JAPAN Law and Practice Contributed by: Hiroaki Takahashi, Kaoru Sato, Kenji Miyagawa and Koji Kawamura, Anderson Mori & Tomotsune
ers) – holds a trust business licence under the Trust Business Act. • The concept of a security trustee was also introduced by the 2006 Trust Act Amend - ments. Before these amendments, security trustee structures were not allowed in Japan (as was the case in other continental law jurisdictions such as France and Germany) because it was not possible to separate the holders of security interests from the holders of secured claims. The security trust struc - ture is now permitted as a result of the 2006 Trust Act Amendments, but a security trustee is required to hold a trust business licence under the Trust Business Act. 4.11 Activities Avoided by SPEs or Other Securitisation Entities There are many activities that a securitisation vehicle should avoid, including money-lending business, financial instruments business, joint real estate venture business, trust business and real estate brokerage. How legal practitioners avoid engaging in such activities depends on the transactions (for exam - ple, see 4.1 Specific Disclosure Laws or Regu - lations ). The regulator will vary, depending on the law involved for each transaction, with the possibil - ity of criminal sanctions being imposed for any breach. 4.12 Participation of Government- Sponsored Entities Government-sponsored entities (GSEs) may par - ticipate in the securitisation market. Regulations applicable to each entity will vary, depending on the particular law applicable to that entity – eg, the Act on Development Bank of Japan, Inc, the Japan Finance Corporation Act, the Japan Bank
for International Co-operation Act and the Shoko Chukin Bank Limited Act. The Japan Housing Finance Agency has been playing an active role, similar to GSEs such as Fannie, Mae and Freddie, Mac in the USA, in providing low-cost finance for the public to purchase houses or for financial institutions extending housing loans by way of securitisation businesses. 4.13 Entities Investing in Securitisation There are various laws and regulations gener - ally regulating investments of financial products depending on the types of entities. However, there is no law specifically prohibiting or limit - ing investment in securitisation products by an entity. 4.14 Other Principal Laws and Regulations The principal laws and regulations which are not already mentioned include the following. • The Companies Act regulates the incorpora - tion, membership, management, financing, and other such matters in respect of GKs. • The Commercial Code also contains impor - tant provisions applicable to TKs in respect of the “GK-TK structure”. • The Act Concerning Liquidation of Assets is the primary legislation regulating TMKs. • The Act on Special Measures Concerning Taxation contains provisions on the special treatment of the taxable income of TMKs and deductible expenses in a GK-TK Structure. • The Trust Act regulates the creation of trusts, trust beneficial interests and management of trusts. • The Trust Business Act regulates applications for licences, and obligations of and require - ments applicable to trust banks as profes - sional trustees.
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