Key Points to Check in a Business Transfer Agreement for a VTuber Channel

The popularity of YouTubers, now a well-known phenomenon, has led to YouTube channels with many followers gaining significant financial value. VTuber channels are also gaining attention as assets with financial value. As a result, they can become targets for “business transfers” or “acquisitions”.

However, the history of business transfer contracts for VTuber channels is relatively short, and it is not fully recognized what points should be taken into account in these contracts.

Therefore, in this article, we will explain the points to be careful about when creating a business transfer contract for a VTuber channel.

What is a VTuber?

A VTuber, or Virtual YouTuber, refers to YouTubers who use 2D or 3D personalitys or avatars for their YouTube activities.

One of the most famous VTubers is “Kizuna AI”.

“Kizuna AI” began her activities as a VTuber at the end of 2016 and continues to be a popular VTuber to this day.

Why VTuber Channels are Considered Assets in Business Transfers

As previously mentioned, VTuber channels are recognized for their financial value.

Specifically, the more subscribers a channel has, the higher its financial value is considered to be.

Not limited to VTubers, the value of videos posted on YouTube lies in their being viewed. The more subscribers a channel has, the higher the likelihood of its videos being viewed. Establishing a VTuber channel and increasing the number of subscribers usually takes a significant amount of time. Therefore, VTuber channels that already have a substantial number of subscribers are recognized for their financial value.

Key Points to Consider When Drafting a Business Transfer Agreement

In the following, we will explain the key points to be careful of when drafting a business transfer agreement, providing specific clauses while taking into account the personalityistics of a VTuber channel.

Provisions Regarding the Transferred Assets in a Business Transfer

For VTuber channels, various property elements are recognized, such as rights related to the account, copyrights of already posted videos, and copyrights of personalitys and avatars. Therefore, it is necessary to clearly define the assets to be transferred in the business transfer agreement.

Specifically, it is possible to stipulate the following clauses.

Article ● (Transferred Assets)

1.     The contents of the assets to be transferred under this agreement shall be as follows (hereinafter referred to as “Transferred Assets”).
(1)  Copyrights of the subject personality (including the rights under Articles 27 and 28 of the Japanese Copyright Law), patent rights, utility model rights, trademark rights, publicity rights, and all other intellectual property rights (hereinafter simply referred to as “Intellectual Property Rights”).
(2)  All rights related to the YouTube channel (https://www.youtube.com/●●●/)
(3)   All rights related to the SNS account of the subject personality (Twitter: https://twitter.com/●●●, Instagram: https://www.instagram.com/●●●/)
(4)   In addition to the rights stipulated in item 1, all rights related to the subject personality that the party A owns
(5)  All goods and products related to the subject personality
2.     Party A and Party B confirm that there are no debts or credits between them other than those stipulated in this agreement.
3.     Party A shall transfer to Party B, in addition to the transferred assets, all information separately designated by Party B, such as business secrets, know-how, customer information, and business methods related to the subject VTuber channel, on the transfer date.

Clause on Transfer Price

In a business transfer contract, matters related to money can easily lead to disputes.

Therefore, it is important to clearly define the terms related to the transfer price in the transfer contract.

Specifically, you may consider stipulating clauses like the following:

Article ● (Transfer Price)
1.     The consideration for the transferred property (hereinafter referred to as the “transfer price”) shall be ● million yen (including tax).
2.     Party B shall pay the transfer price stipulated in the preceding paragraph to Party A by the method of bank transfer to the following account designated by Party A by the ●th month of the Reiwa ● year (Gregorian calendar year: 20XX). The bank transfer fee shall be borne by Party B.
　　　●● Bank　●● Branch
　　　Ordinary deposit account　Account number: ●●●●●●●
　　　Account holder: ●●●●
3.     After the conclusion of this contract, if Party B receives any money related to the personality in question, Party B shall pay the received money by the method of bank transfer to the account stipulated in the preceding paragraph within one week from the date of receipt. The bank transfer fee shall be borne by Party B.

Provisions Regarding the Method and Timing of Transfer of Transferred Assets

In the business transfer of a VTuber channel, as mentioned earlier, various assets are included in the transferred assets. Therefore, by clearly specifying the method and timing of the transfer of the transferred assets in the business transfer agreement, it is possible to avoid troubles.

Specifically, it is possible to stipulate the following clauses.

Article ● (Transfer of Transferred Assets)
1.     Party A shall commence the transfer of the transferred assets under Article ● after the conclusion of this agreement, and if procedures such as the establishment of opposing requirements for the transfer of the transferred assets are necessary, Party A shall take such procedures, and Party B shall cooperate with this.
2.     Party A shall complete the transfer of the transferred assets in the preceding paragraph and the procedures for the establishment of opposing requirements, etc., within 30 days after the conclusion of this agreement.
3.     All costs necessary in relation to the preceding two paragraphs shall be borne by Party A.

Provisions for Maintaining the Value of VTuber Channels

When transferring a VTuber channel, it is common for the transfer to be completed not on the contract signing date, but after a certain period following the contract signing.

Therefore, to maintain the value of the VTuber channel, the following provisions can be considered:

In the business transfer agreement for the VTuber channel, the transfer price is calculated based on the state of the channel at the time of contract signing. Therefore, it is necessary to maintain the value of the VTuber channel from the time of contract signing until the actual transfer of the property is completed.

Article ● (Operation of the VTuber Channel until the Transfer Date)
1.     Party A shall continue to manage and operate the VTuber channel in question with the care of a good manager, complying with all laws, rules, regulations, contracts, and other constraints applicable to this contract until the transfer date.
2.     Party A shall not engage in any actions that could potentially decrease the value of the VTuber channel in question until the transfer date.

Also, it is possible to stipulate a provision that allows for cancellation if the value of the VTuber channel has decreased from the time of the business transfer agreement signing, etc.

Article ● (Conditions for Acceptance and Cancellation)
1.     The acceptance of the VTuber channel in question by Party B is conditional upon all of the following items being satisfied on the transfer date:
(1)   Party A is not in violation of its obligations under this contract
(2)   No circumstances have occurred between the time of contract signing and the completion of the transfer that would significantly impact the value of the VTuber channel in question
2.     If the conditions in the preceding paragraph are not met and the violation cannot be corrected or the circumstances cannot be resolved, Party B may cancel this contract.
3.     If Party B suffers damage due to the conditions in paragraph 1 not being met, Party B may demand compensation for the damage suffered from Party A, along with the cancellation of this contract as stipulated in the preceding paragraph.

Non-Competition Clause

When considering the factors that influence the popularity of a VTuber channel, the personality or avatar comes to mind. However, the voice actor who provides the voice for the personality or avatar is also a crucial element.

If the popularity of a voice actor contributes to the popularity of a VTuber channel, there is a possibility that the value of the VTuber channel, which is the subject of the business transfer, may relatively decrease after the transfer if the voice actor operates another VTuber channel.

Therefore, it is conceivable to stipulate a non-competition obligation clause.

Specifically, it is possible to stipulate clauses as follows:

Article ● (Non-Competition Obligation)
1.     Party A shall not enter into any contract with the voice actor in question for the purpose of activities that may compete with the VTuber channel in question, such as contracts related to the operation of other VTuber channels, for two years after the conclusion of this contract.
2.     If Party A violates the previous paragraph, they shall pay Party B a penalty of ● million yen.

Clause on Applicable Law and Jurisdiction

In the case of transferring a VTuber channel, the internet can be used across borders, so it is conceivable that a business transfer contract may be concluded not only with a party in Japan but also with a party in a foreign country. Therefore, if a clause on applicable law and jurisdiction is not stipulated, problems may arise later on.

Therefore, it is conceivable to stipulate the following clauses:

Article ● (Applicable Law and Jurisdiction)
1.     Japanese law shall be applied to the interpretation and disputes related to this contract.
2.     The Tokyo District Court shall be the exclusive jurisdiction court of first instance for disputes arising in relation to this contract.

Summary: Legal Clauses On Vtuber Business Transfer Agreement

We have discussed the key points to consider when drafting a business transfer agreement for a VTuber channel.

As the transfer agreement for VTuber channels is a recent development, not many people have experience in creating such agreements. Furthermore, knowledge of IT and copyright is also required for these agreements. Therefore, we recommend consulting with a lawyer who has specialized knowledge in these areas.

Introduction to Our Firm’s Measures

Monolith Law Office is a legal office with high expertise in both IT, particularly the Internet, and law. In recent years, we have been handling many advisory cases for YouTubers and VTubers, who are becoming popular online. The need for legal checks in channel management and contract-related matters is increasing. At our firm, lawyers with specialized knowledge are taking measures.