January 2, 1990
TO: SEC RULES COMMITTEE NO. 1-90
INTERNATIONAL FUNDS TASK FORCE NO. 1-90
RE: GUIDELINES FOR LICENSING NON-JAPANESE INVESTMENT TRUST
MANAGEMENT FIRMS
__________________________________________________________
As you may know, the Japanese Ministry of Finance recently
announced the adoption of qualification criteria for new
entrants, including non-Japanese firms, seeking licenses to
participate in the Japanese investment trust business. The
attached translation of the guidelines describes the new
licensing qualifications.
In general, a firm wishing to establish an investment trust
business in Japan must have a minimum of 3 years business
experience in management or sales of investment trusts and
"considerable business records." New investment trust management
companies will also be required to have sufficient personnel,
resources and back-office facilities to properly perform the
administrative functions of the company within Japan. An
applicant must have a minimum capitalization of 500 million yen
and must present a plan for reaching profitability within 3
years. In general, foreign firms will be permitted to enter the
investment trust management business through establishment of a
wholly-owned subsidiary. In limited circumstances, a majority
owned investment trust management company may have minority
Japanese shareholders who do not contribute more than 5 percent
of the capital of the new company.
Interested firms are required to submit their preliminary
applications to the Ministry of Finance by the end of February.
According to the Ministry of Finance, licenses will be awarded
periodically, at least once a year.
We will keep you informed of developments.
Catherine L. Heron
Deputy General Counsel
Attachment