The other day, we received a request to register the ownership transfer of a piece of property in Japan where the seller was a Malaysian individual residing in Singapore and the buyer was a BVI entity. The following is a brief description of the process involved.
Seller’s Signature Certificate
When the seller is Japanese, a copy of that person’s personal seal certificate (inkan shomeisho) is attached to the registration application, however in this case since the seller is a non-Japan resident foreign national, a seal certificate could not be obtained. In such situations, a Signature Certificate notarized in the country of the seller’s citizenship is attached in lieu of a seal certificate. Therefore, the seller arranged to have his Signature Certificate notarized by the Malaysian consulate office in Singapore.
BVI Entity Certificate
When the buyer is a Japanese entity, a copy of that entity’s corporate registration certificate is attached to certify its address and legal representative. In the case of foreign entity, it is necessary to attach either (1) a certificate issued by a government body in the country where the company was incorporated certifying the above, or (2) if no such certificate is issued, prepare and have an Affidavit notarized that certifies the foreign corporation’s name, address and legal representative.
In the BVI, a Certificate of Incumbency which states the entity’s name, address and legal representative can be issued by its Registered Agent, however since a Registered Agent is not a public authority, the certificate must in addition be notarized by a BVI Notary Public.
Conflict of Interest
Furthermore, since the seller himself was appointed as a director of the BVI entity, we also had to consider the issue of a conflict of interest with respect to this transaction.
In the case of a Japanese entity, the purchase and sale of property between a director and the company is considered a conflict of interest and accordingly must receive approval of either a shareholder meeting or the Board of Directors. In addition, since the shareholder meeting (or Board of Director meeting) minutes stating the approval of the transaction, is considered as a “Document certifying third party approval” under the Ordinance for Real Estate Registration, it must be attached to the registration application.
Provisions related to conflict of interest transactions can be found in Articles 124 and 125 of the BVI Companies Act. According to these provisions, while disclosure to the Board is required, since approval is not necessary, we believe it is possible to interpret this to mean that a “Document certifying third party approval” under the Ordinance for Real Estate Registration is not needed.
Notice to Bank of Japan Pursuant to Foreign Exchange and Foreign Trade Act (FEFTA)
When a non-resident buyer acquires domestic real estate, in principle, a notice must be submitted to the Bank of Japan under the FEFTA. However, since the seller is also a non-resident, in this case the filing of such notice is unnecessary and accordingly a notice was not filed.
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