●   FAQ (Section 2 Definitions - Financial Instruments Business, Q16 and Q17) 

●   FAQ (Section 6 Financial Instruments Business Operators, etc. – Outline, Q1 to Q8) 

Note 1: For Type I Financial Instruments Business and Type II Financial Instruments Business, businesses related to asset management business are mainly provided and not all businesses are covered. For details, please refer to relevant provisions (Article 2(8), Article 28 of the Act). Businesses other than those listed above include, for example, businesses related to brokerage for clearing of securities (Type I and Type II Financial Instruments Business) and book-entry transfer of corporate bonds and other securities (Type I Financial Instruments Business). Among market derivatives business transactions, intermediation, brokerage, or agency of commodity-related market derivatives transactions is classified as Type I Financial Instruments Business and the market derivatives transactions related to items other than securities and commodities are classified as Type II Financial Instruments Business.

Note 2: Major securities that are classified as “Paragraph 1 Securities” (securities defined in Article 2, Paragraph 1 of the Act) and “Paragraph 2 Securities” (securities defined in Paragraph 2 of the same Article) are as follows:

*1: “Investment trust” refers to a trust investing in securities, rights to derivatives transactions, real estate, commodities and other specified assets (Specified Assets), which is established under the Investment Trust Act, and trusts similar thereto that are established overseas in accordance with the relevant foreign laws (foreign investment trusts) (Article 2(3) and (24) of the Investment Trust Act).

*2: “ "Electronically Recorded Transferable Rights" are the rights set forth in the items of Article 2(2) of the Financial Instruments and Exchange Act (but only if they are indicated on property value (limited to that which is recorded on an electronic device or any other object by electronic means) which can be transferred by using an electronic data processing system (excluding the cases that are specified Article 9-2(1) by Cabinet Office Order on Definitions (Article 2(3) of the FIEA))). (E.g. tokens (token rights) that are based on a distributed ledger technology such as block-chain)

●   Guidelines for the Financial Instruments and Exchange Act, etc. (Japanese only)

*3: “Interests in collective investment schemes” refer to rights based on various partnership contracts, membership rights of incorporated associations and other rights that allow investors to receive dividends of profits arising from business that is conducted using money invested or contributed by the investors (“invested businesses”) or distribution of assets pertaining to the said invested businesses, excluding the securities separately defined in Article 2(1) and (2) of the Act (such as beneficiary certificates of investment trusts, investment certificates of investment corporations) and other specified rights.  Typical interests in collective investment schemes are shares of partnership-type funds. For more details, see Article 2(2)(v) and (vi) of the Act.

●   To Those who Operate Fund-Related Businesses in Japan (Financial Services Agency)

●   FAQ (Section 2 Definitions - Interests in collective investment schemes (funds), Q5 to Q9) 

Note 3: Where an Investment Management Business Operator newly issues the shares of fund such as an investment trust, registered investment corporation and collective investment scheme (partnership-type fund) established and managed by itself (primary offering), the business operator may solicit investments from investors with registration for Type II Financial Instruments Business (Article 2(8)(vii) and Article 28(2)(i) of the Act, Article 196(2) of the Investment Trust Act). Even in the case of new issuance of fund (primary offering), however, where any other party (including distributor and person managing the fund under entrustment by the investment management company directly in charge of management of the fund) conducts solicitation (handling of public offering or private placement), registration for Type I Financial Instruments Business or Type II Financial Instruments Business is required depending on the type of securities for transactions. Also, in a case where a person conducts solicitation related to purchase and sale of the issued rights (secondary offering), registration for Type I Financial Instruments Business or Type II Financial Instruments Business is required.

●   FAQ (Section 2 Definitions - Financial Instruments Business, Q17) 

Note 4: Even in the case of managing an investment trust or partnership-type fund, if such management businesses are conducted under entrustment by a person who directly established the said investment trust or partnership-type fund (such as investment trust management company of an investment trust or unlimited liability partner of an investment limited partnership), it shall be classified as discretionary investment business and does not constitute investment trust management business or fund management business.

 

(2) Major exemptions from application for Financial Instruments Businesses

1) Exceptions pertaining to sales of securities by foreign securities service providers (Article 58-2 proviso of the Act, Article 17-3(i) and (ii) of the Order)

(a) (i) Purchase and sale, brokerage, solicitation and other securities-related businesses only with Financial Instruments Business Operators conducting securities-related businesses in Japan (Article 58-2 proviso of the Act); and (ii) purchase and sale, brokerage, solicitation and other specified securities-related businesses only with the government or banks, insurance companies, Investment Management Business Operators and other specified financial institutions, conducted from overseas regarding their own investment activities and investment management businesses (Article 17-3(i) of the Order)

(b) Without making solicitation,* (i) purchase and sale and brokerage of securities and other specified securities-related businesses conducted with customers in Japan as the counterparty thereto upon receiving orders from the customers (Article 17-3(ii)(a) of the Order); and (ii) purchase and sale of securities and other specified securities-related businesses conducted with customers in Japan as the counterparty thereto through the agency or intermediary service performed by a Type I Financial Instruments Business operator engaged in securities-related businesses (Article 17-3(ii)(b) of the Order)

* See X-1-2 of the Guidelines for Supervision for solicitation activities using internet by foreign securities service providers.

Note: When conducting investment solicitation (handling of a public offering or a private placement) for beneficiary certificates of a foreign investment trust or foreign investment securities issued by a foreign investment corporation in Japan, the issuer thereof is required to notify the competent authority of specified matters in advance (Article 58(1), Article 220(1) of the Investment Trust Act).

●   FAQ (Section 6 Financial Instruments Business Operators, etc. - Foreign Business Operators, Q57 and Q58)

●   FAQ (Section 6 Financial Instruments Business Operators, etc. - Foreign Business Operators, Q9) (Definition of securities-related business)
 

2) Exemptions pertaining to management/advisory businesses by foreign asset manager (Article 61 of the Act, Article 17-11 of the Order)

- For business scheme cases, see section 2 (2) 2) (i) ,　(ii),　(v),　(ix),　3), and 4) (i).

●   FAQ (Section 6 Financial Instruments Business Operators, etc. - Foreign Business Operators, Q57 and Q59)
 

3) Exemptions pertaining to businesses carried out under entrustment from a group company engaged in a Financial Instruments Business in a foreign country (Article 16(1)(ii) and (viii) of Cabinet Office Ordinance on Definitions)

(a) the person to conduct said business has been registered as a Financial Instruments Business Operator for the Investment Management Business;

(b) the business is intermediation, brokerage or agency for purchase and sale of securities or derivatives transactions that the affiliated foreign investment specialist conducts as its investment management; and

(c) The customers as counterparties of the intermediation, brokerage or agency consist of Financial Instruments Business Operators or Registered Financial Institutions (except in transactions conducted at financial instruments exchanges).
 

(a) Purchase and sale of securities or a derivatives transaction conducted under a contract in which it is provided that, upon obtaining consent from the affiliated foreign financial instruments business operator for purchase or sale as well as the issues of the securities, said financial instruments business operator may decide the volume and price

(b) Purchase and sale of securities or a derivatives transaction conducted under a discretionary trading contract with the affiliated foreign financial instruments business operator in which it is provided that the Financial Instruments Business Operator decides on purchase or sale of the securities and on the issues, volume and price in connection with a transaction on the account of the affiliated foreign financial instruments business operator, and with regard to which the Financial Instruments Business Operator has notified the competent authority of the specified matters in advance
 

4) Exemptions pertaining to businesses for management of foreign investment trusts (Article 16 (1) (ix)-2 of Cabinet Office Ordinance on Definitions)

5) Exemptions pertaining to management businesses of a partnership-type fund conducted by entrusting all of the investment authority to an Investment Management Business Operator or Registered Financial Institution (collectively, the “Investment Management Business Operator, etc.”) (Article 16(1)(x) of Cabinet Office Ordinance on Definitions)

(a) In an investment contract (such as partnership agreement), (i) a statement to the effect that all of the fund management authority is entrusted, and the trade name and name of said Investment Management Business Operator, etc., (ii) an outline of the discretionary investment contract, and (iii) the amount of remuneration to be paid under the discretionary investment contract, are specified.

(b) In the investment contract and discretionary investment contract, (i) that said Investment Management Business Operator, etc. will engage in the Investment Management Business for investors in a loyal manner, and (ii) that said Investment Management Business Operator, etc. will carry out Investment Management Business, etc. while paying the due care of a prudent manager for investors, are specified.

(d) The person engaging in investment management of the fund (self-management) manages the invested assets separately from its own property and other managed assets and said Investment Management Business Operator, etc. supervises such segregated management.

(e) The Investment Management Business Operator, etc. has notified the competent authority of the specified matters in advance (any change arising later in the notified matters also should be notified.)

- For business scheme cases, see section 2 (2) 2) (viii).
 

6) Exemptions pertaining to management businesses of a two-tiered fund based on a silent partnership for investments in beneficial interest in real property trust (Article 16(1)(xi) of Cabinet Office Ordinance on Definitions)

(a) Investors of the baby fund consist exclusively of a single fund under the silent partnership contract (mother fund), and the business operator of the mother fund is an Investment Management Business Operator or a notifier of Specially Permitted Business for Qualified Institutional Investors, etc.

(b) The business operator of the mother fund has notified the competent authority of the specified matters in advance (any change arising later in the notified matters also should be notified.)

- For business scheme cases, see section 2 (2) 2) (viii).
 

7) Exemptions pertaining to management business for a foreign-based partnership-type fund with a small number of domestic investors (Article 16(1)(xiii) of Cabinet Office Ordinance on Definitions)

* Please refer to (Reference 1) (3) “Classification of Investors”for the scope of “Qualified Institutional Investors.”

●   FAQ (Section 6 Financial Instruments Business Operators, etc. - Foreign Business Operators, Q59)
 

8) Exemptions pertaining to investment solicitation and management businesses for a partnership-type fund for professionals (Specially Permitted Business for Qualified Institutional Investors, etc.) (Article 63 of the Act)

*1: Please refer to (Reference 1) (3) “Classification of Investors” (p. 67) for the scope of “Qualified Institutional Investors.”

*2: “Private placement” for a partnership-type fund (collective investment scheme) refers to investment solicitation accepted by less than 500 investors (Article 2(3)(iii) of the Act, Article 1-7-2 of the Order).

Note: Regarding the Specially Permitted Businesses for Qualified Institutional Investors, etc., various changes were made in 2015 revisions to the Financial Instruments and Exchange Act, such as expansion of the scope of matters to be notified and documents to be attached, enhancement of behavior regulations, and limitation of the scope of allowable investors. For more details, please refer to the links below.

- For business scheme cases, see section 2 (2) 2) (ii) , (viii) , (ix) , and 4) (i).

●   To Those who Operate Fund-Related Businesses in Japan (Financial Services Agency)

●   Introduction of a new system (requirement for additional notifications, etc.) regarding Specially Permitted Businesses for Qualified Institutional Investors, etc., and Specially Permitted Investment Management Businesses following 2015 revisions to the Financial Instruments and Exchange Act (Financial Services Agency)

●   Changes in notification procedures due to law revisions regarding Specially Permitted Businesses for Qualified Institutional Investors, etc. (SPBQII) and Specially Permitted Investment Management Businesses (SPIMB)(Financial Services Agency)

●   Specially Permitted Businesses for Qualified Institutional Investors, etc. (Kanto Local Finance Bureau)
 

9) Emergency Registration Exemption for Foreign Financial Institutions / Asset Managers (Temporary relief to address overseas business disruptions due to disaster or other reasons) (Article 16(1)(xvii) of Cabinet Office Order on Definitions)

●   Emergency Registration Exemption for Foreign Financial Institutions / Asset Managers(Temporary relief to address overseas business disruptions due to disaster or other reasons)

10) Entry scheme for GP managers with overseas qualified clients (non-Japanese corporations and individuals domiciled abroad with certain amount of assets) (Specially Permitted Business for Foreign Investors, etc.) (Article 63-8 of the Act)

11) Pre-registration entry scheme for those (who only managed offshore funds) with authorization by regulatory bodies and a proven track record in specified foreign jurisdictions (Specially Permitted Business during Transition Period) (Article 3-3 of the Supplementary Provisions of the Act)

1) Qualified Institutional Investors (Article 10 of Cabinet Office Ordinance on Definitions)

●   Information on qualified institutional investors (Japanese only)

●   FAQ (Section 2 Definitions - Public Offering, Secondary Distribution, etc., Q15)
 

2) Professional investors (Article 2(31) of the Act, Article 23 of Cabinet Office Ordinance on Definitions)

3) Qualified Investors (Article 29-5(3) and (4) of the Act, Article 15-10-7 of the Order, Article 16-6 of FIB Cabinet Office Ordinance) Besides Qualified Institutional Investors and Professional Investors, the following persons:

●  Persons that have a close relationship with related Investment Management Business Operators for Qualified Investors 

4) Investors Subject to Specially Permitted Business (Article 63(1)(a) of the Act, Article 17-12(1) of the Order, Article 233-2 of the FIB Cabinet Office Order)