Development Bank of Japan Inc., 64179-64181 [2020-22373]
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Federal Register / Vol. 85, No. 197 / Friday, October 9, 2020 / Notices
Kenneth R. Moeller; Comments Due:
October 15, 2020.
2. Docket No(s).: MC2021–5 and
CP2021–5; Filing Title: USPS Request to
Add Priority Mail Contract 669 to
Competitive Product List and Notice of
Filing Materials Under Seal; Filing
Acceptance Date: October 5, 2020;
Filing Authority: 39 U.S.C. 3642, 39 CFR
3040.130 through 3040.135, and 39 CFR
3035.105; Public Representative:
Kenneth R. Moeller; Comments Due:
October 15, 2020.
3. Docket No(s).: MC2021–6 and
CP2021–6; Filing Title: USPS Request to
Add Priority Mail Contract 670 to
Competitive Product List and Notice of
Filing Materials Under Seal; Filing
Acceptance Date: October 5, 2020;
Filing Authority: 39 U.S.C. 3642, 39 CFR
3040.130 through 3040.135, and 39 CFR
3035.105; Public Representative:
Kenneth R. Moeller; Comments Due:
October 15, 2020.
4. Docket No(s).: MC2021–7 and
CP2021–7; Filing Title: USPS Request to
Add Priority Mail & First-Class Package
Service Contract 171 to Competitive
Product List and Notice of Filing
Materials Under Seal; Filing Acceptance
Date: October 5, 2020; Filing Authority:
39 U.S.C. 3642, 39 CFR 3040.130
through 3040.135, and 39 CFR 3035.105;
Public Representative: Christopher C.
Mohr; Comments Due: October 15, 2020.
5. Docket No(s).: MC2021–8 and
CP2021–8; Filing Title: USPS Request to
Add Priority Mail & First-Class Package
Service Contract 172 to Competitive
Product List and Notice of Filing
Materials Under Seal; Filing Acceptance
Date: October 5, 2020; Filing Authority:
39 U.S.C. 3642, 39 CFR 3040.130
through 3040.135, and 39 CFR 3035.105;
Public Representative: Christopher C.
Mohr; Comments Due: October 15, 2020.
This Notice will be published in the
Federal Register.
Erica A. Barker,
Secretary.
[FR Doc. 2020–22429 Filed 10–8–20; 8:45 am]
BILLING CODE 7710–FW–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
34043; 812–15164]
Company Act of 1940 (‘‘Act’’) for an
exemption from all provisions of the
Act.
SUMMARY OF APPLICATION: Applicant, a
policy and development finance
organization established by the
government of Japan (the ‘‘Japanese
Government’’), requests an order
exempting it from all provisions of the
Act in connection with the offer and
sale of its debt securities in the United
States.
APPLICANT: Development Bank of Japan
Inc. (‘‘Applicant’’).
FILING DATES: The application was filed
on September 25, 2020.
HEARING OR NOTIFICATION OF HEARING: An
order granting the requested relief will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing by emailing the
Commission’s Secretary at SecretarysOffice@sec.gov and serving applicant
with a copy of the request by email.
Hearing requests should be received by
the Commission by 5:30 p.m. on
October 30, 2020, and should be
accompanied by proof of service on
applicant, in the form of an affidavit or,
for lawyers, a certificate of service.
Pursuant to rule 0–5 under the Act,
hearing requests should state the nature
of the writer’s interest, any facts bearing
upon the desirability of a hearing on the
matter, the reason for the request, and
the issues contested. Persons who wish
to be notified of a hearing may request
notification by emailing the
Commission’s Secretary at SecretarysOffice@sec.gov.
ADDRESSES: The Commission:
Secretarys-Office@sec.gov. Applicant:
grp_dbond@dbj.jp.
FOR FURTHER INFORMATION CONTACT: Jill
Ehrlich, Senior Counsel, at (202) 551–
6819, or Daniele Marchesani, Assistant
Chief Counsel, at (202) 551–6821
(Division of Investment Management,
Chief Counsel’s Office).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
website by searching for the file
number, or applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Development Bank of Japan Inc.
Applicant’s Representations
October 5, 2020.
1. The Applicant is a policy and
development finance organization
established in October 2008 by the
Japanese Government pursuant to the
Development Bank of Japan Inc. Act (the
‘‘DBJ Act’’). The Applicant’s primary
mission is contributing to the
Securities and Exchange
Commission (the ‘‘Commission’’).
ACTION: Notice.
AGENCY:
Notice of application for an order
under section 6(c) of the Investment
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17:26 Oct 08, 2020
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64179
sustainable growth of the Japanese
economy, promoting stable and vital
financial markets in Japan and
enhancing global competitiveness of
Japanese businesses. The Applicant
furthers its mission primarily through
the provision of long-term funding to
enterprises and projects generally in
line with the policy objectives of the
Japanese Government, through loan
financing and other financing methods
(including equity investments).
2. In serving its mission, the
Applicant offers a broad range of
financial products and services to its
clients similar to those offered by
Japanese commercial banks. In recent
years, the Applicant has also
undertaken specific mandates in two
key Japanese Government-sponsored
funding initiatives: (i) ‘‘Crisis Response
Operations,’’ a program designed to
provide appropriate financing to largeand medium-sized enterprises that are
temporarily experiencing a downturn in
business performance and funding
difficulties due to a ‘‘crisis’’ such as
turmoil in the domestic or global
financial system, large-scale natural
disasters, acts of terrorism or medical
epidemics, and (ii) ‘‘Special Investment
Operations,’’ a temporary investment
program designed to supplement and
encourage private-sector financing to
support growth initiatives of enterprises
that contribute to self-reliant
development of regional economies,
contribute to development of markets
for growth capital, or promote the
competiveness of Japanese enterprises
generally.
3. As of March 31, 2020, the
Applicant’s most recently completed
fiscal year end, a majority of the
Applicant’s assets consisted of loans
and other securities such as equity in
other entities and a variety of debt
instruments. Because such loans and
securities could be considered
‘‘investment securities’’ within the
meaning of section 3(a)(1)(C) of the Act,
the Applicant may be considered an
investment company, and it requests an
exemption from all provisions of the
Act.
4. The Japanese Government currently
owns 100% of the Applicant’s issued
share capital. However, the DBJ Act
(including successive amendments
thereto) contemplates a plan to fully
privatize the Applicant over time.
Specific timing for commencing or
completing the Applicant’s privatization
has not been determined, and under
partial amendments to the DBJ Act
effective in 2015, the Japanese
Government is obligated to hold more
than one-half of the total issued share
capital of the Applicant until the
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Federal Register / Vol. 85, No. 197 / Friday, October 9, 2020 / Notices
completion of its Special Investment
Operations, which is currently
scheduled for March 31, 2031, and more
than one-third of the Applicant’s issued
share capital for an indefinite period
with a view to ensuring the sufficient
and appropriate implementation of the
Crisis Response Operations. The
Applicant notes that the anticipated
privatization of the Applicant, as set
forth in the DBJ Act, is a part of broader
efforts to reform and streamline policy
finance and special public institutions
in Japan, such as the Applicant, that
began in the early 2000s.
5. As described more fully in the
application, the Applicant, as a
development bank, is substantially
engaged in banking activity that is
customary for commercial banks in
Japan. However, because the Applicant
does not engage in deposit-taking
activities, it is not considered a
commercial bank under Japanese law.
Despite the formal differences in
applicable rules and regulations, the
Applicant believes that it is subject to a
set of regulatory requirements that, in
combination with the Applicant’s
voluntary policies, are functionally
equivalent to that applied to Japanese
commercial banks in terms of the
regulation of a bank’s safety and
soundness and financial risk exposures.
The Applicant believes the DBJ Act’s
supervisory provisions, combined with
supplemental oversight by multiple
Japanese government agencies and
regulatory authorities and the
Applicant’s voluntary compliance with
key prudential regulatory metrics,
constitute a set of regulatory protections
that meet or exceed those applicable to
Japanese commercial banks. In
particular, the Applicant (i) is subject to
extensive oversight, supervision and
regulation by the Japanese Government,
primarily by the Minister of Finance
and the Commissioner of the Financial
Services Agency (the ‘‘FSA’’) (Japan’s
umbrella financial regulator and
primary bank regulator), including onsite inspections conducted by the FSA
in a manner similar to those conducted
for commercial banks in Japan (i.e., in
accordance with principles and
procedures for bank examinations
established in FSA guidance
documents), (ii) maintains internal
controls and risk management systems
intended to be consistent with
expectations set by the FSA, such as a
credit quality ‘‘self-assessment’’ system,
in line with domestic industry best
practices, and (iii) voluntarily monitors
and controls its balance sheet and risk
exposures at levels that meet or exceed
regulatory requirements applicable to
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17:26 Oct 08, 2020
Jkt 253001
Japanese commercial banks as part of
their prudential banking regulation,
such as risk-based capital and leverage
requirements under Basel III and credit
quality disclosure standards under
Japanese banking law.
6. The Applicant procures funds by
borrowing from the Japanese
Government and private financial
institutions, issuing debt securities in
the Japanese and international capital
markets and accumulating funds
through its business operations,
primarily loan recoveries. The
Applicant uses such funds to extend
loans to and make other investments in
primarily Japanese but also
international enterprises and projects in
order to fulfill its primary mission. In
addition, since the Applicant’s
establishment in 2008, the Japanese
Government has made capital
contributions in the aggregate amount of
¥631.0 billion (approximately $5.8
billion), primarily to fund the Crisis
Response Operations and Special
Investment Operations.
7. The Applicant proposes to issue
and sell its debt securities not
guaranteed by the Japanese Government
in the United States, including under its
Global Medium Term-Notes (GMTN)
program, from time to time. The
Applicant does not intend to offer, issue
or sell any securities in public offerings
under the Securities Act of 1933 (the
‘‘Securities Act’’), and any offers or sales
of its debt securities in the United States
or to U.S. persons would be made in
transactions exempt from the
registration requirements of the
Securities Act, including private
placements to institutional accredited
investors and transactions in which the
securities may be resold to ‘‘qualified
institutional buyers’’ as contemplated
by rule 144A under the Securities Act.
The Applicant intends to use the
proceeds of any such issuance and sale
of debt securities as an additional
source of funding for its general
operations as set forth in the DBJ Act
and to extend loans, make investments
and provide advisory and consulting
services in line with its primary mission
as a policy and development financial
organization.
Applicant’s Legal Analysis
1. Section 3(a)(1)(C) of the Act defines
an ‘‘investment company’’ to include
any issuer engaged in the business of
investing, reinvesting, owning, holding
or trading in securities, and that owns
or proposes to acquire investment
securities having a value exceeding 40%
of the issuer’s total assets. Section
3(a)(2) of the Act defines ‘‘investment
securities’’ to include all securities
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except Government securities, securities
issued by employees’ securities
companies, and securities issued by
majority-owned subsidiaries of the
owner which (a) are not investment
companies, and (b) are not relying on
the exclusions from the definition of
investment company in section 3(c)(1)
or 3(c)(7) of the Act.
2. The Applicant states that, as of
March 31, 2020, it had total assets of
¥17,419,402 million (non-consolidated
basis), of which loans accounted for
¥12,521,358 million (71.9%) and the
Applicant’s securities portfolio for
¥2,400,948 million (13.8%). Such loans
and securities could be construed as
‘‘investment securities’’ within the
meaning of section 3(a)(1)(C) of the Act,
thus potentially rendering the Applicant
a prima facie ‘‘investment company’’
under the Act. As a result, the Applicant
could be deemed to be an ‘‘investment
company’’ under section 3(a)(1)(C) of
the Act.
3. Section 6(c) of the Act provides, in
relevant part, that the Commission, by
order upon application, may
conditionally or unconditionally
exempt any person, security, or
transaction from any provision of the
Act, if and to the extent necessary or
appropriate in the public interest and
consistent with the protection of
investors and the purposes fairly
intended by the policy and provisions of
the Act.
4. Rule 3a–6 under the Act excludes
foreign banks from the definition of an
investment company under the Act. A
‘‘foreign bank’’ is defined in the rule to
include a banking institution ‘‘engaged
substantially in commercial banking
activity’’ which in turn is defined to
include ‘‘extending commercial and
other types of credit, and accepting
demand and other types of deposits.’’
The Applicant represents that it is
functionally similar to a ‘‘foreign bank’’
as defined under rule 3a–6, insofar as it
(i) offers financial services and issues
financial products similar to those
offered and issued by traditional
commercial banks and (ii) is subject to
extensive oversight, supervision and
regulation by the Japanese Government.
However, because the Applicant does
not engage in deposit-taking activities, it
is not considered a commercial bank
under Japanese law. Therefore, the
Applicant states that there is
uncertainty as to whether the rule 3a–
6 exemption would be deemed to apply.
5. The Applicant also believes that the
rationale of Congress and the
Commission in promulgating rules
under the Act in exempting foreign
financial institutions applies to the
Applicant. The Applicant represents
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Federal Register / Vol. 85, No. 197 / Friday, October 9, 2020 / Notices
that it is subject to oversight by a suite
of Japanese government agencies and
regulatory authorities, and conducts its
operations in a manner that is at least
as rigorous as, if not more rigorous than,
Japanese commercial banks subject to
prudential bank regulatory financial
standards. The Applicant is subject to a
comprehensive supervisory and
regulatory regime established by the
Japanese Government as described in
the application. The Applicant is
subject to the general safety and
soundness prudential supervision and
regulation similar to that applicable to
commercial banks in Japan pursuant to
the DBJ Act, including on-site
inspections conducted by the
Commissioner of the FSA, which is also
the primary supervisor of Japanese
commercial banks via delegated
authority under the Banking Act of
Japan (the ‘‘Banking Act’’). The
Applicant also complies with certain of
provisions of the Banking Act or the Act
on Emergency Measures for the
Revitalization of Financial Functions
Act on a voluntary basis in a manner
that is similar to a Japanese commercial
bank as part of risk management
processes and methods implemented
and maintained by the Applicant in
order to ensure sound and appropriate
management of its operations.
Accordingly, the Applicant represents
that its operations do not lend
themselves to the abuses against which
the Act is directed, and states that it
believes it satisfies the standards for
relief under section 6(c) of the Act.
Applicant’s Conditions
The Applicant agrees that the order
granting the requested relief will be
subject to the following conditions:
1. In connection with any offering by
the Applicant of its debt securities in
the United States, the Applicant will
appoint an agent in the United States to
accept service of process in any suit,
action or proceeding brought with
respect to such debt securities instituted
in any state or federal court in the
Borough of Manhattan, The City of New
York, New York. The Applicant will
expressly submit to the jurisdiction of
New York State and United States
Federal courts sitting in the Borough of
Manhattan, The City of New York, New
York with respect to any such suit,
action or proceeding. The Applicant
also will waive the defense of an
inconvenient forum to the maintenance
of any such action or proceeding. Such
appointment of an agent to accept
service of process and such consent to
jurisdiction shall be irrevocable until all
amounts due and to become due in
respect thereof have been paid. No such
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17:26 Oct 08, 2020
Jkt 253001
submission to jurisdiction or
appointment of agent for service of
process will affect the right of a holder
of any such security to bring suit in any
court which shall have jurisdiction over
the Applicant by virtue of the offer and
sale of such securities or otherwise.
2. The Applicant undertakes to
provide to any person to which it offers
its debt securities in the United States
disclosure documents that are at least so
comprehensive in their description of
the Applicant and its business as those
which may be used by comparable U.S.
issuers in similar U.S. offerings of such
securities and that contain the latest
available audited annual financial
statements (and, if available, reviewed
interim financial statements) of the
Applicant. The Applicant further
undertakes to ensure that any
underwriter or dealer through whom it
makes such offers will provide such
disclosure documents to each person to
whom such offers are made prior to any
sale of securities to such offeree. Such
documents will be updated promptly to
reflect any material change in the
Applicant’s financial status and shall be
at least as comprehensive as offering
memoranda customarily used in similar
offerings in the United States. Any
offering of the Applicant’s securities in
the United States shall comply with
applicable U.S. securities and anti-fraud
laws and regulations.
3. The Applicant shall rely upon the
order so long as (i) the Applicant’s
activities conform in all material
respects to the activities described in
the application, (ii) the Applicant
continues to be regulated by the
Minister of Finance, the FSA or other
applicable Japanese regulatory
authorities as a policy and development
financial organization as described in
the application, (iii) the Applicant
continues to follow, in all material
respects, the voluntary compliance
measures described in the application,
(iv) there is no material change in the
Applicant’s primary mission or how it
is regulated as compared to today, and
(v) the Japanese Government continues
to hold at least 10% of the Applicant’s
issued share capital.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–22373 Filed 10–8–20; 8:45 am]
BILLING CODE 8011–01–P
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SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meeting; Cancellation
FEDERAL REGISTER CITATION OF PREVIOUS
ANNOUNCEMENT: 85 FR 62361, October
2, 2020.
PREVIOUSLY ANNOUNCED TIME AND DATE OF
THE MEETING: Wednesday, October 7,
2020 at 2:00 p.m.
The Closed
Meeting scheduled for Wednesday,
October 7, 2020 at 2:00 p.m., has been
cancelled.
CHANGES IN THE MEETING:
CONTACT PERSON FOR MORE INFORMATION:
For further information; please contact
Vanessa A. Countryman from the Office
of the Secretary at (202) 551–5400.
Dated: October 7, 2020.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2020–22552 Filed 10–7–20; 4:15 pm]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Advisers Act Release No. 5607/
File No. 803–00253]
D.B. Fitzpatrick & Co., Inc.
October 6, 2020.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
AGENCY:
Notice of application for an exemptive
order under Section 206A of the
Investment Advisers Act of 1940 (the
‘‘Act’’) and rule 206(4)–5(e) under the
Act.
APPLICANT: D.B. Fitzpatrick & Co., Inc.
(‘‘Applicant’’).
SUMMARY OF APPLICATION: Applicant
filed an application for an order under
Section 206A of the Act and rule
206(4)–5(e) under the Act exempting it
from rule 206(4)–5(a)(1) under the Act
to permit Applicant to receive
compensation from a government entity
for investment advisory services
provided to the government entity
within the two-year period following
contributions by a covered associate of
the Applicant to an official of the
government entity. The Commission
issued a notice of application on April
9, 2020 1 (‘‘Notice’’). The Commission
did not receive a hearing request and
issued an order on May 5, 2020 2
1 Investment Advisers Act Release No. 5475 (Apr.
9, 2020) (notice).
2 Investment Advisers Act Release No. 5946 (May
5, 2020) (order).
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Agencies
[Federal Register Volume 85, Number 197 (Friday, October 9, 2020)]
[Notices]
[Pages 64179-64181]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-22373]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 34043; 812-15164]
Development Bank of Japan Inc.
October 5, 2020.
AGENCY: Securities and Exchange Commission (the ``Commission'').
ACTION: Notice.
-----------------------------------------------------------------------
Notice of application for an order under section 6(c) of the
Investment Company Act of 1940 (``Act'') for an exemption from all
provisions of the Act.
Summary of Application: Applicant, a policy and development finance
organization established by the government of Japan (the ``Japanese
Government''), requests an order exempting it from all provisions of
the Act in connection with the offer and sale of its debt securities in
the United States.
Applicant: Development Bank of Japan Inc. (``Applicant'').
Filing Dates: The application was filed on September 25, 2020.
Hearing or Notification of Hearing: An order granting the requested
relief will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by emailing the Commission's
Secretary at [email protected] and serving applicant with a
copy of the request by email. Hearing requests should be received by
the Commission by 5:30 p.m. on October 30, 2020, and should be
accompanied by proof of service on applicant, in the form of an
affidavit or, for lawyers, a certificate of service. Pursuant to rule
0-5 under the Act, hearing requests should state the nature of the
writer's interest, any facts bearing upon the desirability of a hearing
on the matter, the reason for the request, and the issues contested.
Persons who wish to be notified of a hearing may request notification
by emailing the Commission's Secretary at [email protected].
ADDRESSES: The Commission: [email protected]. Applicant:
[email protected].
FOR FURTHER INFORMATION CONTACT: Jill Ehrlich, Senior Counsel, at (202)
551-6819, or Daniele Marchesani, Assistant Chief Counsel, at (202) 551-
6821 (Division of Investment Management, Chief Counsel's Office).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's website by searching for the file number, or applicant
using the Company name box, at https://www.sec.gov/search/search.htm or
by calling (202) 551-8090.
Applicant's Representations
1. The Applicant is a policy and development finance organization
established in October 2008 by the Japanese Government pursuant to the
Development Bank of Japan Inc. Act (the ``DBJ Act''). The Applicant's
primary mission is contributing to the sustainable growth of the
Japanese economy, promoting stable and vital financial markets in Japan
and enhancing global competitiveness of Japanese businesses. The
Applicant furthers its mission primarily through the provision of long-
term funding to enterprises and projects generally in line with the
policy objectives of the Japanese Government, through loan financing
and other financing methods (including equity investments).
2. In serving its mission, the Applicant offers a broad range of
financial products and services to its clients similar to those offered
by Japanese commercial banks. In recent years, the Applicant has also
undertaken specific mandates in two key Japanese Government-sponsored
funding initiatives: (i) ``Crisis Response Operations,'' a program
designed to provide appropriate financing to large- and medium-sized
enterprises that are temporarily experiencing a downturn in business
performance and funding difficulties due to a ``crisis'' such as
turmoil in the domestic or global financial system, large-scale natural
disasters, acts of terrorism or medical epidemics, and (ii) ``Special
Investment Operations,'' a temporary investment program designed to
supplement and encourage private-sector financing to support growth
initiatives of enterprises that contribute to self-reliant development
of regional economies, contribute to development of markets for growth
capital, or promote the competiveness of Japanese enterprises
generally.
3. As of March 31, 2020, the Applicant's most recently completed
fiscal year end, a majority of the Applicant's assets consisted of
loans and other securities such as equity in other entities and a
variety of debt instruments. Because such loans and securities could be
considered ``investment securities'' within the meaning of section
3(a)(1)(C) of the Act, the Applicant may be considered an investment
company, and it requests an exemption from all provisions of the Act.
4. The Japanese Government currently owns 100% of the Applicant's
issued share capital. However, the DBJ Act (including successive
amendments thereto) contemplates a plan to fully privatize the
Applicant over time. Specific timing for commencing or completing the
Applicant's privatization has not been determined, and under partial
amendments to the DBJ Act effective in 2015, the Japanese Government is
obligated to hold more than one-half of the total issued share capital
of the Applicant until the
[[Page 64180]]
completion of its Special Investment Operations, which is currently
scheduled for March 31, 2031, and more than one-third of the
Applicant's issued share capital for an indefinite period with a view
to ensuring the sufficient and appropriate implementation of the Crisis
Response Operations. The Applicant notes that the anticipated
privatization of the Applicant, as set forth in the DBJ Act, is a part
of broader efforts to reform and streamline policy finance and special
public institutions in Japan, such as the Applicant, that began in the
early 2000s.
5. As described more fully in the application, the Applicant, as a
development bank, is substantially engaged in banking activity that is
customary for commercial banks in Japan. However, because the Applicant
does not engage in deposit-taking activities, it is not considered a
commercial bank under Japanese law. Despite the formal differences in
applicable rules and regulations, the Applicant believes that it is
subject to a set of regulatory requirements that, in combination with
the Applicant's voluntary policies, are functionally equivalent to that
applied to Japanese commercial banks in terms of the regulation of a
bank's safety and soundness and financial risk exposures. The Applicant
believes the DBJ Act's supervisory provisions, combined with
supplemental oversight by multiple Japanese government agencies and
regulatory authorities and the Applicant's voluntary compliance with
key prudential regulatory metrics, constitute a set of regulatory
protections that meet or exceed those applicable to Japanese commercial
banks. In particular, the Applicant (i) is subject to extensive
oversight, supervision and regulation by the Japanese Government,
primarily by the Minister of Finance and the Commissioner of the
Financial Services Agency (the ``FSA'') (Japan's umbrella financial
regulator and primary bank regulator), including on-site inspections
conducted by the FSA in a manner similar to those conducted for
commercial banks in Japan (i.e., in accordance with principles and
procedures for bank examinations established in FSA guidance
documents), (ii) maintains internal controls and risk management
systems intended to be consistent with expectations set by the FSA,
such as a credit quality ``self-assessment'' system, in line with
domestic industry best practices, and (iii) voluntarily monitors and
controls its balance sheet and risk exposures at levels that meet or
exceed regulatory requirements applicable to Japanese commercial banks
as part of their prudential banking regulation, such as risk-based
capital and leverage requirements under Basel III and credit quality
disclosure standards under Japanese banking law.
6. The Applicant procures funds by borrowing from the Japanese
Government and private financial institutions, issuing debt securities
in the Japanese and international capital markets and accumulating
funds through its business operations, primarily loan recoveries. The
Applicant uses such funds to extend loans to and make other investments
in primarily Japanese but also international enterprises and projects
in order to fulfill its primary mission. In addition, since the
Applicant's establishment in 2008, the Japanese Government has made
capital contributions in the aggregate amount of [yen]631.0 billion
(approximately $5.8 billion), primarily to fund the Crisis Response
Operations and Special Investment Operations.
7. The Applicant proposes to issue and sell its debt securities not
guaranteed by the Japanese Government in the United States, including
under its Global Medium Term-Notes (GMTN) program, from time to time.
The Applicant does not intend to offer, issue or sell any securities in
public offerings under the Securities Act of 1933 (the ``Securities
Act''), and any offers or sales of its debt securities in the United
States or to U.S. persons would be made in transactions exempt from the
registration requirements of the Securities Act, including private
placements to institutional accredited investors and transactions in
which the securities may be resold to ``qualified institutional
buyers'' as contemplated by rule 144A under the Securities Act. The
Applicant intends to use the proceeds of any such issuance and sale of
debt securities as an additional source of funding for its general
operations as set forth in the DBJ Act and to extend loans, make
investments and provide advisory and consulting services in line with
its primary mission as a policy and development financial organization.
Applicant's Legal Analysis
1. Section 3(a)(1)(C) of the Act defines an ``investment company''
to include any issuer engaged in the business of investing,
reinvesting, owning, holding or trading in securities, and that owns or
proposes to acquire investment securities having a value exceeding 40%
of the issuer's total assets. Section 3(a)(2) of the Act defines
``investment securities'' to include all securities except Government
securities, securities issued by employees' securities companies, and
securities issued by majority-owned subsidiaries of the owner which (a)
are not investment companies, and (b) are not relying on the exclusions
from the definition of investment company in section 3(c)(1) or 3(c)(7)
of the Act.
2. The Applicant states that, as of March 31, 2020, it had total
assets of [yen]17,419,402 million (non-consolidated basis), of which
loans accounted for [yen]12,521,358 million (71.9%) and the Applicant's
securities portfolio for [yen]2,400,948 million (13.8%). Such loans and
securities could be construed as ``investment securities'' within the
meaning of section 3(a)(1)(C) of the Act, thus potentially rendering
the Applicant a prima facie ``investment company'' under the Act. As a
result, the Applicant could be deemed to be an ``investment company''
under section 3(a)(1)(C) of the Act.
3. Section 6(c) of the Act provides, in relevant part, that the
Commission, by order upon application, may conditionally or
unconditionally exempt any person, security, or transaction from any
provision of the Act, if and to the extent necessary or appropriate in
the public interest and consistent with the protection of investors and
the purposes fairly intended by the policy and provisions of the Act.
4. Rule 3a-6 under the Act excludes foreign banks from the
definition of an investment company under the Act. A ``foreign bank''
is defined in the rule to include a banking institution ``engaged
substantially in commercial banking activity'' which in turn is defined
to include ``extending commercial and other types of credit, and
accepting demand and other types of deposits.'' The Applicant
represents that it is functionally similar to a ``foreign bank'' as
defined under rule 3a-6, insofar as it (i) offers financial services
and issues financial products similar to those offered and issued by
traditional commercial banks and (ii) is subject to extensive
oversight, supervision and regulation by the Japanese Government.
However, because the Applicant does not engage in deposit-taking
activities, it is not considered a commercial bank under Japanese law.
Therefore, the Applicant states that there is uncertainty as to whether
the rule 3a-6 exemption would be deemed to apply.
5. The Applicant also believes that the rationale of Congress and
the Commission in promulgating rules under the Act in exempting foreign
financial institutions applies to the Applicant. The Applicant
represents
[[Page 64181]]
that it is subject to oversight by a suite of Japanese government
agencies and regulatory authorities, and conducts its operations in a
manner that is at least as rigorous as, if not more rigorous than,
Japanese commercial banks subject to prudential bank regulatory
financial standards. The Applicant is subject to a comprehensive
supervisory and regulatory regime established by the Japanese
Government as described in the application. The Applicant is subject to
the general safety and soundness prudential supervision and regulation
similar to that applicable to commercial banks in Japan pursuant to the
DBJ Act, including on-site inspections conducted by the Commissioner of
the FSA, which is also the primary supervisor of Japanese commercial
banks via delegated authority under the Banking Act of Japan (the
``Banking Act''). The Applicant also complies with certain of
provisions of the Banking Act or the Act on Emergency Measures for the
Revitalization of Financial Functions Act on a voluntary basis in a
manner that is similar to a Japanese commercial bank as part of risk
management processes and methods implemented and maintained by the
Applicant in order to ensure sound and appropriate management of its
operations. Accordingly, the Applicant represents that its operations
do not lend themselves to the abuses against which the Act is directed,
and states that it believes it satisfies the standards for relief under
section 6(c) of the Act.
Applicant's Conditions
The Applicant agrees that the order granting the requested relief
will be subject to the following conditions:
1. In connection with any offering by the Applicant of its debt
securities in the United States, the Applicant will appoint an agent in
the United States to accept service of process in any suit, action or
proceeding brought with respect to such debt securities instituted in
any state or federal court in the Borough of Manhattan, The City of New
York, New York. The Applicant will expressly submit to the jurisdiction
of New York State and United States Federal courts sitting in the
Borough of Manhattan, The City of New York, New York with respect to
any such suit, action or proceeding. The Applicant also will waive the
defense of an inconvenient forum to the maintenance of any such action
or proceeding. Such appointment of an agent to accept service of
process and such consent to jurisdiction shall be irrevocable until all
amounts due and to become due in respect thereof have been paid. No
such submission to jurisdiction or appointment of agent for service of
process will affect the right of a holder of any such security to bring
suit in any court which shall have jurisdiction over the Applicant by
virtue of the offer and sale of such securities or otherwise.
2. The Applicant undertakes to provide to any person to which it
offers its debt securities in the United States disclosure documents
that are at least so comprehensive in their description of the
Applicant and its business as those which may be used by comparable
U.S. issuers in similar U.S. offerings of such securities and that
contain the latest available audited annual financial statements (and,
if available, reviewed interim financial statements) of the Applicant.
The Applicant further undertakes to ensure that any underwriter or
dealer through whom it makes such offers will provide such disclosure
documents to each person to whom such offers are made prior to any sale
of securities to such offeree. Such documents will be updated promptly
to reflect any material change in the Applicant's financial status and
shall be at least as comprehensive as offering memoranda customarily
used in similar offerings in the United States. Any offering of the
Applicant's securities in the United States shall comply with
applicable U.S. securities and anti-fraud laws and regulations.
3. The Applicant shall rely upon the order so long as (i) the
Applicant's activities conform in all material respects to the
activities described in the application, (ii) the Applicant continues
to be regulated by the Minister of Finance, the FSA or other applicable
Japanese regulatory authorities as a policy and development financial
organization as described in the application, (iii) the Applicant
continues to follow, in all material respects, the voluntary compliance
measures described in the application, (iv) there is no material change
in the Applicant's primary mission or how it is regulated as compared
to today, and (v) the Japanese Government continues to hold at least
10% of the Applicant's issued share capital.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-22373 Filed 10-8-20; 8:45 am]
BILLING CODE 8011-01-P