options:

One share option shall be granted without contribution to a shareholder for one share held by such shareholder (however, excluding common shares held by GMO), whose name is entered of record in the shareholder register as of the allotment day to be specified by GMO’s Board of Directors.

2. Type and number of shares to be acquired upon exercise of the share options:

The type of shares to be acquired upon exercise of share options shall be common shares of GMO, and the number of shares to be acquired upon the exercise of one share option shall be one share. However, if GMO conducts a share split or consolidation of shares, required adjustments shall be made.

3. Total number of share options to be allotted:

The total number of share options to be allotted shall be determined by GMO’s Board of Directors, and the upper limit shall be no more than 130 million. In some cases including the case where a Large-Scale Purchaser purchases GMO shares in stages, GMO’s Board of Directors may allot share options more than once, to the extent that the total number of share options to be issued shall not exceed 130 million.

4. Content and amount of assets to be contributed upon exercise of a share option:

The assets to be contributed upon exercise of a share option shall be cash, and the amount of the assets to be contributed upon exercise of each of the share options shall be one Japanese yen or more, as determined by GMO’s Board of Directors.

5. Restrictions on transfer of share options:

Share options may be transferred only with the approval of GMO’s Board of Directors.

6. Exercise period and other conditions of share options:

The exercise period, conditions of exercise (including provisions barring a Certain Group that includes Large-Scale Purchasers from exercising the share options), acquisition terms, and other necessary matters relating to the share options shall be determined separately by GMO’s Board of Directors. With respect to the acquisition terms, GMO may incorporate a provision stipulating that GMO shall acquire the share options of persons other than those who are not allowed to exercise the share options due to the conditions of exercise, and may grant common shares of GMO in such number as is determined separately by GMO’s Board of Directors in exchange for one share option, and that if GMO’s Board of Directors acknowledge that such persons, other than those who belong to a Certain Group, exist among those who own the share options after such acquisition, GMO may acquire the share options owned by such persons, and grant common shares of GMO in such number as is determined separately by GMO’s Board of Directors in exchange for one share option, and may repeat this process.

（2）Measures to be taken in the event of compliance with the Large-Scale Purchase Rules by a Large-Scale Purchaser

In principle, should a Large-Scale Purchaser comply with the Large-Scale Purchase Rules, GMO’s Board of Directors will not implement Countermeasures, even if GMO’s Board of Directors is opposed to the proposed Large-Scale Purchase. However, this does not eliminate the possibility that GMO’s Board of Directors may choose to carry out acts such as expressing its opposition to the proposed Large-Scale Purchase, proposing alternative plans, or persuading GMO shareholders not to approve the Large-Scale Purchase. GMO shareholders will determine whether to accept a Large-Scale Purchase that has been proposed by a Large-Scale Purchaser after considering factors such as the conditions of the purchase, the opinions of GMO’s Board of Directors with respect to the purchase, and alternative plans that may have been proposed by GMO’s Board of Directors.

However, even if the Large-Scale Purchase Rules are complied with, if GMO’s Board of Directors judges that the proposed Large-Scale Purchase would have the effect of being severely harmful to the common interests of GMO shareholders and GMO’s corporate value, GMO’s Board of Directors may choose to implement Countermeasures to protect the interests of GMO shareholders. (Specifics of the Countermeasures that may be taken are enumerated in the aforementioned 3 (1) of this document.) If the proposed Large-Scale Purchase is judged to qualify under any of the patterns that are enumerated in “Situations Under Which It Will Be Judged That the Common Interests of GMO Shareholders Will Be Severely Harmed,” in principle the purchase will be deemed severely harmful to the common interests of GMO shareholders and GMO’s corporate value.

Situations Under Which It Will Be Judged That the Common Interests of GMO Shareholders Will Be Severely Harmed

（1）: Situations wherein it is judged that the Large-Scale Purchaser has no real intent to participate in the management of GMO, and purchases GMO shares for the purpose of pushing up the share price and thereafter having parties related to GMO buy back the shares at a high price (cases involving a so-called “greenmailer”).

（2）: Situations wherein it is judged that the Large-Scale Purchaser purchases GMO shares for the purpose of temporarily controlling GMO’s management and thereafter transferring assets that belong to GMO and are crucial to the GMO’s business management to the Large-Scale Purchaser or its group companies, etc., including real estate, movables, intellectual property, know-how, corporate secrets, key trading partners and customers.

（3）: Situations wherein it is judged that the Large-Scale Purchaser purchases GMO shares planning to control GMO’s management and, thereafter, to divert GMO’s assets as collateral or repayment resources for debts that are owed by the Large-Scale Purchaser or its group companies, etc.

（4）: Situations wherein it is judged that the Large-Scale Purchaser purchases GMO shares for the purpose of temporarily controlling GMO’s management, thereby causing GMO to sell or otherwise dispose of high-priced assets that are not currently related to the business of GMO, such as real estate and securities, and making temporary large dividend payments using the proceeds from such assets, or selling GMO shares at high prices after the shares’ prices have been pushed up on account of the large dividend payments.

（5）: Situations wherein it is judged, on reasonable grounds, that the purchase terms proposed by the Large-Scale Purchaser (including but not limited to the amount and type of consideration for the shares, as well as the content, timing, methodology, legality, and feasibility) are seriously insufficient or inappropriate, when considered in light of GMO’s corporate value.

（6）: Situations wherein it is judged, on reasonable grounds, that the method for purchasing GMO shares proposed by the Large-Scale Purchaser is likely to restrict the judgment opportunities or options of shareholders and to virtually coerce them into selling their GMO shares through a coercive process, such as a two-tiered purchase (meaning a purchase, like a takeover bid, whereby the Large-Scale Purchaser does not offer to purchase all of the GMO shares, but sets unfavorable purchase conditions or does not set clear conditions for the second purchase). (However, a partial takeover bid will not automatically be construed to be a situation that falls into this category.)

（7）: Situations wherein it is judged, on reasonable grounds, that acquisition of control over GMO by the Large-Scale Purchaser, or the Large-Scale Purchaser’s policies for treatment of GMO’s clients, employees or other interested parties will likely cause GMO’s corporate value, including the interests of GMO shareholders, clients, employees, or other interested parties to be impaired, or will likely to prevent the protection and enhancement of GMO’s corporate value.

（8）: Situations wherein it is judged, on reasonable grounds, that the Large-Scale Purchaser is inappropriate as a controlling shareholder from the perspective of public order.

4.Procedures to be taken to ensure the reasonability and fairness of the Countermeasures

（1）: In the course of carrying out procedures based on the Large-Scale Purchase Rules, and under circumstances in which the Large-Scale Purchase Rules are complied with but it is nonetheless deemed appropriate to implement certain Countermeasures to protect the common interests of GMO shareholders and GMO’s corporate value, GMO’s Board of Directors will be tasked with making the final decisions on such matters. To ensure that the decisions undertaken by GMO’s Board of Directors are efficient and fair, GMO has decided to establish a Special Committee that is independent of GMO’s Board of Directors. The Special Committee shall have three or more, but no more than five, members, who shall be selected from among persons such as our external directors, lawyers, certified public accountants, certified public tax accountants, academics, persons well versed in investment banking activities, and persons with experience as corporate directors or executive directors who have served at companies other than the companies of GMO Group.

（2）

Should GMO’s Board of Directors decide to implement Countermeasures, the following procedures shall be followed to ensure the reasonability and fairness of such decision.

Before implementing the Countermeasures, GMO’s Board of Directors first will disclose the details of the Countermeasures that will be taken to the Special Committee, and will consult with the Special Committee concerning whether to implement the Countermeasures. The Special Committee will act on the consultation and issue a recommendation on whether to implement the Countermeasures. GMO’s Board of Directors will respect the recommendation of the Special Committee to the greatest extent possible when making a decision on whether to implement the Countermeasures.

Should GMO’s Board of Directors decide to implement the Countermeasures, it will do so only after first obtaining the approval of all Directors and Audit and Supervisory Committee Members, including the three External Directors. The decision of GMO’s Board of Director to implement the Countermeasures will also require the approval of all of the Directors. In addition to consulting with the Special Committee concerning whether to implement the Countermeasures, GMO’s Board of Directors will review the Large-Scale Purchaser, the details of the Large-Scale Purchase, and the impact of the Large-Scale Purchase on the common interests of GMO shareholders and GMO’s corporate value, seeking the advice of external experts and other sources, based on the Large-Scale Purchase Information provided by the Large-Scale Purchaser.

If GMO’s Board of Directors has reason to doubt that the Large-Scale Purchase Information provided by the Large-Scale Purchaser is adequate and complete, chooses to present an alternative plan to GMO shareholders, or otherwise deems it necessary, GMO’s Board of Directors may, at its own discretion, choose to consult with the Special Committee on matters other than whether to implement the Countermeasures described above. The Special Committee will act on the consultation, review the matter in question, and issue a recommendation to the Board of Directors.

（3）

Even if Countermeasures are implemented after carrying out the procedures described in (2) above,: 1) should the Large-Scale Purchaser choose to revoke or withdraw its proposed Large-Scale Purchase, or 2) should the circumstances that formed the basis for making the decision to implement the Countermeasures undergo changes, and if it may be objectively judged that maintaining the Countermeasures is no longer appropriate, from the standpoint of maintaining and increasing the common interests of GMO shareholders and GMO’s corporate value, GMO’s Board of Directors may, after indicating the circumstances in question, once again choose to consult with the Special Committee regarding whether or not to maintain the Countermeasures, and to examine whether to halt or repeal the Countermeasures that have been implemented, seeking the advice of external experts and other sources. The Special Committee will act on the consultation and issue a recommendation to GMO’s Board of Directors concerning whether or not to maintain the Countermeasures. The Board of Directors will respect the recommendation of the Special Committee to the greatest extent possible when making a decision on whether to maintain the Countermeasures.

After carrying out an assessment that takes into account the recommendation of the Special Committee, should GMO’s Board of Directors decide that maintaining the Countermeasures would not be appropriate from the standpoint of maintaining and increasing the common interests of GMO shareholders and GMO’s corporate value, it may decide to halt the Countermeasures, and may halt or revoke the Countermeasures that have been taken.

Should GMO’s Board of Directors choose to implement the allotment of share options without contribution, and thereafter choose to halt the allotment of share options without contribution on or after the ex-rights date (hereinafter referred to the "Ex-Rights Date") pertaining to the allotment day (as stipulated in “Summary of the Share Options.” Paragraph 1) or if GMO’s Board of Directors acquires the allotted share options without contributions to revoke the Countermeasures, the dilution of the value of the GMO shares will not occur, so those who have traded GMO shares assuming that the dilution of the value of the GMO shares will occur may suffer an unexpected loss resulting from fluctuations in share prices.

Summary of the Share Options.

1. Shareholders who are entitled to receive share options, and the conditions of the issuance of such share options:

One share option shall be granted without contribution to a shareholder for one share held by such shareholder (however, excluding common shares held by GMO), whose name is entered of record in the shareholder register as of the allotment day to be specified by GMO’s Board of Directors.

2. Type and number of shares to be acquired upon exercise of the share options:

The type of shares to be acquired upon exercise of share options shall be common shares of GMO, and the number of shares to be acquired upon the exercise of one share option shall be one share. However, if GMO conducts a share split or consolidation of shares, required adjustments shall be made.

3. Total number of share options to be allotted:

The total number of share options to be allotted shall be determined by GMO’s Board of Directors, and the upper limit shall be no more than 130 million. In some cases including the case where a Large-Scale Purchaser purchases GMO shares in stages, GMO’s Board of Directors may allot share options more than once, to the extent that the total number of share options to be issued shall not exceed 130 million.

4. Content and amount of assets to be contributed upon exercise of a share option:

The assets to be contributed upon exercise of a share option shall be cash, and the amount of the assets to be contributed upon exercise of each of the share options shall be one Japanese yen or more, as determined by GMO’s Board of Directors.

5. Restrictions on transfer of share options:

Share options may be transferred only with the approval of GMO’s Board of Directors.

6. Exercise period and other conditions of share options:

The exercise period, conditions of exercise (including provisions barring a Certain Group that includes Large-Scale Purchasers from exercising the share options), acquisition terms, and other necessary matters relating to the share options shall be determined separately by GMO’s Board of Directors. With respect to the acquisition terms, GMO may incorporate a provision stipulating that GMO shall acquire the share options of persons other than those who are not allowed to exercise the share options due to the conditions of exercise, and may grant common shares of GMO in such number as is determined separately by GMO’s Board of Directors in exchange for one share option, and that if GMO’s Board of Directors acknowledge that such persons, other than those who belong to a Certain Group, exist among those who own the share options after such acquisition, GMO may acquire the share options owned by such persons, and grant common shares of GMO in such number as is determined separately by GMO’s Board of Directors in exchange for one share option, and may repeat this process.

5.Reasonability of the Policy

（1）Fulfillment of the requirements of the Guidelines for Takeover Defense Measures

The Policy satisfies the three principles (the principle of securing and enhancing corporate value and the shareholders’ common interests, the principle of prior disclosure and shareholders’ consent, and the principle of ensuring necessity and suitability) set forth in the Guidelines Regarding Takeover Defense for the Purposes of Security and Enhancement of Corporate Value and Shareholders’ Common Interests published by the Ministry of Economy, Trade and Industry and the Ministry of Justice on May 27, 2005. The Policy also takes into account the substance of the State of Takeover Defenses Measures in Light of Recent Changes in the Environment, released by the Corporate Value Research Group on June 30, 2008.

（2）Contribution to the shareholders’ common interests

As mentioned in 1 above, we believe that collecting and providing shareholders with necessary and sufficient information for them to make an appropriate judgment about Large-Scale Purchases of shares on their own, and disclosing the results of the assessment and examination of such information by the Board of Directors, will contribute to the shareholders’ common interests.

（3）Solicitation of opinions from external experts by GMO’s Board of Directors

As mentioned in 4(2) above, GMO’s Board of Directors will seek the advice of external experts and other sources as appropriate and if necessary for assessment and discussions with respect to a Large-Scale Purchase. The solicitation of opinions from external experts is intended to ensure that the decisions undertaken by GMO’s Board of Directors are objective and efficient.

（4）Establishment of the Special Committee

As mentioned in 4(1) described above, to ensure that the decisions undertaken by GMO’s Board of Directors concerning whether to implement the Countermeasures are reasonable and fair, GMO has established a Special Committee that is independent of GMO’s Board of Directors.

（5）The Policy is neither a dead-hand takeover defense measure nor a slow-hand takeover defense measure

As mentioned in 1 above, GMO’s Board of Directors may abolish the Policy. The Policy, therefore, is not a dead-hand takeover defense measure (i.e., a takeover defense measure, the implementation of which cannot be stopped even upon the replacement of the majority of the members of the Board of Directors).

Also, because the Directors’ term of office continues until the end of the Annual General Shareholders Meeting relating to the final accounting period ending within one year from the time of their election, the Policy is not a slow-hand takeover defense measure (i.e., a takeover defense measure which takes longer to stop due to the fact that all members of the board of directors cannot be replaced at once).

6.The impact on shareholders and investors

（1）The impact on shareholders and investors when the Policy is introduced

At the time the Policy is introduced, no allotment of share options without contribution, or other Countermeasures, will be implemented. Accordingly, the Policy will have no direct or specific impact on the legal rights and economic benefits of GMO shares held by shareholders and investors at the time of its introduction.

（2）The impact on shareholders and investors when Countermeasures are implemented

GMO’ s Board of Directors may carry out Countermeasures to protect the common interests of GMO shareholders and GMO’s corporate value. If GMO’s Board of Directors decides to implement specific Countermeasures, timely and appropriate discloses will be made in accordance with applicable laws and the regulations of financial instruments exchanges.

Because the share options are planned to be provided with discriminatory conditions regarding Large-Scale Purchaser, for their exercise or acquisition, the implementation of Countermeasures may cause Large-Scale Purchaser to incur losses, either from a legal or economic perspective, upon such exercise or acquisition. However, even in such case, GMO does not expect that the policy will have direct or specific impact on the legal rights and economic benefits of GMO shares held by GMO shareholders and investors other than Large-Scale Purchaser.

（3）Procedures that GMO shareholders will be required to carry out in the event Countermeasures are implemented

If an allotment of share options without contribution is implemented as a Countermeasure, GMO shareholders who have not completed entry of a name change will be required to complete the entry of name change before a deadline that will be decided and publicly announced by GMO’s Board of Directors. Further, upon allotment of share options without contribution, GMO shareholders will be required to pay a certain amount of funds within a prescribed period of time in order to exercise the share options. Details of the procedures will be made known, in accordance with applicable laws and the regulations of financial instruments exchanges, when these procedures are actually required.

(Note 1) Large-Scale Purchase

"Large-Scale Purchase" refers to purchases of share certificates, etc., of GMO for the purpose of making the ratio of voting rights*4 of a Certain Group 20% or higher or purchases of share certificates, etc., of GMO that result in the ratio of voting rights of a Certain Group being 20% or higher (in either case, excluding purchases that GMO’s Board of Directors approves in advance).

(Note 2) Large-Scale Purchaser

"Large-Scale Purchaser" refers to a person who contemplates making a Large-Scale Purchase, as described in Note 1.

(Note 3) Certain Group

"Certain Group" refers to (1) 1) a holder (meaning a holder described in Article 27-23, Paragraph 1 of the Financial Instruments and Exchange Act (hereinafter, the “Act"), including those considered holders under Article 27-23, Paragraph 3 of the Act) of share certificates, etc. (meaning the share certificates, etc., described in Article 27-23, Paragraph 1 of the Act), of GMO and 2) its joint holder (meaning the joint holder described in Article 27-23, Paragraph 5 of the Act and including those who are deemed a joint holder under Paragraph 6 thereof), or (2) 1) a person who conducts a purchase, etc. (meaning a purchase, etc., described in Article 27-2, Paragraph 1 of the Act, including purchases conducted on an exchange financial instruments market), of share certificates, etc. (meaning the share certificates, etc., described in Article 27-2, Paragraph 1 of the Act), of GMO and 2) persons in a special relationship (meaning the persons in special relationship described in Article 27-2, Paragraph 7 of the Act) with such person.

(Note 4) Ratio of Voting Rights

"Ratio of Voting Rights", in connection with a pattern of specific purchase(s) by a Certain Group, refers to: 1) the holding ratio of share certificates, etc. (meaning the holding ratio of share certificates, etc., described in Article 27-23, Paragraph 4 of the Act; in this case, the number of share certificates, etc. (meaning the number of share certificates, etc., described in Article 27-23, Paragraph 4 of the Act), owned by a joint holder of the holder shall be considered for purposes of this calculation), owned by a holder, when a Certain Group qualifies as the holder of share certificates, etc. (meaning the share certificates, etc., described in Article 27-23, Paragraph 1 of the Act), of GMO or its joint holder; or 2) the sum of the share certificates, etc., holding rate (meaning the share certificates, etc., holding rate described in Article 27-2, Paragraph 8 of the Act) owned by a Large Scale Purchaser or persons in a special relationship therewith, when the Certain Group qualifies as a Large Scale Purchaser of share certificates, etc. (meaning share certificates, etc., described in Article 27-2, Paragraph 1 of the Act), of GMO or persons in a special relationship therewith. For purposes of calculating the holding ratio of share certificates, etc., or the share certificates, etc., holding rate, with regard to the total number of issued shares (meaning as described in Article 27-23, Paragraph 4 of the Act) and the total number of voting rights (meaning as described in Article 27-2, Paragraph 8 of the Act), reference may be made to the most recently submitted Annual Securities Report, Quarterly Securities Report, or Status Report on Purchase of Company’s Own Shares.

Established on March 13, 2006
Last revised on July 20, 2020

Related contents

Corporate Governance policy

Related file

Concerning GMO’s Policy Toward Large-Scale Purchases of GMO Shares PDF（190KB）