JAPAN Law and Practice Contributed by: Eriko Ozawa, Satoru Hasumoto, Takahiro Sato and Fuyuki Uchitsu, Mori Hamada & Matsumoto
ment Corporation Law, which is set up to acquire real estate assets (whether actual real properties or TBIs). Similar to a TMK, a J-REIT can be eli - gible for special favourable tax treatment that is not available to a KK or a GK, but it is subject to various regulatory requirements and restric - tions under the Investment Trust and Investment Corporation Law. A J-REIT’s equity is issued in the form of invest - ment units, and the investment units of a J-REIT can be 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. On the other hand, units of non-listed J-REITs are usually offered and held only by certain types of institu - tional investors due to securities regulation and tax considerations. 5.4 Minimum Capital Requirement There are no minimum capital requirements on KKs, GKs and TMKs, whereas J-REITs have a minimum equity requirement of JPY100 million. 5.5 Applicable Governance Requirements Governance requirements vary, depending on the structure. GK-TK Structure The governance of a GK is simpler and more flexible than a KK, and the characteristics of the operations and governance of a GK are intended to be more similar to those of a limited partner - ship. In most cases, a GK is incorporated with one corporate entity being the sole managing member representing the GK, and such man -
aging member appoints an individual (operat - ing manager or shokumu shikkosha ) to act as its representative and perform the duties of a managing member. In a GK-TK structure, the GK is structured as a special purpose company that has no human resources. Thus, it is intended for the GK to retain an asset manager, who takes a lead role in the GK’s activities. Such asset manager must be a registered investment adviser or manager under the Financial Instruments and Exchange Law. TMK Structure A TMK must always have at least one direc - tor and one statutory auditor. In addition, one accounting auditor is usually required to be appointed, who must be either a certified public accountant or an auditing firm. Certain fundamental matters with respect to a TMK require the approval of its shareholders (in the form of a resolution). In general, only speci - fied shareholders have voting rights at share - holders’ meetings. The management and disposal of the real estate assets owned by the TMK must be subcontract - ed to a third party, which must be a trust compa - ny or certain other service provider experienced in asset management 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
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