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What is the typical scope of due diligence in your jurisdiction? Do sellers usually provide due diligence reports to prospective buyers? Can buyers usually rely on due diligence reports produced for the seller?

The typical scope of due diligence includes examinations of:

It is not necessarily common in Japan for a seller to conduct due diligence on itself, thus the provision of a seller due diligence report to prospective buyers is not customary. It also is not thought prudent for a buyer to rely on a due diligence report produced for the seller, and so it is common for a buyer to conduct their own due diligence with respect to a target.

Can a seller be liable for pre-contractual or misleading statements? Can any such liability be excluded by agreement between the parties?

A seller can be liable for pre-contractual or misleading statements, although this liability can be excluded in the definitive agreement.

What information is publicly available on private companies and their assets? What searches of such information might a buyer customarily carry out before entering into an agreement?

A company incorporated under the laws of Japan must register its fundamental information in its commercial registry; if any of these registered items change, an updated filing needs to be made. Items to be registered include:

In addition, real property, addresses, ownership, scale, and structure type (in case of a building or house) are also registered and this information is publicly available. Thus, if a target company owns real property, a buyer typically reviews the real property registry as part of their diligence.

Moreover, intellectual properties, namely trademarks, designs, patents, and utility models, can be registered with the Japan Patent Office if they satisfy criteria provided in the relevant laws of Japan. Information of these registrations is also publicly available and searchable online at a website managed by the National Centre for Industrial Property Information and Training. Copyright can be registered with the Agency for Cultural Affairs and registered copyright is searchable on the website for the Agency for Cultural Affairs.

Research of this nature is customarily conducted by a buyer before entering into a definitive agreement.

What impact might a buyer’s actual or deemed knowledge have on claims it may seek to bring against a seller relating to a transaction?

A decision rendered by the Tokyo District Court states that if a buyer has actual knowledge of a breach by the seller of representations and warranties or if a buyer is not aware of a breach because of their gross negligence, the seller is not liable for such breach. However, this precedent does not apply if both parties agree, and consequently buyers tend to seek a sand-bagging provision in the definitive agreement.

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