JAPAN Law and Practice Contributed by: Hiroaki Takahashi, Kaoru Sato, Kenji Miyagawa and Koji Kawamura, Anderson Mori & Tomotsune
4.3 Credit Risk Retention The FSA has published guidelines recommend - ing that an originator retains a part of the risks associated with the securitisation products. The guidelines also recommend checking whether the originator continues to retain a part of the risks and, if not, to review and analyse the involvement by the originator in the securitised assets and the quality of the securitised assets. Furthermore, an amendment to the FSA’s capi - tal adequacy regulations became effective in March 2019, under which banks are required to use three times (up to 1,250%) the risk-weight on their securitisation exposure unless the banks can confirm that the originators fulfil certain risk- retention criteria, such as the retention of 5% or more of the junior exposure, etc, or the origina - tion of underlying assets being not improperly conducted. 4.4 Periodic Reporting As far as laws and regulations relating specifi - cally to securitisation are concerned, there is no requirement for periodic reporting. However, requirements for periodic reporting may apply to the vehicle used for a securitisation transaction. As an example, in a case where a stock cor - poration, kabushiki kaisha or TMK – which is designed to be used as a special-purpose vehi - cle for a securitisation transaction under the Act on Securitisation of Assets – is used as a securitisation vehicle, a periodic disclosure of its financial statements may be required under the Companies Act and the SPC Act, respec - tively. For a TMK, there is a further requirement to submit business reports every business year. Separately from the vehicle used for a securitisa - tion, when the special provisions under the FIEA are applicable concerning specially permitted business of a qualified institutional investor, etc,
The basic form for disclosure for public offerings is the filing of a security registration statement ( yuka shoken todokede sho ) by the issuer pursu - ant to Article 5.1 of the FIEA. The security regis - tration statement will describe matters pertain - ing to the public offering, the trade name of the issuer, the financial condition of the issuer and the corporate group to which the issuer belongs. There is no filing requirement for private place - ments, but a financial instruments business operator who solicits the purchase of a financial instrument has to notify a prospective purchas - er of certain matters provided in the FIEA and deliver a document to the prospective purchaser explaining the details of the financial instrument being offered, among other requirements. For sales of financial products by way of a pri - vate placement (eg, those sold to sophisticated investors that satisfy the requirements for a private placement), filing by the issuer and, in some cases, explanation by a financial instru - ments business operator are not required, but the notification requirement applies. The principal penalty for violation of the filing requirement or obligation to deliver a document explaining details of the financial instrument is criminal imprisonment and/or a fine. For a vio - lation of the notification requirement, a minor administrative penalty will apply. If a financial instruments business operator violates any requirement under the FIEA, an administrative sanction will apply. 4.2 General Disclosure Laws or Regulations See 4.1 Specific Disclosure Laws or Regula - tions .
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