Washington Law Review


Foreigners have been freely permitted to purchase shares of Japanese corporations since 1950, with the condition that the principal would not be freely remitted abroad. Until 1960 little attention was paid to this opportunity. The recent increase in foreign interest in Japanese equities has coincided with the easing of currency and exchange restrictions, particularly the shortening of the waiting period for the conversion of invested principal to the original currency of the investor. As of April 1, 1963, the waiting period was entirely eliminated, with the expectation of increased foreign investments. Because of the significant increase of foreign offerings in the U.S. affecting the U.S. Balance of Payments, on July 17, 1963, President Kennedy proposed the enactment of a United States Interest Equalization Tax of fifteen per cent on purchases of foreign securities. This proposal has dampened the demand in the United States for foreign securities—Japanese or other. There remains, however, a growing awareness of Japan's investment opportunities. Among these opportunities is the institution which has been described as "the best medium for investment of any vehicle yet devised"—the investment trust. The advantages of investing through investment trusts are much more compelling when investing in foreign securities. It is interesting, but perhaps not surprising, that the pioneer of all investment trusts was formed for investing in foreign and colonial stocks. It is the purpose of this article to examine: a) the present structure of Japan's investment trust industry in its own legal, historical, and economic setting; b) some similarities of and differences between U.S. and Japanese law and structures; and c) some problems common to both countries and some problems peculiar to Japan that may make a comparative study profitable.

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