Investor Presentaiton
TMK "tax qualifying" conditions
Conditions to be a "tax qualifying" TMK
1. The TMK is duly registered under Article 8 of the current TMK law;
2. At least one of the following conditions is satisfied:
a. The TMK has issued corporate bonds which are offered to the
public, as provided in Article 2-3-1 of the Financial
Instruments and Exchange Law, and the issuance amount is
JPY 100 million or more;
b. The TMK has issued corporate bonds which are fully
subscribed by and are expected to be continued to be held by
Tax QII;
C.
The TMK has issued preferred equity units which are
subscribed by 50 or more investors; or
d. The TMK has issued preferred equity units which are
subscribed to only by Tax QIls.
3. More than 50% of the total issuance price of any preferred equity
issued, and more than 50% of the total issuance price of any
specified equity issued, must be for, respectively, preferred equity
and specified equity issued in Japan.
4. The TMK's fiscal year does not exceed one year.
Although there are four “securitisation" events available to
the TMK, the practical reality is that the Tax QII bond
issuance is the option which is adopted in practice. Note
that there is no minimum issuance amount prescribed for
this and the necessary amount should be considered on
both absolute and relative terms based on the specific
investment.
This is an important requirement because it effectively
requires that the majority of the TMK's equity must be
issued domestically. Since a domestic shareholder will
be subject to a higher level of taxation than an offshore
shareholder this has the effect of increasing the overall
Japanese tax rate on an investment ultimately held 100%
from offshore.
KPMG
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Document Classification: KPMG Confidential
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