Financial Instruments and Exchange Act

The term "specially permitted services for foreign investors, etc." as used in this Section means performing any of the following acts on a regular basis:

the act set forth in Article 2, paragraph (8), item (xv), of investing money (including anything specified by Cabinet Order as being similar to money; the same applies in this item and paragraph (9) of the following Article) that has been invested or contributed by a foreign investor, etc. that holds the right set forth in Article 2, paragraph (2), item (v) or (vi) (limited to right in the same business subject to investment (meaning a business subject to investment provided for in item (v) of that Article) in which foreign investors, etc. are the only holders of those rights (limited to foreign investors, etc. that do not fall under any of the following cases)) (limited to cases in which the invested or contributed money is money that has been mainly invested or contributed by non-residents (meaning the non-residents prescribed in Article 6, paragraph (1), item (vi) of the Foreign Exchange and Foreign Trade Act; the same applies in paragraph (9) of the following Article), and excluding the acts specified by Cabinet Order as being likely to compromise the protection of investors):

a special purpose company (meaning a special purpose company as defined in Article 2, paragraph (3) of the Act on Securitization of Assets) that issues asset backed securities (meaning asset backed securities as defined in paragraph (11) of that Article) which have been acquired by persons other than foreign investors, etc.;

the business operator or a person seeking to become a business operator in a silent partnership agreement (meaning a silent partnership agreement prescribed in Article 535 of the Commercial Code) that concerns the rights set forth in Article 2, paragraph (2), item (v) or (vi) and that has a person other than a foreign investor, etc. as a silent partner; and

a person that is specified by Cabinet Office Order as being equivalent to a person set forth in (a) or (b); and

the public offering or private placement related to rights set forth in Article 2, paragraph (2), item (v) or (vi) made to foreign investors, etc. that do not fall under any of (a) through (c) of the preceding item in connection with the person's act set forth in that item (limited to public offering or private placement specified by Cabinet Order as having little likelihood of persons that are not foreign investors, etc. acquire the relevant rights and excluding those specified by Cabinet Office Order as being likely to compromise the protection of investors).

The term "foreign investor, etc." as used in the preceding paragraph means one of the following persons:

a foreign corporation or an individual that has an address in a foreign country that satisfies the requirements specified by Cabinet Office Order in light of their knowledge and experience and the state of their assets;

a qualified institutional investor (including persons specified by Cabinet Office Order as being equivalent to them, and excluding the persons set forth in the preceding item); and

in addition to the persons set forth in the preceding two items, a person specified by Cabinet Order as being closely related to the person that performs each of the acts set forth in the items of the preceding paragraph.

Notwithstanding the provisions of Article 29, a person other than a financial instruments business operator and a financial institution prescribed in Article 33, paragraph (1) may engage in specially permitted services for foreign investors, etc. by notifying the Prime Minister of the following particulars pursuant to the provisions of Cabinet Office Order in advance; provided, however, that this does not apply if the person comes to fall under paragraph (3), item (ii) of the following Article:

the person's trade name or name;

if the person is a corporation, the amount of stated capital or total amount of contributions;

if the person is a corporation, the names of its officers;

if the person has an employee specified by Cabinet Order, the name of that employee;

the type of business (meaning the type of business related to the acts set forth in the items of paragraph (1) of the preceding Article);

the name and location of the person's principal business office or office (if it is a foreign corporation, including the principal business office or office in Japan);

the name and location of the business office or office for conducting specially permitted services for foreign investors, etc.;

if it entrusts investment management-related services, that fact, the trade name, name, or personal name of the entrustee and the content of the investment management-related services entrusted to that entrustee, and other particulars specified by Cabinet Office Order;

if the person engages in other business, the business type; and

other particulars specified by Cabinet Office Order.

The following documents must be attached to the notification under the provisions of the preceding paragraph:

if the person is a corporation, a document pledging that the person does not fall under paragraph (6), item (i) or (ii) (excluding (d)), the articles of incorporation (including anything equivalent to this), and the corporation's certificate of registered information (including equivalent to this);

if the person is an individual, a document pledging that the person does not fall under paragraph (6), item (i) or (iii); and

other documents specified by Cabinet Office Order.

In attaching the documents set forth in item (i) of the preceding paragraph to a notification, if the articles of incorporation have been prepared as electronic or magnetic records, electronic or magnetic records (limited to those specified by Cabinet Office Order) may be attached to the notification in lieu of written documents.

The Prime Minister must make available for public inspection the particulars that are set forth in the items of paragraph (1) related to a notifier of specially permitted services for foreign investors, etc. (meaning a person that has made a notification under the provisions of paragraph (1) and excluding a person that has made a notification under the provisions of paragraph (3) of the following Article to the effect that they fall under item (ii) of that paragraph; the same applies hereinafter) which are specified by Cabinet Office Order.

Notwithstanding the provisions of paragraph (1), a person that falls under any of the following items (excluding a financial instruments business operator, etc.) must not conduct specially permitted services for foreign investors, etc. (excluding the services conducted by a notifier of specially permitted services as specially permitted services for qualified institutional investors, etc.):

a person that falls under any of the following persons:

a person that falls under any of Article 29-4, paragraph (1), item (i), (a) through (c);

a person falling under any of the following:

a person found likely to cause specially permitted services for foreign investors, etc. to lose credibility, in light of the person's relationship with an organized crime group prescribed in Article 2, item (ii) of the Act on Prevention of Unjust Acts by Organized Crime Group Members or an organized crime group member prescribed in item (vi) of that Article, and other circumstances;

any other person that falls under the criteria specified by Cabinet Office Order as a person that does not have a personnel structure sufficient to conduct specially permitted services for foreign investors, etc. in an appropriate manner; or

a person specified by Cabinet Office Order as a person that is found not to have in place the necessary system for performing specially permitted services for foreign investors, etc. in an appropriate manner;

if the person is a corporation, a person that falls under any of the following persons:

a person that falls under Article 29-4, paragraph (1), item (ii);

a person that does not have a business office or office in Japan;

a foreign corporation that has not designated a domestic representative;

a foreign corporation that has not been given the assurance referred to in Article 189, paragraph (2), item (i) by the foreign regulatory authority for financial instruments prescribed in paragraph (1) of that Article in a foreign country where its principal business office or office, or its business office or office for conducting specially permitted services for foreign investors, etc. is located;

a person found not to have secured, for each of the specially permitted services for foreign investors, etc. subject to the notification, officers or employees who have sufficient knowledge and experience necessary for its execution; provided, however, that with regard to investment management-related services, in the case where the person making the notification entrusts those investment management-related services to an investment management-related services contractor (limited to a person that has obtained the registration referred to in Article 66-71 or the registration of a change referred to in Article 66-75, paragraph (4) for performing those investment management-related services), it is to be sufficient if the person has secured officers or employees with the ability to appropriately supervise that business;

if the person is an individual, a person that falls under any of the following persons:

a person that falls under Article 29-4, paragraph (1), item (iii), (b); or

an individual that has an address in a foreign country.

a person found not to have sufficient knowledge and experience necessary for the execution of each of the specially permitted services for foreign investors, etc. subject to the notification; provided, however, that with regard to investment management-related services, in the case where the person making the notification entrusts those investment management-related services to an investment management-related services contractor (limited to a person that has obtained the registration referred to in Article 66-71 or the registration of a change referred to in Article 66-75, paragraph (4) for performing those investment management-related services), it is to be sufficient if the person is one with the ability to appropriately supervise that business;

If a particular set forth in one of the items of paragraph (1) changes, a notifier of specially permitted services for foreign investors, etc. must notify the Prime Minister of this without delay.

If a notifier of specially permitted services for foreign investors, etc. conducts specially permitted services for foreign investors, etc., the notifier of specially permitted services for foreign investors, etc. is deemed to be a financial instruments business operator and the provisions of Section 1, Subsection 5, Article 35-3, Article 36-3, Article 37, Article 37-3, Article 37-4, Article 38 (limited to the part that involves items (i), (ii), and (ix)), Article 39 (excluding paragraphs (4) and (6)), Article 40, Article 40-3, Article 40-3-2, Article 42, Article 42-2, Article 42-4, Article 42-7, Article 43-6, and Article 45, and the provisions of Chapters VIII and VIII-2 related to these provisions apply.

If the right set forth in Article 2, paragraph (2), item (v) or (vi) connected with an act set forth in paragraph (1), item (i) of the preceding Article which a notifier of specially permitted services for foreign investors, etc. has commenced as specially permitted services for foreign investors, etc. no longer falls under the right prescribed in paragraph (1), item (i) of the preceding Article, or the money invested or contributed by foreign investors, etc. (meaning the foreign investors, etc. prescribed in paragraph (2) of the preceding Article) that hold that right no longer falls under the money that has been mainly invested or contributed by non-residents, the Prime Minister may order the notifier of specially permitted services for foreign investors, etc. to take the necessary measures during a fixed period of no longer than three months.

If the situation falls under the preceding paragraph, a notifier of specially permitted services for foreign investors, etc. must notify the Prime Minister of this without delay.

Specially permitted services for foreign investors, etc. that are conducted by a notifier of specially permitted services for foreign investors, etc. are deemed not to fall under specially permitted services for qualified institutional investors, etc.