JAPAN Law and Practice Contributed by: Kunihiko Morishita, Masayuki Hashimoto and Koichi Miyamoto, Anderson Mori & Tomotsune
Foreign Investment Trust/Corporations The Investment Trusts Act defines a foreign investment trust/corporation as an investment fund established or incorporated outside Japan under the laws and regulations of a foreign juris - diction, which is similar to an investment trust/ corporation. Therefore, a close review of wheth - er an offshore investment fund is treated as a foreign investment trust/corporation under the Investment Trusts Act is required before intro - ducing it into Japan. A foreign investment trust/corporation must file a “notification” with the regulator before conduct - ing an offering (whether private placement or public offering) in Japan under the Investment Trusts Act, containing basic terms such as its investment objective, restrictions, dividend poli - cy, procedures of subscription and redemptions, and costs and expenses. No regulatory requirement is imposed on a manager, investment manager, asset manage - ment company or trustee in respect of a foreign investment trust/corporation. Collective Investment Schemes The establishment process and notification requirements for collective investment schemes are prescribed by the relevant laws governing such collective investment schemes. For exam - ple, an investment limited partnership formed pursuant to the LPAI becomes effective upon the execution of a partnership agreement by at least one general partner and one limited part - ner. When a partnership agreement takes effect, its business, its duration and the name of its general partner must be registered within two weeks. The general partner of an investment limited partnership under the LPAI must be a Registered
Investment Manager under the FIEA, unless an exemption from registration requirements is available. An offshore partnership established under a for - eign law can also be offered for private place - ment in Japan, although a general partner is required to be a Registered Investment Manager if any Japanese investor acquires and holds an interest in it, unless an exemption from registra - tion requirements is available. 2.1.3 Limited Liability Holders of units/shares in an investment trust/ corporation are liable only to the extent of the amount contributed by them. Liabilities of investors in collective investment schemes are determined by the relevant gov - erning law. For example, a general partner of an investment limited partnership formed pursuant to the LPAI is jointly and severally liable for the obligations of the partnership, while a limited partner thereof is liable for the partnership’s obligations only to the extent of its contribution of or commitment to contribute capital to the partnership. 2.1.4 Disclosure Requirements In contrast to publicly offered investment funds (please see 3.1.4 Disclosure Requirements ), the disclosure requirements for privately placed investment funds are limited. However, for a pri - vate placement intended for Professional Inves - tors only (“Professional Investors Placement”), certain information must be disclosed in accord - ance with the rules of the Japan Securities Dealers Association (JSDA – a self-regulatory organisation of securities firms, banks and other financial institutions operating in the securities business) (please see 2.3.6 Rules Concerning Marketing of Alternative Funds ).
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