JAPAN - REGULATONS - Islamic Finance - Japanese law reforms

A recent amendment to the Japanese laws will facilitate Shari'a-compliant financing structures within Japan. Historically, it had been difficult to structure Shari'a-compliant financing structures in Japan due to a number of factors, including the tax treatment of the distribution of profits to overseas Islamic investors. However, a recent amendment to the Japanese Asset Securitisation Law together with certain tax reforms have made investing in Japan in a Shari'a-compliant manner more attractive and have helped to level the playing field between conventional financing and Islamic financing for such investments in Japan. These amendments came into effect on 24 November 2011.

This client briefing re-visits the basics of the sukuk and sukuk-al-ijara and discusses the consequences of the latest legislative amendments for the development of Islamic finance in Japan.

Access the report : Japanese Law Reforms

Previous report : An opportunity for Japanese Banks (2009)

An amendment to the Japanese banking laws late last year will bring Japanese banks closer to participating in Islamic Finance. Following the enactment of Article 17-3.2.(ii)-2 of the Amendment to the Ordinance on the Enforcement of Banking Law which became effective on 12 December 2008, it is now expressly provided that a subsidiary company of a Japanese bank (or bank holding company) which engages only in the Financial Related Businesses (as defined in the BL) or the securities business may also engage in Islamic finance transactions. Our experts in Dubai and Tokyo have prepared a briefing note exploring the the fundamentals and techniques of Islamic finance and what this means for Japanese banks in the light of this banking law amendment.