JAPAN Law and Practice Contributed by: Eri Hirata, Takunori Kono, Naoki Matsumoto and Ikki Kawasaki, Nishimura & Asahi
of equity investment while complying with the voting requirements. The use of the Investment Facilitation Act Fund described in 2.2 Agriculture-Sector Finance for equity investment is also expected to be beneficial. Various subsidies are provided by national and local governments, and it is necessary to examine the requirements for each of these subsidy systems as and when appropriate. In this regard, the MAFF publishes and maintains an online “Reverse Look-up Encyclopedia” ( Gyakubiki Jiten ), which enables agricultural operators to search across all available government support programmes – including subsidies, loans, equity investments, tax incentives and best-practice case studies – based on their specific business needs and circumstances. This tool provides a practical starting point for identifying the financing and incentive options most relevant to a particular agribusiness project. 5.2 Export Financing Structures Agricultural, forestry and fisheries operators, etc, who engage in efforts to export agricultural, forestry and fishery products or food produced in Japan may prepare a project plan to rationalise, upgrade or oth- erwise improve the production, processing or distri- bution of agricultural, forestry and fishery products or food products produced in Japan, either indepen- dently or jointly, in order to expand the export of these products or foods (an “Export Business Plan”). They may submit the Export Business Plan to the MAFF for authorisation, pursuant to the Act on Facilitating the Export of Agricultural, Forestry, and Fishery Products and Food (the “Export Facilitation Act”). On 1 October 2022, the JFC established the Fund to Strengthen the Foundations for the Export of Agricul- ture, Forestry and Fisheries Products and Food for those engaged in exporting agricultural, forestry and fisheries products and foods produced in Japan in accordance with an approved Export Business Plan (“Approved Export Business Operators”). The lend- ing limit is equivalent to 80% of the amount borne by the borrower, and co-financing with private financial institutions is assumed.
The funds are to be implemented in accordance with the approved Export Business Plan under the Export Facilitation Act, and are to be used for: • manufacturing facilities, distribution facilities and equipment upgrades necessary for the export busi- ness of agriculture, forestry, fishery products and foods; • long-term working capital; or • investments in, or subleases to, overseas subsidi - aries, etc (limited to the use of the foregoing two items for sublease). The funds can thus be used to meet diverse needs. The loans have a maturity of 25 years or less, so the funds can accommodate large-scale investments. In order to promote exports, the JFC has a system by which letters of credit are issued to Approved Export Business Operators to guarantee the obligations of overseas affiliated financial institutions whose over- seas subsidiaries have overseas bases, in order to facilitate the smooth procurement of loans in local cur- rencies. When an Approved Export Business Opera- tor borrows funds from private institutions for export businesses (for example, for market development and test exports), it is also possible to obtain debt guarantees from the Organisation for Improvement of Food-Marketing Structures, which facilitates the pro- curement of funds. 5.3 Capital Market Instruments As described in 2.1 Agriculture-SectorPolicies and Planning Instruments , a Corporation Qualified to Own Cropland is required to be a privately held company. Moreover, debt financing in agribusiness is carried out primarily through loans, and corporate bonds are not used much, meaning that capital market activities in this sector are limited. 5.4 Investment Funds and Securitisation As described in 2.2 Agriculture-Sector Finance , agri- cultural land trusts are prohibited under the Cropland Act, and agricultural land may not be converted into beneficiary rights. The legality of converting the shares of a Corporation Qualified to Own Cropland into ben- eficial rights is controversial and indeed doubtful, in
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