ABS New Markets Japan

Transcription

1 ABS New Markets Japan

2 2 ABS New Markets Japan Fact pattern This scenario considers a UK RMBS master trust structure (a UK SPV Issuer, ultimately backed by a pool of UK collateral) admitted to trading on the UK regulated market and cleared through Euroclear and Clearstream clearing systems. Denominations will be wholesale (that is, denominations of EUR 100,000 (or equivalent) and above) and will be targeted at wholesale and professional investors in each jurisdiction. Questions A Currency requirements (for Sterling, Non-sterling, Local currency) B Marketing and offering requirements C Investors: Who can you issue to? D Issuing entity: Are there any restrictions on the type of entity? E Selling restrictions: A sample selling restriction

3 ABS New Markets 3 A. Are there any specific requirements in relation to offering securities denominated in the following currencies into the jurisdiction? Sterling No Non-sterling No Local currency No B. Marketing and offering requirements Will any documentation or filings be required to offer wholesale debt securities? Summary: So long as the notes are issued on a private placement basis (i.e. not on a public offering basis), there is no need to file registration documents. However, the requirements for the private placement need to be fulfilled and the selling restriction wording needs to be included in an offering document if the total issue price of the notes is JPY 100 million or more, see section E below. Also, there is a licence requirement for the offering and, after the issue date, the filing of the FX Report may be required. Additional information: 1. Requirements for the private placement There are two types of the private placement, namely (1) the private placement only for qualified institutional investors (tekikaku kikan toshika) ( QII ) as defined under the Financial Instruments and Exchange Act of Japan (the FIEA ) ( QII Private Placement ) and (2) the private placement for a small number (i.e. up to 49) of investors ( Small Number Private Placement ), and different requirements need to be satisfied for each type: (1) QII Private Placement (i) The solicitation for the offer is made only to one or more QIIs; (ii) The issuer has neither submitted a securities registration statement (yuukashoken todokedesho) ( SRS ) with respect to the same type of the Notes with the Kanto Local Financial Bureau (the KLFB ) nor listed the same kind of the notes to any of the stock exchanges in Japan; (iii) The relevant offering material states that QIIs are subject to a transfer restriction that prohibits any transfer to non-qiis, and such offering material is delivered to the investors before the acquisition of the notes; and (iv) The issuer must appoint an agent in Japan, who is a resident of Japan and is obliged to notify the KLFB of any breach of the transfer restriction (if any) if the agent becomes aware that a transfer of the notes is in breach of the transfer restriction. (2) Small Number Private Placement (a) In the case where the offerees include QIIs who are subject to a transfer restriction which prohibits any transfer to non-qiis (i) The solicitation for the offer is not made to a Large Number of People (i.e. 50 persons or more, excluding QIIs);

4 4 ABS New Markets (ii) The relevant offering material mentions that investors who are non-qiis are subject to a transfer restriction that the number of the investment units of the notes is 49 or less and the notes cannot be divided, or a holder of the notes cannot transfer the notes unless all of its notes is being transferred to a single transferee; and (iii) The relevant offering material states that investors who are QIIs are subject to a transfer restriction which prohibits any transfer to non-qiis. (b) In the case (A) where the offerees include QIIs who are NOT subject to a transfer restriction which prohibits any transfer to non-qiis or (B) where the offerees do not include any QII (i) The solicitation for the offer is not made to a Large Number of People (i.e. 50 persons or more, including any QIIs); and (ii) The relevant offering material mentions that investors who are both non-qiis and QIIs are subject to a transfer restriction that the number of the investment units of the Notes is 49 or less and the notes cannot be divided, or a holder of the notes cannot transfer its notes unless all of its notes is being the transferred to a single transferee. As you can see from the above, QII Private Placement requires more procedures (i.e. appointment of an agent and investigation of the type of the offerees are required) and therefore Small Number Private Placement is likely to be preferable in cases where the number of the offerees is 49 or less. 2. Licence requirement Offering or selling the notes to investors located in Japan triggers a licence issue under the FIEA unless the issuer itself offers or sells to the investors in which case the licence is not necessary. The offering or selling of the notes, if not carried out by the issuer itself, can only be made by any person/entity who is duly licensed for the Type 1 Financial Instruments Services. Typically a domestic broker dealer will be so licensed. 3. Other filing requirement FX report (post issue date) The issuer must file an after-fact-report with the Minister of Finance of Japan through the Bank of Japan within 20 days of the issue date of the Notes in Japan under the Foreign Exchange and Foreign Trade Act of Japan when the total issue price is JPY 1 billion or more.

5 ABS New Markets 5 C. Investors Who can you offer and sell to? Are there any selling or marketing restrictions in relation to types of investors? Summary: Depending on the type of the private placement (i.e. QII Private Placement or Small Number Private Placement), there may be restriction on the types of investors whom you can offer and sell to. Additional information: In case of QII Private Placement, you can only offer and sell to QIIs. Are there any limitations or prohibitions applicable to any classes of investors (e.g. maximum exposures to individual issuers/sectors or tax/fiscal rules)? No D. Issuing entity: Are there any restrictions on the type of issuing entity? e.g. Offshore SPV Summary: Yes Additional information: If the issuer is recognised as an investment corporation under Japanese law, which we believe is the case, another notification filing will be required. The issuer will incur substantive cost to fulfil a notification requirement (i.e. a notification under the Act on Investment Trusts and Investment Corporations). It would typically take 3 to 4 weeks and cost JPY 3 to 4 million of our fee. Also, in order to flag such license issue, we would suggest to add the following language after the selling restriction wording stated in the section E below (although it is not a legal requirement). In addition, each Dealer understands that the Notes have not been and will not be registered under the Act on Investment Trust and Investment Corporations (Act No. 198 of 1951, as amended) and, accordingly, each Dealer undertakes that it will not offer or sell any Notes, directly or indirectly, in Japan or to, or for the benefit of, any Japanese Person or to others for re-offering or resale, directly or indirectly, in Japan or to any Japanese Person except under circumstances which will result in compliance with all applicable laws, regulations and guidelines promulgated by the relevant Japanese governmental and regulatory authorities and in effect at the relevant time.

6 6 ABS New Markets E. Sample selling restriction (1) QII Private Placement The Notes have not been and will not be registered in Japan pursuant to Article 4, Paragraph 1 of the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended, the FIEA ) in reliance upon the exemption from the registration requirements since the offering constitutes the private placement to qualified institutional investors only as provided for in i of Article 2, Paragraph 3, Item 2 of the FIEA. A transferor of the Notes shall not transfer or resell them except where a transferee is a qualified institutional investor under Article 10 of the Cabinet Office Ordinance concerning Definitions provided in Article 2 of the Financial Instruments and Exchange Act of Japan (the Ministry of Finance Ordinance No. 14 of 1993, as amended). (2) Small Number Private Placement The Notes have not been and will not be registered in Japan pursuant to Article 4, Paragraph 1 of the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended, the FIEA ) in reliance upon the exemption from the registration requirements since the offering constitutes the small number private placement as provided for in ha of Article 2, Paragraph 3, Item 2 of the FIEA. [A transferor of the Notes shall not transfer or resell the Notes except where the transferor transfers or resells all the Notes en bloc to one transferee./the Note is not permitted to be divided into any unit less than the minimum denomination indicated in such certificates.] NB: In the case of Small Number Private Placement type (a) referred to in section B above, if the offering is also made to QIIs who are excluded from the number of the offerees, the wording described in (1) QII Private Placement above is to be included in respect of solicitations to such QIIs.

7 ABS New Markets 7 Clifford Chance contacts Eiichi Kanda Partner T: M: E: eiichi.kanda@cliffordchance.com Leng-Fong Lai Partner T: M: E: leng-fong.lai@cliffordchance.com Yu Nimura Associate T: M: E: yu.nimura@cliffordchance.com

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