Special purpose company (Japan)
A is a type of corporation which can be formed under Japanese law. SPCs were enacted by the Diet of Japan in Law No. 105 of 1998.
The main features of an SPC are:
- An SPC can only be used for the . It cannot manage or dispose of assets, although it can commission these activities to a third party manager.
- If certain conditions are met, an SPC can write off the assets it distributes as losses for tax purposes, thus exempting those distributions from corporate taxation.
SPCs are the only corporate entity which can make tax-free distributions under Japanese tax law As of 2006, and are an attractive alternative to general partnerships, tokumei kumiai, trusts or other tax-free alternatives in a number of investment transactions.
Structure
An SPC is formed by registering articles of incorporation with a Legal Affairs Bureau, a branch office of the Ministry of Justice. Each SPC must have at least one director and at least one statutory auditor.
Investing in an SPC
An SPC may issue any of five types of securities in exchange for an investment:
, equity securities similar to shares of preferred STOCK, where the bearers have rights to share in the profits of the company, but cannot participate in decision-making
Taxation
In order for its distributions to be exempt from corporate taxes, an SPC must meet a number of criteria:
- Be registered on the national list of SPCs (maintained by the Prime Minister's office)
- Either:
- Have ¥100,000,000 or more in outstanding special bonds, or
- Have all of its outstanding bonds held by institutional investors, or
- Have more than fifty holders of preferred investment certificates, or
- Have all of its outstanding preferred investment certificates held by institutional investors
- Conduct at least 50% of the total value of its equity and debt offerings within Japan
- Have an accounting period of one year or less
- Conform to the purposes permitted for SPCs throughout the tax year in question
See also
- Special purpose entity
ja:特定目的会社