Financial Instruments and Exchange Act

The term "foreign securities services provider" as used in this Section means a person other than a financial instruments business operator, bank, cooperative financial institution, or financial institution specified by Cabinet Order, which is governed by foreign laws and regulations, and which engages in securities services in a foreign country.

A foreign securities services provider must not perform any act set forth in the items of Article 28, paragraph (10) with a person in Japan as the counterparty; provided, however, that this does not apply if a foreign securities services provider performs such an act with a financial instruments business operator engaged in securities services as the counterparty (excluding cases where the relevant foreign securities services provider conducts specified over-the-counter derivatives transactions, or intermediation, brokerage (excluding brokerage for clearing of securities, etc.), or agency therefor using the electronic data processing system used by the relevant foreign securities services provider for its business of over-the-counter derivatives transactions, etc.), or if it does so in a case that is specified by Cabinet Order.

Notwithstanding the provisions of Article 29 and the preceding Article, with the permission of the Prime Minister, a foreign securities services provider may participate in a wholesale underwriting contract (meaning a wholesale underwriting contract as prescribed in Article 21, paragraph (5); hereinafter the same applies in paragraph (1), item (vi), (f) of the following Article) and perform other acts specified by Cabinet Order in Japan, as a part of the underwriting of securities that it carries out (hereinafter referred to as the "underwriting activities" in this Section).

The Prime Minister may attach conditions to the permission referred to in the preceding paragraph.

The conditions referred to in the preceding paragraph must constitute the minimum level of conditions that are necessary for the public interest and the protection of investors.

If the Prime Minister decides to attach conditions pursuant to the provisions of paragraph (2), the Prime Minister must notify the applicant for permission of this in writing.

A person seeking to obtain the permission referred to in paragraph (1) of the preceding Article must submit a written application for permission to the Prime Minister, in which the person states the following particulars (if the applicant for permission is an individual, the particulars set forth in items (iii) and (iv) are excluded):

its trade name or name;

the location of its head office or principal office;

the amount of stated capital or the total amount of contributions;

the title and the name of the officer that has the authority of representation;

the name, and the address, residence, or other contact address in Japan, of the person that will perform the activities to which the application pertains;

the following particulars, as scheduled, of the securities that are connected with the activities to which the application pertains:

the issuer or holder;

the class;

the volume and amount;

the issuance or sales location;

the date of issuance or sale;

the other financial instruments business operator managing the underwriting (meaning the financial instruments business operator that holds discussions with the issuer or holder of the securities in order to fix the content of the wholesale underwriting contract, when a wholesale underwriting contract is being concluded); and

the amount that the applicant for permission seeks to underwrite.

The calculation of the amount of stated capital or the total amount of contributions as prescribed in item (iii) of the preceding paragraph is specified by Cabinet Order.

The following documents must accompany the written application for permission referred to in paragraph (1); provided, however, that if a document provided for in item (i) or (iv) has the same content as an accompanying document submitted within one year prior to the date on which the written application for permission provided for in paragraph (1) is submitted, a document stating the submission date of that document and indicating that reference should be made to that document may be used:

a document giving the business outline;

a document summarizing underwriting activities in the most recent one-year period;

a document in which the officer that has the authority of representation pledges that the applicant does not fall under the purview of Article 59-4, paragraph (1), item (i) or (ii), and that no officer falls under any of the categories in Article 29-4, paragraph (1), item (ii), (a) through (i) (if the applicant for permission is an individual, a document in which the individual pledges that the relevant individual does not fall under the purview of Article 59-4, paragraph (1), item (i) or (ii) or under any of the categories in Article 29-4, paragraph (1), item (ii), (a) through (i)); and

the balance sheet and profit and loss statement for each business year ending in the most recent one-year period.

Before seeking to grant the permission referred to in Article 59, paragraph (1), the Prime Minister must examine whether there is compliance with the following criteria:

the applicant has been continuously engaged in the same type of business in a foreign country as the business for which it seeks to obtain permission, for a period longer than the period specified by Cabinet Order;

the applicant is a corporation whose stated capital or total contributions are not less than the amount specified by Cabinet Order as the amount necessary and appropriate in the public interest or for the protection of investors in light of the mode of business for which the applicant seeks to obtain permission; and

the net assets provided for in Article 29-4, paragraph (1), item (v), (b) are not less than the amount specified by Cabinet Order as provided for in the preceding item.

The Prime Minister must refuse permission if an applicant for permission falls under any of the following items, or if the written application for permission or an accompanying document contains a false statement or lacks a statement of a material fact:

the applicant is a person that has had the registration referred to in Article 29 rescinded pursuant to the provisions of Article 53, paragraph (3), has had the permission referred to in Article 59, paragraph (1) rescinded pursuant to the provisions of paragraph (1) of the following Article, has had the registration referred to in Article 66 rescinded pursuant to the provisions of Article 66-20, paragraph (1), has had the registration referred to in Article 66-27 rescinded pursuant to Article 66-42, paragraph (1), has had the registration referred to in Article 66-50 rescinded pursuant to Article 66-63, paragraph (1), has had the registration referred to in Article 66-71 rescinded pursuant to Article 66-85, paragraph (1), or has had the registration referred to in Article 12 of the Act on the Provision of Financial Services and the Development of the Accessible Environment Thereto (limited to the registration related to the type of securities, etc. intermediary business operations; hereinafter the same applies in this item) rescinded pursuant to the provisions of Article 38, paragraph (1) of that Act (excluding items (ii), (iii), and (v)); or a person that had a registration of the same kind as the registration referred to in Article 29, Article 66, Article 66-27, Article 66-50, or Article 66-71 or Article 12 of the Act on the Provision of Financial Services and the Development of the Accessible Environment Thereto obtained in the country where its head office is located (including permission or any other administrative disposition similar to such a registration) rescinded pursuant to a foreign law or regulation that is equivalent to this Act or the Act on the Provision of Financial Services and the Development of the Accessible Environment Thereto; and for whom five years have not passed since the day of the rescission;

the applicant has been sentenced to a fine (including an equivalent sentence under foreign laws and regulations) for violating the provisions of this Act, the Act on Investment Trusts and Investment Corporations, the Commodity Derivatives Transaction Act, the Act on Regulation of Commodity Investment, the Money Lending Business Act, the Act Regulating the Receipt of Contributions, the Receipt of Deposits, and Interest Rates, or the Act on the Provision of Financial Services and the Development of the Accessible Environment Thereto; or for violating the provisions of a foreign law or regulation that is equivalent to any of these Acts, and five years have not passed since the day on which the applicant finished serving the sentence or ceased to be subject to its enforcement; and

the applicant is a corporation that has a person falling under any of the persons set forth in Article 29-4, paragraph (1), item (ii), (a) through (i), as an officer (including a person that is found to have at least the same amount of authority as an officer over the corporation, irrespective of their title; hereinafter the same applies in paragraph (1), item (iii) of the following Article, Article 60-3, paragraph (1) and Article 60-8, paragraph (2)) or the domestic representative (meaning the representative in Japan of a foreign securities services provider prescribed in Article 817, paragraph (1) of the Companies Act; hereinafter the same applies in this Section).

Before seeking to refuse the permission referred to in Article 59, paragraph (1), the Prime Minister must notify the applicant for permission and have the relevant officials conduct a hearing regarding the applicant for permission.

Upon deciding to grant or not to grant the permission referred to in Article 59, paragraph (1), the Prime Minister must notify the applicant for permission of this in writing.

If a foreign securities services provider that has obtained the permission referred to in Article 59, paragraph (1) falls under any of the following items, the Prime Minister may rescind the permission:

the foreign securities services provider comes to fall under paragraph (1), item (i) or (ii) of the preceding Article;

the foreign securities services provider violates a law or regulation (including a foreign law or regulation) or a disposition by a government agency which is based on a law or regulation, or violates a condition attached to its permission or to the registration, etc. it has obtained in the state where its head office is located (meaning a registration of the same kind as the registration referred to in Article 29 (including permission or any other administrative disposition similar to such a registration); hereinafter the same applies in Article 60-3, paragraph (1), item (i), (b)), and rescinding its permission is found to be necessary and appropriate in the public interest or for the protection of investors; or

the officer or the domestic representative of the foreign securities services provider (or, if the foreign securities services provider is an individual, that individual) comes to fall under any of the categories of persons set forth in Article 29-4, paragraph (1), item (ii), (a) through (i), or has acted as set forth in the preceding item, and it is found to be likely that the activities subject to the permission will not be performed fairly.

Before seeking to rescind the permission referred to in Article 59, paragraph (1) pursuant to the provisions of the preceding paragraph, the Prime Minister must notify the foreign securities services provider of this in writing.

If the Prime Minister rescinds the permission referred to in Article 59, paragraph (1) pursuant to the provisions of paragraph (1), the Prime Minister must make a public notice of this, pursuant to the provisions of Cabinet Office Order.

The provisions of Article 36-3; Article 36-4, paragraph (1); Article 38 (limited to the part that involves items (i) through (iii) and (ix)); and Article 44-4, paragraph (1) apply mutatis mutandis to the underwriting activities of the foreign securities services provider that has obtained the permission referred to in Article 59, paragraph (1).