Financial Reform in Japan Update #1: Investment Management Business for Qualified Investors Only

White & Case LLP

This Client Alert is the first in a series of alerts concerning amendments (the "Amendments") to the Financial Instruments and Exchange Law ("FIEL") of Japan passed by the Japanese Diet on May 17, 2011 and promulgated on May 25, 2011.The amendments were adopted expressly for the purpose of expanding the Japanese financial market and making it more attractive to international and domestic financial firms, and to create new business opportunities in Japan's financial sector.

This first alert concerns the expansion of asset management opportunities through the creation of an exception to the FIEL's provisions regarding the investment management business registration that will facilitate a new business model for investment managers who focus only on "Qualified Investors", ("Qualified Investor Investment Management Business").

Under the Amendments, the registration requirements to conduct an investment management business will be relaxed for investment managers who obtain mandates only from "Qualified Investors" and who manage assets the total amount of which is less than an amount to be specified by regulation. Informal discussion with the Financial Services Agency of Japan("FSA") suggest that the upper limit will be somewhere between JPY 3 billion (US$37.5 million) and JPY 5 billion (US$62.5million), although a lower figure remains possible.

Please see full alert below for more information.

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