Investment Funds (Specified Jurisdiction Fund) (Japan) Rules 2012

Summary

These Rules, made under the Investment Funds Act 2006 and the Investment Funds (Specified Jurisdiction Fund) (Japan) Order 2012, set out the operating and reporting requirements for funds authorised and classified as specified jurisdiction funds for Japan. They cover the fund's constitution, pricing, reporting to participants and the Authority, and the duties of the fund administrator, custodian, investment manager and auditor.

• Constitution and pricing: The fund's constitution must cover unit issuance terms and auditor appointment, be available for inspection, and issue/redemption prices must be available on request free of charge.
• Reporting to participants: An annual report including audited financial statements must be distributed to participants within six months of the financial year end (or the period stated in the prospectus); periodical/interim reports may also be prepared.
• Reporting to the Authority: The operator must submit a monthly written activity report to the Authority within twenty business days of month end, containing net asset value, subscription/redemption activity, and units in issue.
• Service provider duties: Detailed functions are prescribed for the fund administrator (administration, register maintenance, NAV calculation), the custodian (safekeeping, oversight of sub-custodians), and the investment manager (application of subscription monies and income, investment restrictions on short selling, borrowing above ten percent of net assets, concentration above fifty percent voting shares of a company, and illiquid holdings above fifteen percent of net assets).
• Delegation: An investment manager may appoint sub-advisers but remains responsible for their performance of delegated functions.
• Financial statements and audit: Financial statements must be prepared under IFRS or appropriate GAAP with specified minimum disclosures, and audited; the auditor's report cannot be published or distributed without the auditor's written consent.

The Rules are principally directed at the operator, fund administrator, custodian, investment manager and auditor of a Japan specified jurisdiction fund, prescribing ongoing conduct, disclosure and reporting obligations rather than one-off licensing requirements.

Key obligations

• A fund's constitution must provide for the terms of unit issuance and the appointment of an auditor, and must be made available for inspection by participants or prospective participants
• Copies of the constitution must be provided to participants or prospective participants on payment of reasonable copying costs
• A fund must make issue and redemption or repurchase prices available on request without charge at its registered/principal office or service provider's office
• A fund must prepare and distribute an annual report, including audited financial statements, to participants within six months of the end of its financial year (or such other period specified in the prospectus)
• The operator must submit a written monthly activity report to the Authority no later than twenty business days from the last day of each month, containing prescribed fund data
• The fund administrator must administer the fund in accordance with the Act, these Rules, the constitution, prospectus and contractual arrangements, and maintain records, registers and reports as required
• The custodian must safekeep investment documents, follow lawful directions, and maintain appropriate supervision over each sub-custodian with periodic enquiries
• The investment manager must ensure subscription monies, sale proceeds and income are applied per the constitution/prospectus, and must not exceed prescribed limits on short selling, borrowing (10% of net assets), single-company voting share acquisition (50%), or illiquid investment holdings (15% of net assets)
• An investment manager delegating to sub-advisers remains responsible for their performance
• Financial statements must be prepared using IFRS or appropriate GAAP and must include the minimum disclosures set out in the Rules
• The auditor must audit the fund's financial statements and report to participants in accordance with the applicable reporting standards
• A fund must not publish or distribute the auditor's report without the auditor's prior written consent

Applies to

specified jurisdiction fund for Japan, fund operator, fund administrator, custodian, sub-custodian, investment manager, sub-adviser, auditor

Deadlines

• within six months of the end of its financial year: Deadline for a fund to prepare and distribute its annual report, including audited financial statements, to participants (unless a different period is specified in the prospectus)
• no later than twenty business days from the last day of each month: Deadline for the operator to submit a monthly written activity report on the fund to the Authority

Related documents

• This document commences Investment Funds Act 2006
• This document is made under Investment Funds Act 2006