JAPAN Law and Practice Contributed by: Kunihiko Morishita, Masayuki Hashimoto and Koichi Miyamoto, Anderson Mori & Tomotsune
Therefore, for the purpose of this article, pri - vately placed investment funds are treated as alternative investment funds. 2.1.2 Common Process for Setting Up An investment trust is generally established by a trust agreement between an investment trust manager and a trustee. An investment trust man - ager must be a person registered as an invest - ment management business under the Financial Instruments and Exchange Act of Japan (FIEA) (“Registered Investment Manager”), and a trus - tee must be a trust company licensed under the Trust Business Act or a financial institution authorised to engage in trust business under the Act on Engagement in Trust Business by Finan - cial Institutions. Investment Funds Investment Trusts An investment trust must invest more than half of its assets in securities, derivatives, real estate, commodities and other assets specified by the regulation under the Investment Trusts Act (“Specified Assets”). An investment trust manager intending to enter into a trust agreement has to notify the regulator of the terms and conditions thereof in advance, and these must contain items such as the invest - ment objective, policy, restrictions, dividend policy, method of calculation of net asset value and procedures for the issuance and redemp - tion of units. Investment Corporations In order to incorporate an investment corpora - tion, promoters must prepare a certificate of incorporation, which must be executed by all of the promoters; the promoters must notify the regulator of their intention to that effect. At least one promoter must be a Registered Invest -
ment Manager or must have the experience and knowledge specified by the Investment Trusts Act. A certificate of incorporation must include the investment corporation’s: • purpose; • investment policy;
• types of assets; • dividend policy; • valuation method of assets; and • fees and charges.
As with an investment trust, an investment cor - poration must invest more than half of its assets in Specified Assets. Subscribers for shares must contribute capital in cash into an investment corporation at the time of incorporation in exchange for an issuance of new shares. The minimum contributed capital and the net asset value at the incorporation are JPY100 million and JPY50 million, respectively. An investment corporation is established upon the registration of its incorporation. In order to ensure that an investment corporation functions solely as an investment vehicle, the Investment Trusts Act prohibits it from engaging in business other than asset management and the hiring of employees. As such, an investment corporation must retain an asset management company, a custody company and an admin - istrative agent, and must delegate the relevant functions to them. An investment corporation must be registered by the regulator with the basic terms of its certificate of incorporation, the names of executive and supervisory directors, and the name of an asset management company before commencement of its operations.
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