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This book serves as an introductory guide to the Financial Instruments and Exchange Act (hereinafter referred to as "FIEA") for students who have completed their studies in corporate law. Designed for undergraduate and graduate law students, it bridges the concepts of corporate law and FIEA, focusing on companies listed on the Tokyo Stock Exchange. By doing so, the book provides a seamless transition from the foundational principles of corporate law to the broader regulatory framework of FIEA.
 
#### The Relationship Between Corporate Law and FIEA
 
FIEA and corporate law are closely interconnected. While corporate law provides the general framework for company governance, FIEA serves as a specialized law focusing on the capital markets. Many aspects of corporate law overlap with FIEA, such as public tender offers, insider trading, and disclosure requirements for executive compensation. For instance, Article 201(5) of the Companies Act allows companies to forgo specific corporate notifications if disclosures under FIEA are made. Similarly, the obligation to appoint outside directors under Article 327-2 applies to companies required to submit securities reports under FIEA.
 
These examples highlight the interplay between the two laws, emphasizing that mastering corporate law in isolation is insufficient. A comprehensive understanding of corporate law necessitates familiarity with FIEA. However, it is crucial to note that FIEA extends beyond corporate governance to serve as the fundamental law governing Japan’s capital markets.
 
#### The Scope and Purpose of FIEA
 
FIEA regulates not only traditional fundraising mechanisms, such as stocks and bonds, but also derivatives and other financial instruments. Its scope extends beyond organized markets like the Tokyo Stock Exchange to include over-the-counter transactions. This broader focus underscores FIEA’s role as a fundamental law ensuring transparency, fairness, and investor protection within capital markets.
 
Unlike corporate law, which primarily addresses the internal management of companies, FIEA establishes rules for the functioning of markets and the relationships between market participants. By regulating disclosure, trading practices, and investor protection, FIEA ensures that capital markets operate efficiently and fairly. This framework is essential for maintaining trust in the financial system and fostering economic growth.
 
#### Academic and Practical Value of This Book
 
This book aims to provide readers with a foundational understanding of FIEA’s structure and principles. It focuses on presenting the core framework of FIEA without delving into exhaustive detail. Readers are encouraged to consult comprehensive commentaries and legal texts for in-depth analysis. By gaining a clear overview of FIEA through this book, readers will find it easier to explore specific rules and their applications in the future.
 
The book is particularly valuable for students who aspire to contribute to legal practice or academia, as it highlights FIEA’s significance in regulating Japan’s financial markets. By fostering a deep understanding of market regulations, the book equips readers to address complex legal and economic challenges in a globalized financial environment.
 

(Written by IIDA Hidefusa, Professor, Graduate Schools for Law and Politics / 2025)