The Japanese government has submitted to the Diet a bill of amendment to the Law Concerning the Securitization of Specified Assets by Special Purpose Companies (the SPC Law). The Bill is intended to further promote securitization of various assets by way of diversified schemes in Japan which are not possible under the present law. The following are the main points of the Bill:
- the registration and licence tax and the real property acquisition tax that are currently imposed on an SPC when it acquires real property subject to securitization (the specified assets) will be reduced;
- to assure the stability of the management of an SPC, shareholders' rights concerning election and dismissal of directors of the SPC will be restricted;
- at present, the specified assets that may be securitized by an SPC are limited to loans extended by financial institutions, nominative monetary credits, real estate and the beneficial interest of the trust holding such assets. The scope of specified assets will be enlarged to include general proprietary rights;
- the Asset Securitization Plan will be removed from the matters to be stated in the articles of incorporation; the Asset Securitization Plan will be required for submission to the relative administrative agency two weeks before the issuance of asset-backed securities;
- the minimum capital will be reduced from ¥3 million ($9,300) to ¥100,000.
- an SPC may issue convertible bonds and bonds with the pre-emptive rights of preferred shares;
- an SPC may borrow money for the purpose of acquiring further specified assets;
- an SPC may cancel preferred shares or distribute profits as a result of gains from the depreciation of specified assets;
- specified assets may be securitized by using a trust instead of an SPC; and
- the Bill introduces investment in real estate through Corporate Type Investment Trusts (a Japanese version of US REIT).
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