What Is the Essence of Corporate System Reform in an Era of Risk Diversification? Why Economic Security Must Be Embedded in Corporate Management (Part 2)

The article outlines the new positioning of M&A guidelines for quantitatively assessing corporate value. The published key points and Q&A define corporate value as the sum of the discounted present values of future cash flows, and indicate that management decisions addressing economic security can affect future cash flows and discount rates.

It points out that a board of directors may be able to consider corporate value assessment alongside national security considerations. The guidelines present the view that a potential weakening of procurement networks or leakage of technical information resulting from an acquisition could be assessed as dis-synergies.

The government’s recommendation to discontinue the acquisition proposal for Makino Milling Machine Co., Ltd. under Article 27, paragraph 5 of the Foreign Exchange and Foreign Trade Act is positioned not as an example in which the failure to explain the decision-making process to shareholders is problematic because of the difficulty of quantification, but as an example showing that national security considerations and corporate value assessment can realistically coexist.