JAPAN Law and Practice Contributed by: Satoru Hasumoto, Takahiro Sato and Fuyuki Uchitsu, Mori Hamada
TMK Structure A TMK must always have at least one director and one statutory auditor. In addition, one accounting auditor must usually be appointed. This auditor must either be: • a certified public accountant; or • an auditing firm. Certain fundamental matters regarding a TMK require the approval of its shareholders (by resolution). In gen - eral, only specified shareholders have voting rights at shareholders’ meetings. The management and disposal of the real estate assets owned by the TMK must be subcontracted to a third party, which must be a trust company or certain other service provider experienced in asset manage - ment and permitted under the Asset Liquidation Law. In practice, there are two types of asset management, depending on whether the TMK acquires actual real properties or TBIs: • actual real properties: the TMK needs to retain an asset manager who is licensed to engage in a real estate transaction business under the Real Estate Transaction Business Law; or • TBIs: the trustee of a property trust is responsi - ble for the management and disposal of the real estate assets and the TMK needs to retain an asset manager who is a registered investment adviser or manager under the Financial Instruments and Exchange Law. J-REIT Structure A J-REIT must have at least one corporate officer and supervisory officers who outnumber the directors by at least one person. They must also have a board of officers and an accounting auditor, who must either be a certified public accountant or an auditing firm. The fundamental matters regarding a J-REIT are quite limited and require the approval of its unitholders (by resolution). Under the Investment Trust and Investment Corpora - tion Law, a J-REIT must retain:
listed and traded on a stock exchange. As of 1 March 2024, there were 58 publicly listed J-REITs in Japan. In general, the Foreign Exchange and Foreign Trade Law allows non-residents of Japan to acquire units of listed J-REITs from Japanese residents without any restriction. Units of non-listed J-REITs are usually offered and held only by certain types of institutional investors due to securities regulation and tax consid - erations. 5.4 Minimum Capital Requirement There are no minimum capital requirements for KKs, GKs and TMKs. However, J-REITs have a minimum equity requirement of JPY100 million. 5.5 Applicable Governance Requirements There are no minimum capital requirements for KKs, GKs and TMKs. However, J-REITs have a minimum equity requirement of JPY100 million. 5.6 Annual Entity Maintenance and Accounting Compliance The governance requirements vary, depending on the structure. GK-TK Structure The governance of a GK is simpler and more flex - ible than that of a KK, and the characteristics of the operations and governance of a GK are intended to be more similar to those of a limited partnership. In most cases, a GK is incorporated with one corporate entity serving as the sole managing member representing it and the managing member appoints an individual (operating manager or shokumu shikkosha ) to act as its representative and perform the duties of a manag - ing member. In a GK-TK structure, the GK is a special-purpose company with no human resources. It is therefore intended that the GK will retain an asset manager, who will take a lead role in the GK’s activities. The asset manager must be a registered investment advis - er or manager under the Financial Instruments and Exchange Law.
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