JAPAN Law and Practice Contributed by: Hiroaki Takahashi, Kaoru Sato, Kenji Miyagawa and Koji Kawamura, Anderson Mori & Tomotsune
(b) KK: required if it is a large company; and (c) TMK: required if the total debt is JPY20 billion or more. • Statutory auditor: (a) GK: not required; (b) KK: required for a large company unless it is a corporation with committees; and (c) TMK: required. • Internal control system: (a) GK: not required; (b) KK: required for a large company; and (c) TMK: not required. • Transferability of shares: (a) GK: approval of other members is required, unless provided otherwise in the Articles of Incorporation; (b) KK: approval of the company is required; and (c) TMK: approval is required for the trans - fer of specified shares to non-members, whereas restrictions on the transfer of preferred shares are prohibited. Apart from corporate vehicles (ie, TMKs, GKs or KKs), trusts are also commonly used as an SPE for securitisation because they are legally assured bankruptcy remoteness under the Trust Act. Therefore, a trustee’s bankruptcy will not statutorily affect its trust assets. Also, trustees are subject to various requirements, including licensing requirements and fiduciary duties, and other regulatory requirements on their busi - nesses under the Trust Business Act and related regulations. Due to such requirements and regu - latory supervision by the FSA, the trust structure is generally regarded as stable and credible from the investors’ viewpoint. In addition, trusts are generally subject to “pass- through” taxation, whereby taxation at the trust level (“double taxation”) can be avoided. The trust is merely a “conduit” and is not a taxable
entity, and trust beneficiaries are deemed to hold the underlying trust assets for tax purposes. Furthermore, the trust structure and the terms of trust beneficial interests (TBIs) can be created flexibly under the trust agreement, as described in 1.2 Structures Relating to Financial Assets . 6.3 Transfer of Financial Assets A property title is in principle transferable and assignable under the laws of Japan, whether it is tangible or intangible and movable or immov - able. A transferee of a true sale that complies with the perfection requirements is completely pro - tected and entitled to keep the property, and to enforce the claim against the obligor and any third persons. Perfection procedures vary, depending on the type of asset to be transferred. With regard to claims and/or receivables, for per - fection against an obligor, a notice to or con - sent from the obligor is required. For perfection against third persons, including a trustee ( kan - zainin ), such a notice or consent must have a certified date stamp affixed at a notary public office, or be delivered by content-certified mail certifying the date of delivery of the notice or consent. Registration under the Act on Special Measures Concerning Claim Management and Collection Businesses would work as an alternative method of perfection against third persons. A loan secured by way of an assignment of a claim and/or receivable will require the same perfection requirements.
209 CHAMBERS.COM
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