On January 29, 2016, the amendments to the new regulations in relation to certain partnership-type funds in Japan, known as Special Exempted Business for Qualified Institutional Investors, etc. (SEB or Tekikaku Kikan Toushika Tou Tokurei Gyoumu) were approved at a cabinet meeting of the Japanese government.

The new rule for the SEB will be stringent. The amendments include transitional measures, under which entities utilizing the SEB before the effective date of the amendments will be required to submit certain documents and comply with certain disclosure and reporting obligations. The amendments will come into effect on March 1, 2016.

New Rule

Under the amendments, certain obligations and business conduct restrictions (such as the suitability doctrine) applicable to a registered financial instruments exchange business operator will also be applicable to entities under the SEB. Target investors will be limited to certain sophisticated investors. However, certain obligations and business conduct restrictions will not be applicable to activities in relation to professional investors (tokutei toushika), including qualified institutional investors.

Certain disclosure and filing obligations such as the filing of a business report with the Japanese government will be introduced. When filing the notification for the SEB, additional attachment documents such as certificates of residence and CVs of directors are introduced. The forms of these documents are in the Japanese language for reference of the Japan Financial Services Agency (JFSA) and are based on the Japanese legal system and on documents obtainable from Japanese government agencies. Thus, further consideration and practice may be required as to how foreign applicants should prepare such documents.

Under the new rule, it becomes necessary to appoint a “representative in Japan.” According to the JFSA, a “representative in Japan” is a point of contact for Japanese authorities and a lawyer or a Japanese law firm may act as a representative for the purpose of the SEB.

Impact and Transitional Measures

Any entity that files notification for the SEB on and after the amendments’ effectivity date on March 1, 2016, must use the new form of the notification and submit new attachment documents. Entities that filed the notification for the SEB before March 1, 2016, are required to submit new attachment documents and a new notification under the new rule by September 1, 2016.

Entities looking to utilize the SEB should pay attention to the scope of acceptable fund investors under the new rule, as well as business conduct restrictions.


Takeshi Nishida is a member of the Capital Markets group in the Firm’s Tokyo office. He regularly handles securities matters and has over ten years of professional legal experience in Japan.