Article 63 of the Financial Instruments and Exchange Act of Japan provides an exemption from the licensing requirements applicable to the marketing and investment management activities of partnership-type funds in Japan (known as "Special Exempt Business for Qualified Institutional Investors, etc." (tekikaku kikan toshika tou tokurei gyomu)). Many partnership-type funds operate under this exemption as an alternative to complying with the strict licensing requirements under the FIEA. In May 2015, in response to reported abuses of the Article 63 Exemption, resulting in Japanese retail investors suffering financial losses, the National Diet of Japan passed a bill amending Article 63. On 3 February 2016, the Japan Financial Services Agency published its responses to comments on the amendments received during the public consultation period (as well as the relevant Enforcement Order and Cabinet Office Ordinance finalising the amendments).
This Client Briefing outlines the amendments to the Article 63 Exemption, which came into effect on 1 March 2016, and their impact on partnership-type funds currently operating under the exemption.