Banking and Other Financial Transactions

In the past decade or so, the Japanese financial regulations have changed from "before-the-fact" type regulations (which means the government's practice of using licensing and approval processes to ensure that businesses operate in accordance with government policy) to "after-the-fact" type regulations (which means the idea of simplifying licensing/approval processes and relying more on enforcement of laws by judicial or semi-judicial processes). With such change in the governmental policy on financial regulations, the Financial Instruments & Exchange Law was enacted and the Banking Act, the Money Lending Business Act, other related laws and regulations, have been drastically amended. Also, the new Trust Act was enacted and the Trust Business Act was thoroughly amended to allow trust companies to use trusts more flexibly in various types of financial transactions.

From the perspective of cross-border finance, the BIS regulation has been strengthened, and there has been an increase in the number of issues which require the financial institutions to respond, such as regulations on money laundering and on the protection of customers of financial institutions. Moreover, the number of lawsuits in which a financial institution is a counterparty has increased.

On the other hand, new financial instruments such as securitization and liquidation of assets, non-recourse loans and electronic monetary claims have been introduced and are used increasingly, in addition to traditional financial instruments such as mortgage backed loans, corporate loans and discounts on notes. New types of collateral such as collateral on collective property and intellectual property are starting to be used.

In the area of cross-border finance, Japanese companies and financial institutions have mainly dealt with, or entered into business partnership with, US or European financial institutions. However, Japanese companies are expected in the future to become more active in entering into financial transactions with the financial institutions in Asia, such as China and India, where there has been remarkable economic growth, and with Islamic financial institutions supported by "petrodollars".

Furthermore, from the perspective of the clients of financial institutions, their purpose in raising funds has become diversified, and includes the use of funds for leveraged buyouts (LBO), management buyouts (MBO) and loans for revitalization of distressed companies.

In order to respond to the changes in the legal system and regulations, the introduction of new financial instruments, the diversification of participants in the financial market and the diversification of purposes of use of funds, it is necessary for attorneys not only to become specialized in the specific practice areas but also to work together with the attorneys having expertise in other practice areas. In addition, in order to meet the demands arising from globalization, there will be more cases in which Japanese attorneys will be jointly retained by clients with foreign attorneys.

City-Yuwa Partners not only has attorneys who specialize in practice areas such as securitization, non-recourse loans, acquisition finance (LBO/MBO) and mezzanine finance, it also provides comprehensive legal services in which such attorneys work together with its intellectual property practice group, attorneys specializing in business revitalization and bankruptcy and attorneys specializing in litigation and dispute resolution. In order to meet global demands, City-Yuwa is closely working with distinguished law firms in various jurisdictions around the world.

For details of each practice area, please see the descriptions of practice areas in the City-Yuwa website.

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