JAPAN Law and Practice Contributed by: Satoru Hasumoto, Takahiro Sato and Fuyuki Uchitsu, Mori Hamada & Matsumoto
J-REIT Structure Please see 5.3 REITs .
ally, a licensed trust bank in Japan) for the ben - efit of the GK as the beneficiary. A TK is one of the forms of partnership available under the Commercial Code and is formed by an agreement between the GK as operator and a TK investor. Under the law, the funds contributed by the TK investor belong to the GK as operator and all acts of the TK business are carried out in the A tokutei mokuteki kaisha (TMK) structure involves a specified purpose company, which is a corporate entity specifically designed to acquire a specific asset (such as real estate assets) by issuing asset-backed securities under the Asset Liquidation Law. The most attractive feature of a TMK is that, by fulfilling certain requirements, it will be eligible for special favourable tax treatment that is not available to a KK or a GK. The imposition of vari - ous regulatory requirements and special restric - tions under the Asset Liquidation Law are the least attractive feature. name of the GK. TMK Structure In most cases, a TMK finances the acquisition of real estate assets (which can be actual real properties or TBIs) by issuing preferred shares and obtaining third-party debt. The TMK’s equity consists of “specified shares” and “preferred shares” . “Specified shares” are similar to ordinary voting shares of a KK. The amount of “specified shares” is nominal and is not supposed to be used for the acquisition of real estate assets. “Preferred shares” comprise mostly of the TMK’s equity. The third-party debt is usually obtained in the form of “specified bonds” or “specified loans” .
5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity Please see 5.1 Types of Entities Available to Investors to Hold Real Estate Assets . 5.3 REITs A J-REIT is a type of investment fund in corpo - rate form under the Investment Trust and Invest - ment Corporation Law, which is set up to acquire real estate assets (whether actual real properties or TBIs). Similar to a TMK, a J-REIT can be eli - gible for special favourable tax treatment that is not available to a KK or a GK, but it is subject to various regulatory requirements and restric - tions under the Investment Trust and Investment Corporation Law. A J-REIT’s equity is issued in the form of invest - ment units and the investment units of a J-REIT can be listed and traded on a stock exchange. As of 1 March 2024, there were 58 publicly listed J-REITs in Japan. In general, the Foreign Exchange and Foreign Trade Law allows non-residents of Japan to acquire units of listed J-REITs from Japanese residents without any restriction. Units of non- listed J-REITs are usually offered and held only by certain types of institutional investors due to securities regulation and tax considerations. 5.4 Minimum Capital Requirement There are no minimum capital requirements for KKs, GKs and TMKs. However, J-REITs have a minimum equity requirement of JPY100 million.
541 CHAMBERS.COM
Powered by FlippingBook