In the event you hope to launch, operate fund business, basically you need to fulfill many laws and regulations.
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You need to obtain permit of financial instruments business operator from finance bureau ( Zaimu kyoku ).
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However, if you business can satisfy necessary standards of ” Special Business Activities for Qualified Institutional Investors （ Tekikaku Kikan toshika tou Tokurei Gyomu = 適格機関投資等特例業務 ）”, you can collect investors and manage investment asset contributed by investors without such regulations.
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It is stipulated in financial instruments exchange act article 63 ( Kin yu shohin torihiki ho= 金融商品取引法 = FIEA ).
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If one of investors to your fund related business is qualified institutional investors ( 適格機関投資家 = tekikaku kikan toshika ) and the number of investors other than qualified institutional investors is 49 or less , you can operate fund business without registration of financial instrument business operator.
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( As for 49 : Even if you solicit 100 persons to your funds, the number of persons who conclude with your fund related business is 49 or less, you can apply for this article 63 of FIEA.
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These 49 or less investors should have enough knowledge, skill to invest in your fund business.
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Ordinary person can not become specified investors.
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In order that these investors have enough experience, they should have capacity to make reasonable decision in investment.
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Then, if investors are applied to one of below, you can solicit some persons or legal entities.
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1 Listed company
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2 Legal entity with capital amount or net amount of 50 million yen or more
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3 Related company to listed company
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4 Persons who have securities of 100 million yen or more and have account in securities company for more than one year.
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5 Related persons of your business
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( Your colleagues, employee ).
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6 Related company or subsidy of legal entity with capital amount or net amount of 50 million yen or more.
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7 Specific purpose company
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8 Foreign company ( there is not regulation related to capital amount ).
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9 Legal entities who have securities of 100 million yen or more.
In the case of article 63, you need to provide pre-contract document ( Keiyaku teiketsumae shomen ) to your investors.
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If you can apply for this articles 63, you can make public offering ( Kobo = 公募 ) and private offering ( shibo = 私募 ) and investment management of asset contributed by your investors ( in this asset, ownership of real estate is not included ).
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Requirements to become qualified institutional investors are stipulated in cabinet order article 10.
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For example, legal entity who has securities of 1,000,000,000 yen or more and submitted paper to finance bureau in advance.
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When two months has passed since submission, it can become qualified institutional investors.
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Valid period of such submission is for 2 years.
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As for article 63, paragraph 1.
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In the case investors of your funds is qualified institutional investor named Q KK and general investor named Mr.G.
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If Mr. G solicits general investors to your funds , your funds can not be included in this Special Business Activities for Qualified Institutional Investors （ Tekikaku Kikan toshika tou Tokurei Gyomu = 適格機関投資等特例業務 .
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If Mr.G ‘s activity was permitted, you could collect investors of more than 49 person without regulation.
No one will register as financial instruments business operator.
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When you start fund related business based on this article 63, you need submit this notification ( not permit ) before you solicit investors.
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According to article 63, your funds can not invest in real estate.
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When you submit this notification to financial bureau ( zaimukyoku ), registration tax is not required.
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Different from financial instrument business operator type 2, skill and experience of manager ( Kanrisha ) and operator ( Un yo sha ) are not required.
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Shares of qualified institutional investor can not be transferred to general investors.
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If it transferred its shares to general investors, article 63 is not applicable to your funds.
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In that case you need to find next qualified institutional investor within three months.
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So, in contract paper, it should be stipulated that ” Shares of qualified institutional investor can not be transferred to general investors.”
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And Mr. G can not transfer a part of his/her shares to other general investors.
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Difference between Public offering ( Kobo = 公募 ) and private offering ( shibo = 私募 ) .
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In the case you solicit prospective investors, if the number of such investors are 50 or more during six months, even if the number of prospective investors who actually invested in your funds is only one, your activity is regarded as ” public offering “.
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In the case you solicit prospective investors, if the number of such investors are 49 or less during six months, even if the number of investors who actually invested in your funds is 499, your activity is regarded as ” private offering “.
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In this ” offering ” means that you make offer to prospective investors to contribute to your funds.
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As for Secondary distribution ( Uridashi = 売出 ).
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In the case your funds made private offering and Mr. S invested on it.
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If Mr. S distributed his shares to other 50 persons , his engagement is called Secondary distribution ( Uridashi = 売出 ).
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It is similar to public offering.
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Then, depending on situation, some regulations are applicable.
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As for disqualification ( Kekkaku jiyu = 欠格事由 )
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In the case a person ( “Taro” ) was a director of a company ( F inc. ) that operated financial instruments busines.
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Then if F inc. was prohibited from its business by authority, Taro can not assume director of other company that operates financial business for 5 years.
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It means Taro is applied to disqualification for 5 years.
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In the case you operate fund business of article 63, you need to submit business report to finance bureau ( Zaimukyoku = 財務局) within three months after end of each business year ( if you do not fulfill this obligation, you are sentenced to imprisonment, fine ).
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And matters those are indicated in business report and necessary to protect investors should be publicized in your office or website within four months after end of each business year ( if you do not fulfill this obligation, you are sentenced to imprisonment, fine ).
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In the case you have engaged in fund business without submitting this notification of article 63 or submitted this notification based on fake content, you are sentenced to 5 years of imprisonment or / and fine of 5 million yen or less.
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