Recommendation 1 Recommendation 2 Recommendation 3 Recommendation 4

Recommendation 5 Recommendation 6 Recommendation 7 Recommendation 8

Market selection

Recommendation 7

Investor compliance with the laws and regulations in the home countries of their investments should be part of their regulators' due diligence process. They, in turn, should be treated equitably in the home country of their investments especially in respect to their rights to shareholder benefits and concessionary arrangements under double tax agreements.

1.	Do domestic regulators monitor the procedures in place at their locally based cross-border custodians to assure compliance with the laws and regulations of the home countries of their investments?	The Financial Services Agency (the "FSA"), which is the domestic regulatory body in Japan, monitors the actions of Japan based custodian banks. The FSA conducts periodical examinations of these domestic custodians, including Japanese custodian banks' overseas services. (The standard market practice is for custodian banks to comply with the laws of the country in which their investments are made. This practice is monitored by the FSA, who verify compliance with this practice during their examinations. As well, the FSA checks the due diligence done by custodian banks prior to the appointment of overseas agents, in order to ensure that the overseas agents are compliant with their own local laws and regulations. There is normally a strong dependency on overseas agents to advise custodian banks on compliance with the laws and regulations of the overseas agents’ home jurisdictions. This is a standard contractual requirement imposed by Japanese custodian banks upon their overseas agents.)
2.	What are the areas (e.g. benefits, investor compensation) where foreign investors are not treated in the same way as local investors?	Basically, there is no discrimination under the Japanese Law. However, there are certain restrictions applicable to direct investments to cover exceptional cases as a matter of national interest. Besides there are 20 listed companies, of which foreign ownership is restricted to a certain percentage of outstanding shares by law as of the end of August 2001. It should be noted that stocks subject to foreign ownership limits must be registered under each individual foreign owner’s name so that the foreign owner limitation for those stocks will be controlled by the issuing company. In this regard, stocks subject to foreign ownership limits must be withdrawn form JASDEC by non-resident shareholders.
3.	Can sales proceeds and income be repatriated without any restrictions?	There are no restrictions of repatriating sales proceeds and income. However there are some reporting requirements in certain cases.
4.	Are double tax agreements simple to apply, and do foreign investors receive promptly their full entitlement to dividends and interest payments?	It is quite simple to apply any concessionary rates under tax agreements. Foreign investors promptly receive full entitlement of dividends and interest payments since issuing companies deduct applicable tax amount at source.