A comprehensive new law on capital market regulation is expected to take effect in Japan in Spring 2007. Though most of its provisions will affect domestic issuers, intermediaries and investors, a spokesman for Mizuho Corporate Bank in Tokyo says overseas investors should pay attention to the fact that corporations will need to disclose more information and report their financials on a quarterly basis. Overseas investors will also be affected by new rules on overseas shareholdings.
The new law encompasses a number of existing laws – Securities and Exchange law, Foreign Stock Broker law, Investment Advisory law and Financial Futures law – and some financial products with investment characteristics provided by banks and insurance companies. The new law will cover commodity funds and collective investment schemes such as Kumiai associations and partnerships as well bonds, equities and investment trusts and trust funds currently regulated by the Stock Exchange Law. The new law also brings derivatives products within its scope.
The Japanese Financial Services Agency has now presented the final draft of the new Financial Products Trading Law – formerly known as the Financial Service Law – to the working groups of the ruling Liberal Democratic Party. The new law, once approved by the Cabinet, will be sent to the Diet. It is expected to take effect in Spring 2007 at the earliest.