JAPAN Law and Practice Contributed by: Hiroaki Takahashi, Kaoru Sato, Kenji Miyagawa and Koji Kawamura, Anderson Mori & Tomotsune
gation, an order to correct illegal acts and an order to cease business. Compliance by a TMK with the SPC Act and other applicable laws is expected to be monitored by the government. Particular requirements apply to TMKs in speci - fied circumstances, such as: • a prohibition on the acquisition of certain assets by the TMK; • an amendment to the ALP is subject to certain limitations and procedures under the SPC Act, and in many cases the unanimous approval of interested parties is required; • lenders for “securitisation of assets” must be qualified institutional investors (QIIs); • securitised assets must, in principle, be specified at the outset, and the acquisition of additional assets is subject to strict limitations except for certain cases; • actual money transfer is required for the issu - ance of preferred shares and a certificate of preferred shares is required for their transfer; and • the management and disposition of the assets must be delegated to certain qualified persons. Accordingly, where a TMK is used as an SPC for securitisation, the above requirements and restrictions should be taken into account in the structuring of the transaction and the manage - ment of the TMK. Comparison between GKs, KKs (so-called “closed KK share transfers”, which are sub - ject to the approval of the board of directors or shareholders’ meeting) and TMKs may be sum - marised as follows. • Application of Corporate Reorganisation Act: (a) GK: no; (b) KK: yes; and
(c) TMK: no. • Bond issue: (a) GK, KK, TMK: applicable. • Required approval and other internal process for bond issue: (a) GK: representative members’ approval; (b) KK: directors’ (directors’ meeting) ap - proval; and (c) TMK: directors’ approval and preparation and filing of an ALP. • Taxation: (a) GK, KK: corporate taxation but profit dis - tribution for TK investments to be deduct - ible for corporate tax purposes; and (b) TMK: corporate taxation but pay-through treatment where profit distribution could be deducted as an expense for corporate tax purposes. • Mitigation on real estate taxation: (a) GK, KK: not available; and (b) TMK: available (see 7.1 Transfer Taxes ). • Registration tax on incorporation: (a) GK: JPY60,000; (b) KK: 0.7% of capital amount (JPY150,000 minimum); and (c) TMK: JPY30,000. • Public notice obligation on financial informa - tion: (a) GK: no; (b) KK: yes; and (c) TMK: yes. • Large company regulations: (a) GK: no; (b) KK: yes (where a KK’s capital is JPY500 million or more, or a KK’s total debt is JPY20 billion or more, the KK must ap - point an accounting auditor and a statu - tory auditor, and set up an internal control system); and (c) TMK: no. • Accounting auditor: (a) GK: not required;
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