By Iain
McDonald
TOKYO (Dow
Jones)--Altering a proposed law that could make illegal the company structure of
most foreign securities firms in Japan is possible but will be difficult, a
ruling-party member of Japan's upper house of parliament said Friday.
The new law,
known as Article 821, is part of the proposed Corporations Law, which has
already passed the Diet's lower house but has only now attracted the attention
of foreign companies operating in Japan and groups representing them.
Article 821
states that "foreign companies with a main office in Japan or whose primary
purpose is to conduct business in Japan cannot continue transactions in
Japan."
"This
has already passed the lower house and if we try to change it, it is a huge
job," Kotaro Tamura, a Liberal Democratic Party member of the upper house,
told Dow Jones Newswires in an interview Friday.
Tamura is
also a member of the upper house finance committee, which will meet jointly with
the legal and economics committees of the upper house next week to discuss the
corporate law changes.
Tamura said
his first question at that meeting will be about the proposed commercial code.
"I will
be working for a possible solution," he said.
The
parliamentarian said a number of foreign firms have contacted him about this
issue but he isn't yet sure that a solution will be found.
The
International Bankers Association, the American Chamber of Commerce in Japan
and the European Business Council are lobbying the government to change the
legislation before it passes the upper house and becomes law possibly sometime
in the next month.
Jakob Edberg,
policy director at the European Business Council in Tokyo, told Dow Jones
Newswires Thursday that the ECB "can't understand the reason behind this
move."
"It
seems this is hitting the securities firms the worst," Edberg said.
Under the
proposed law, foreign firms won't be able to operate as a branch in Japan if
their head office or headquarters is in another country and was established
purely for the purposes of managing operations in Japan.
However,
nearly all-foreign securities businesses in Japan have this structure, which
they adopted when setting up in the country. If the new rules are passed without
any change, the affected firms would have to transfer their operations to a
Japanese company structure, which could be costly.
Tamura said
there are three possible options to fix the problem.
The law
could be amended, a Cabinet order could be issued that would make the status of
affected firms legal or the date of the law's implementation could be delayed.
"Personally,
I would like to change the proposed Article 821," he said. It will be
difficult, but it "is feasible."
Japan's
Ministry of Justice, which drafted the legislation, so far has declined to
comment on the issue.
-By Iain
McDonald, Dow Jones Newswires; 813-5255-2941; iain.mcdonald@dowjones.com
-Edited by
Shawn Schroter [ 27-05-05 0445GMT ]
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