Foreign Exchange and Foreign Trade Control Law. Copyright Roderick Seeman

Article 22 (Notice, etc., of capital transactions)

1. When a resident or non-resident is to become a party to any capital transaction listed in any Item below (excepting those capital transactions falling under the provisions of Article 24, Paragraph 1 and, from among the capital transactions of Item 1, a transaction involving claimable right creation, etc. based on monetary contracts for borrowing or lending between an authorized foreign exchange bank of Japan and a non-resident, where the accounting related to the management or procurement of funds related to the said transaction, is adjusted in the special international financial transactions account at the said authorized foreign exchange bank), either the resident or non-resident, as designated in the said Item below, shall give a prior notice, as per the provisions of Cabinet Order, to the Minister of Finance, of those matters as designated by the Cabinet Order such as particulars of the capital transaction, time of execution thereof, and others. However, this requirement shall not apply to persons who are to become parties to any capital transactions mentioned in Item (2), Item (3) or Item (7), of which one of the parties thereto is a securities companies designated by the Minister of Finance (meaning the securities companies defined by Article 2, Paragraph 2 of the Securities and Exchange Law, or the foreign securities dealers defined by Article 2, Item 2 of the Law Concerning Foreign Securities Dealers (Law No. 5 of 1971), hereinafter in this Paragraph referred to as "designated securities companies"), or for which one of the designated securities companies acts as an intermediary, broker, or agent:

(1) Among the capital transactions listed in Article 20, Item (2), those transactions involving a claimable right creation, etc., under a money lending and borrowing contract (excepting those falling under Item (4)), or those transactions involving a claimable right creation, etc., based on a guarantee contract covering liabilities of those juridical persons established under foreign legislation as designated by a Cabinet Order (hereinafter in this Item referred to as "foreign corporation") arising out of that foreign corporation's issuance or offer for subscription of securities in a foreign country --- by the resident;

(2) Among the capital transactions mentioned in Article 20, Item (5), acquisition of foreign currency denominated securities by a resident from a non-resident (excepting those falling under Item (4)) --- by the resident;

(3) Among the capital transactions mentioned in Article 20, Item (5), acquisition of securities by a non-resident from a resident --- by the non-resident;

(4) Among the capital transactions mentioned in Article 20, Items (2), (5) and (11), those concerning a direct foreign investment by a resident --- by the resident;

(5) Among the capital transactions mentioned in Article 20, Item (6), the issuance or offer for subscription of securities in a foreign country, or issuance or offer for subscription in Japan of foreign currency denominated, by a resident --- by the resident;

(6) Among the capital transactions mentioned in Article 20, Item (6), issuance or offer for subscription of securities in Japan by a non-resident --- by the non-resident;

(7) Capital transactions listed in Article 20, Item (8) (excluding those related to financial indexes, etc. futures contracts involving currency financial indexes.)

(8) Among the capital transactions mentioned in Article 20, Item (10), acquisition of any immovables existing in Japan or rights related thereto by a non-resident - by the non-resident.

2. The "special international financial transactions account" means the account which has received the authorization of the Minister of Finance in order to make adjustments by dividing the accounting into that related to

an authorized foreign exchange bank in Japan lending to a nonresident funds which were received by deposit from nonresidents (limited to those juridical persons established based on laws and regulations of foreign countries or otherwise determined by Cabinet Order. Hereinafter in this Article the same.) or other funds raised from other nonresidents and the procurement and management of funds in relation to other transactions or actions listed in any of the Items listed hereunder in order to provide funds for management to nonresidents; and

that accounting related to the management or procurement of funds for other transactions or actions.

(1). From among the capital transactions of Article 20, Item 1, transactions related to claimable right creation, etc. based on deposit contracts with nonresidents as detAermined by Cabinet Order .

(2). From among the capital transactions of Article 20, Item 2 transactions related to claimable right creation, etc. based on monetary loan contracts with non-residents.

(3). Other transactions or actions as determined by Cabinet Order.

3. The "direct foreign investment" mentioned in Item (4) of the preceding Paragraph shall mean acquisition by a resident of securities issued by a juridical person established under foreign legislation, or any money lending by a resident to such a juridical person, as designated by Cabinet Order as establishing a long-term economic relationship therewith, or any payment by a resident of funds for establishment or expansion of a branch, factory, or other place of business (hereinafter referred to as "branch, etc.") in a foreign country.

4. Matters concerning the accounting of transfers of funds between the special international financial transactions account provided for in Paragraph 2 (hereinafter in the Paragraph called "special international financial transactions account") and other accounts and other accounting matters of the special international transactions account and the confirmation that the other party to the said transaction or action is a nonresident for transactions or actions the accounting for which is in the special international financial transactions account and other necessary matters, shall be as provided by Cabinet Order.

5. Necessary matters in relation to the designation by the Minister of Finance mentioned in the proviso of Paragraph 1 shall be provided by Cabinet Order.

6. When an obligation to obtain a license from the Minister of Finance is imposed under the provisions of Paragraph 2 of the preceding Article, regardless of the provisions of Paragraph 1, from among the capital transactions listed in the items of the same Paragraph 1, for those for which the acquisition of the said license is required, the provisions of the same Article and the following Article, shall not apply.