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Newsletter | December 2014, Issue 4
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CORPORATE
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Proposed Amendment of the Financial Investment Services and Capital Markets Act Approved at the Cabinet Meeting
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After reflecting public comments and the results of discussions and negotiations with interested governmental ministries and agencies, the proposed amendment of the Financial Investment Services and Capital Markets Act (the “Capital Markets Act”) publicly announced by the Financial Services Commission on April 24, 2014 (the “Original Proposal”) was approved at the Cabinet Meeting on September 2, 2014 (the revised proposed amendment, the “Proposed Amendment”).
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The Proposed Amendment largely retains the substance of the Original Proposal but significantly restricts the scope of deregulation relating to private equity funds (PEFs) belonging to a financial services group subject to legal limitations on mutual investment among group members.
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In addition, the Proposed Amendment permits PEFs to utilize a multi-level special purpose company ("SPC") structure in making investments by allowing a SPC to acquire equity securities of another SPC.
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The Proposed Amendment does not include deregulation measures related to asset management regulations contained in the PEF regulation reorganization plan such as allowing passive investments in securities, investments in derivative products for non-hedging purposes and real estate investments. We will need to monitor whether further deregulation is implemented through amendments of decrees to the Capital Markets Act.
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