On December 1 2017, partial amendments to the Act on Specified Joint Real Estate Ventures (Amended Act) came into force. The Amended Act is aimed at making the specified joint real estate ventures system more accessible. The following is a brief summary of the new business categories established by the Amended Act.
The Amended Act established a new business category referred to as small specified joint real estate ventures. A small specified joint real estate venture is a business whose total investment falls under a specified amount, for example, JPY100 million ($908,000). Under the existing law, to conduct a specified joint real estate venture, it is necessary to obtain the approval of the competent ministers or prefectural governors, and the requirements for obtaining such approval may be strict for regional real estate business operators (for example, the capital requirement for such approval is JPY100 million). In light of this situation, the Amended Act established this category so that regional real estate business operators, and the like, could widely use the specified joint real estate venture system for business concerning the revitalisation and utilisation of vacant housing and shops, and so on. In accordance with this aim, the requirements for small specified joint real estate ventures were eased.
The new requirements are as follows. Firstly when a person intends to conduct a small specified joint real estate venture, it is necessary to be registered with the competent ministers or prefectural governors, but the approval of the competent ministers or prefectural governors is not required. Secondly, the requirements for such registration are also less strict than those for approval (for example, the capital requirement for such registration is JPY10 million).
The Amended Act also established a new category of business referred to as business limited to specially qualified investors, which is a business that only specially qualified investors (in other words, persons recognised as having particularly specialised knowledge of and experience in real estate investments, as defined in the Ordinance for Enforcement of the Act on Specified Joint Real Estate Ventures) are business partners (as defined in the Amended Act). The main aim of the establishment of this category is to make it possible to conduct business more promptly with investors who have particularly specialised knowledge and experience. Therefore, under the Amended Act, it is possible for a person who intends to conduct a business limited to specially qualified investors to commence that business solely by providing a notification, without the need for obtaining the competent minister's or prefectural governor's approval. Due to the establishment of this simple procedure, it is thought that some projects with specially qualified investors can be organised and commenced more quickly than before.
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