GPs that operate limited partnerships based on the exemption under Article 63 of the FIEA and have recently completed a renewal filing around the end of the grace period (August 31, 2016) are required to prepare Form 20-2 “without delay.”

This LawFlash serves as a reminder of certain disclosure and information maintenance obligations for general partners (GPs) that continue to rely on Article 63 of the Financial Instruments and Exchange Act (FIEA) for their distribution and/or asset management activities in Japan. Where a GP operates its limited partnership based on the exemption under Article 63 of the FIEA and has recently completed a renewal filing around the end of the grace period (i.e., August 31, 2016), the GP is required “without delay” to prepare Form 20-2 (see contents of the form below).

The GP must place and maintain Form 20-2 in the principal business office and in any other offices where the GP conducts business exempted under Article 63 of the FIEA in order to make the document available for public inspection. Alternatively, the GP may post the document on a webpage or disclose it in any other method that will ensure that the document is continuously and easily accessible to the public.[1]

See the content of Form 20-2.

Because, in practice, “without delay” generally is interpreted to mean about one month, a GP that has made a renewal filing around August 31, 2016 should satisfy such obligation at the latest by the end of September 2016.

The Financial Services Agency of Japan (JFSA) commented in its response to the public comments that foreign Article 63 Exemption Operators that have no office in Japan must make Form 20-2 available to the public through the internet or “any other method.” [2] The JFSA also commented that

  • the GP is not required to create a new webpage;[3]
  • there is no specific guidance about what “any other method” should be; and
  • it is not appropriate to simply let the Representative in Japan (kokunai ni okeru daihyosha) hold the Form 20-2 document without providing a method for investors to continuously and easily access the document.[4]

According to our recent conversations with the Saitama headquarters of the Kanto Local Finance Bureau, the regulators are not requiring a resident of Japan to hold the Form 20-2 document and do not have a concrete idea of what the offshore GP should do. On the other hand, the regulators appear to believe that it is critical to ensure that investors have access to the location where individuals who in substance conduct the business under Article 63 of the FIEA are present, and that these individuals properly respond to investors’ inquires.

Because of this, one possible arrangement would be that the asset management company that manages assets of the limited partnership based on the authority delegated by the GP would hold the Form 20-2 document. The GP might also additionally delegate the holding of the Form 20-2 document to the designated Representative in Japan (kokunai ni okeru daihyosha) for the business under Article 63 of the FIEA where the asset management company requests assistance in communicating with Japanese investors.