LawFlash

Inquiries by the Japan Regulators to Filers under the Article 63 Exemption

October 02, 2013

The Kanto Local Finance Bureau is currently issuing inquiry notices to entities that have made a filing to operate under the “Exemption for Special Business Activities Directed at Qualified Institutional Investors” (the “Article 63 Exemption”) as set forth under Article 63 of Financial Instruments and Exchange Act of Japan (the “FIEA”).

The stated purpose of these inquiry notices is to confirm the name of the investment fund for which the filer under the Article 63 Exemption (the “Article 63 Filer”) is acting as the general partner and the name of the requisite Qualified Institutional Investor who has subscribed to the investment fund. Because of this purpose, only those Article 63 Filers that did not identify the name of the investment fund or Qualified Institutional Investor in their notification (the “Article 63 Notification”) as of July 31, 2013 were issued such inquiry notice.1

As part of its inquiry, the Kanto Local Finance Bureau requests that each Article 63 Filer submit a written reply setting forth the name of the investment fund and the name of the Qualified Institutional Investor. Where relevant the Article 63 Filer would also submit an amendment to its Article 63 Notification. In addition, where more than one month has passed since the date on which the Article 63 Filer should have been able to identify the investment fund or the name of the Qualified Institutional Investor, the Article 63 Filer is also required to submit an additional notification setting forth the reason for the delay in updating its Article 63 Notification.

Where either the investment fund or the Qualified Institutional Investor cannot yet be identified by the Article 63 Filer, in its written reply, the Article 63 Filer must provide a specific date by when such Article 63 Filer expects to be able to provide the requested information. If the Article 63 Filer is not able to identify the investment fund or the requisite Qualified Institutional Investor at such time, the Kanto Local Finance Bureau requests that the Article 63 Filer consider withdrawing its registration under the Article 63 Exemption.

It is our understanding that all recipients of the inquiry notice are required to submit a written reply to the Kanto Local Finance Bureau within one month of the date of the inquiry notice.

Lastly, related to the above, Article 63 Filers should be mindful that pursuant to the FIEA, each Article 63 Filer is required to submit an amendment notification to the Kanto Local Finance Bureau without delay2 in respect of a change to any of the information set forth in its Article 63 Notification.

The Investment Management Group of Bingham McCutchen Murase, Sakai Mimura Aizawa - Foreign Law Joint Enterprise welcomes the opportunity to provide any requested additional information or assistance to Article 63 Filers in responding to these inquiries from the Kanto Local Finance Bureau.

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Wells-Christopher
Fuminaga-Tomoko
Miyake-Akihito

1While not required previously, subsequent to April 1, 2012, filers under the Article 63 Exemption were required to list the name of the investment fund for which the filer is acting as the general partner and the name of the requisite Qualified Institutional Investor in their Article 63 Exemption notification filing.

2While there is no clear legal interpretation on the time period “without delay”, in relation to the Article 63 Notification, this has generally been held to mean “within one month”.

This article was originally published by Bingham McCutchen LLP.