JAPAN Law and Practice Contributed by: Satoru Hasumoto, Takahiro Sato and Fuyuki Uchitsu, Mori Hamada & Matsumoto
5.5 Applicable Governance Requirements The governance requirements vary, depending
ed to a third party, which must be a trust compa - ny or certain other service provider experienced in asset management and permitted under the Asset Liquidation Law. In practice, there are two types of asset management, depending on whether the TMK acquires actual real properties or TBIs: • actual real properties: the TMK needs to retain an asset manager who is licensed to engage in a real estate transaction business under the Real Estate Transaction Business Law; or • TBIs: the trustee of a property trust is respon - sible for the management and disposal of the real estate assets and the TMK needs to retain an asset manager who is a registered investment adviser or manager under the Financial Instruments and Exchange Law. J-REIT Structure A J-REIT must have at least one corporate officer and supervisory officers who outnumber the directors by at least one person. They must also have a board of officers and an account - ing auditor, who must either be a certified public accountant or an auditing firm. The fundamental matters with respect to a J-REIT are quite limited and require the approval of its unitholders (in the form of a resolution). Under the Investment Trust and Investment Cor - poration Law, a J-REIT must retain: • an asset manager who is a registered invest - ment manager under the Financial Instru - ments and Exchange Law and a licensed real estate transaction business provider with a discretionary agency permit under the Real Estate Transaction Business Law; • an asset custodian; and
on the structure. GK-TK Structure
The governance of a GK is simpler and more flexible than a KK and the characteristics of the operations and governance of a GK are intended to be more similar to those of a limited partner - ship. In most cases, a GK is incorporated with one corporate entity being the sole managing member representing the GK and the managing member appoints an individual (operating man - ager or shokumu shikkosha ) to act as its repre - sentative and perform the duties of a managing member. In a GK-TK structure, the GK is structured as a special purpose company that has no human resources. It is therefore intended that the GK will retain an asset manager, who will take a lead role in the GK’s activities. The asset man - ager must be a registered investment adviser or manager under the Financial Instruments and A TMK must always have at least one direc - tor and one statutory auditor. In addition, one accounting auditor is usually required to be appointed. This auditor must either be a certi - fied public accountant or an auditing firm. Certain fundamental matters with respect to a TMK require the approval of its shareholders (in the form of a resolution). In general, only speci - fied shareholders have voting rights at share - holders’ meetings. Exchange Law. TMK Structure The management and disposal of the real estate assets owned by the TMK must be subcontract -
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