This third column by Japan Asset Management Platform Group (JAMP) on potential snags for financial instruments business operators (FIBOs) concerns the Notification of Holding Subject Voting Rights.
Submission of a Notification of Holding Subject Voting Rights (“Notification”) is required of a “major shareholder” of a Type I FIBO or Investment Management Business, excluding foreign entities, as defined in Article 29-4, Paragraph 2 of the Financial Instruments and Exchange Act (FIEA)*.
The Notification must be accompanied by: 1) a document pledging that the major shareholder does not fall under any category for refusal of registration; 2) in the case of an individual, an extract copy of the certificate of residence or any other document in lieu thereof; and 3) in the case of a corporation, its certificate of registered matters, or any other document in lieu thereof. (Article 32, Paragraph 2 of the FIEA, Article 38 of the Cabinet Order on Financial Business, etc.)
Major shareholders are those who hold 20% or more (50% in the case of specified shareholders) of the voting rights of all shareholders, etc. of the company.
Pursuant to Article 32-2 (1) of the FIEA, when a major shareholder of a FIBO meets the requirements for refusal of registration (under any of Article 29-4 (1)(v)(d) 1. or 2. or (e) 1. through 3.), the Prime Minister may order the major shareholder to take measures to cease to be a major shareholder of the FIBO and other necessary measures within three months.
Anyone who ceases to be a major shareholder must notify the Director-General of the Local Finance Bureau to that effect without delay. (Article 32-3 and Article 32-4 of the FIEA)
A person or entity who becomes a major shareholder of a Type I FIBO or Investment Management Business must submit Notification to the Prime Minister without delay, stating the percentage of the subject voting rights held, the purpose of the holding, and other matters detailed by Cabinet Office Order on Financial Instruments Business, etc.
"Without delay" is interpreted to mean longer than two weeks if there is a reasonable reason, but generally within 30 days.
If yours is a new Type I FIBO or Investment Management Business, we would remind you to ensure all major shareholders have properly submitted this Notification.
* Financial Instruments and Exchange Act:
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