The Japan regulator is requesting filers under the Article 63 Exemption to complete questionnaires regarding their funds.
On or around March 20, registrants that operate under “Special Business Activities for Qualified Institutional Investors” (Article 63 Filers), as permitted under Article 63 of the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended or supplemented from time to time, the FIEA), received a written request (the Notice) from the Kanto Local Finance Bureau (the KLFB) to complete a questionnaire regarding their activities (the Questionnaire).
Both the Notice and the Questionnaire are in English and in Japanese, and detailed instructions are included on how to complete the Questionnaire. It consists of 20 questions regarding the Article 63 Filer, including, but not limited to, information regarding
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the fund name;
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the form of the fund;
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the number of the Qualified Institutional Investors;
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the amount invested by Qualified Institutional Investors;
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the amount of assets managed;
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long and short positions held by the fund;
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the category of the fund (such as a hedge fund or fund of funds);
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the fund’s major investment targets; and
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whether any investors in the fund are individual investors.
While the KLFB may issue a public report setting forth the results of the Questionnaire on an aggregated basis, the KLFB will treat all specific information that each Article 63 Filer provides in the Questionnaire as confidential.
Although traditionally, only onshore Article 63 Filers have been requested to complete the Questionnaire, this appears to be the first time that the KLFB is requesting that offshore Article 63 Filers also complete it. The KLFB has not explained this apparent change in policy.
The KLFB has the regulatory authority to request Article 63 Filers to complete the Questionnaire under its general authority to request information with respect to Article 63 Filers pursuant to Article 63(7) of the FIEA. Moreover, the KLFB notes in the Notice that failure to complete the Questionnaire may result in an offending Article 63 Filer to be listed on the Financial Services Agency of Japan’s website as a “problematic” Article 63 Filer.
We recommend that all Article 63 Filers that receive the Notice comply with the KLFB’s request by completing the Questionnaire by the prescribed deadline of Monday, June 1, 2015.
