Fintech

2024
Eighth Edition

Contributing Editors:

David Ives, David Shone & James Cook
Slaughter and May

Table of Contents

Expert Analysis Chapter
1

Big Tech and Financial Services – Competition, Co-operation or Convergence?
Charles Randell CBE & David Shone, Slaughter and May

Q&A Chapters
5

17

23

30

37
43

53
59

65

73

Australia
Gilbert + Tobin: Peter Reeves, Emily Shen &Meg Dalco
BahamasHiggs & Johnson: Christel Sands-Feaste &Portia J. Nicholson
Bahrain
Hassan Radhi & Associates: Noora Janahi,
Saifuddin Mahmood, Abdulla Alkhaja &Mohamed Altraif
BrazilMachado, Meyer, Sendacz e Opice Advogados:
Pedro Nasi, Marcelo de Castro Cunha Filho,
Gabriel Benevenuto Libanori &Ana Carolina Nista Gonçalves
British Virgin Islands
Appleby (BVI) Limited: Andrew Jowett
CanadaMcMillan LLP: Pat Forgione, Robert Piasentin,
Isabelle Guevara & Alice Ahmad
China
Fangda Partners: Zhiyi Ren & Lily Yin
Colombia
Lloreda Camacho & Co: Carlos Carvajal &Santiago Garzón
Cyprus
E & G Economides LLC: Xenia Kasapi &George Economides
Czech Republic
Glatzová & Co.: Libor Němec, Andrea Pišvejcová,
Gabriela Prášková & Erika Novotná

108

114

121
135

145

152

162

167

174
181

187

Gibraltar
Ramparts: Peter Howitt, David Borge &Nicholas Borge
GreeceSioufas & Associates Law Firm: Marios D. Sioufas,
Aikaterini Gkana & Athanasia Vaiopoulou
Hong Kong
Slaughter and May: Vincent Chan
India
G&W Legal: Manavi Jain, Anup Kumar &Arjun Khurana
Indonesia
Makes & Partners: Niki Satyapeni, Astama Putra &Felicia Tamarind
IrelandMason Hayes & Curran LLP: Sarah Cloonan &Katie Keogh
Isle of Man
Appleby (Isle of Man) LLC: Claire Milne &Katherine Garrood
Japan
Chuo Sogo LPC: Koji Kanazawa,
Katsuya Hongyo & Shun Komiya
Kenya
MMW Advocates LLP: Stella Muraguri
Korea
Yoon & Yang LLC: Kwang-Wook Lee, Ju Yong Lee,
Yong Ho Choi & Min Seok Joo
Lithuania
ADON legal: Donatas Šliora & Marius Matiukas
Malaysia
Shearn Delamore & Co.: Christina Kow &Timothy Siaw

Denmark
Gorrissen Federspiel: Tue Goldschmieding,Morten Nybom Bethe & David Telyas

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87

Egypt
Shahid Law Firm: Rehan El-Bashary

202

Malta
GTG: Dr. Ian Gauci & Dr. Cherise Abela Grech

93

FranceBredin Prat: Bena Mara & Adrien Soumagne

208

MexicoLawtæm: Sergio Legorreta

Ghana
Asiedu & Yorke: Kwesi Dadzie-Yorke,
Gregory K.B. Asiedu, Edinam Ama PriscillaAmekpleame & Nii Tetteh-Djan Abbey

214

80

101

Netherlands
De Brauw Blackstone Westbroek: Else Rowel,
Marit van Zandvoort, Pete Lawley &Mariska Enzerink

Q&A Chapters Continued
224

234

243

253

261

270
277

NorwayAdvokatfirmaet BAHR AS: Markus Nilssen,
Eirik Basmo Ellingsen & Kari Bryge Ødegården
Philippines
Gorriceta Africa Cauton & Saavedra: Mark S. Gorriceta,
Kristine T. Torres, Liane Stella R. Candelario &Ma. Katrina Rafaelle M. Ortiz
Portugal
Uría Menéndez – Proença de Carvalho:
Hélder Frias & Domingos Salgado
Romania
VD Law Group: Sergiu-Traian Vasilescu & Luca Dejan
Jasill Accounting & Business: Flavius Valentin Jakubowicz
Saudi Arabia
BSA Ahmad Bin Hezeem & Associates LLC:
Jean Abboud & Patrick Chabhar

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296

307

314
321

328

Singapore
KGP Legal LLC: Kenneth Pereire & Lin YingXin
Spain
Uría Menéndez: Leticia López-Lapuente &Isabel Aguilar Alonso

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SwedenMannheimer Swartling: Anders Bergsten &Carl Johan Zimdahl
Switzerland
Bär & Karrer: Dr. Daniel Flühmann &Dr. Peter Ch. Hsu
TaiwanXirilaw Attorneys: Sabine Lin, Yen-Chou Pan,
Peter Lin & Maiya Mai
Turkey/TürkiyeÜnsal Law Firm: Burçak Ünsal & Tuğçe Bozkurt
United Arab Emirates
Afridi & Angell: Abdus Samad, Alex Vromans &Zaid Mahomed
United Kingdom
Slaughter and May: David Shone, James Cook &David Ives
USA
Wilmer Cutler Pickering Hale and Dorr:
Franca Harris Gutierrez, Robert Finkel,
Tiffany J. Smith & Zachary Goldman

Chapter 23

Japan

Japan
Koji Kanazawa

Katsuya Hongyo

Chuo Sogo LPC

12The Fintech Landscape

1.1 Please describe the types of fintech businesses
that are active in your jurisdiction and the state of thedevelopment of the market, including in response to the
COVID-19 pandemic and ESG (Environmental, Social andGovernance) objectives. Are there any notable fintech
innovation trends of the past year within particularsub-sectors (e.g. payments, asset management, peerto-peer lending or investment, insurance and blockchain
applications)?

The fintech movement in Japan first started in the payment
sector – in particular, the enactment of the Payment Services
Act in 2010 made it possible for non-banks to provide payment
services. Currently, there are various types of payment services
available in Japan (both prepaid and postpaid). As a recent
trend, several companies have launched Buy Now, Pay Later(BNPL) services as one of their postpaid payment options for
consumers. In September 2021, PayPal purchased Paidy, Inc., a
BNPL service provider, for JPY 30 billion, which was reported
as the largest takeover of a Japanese startup at that moment.
Methods for payment have also diversified. Smartphones havebecome a popular instrument for contactless payments via theuse of NFC or QR codes. PayPay is the most popular QR code
payment service.
Personal financial management (PFM) services also attracted
public attention at the early stage of the fintech movement inJapan. This type of service allows users to collect their digitalfinancial data from several banks, credit cards and investment
accounts, and aggregate such data so that they may analyse theirpersonal financial situation. Money Forward, Inc. is a popular
service provider which started as such an account aggregation
service and went public in 2017. This type of service became
the driving force for the 2017 amendments to the Banking Act,with which service providers were required to be registered with
the Japanese Financial Services Agency ( JFSA) in order to havean API connection with banks.
Several types of crowdfunding services are available in Japan,
including donation-based crowdfunding, purchase-based (rewardbased) crowdfunding and investment-based crowdfunding.
Investment-based crowdfunding services became widely available
due to the 2014 amendment of the Financial Instruments andExchange Act. Under the Act, when a service provider intends
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Shun Komiya

to operate an investment-based crowdfunding platform, it
is required to be registered as a Type II Financial Instruments
Business engaging in electronic public offering services.
Peer-to-peer lending services in Japan are structured by
the combination of debt and equity. Lenders provide equity
investments (Tokumei Kumiai Shusshi) in a service provider, while
such provider makes loans to borrowers. After 2017, many peerto-peer service providers were subject to administrative orders
in relation to serious false disclosures/fraudulent conduct. Someregulatory enhancement/improvement for peer-to-peer lending
services will be put in place in the near future.
The 2016 amendment of the Payment Services Act introduced
the regulation for crypto-asset exchange business providers.
The Japanese regulator had previously taken a strict approachagainst crypto-related business. In 2022, although Web3 becamea buzzword and positive views regarding crypto spread, withthe failure of FTX, the general public still perceive crypto withuncertainty.
In June 2023, the amended Payment Services Act came into
effect, which clarifies the regulatory position of “Electronic
Payment Instruments”, i.e., so-called “stable coins”, andintroduces a registration system for the intermediary acts ofbuying, selling, exchanging, managing and mediating such
Electronic Payment Instruments as a business.
1.2 Are there any types of fintech business that are atpresent prohibited or restricted in your jurisdiction (forexample cryptocurrency-based businesses)?

No, there are not.

22

Funding For Fintech

2.1 Broadly, what types of funding are available for new
and growing businesses in your jurisdiction (coveringboth equity and debt)?

There are various types of funding schemes available for startups
in Japan. The following are examples of financing methods for
new and growing businesses:
1.
EquityInvestments by ordinary shares are the simplest way toacquire equity investments. For startup investments,

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Japan

2.

preferred share structure is also commonly used, which isthe combination of several rights for shareholders such as
with/without voting rights, preference in dividends andresidual assets.
Recently, the “J-KISS” type of convertible equity has
gained popularity as a quick method for financing
without the need for valuation at the issuance of equity.
Convertible bonds with share acquisitions rights can beused by venture capital funds for investment in startups
that prefer to avoid dilution.
Debt
Generally, banks provide corporate loans to startups andreceive a guarantee from the Credit Guarantee Corporations(CGCs) in return. CGCs are public institutions that support
small and medium enterprises (SMEs) by serving as publicguarantors to make it easier for them to borrow funds.
In this regard, CGCs provide guarantees for startups toborrow money (up to JPY 35 million) from banks without
any mortgages and guarantees.
Japan Finance Corporation, a public corporation wholly
owned by the Japanese government, lends money (up to
JPY 30 million) to startups without any mortgages orguarantees.
2.2 Are there any special incentive schemes forinvestment in tech/fintech businesses, or in small/medium-sized businesses more generally, in yourjurisdiction, e.g. tax incentive schemes for enterpriseinvestment or venture capital investment?

The angel tax credit programme is available for venture
investment. This programme is applicable to individual investors
making investments in certain startups. Investors may receive
tax credit for a certain amount. In addition, investors may
deduct capital loss incurred through such venture investmentsfrom their capital gains for three years in total.
2.3 In brief, what conditions need to be satisfied for abusiness to IPO in your jurisdiction?

In 2022, the Tokyo Stock Exchange (TSE) restructured themarkets into three segments, i.e., “Prime Market”, “Standard
Market” and “Growth Market”.
1.
The Prime Market is for companies “which haveappropriate levels of market capitalisation (liquidity) to beinvestment instruments for many institutional investors,
keep a higher quality of corporate governance, and commit
to sustainable growth and improvement of medium- tolong-term corporate value, putting constructive dialogue
with investors at the center”.
2. The Standard Market is for companies “which haveappropriate levels of market capitalisation (liquidity) to
be investment instruments in the open market, keep thebasic level of corporate governance expected of listedcompanies, and commit to sustainable growth andimprovement of medium- to long-term corporate value”.
3.
The Growth Market is for companies “which have acertain level of market value by disclosing business plans
for realising high growth potential and their progress
towards these appropriately and in a timely manner, but at
the same time pose a relatively high investment risk fromthe perspective of business track record”.
Listing requirements for the Growth Market are as follows:1.
Business Plan
a. A reasonable business plan is in place.

b. The principle underwriter submits its basis for its
opinion on the company’s high growth potential.
c. Appropriate disclosure on business plans and mattersrelated to high growth potential (business model,
market size, source of its competitive advantages, andbusiness risk).
Liquidity
a. At least 150 shareholders.
b. At least 1,000 units of tradable shares.
c. At least JPY 0.5 billion market capital of tradable
shares.
Governancea. A tradable share ratio of at least 25%.

2.

3.

2.4 Have there been any notable exits (sale of businessor IPO) by the founders of fintech businesses in yourjurisdiction?

The recent notable exits of founders of fintech companies inJapan are listed below:
1.
On December 22, 2021, Finatext Holdings Inc., anenterprise system provider for insurance companies andsecurity brokerages, listed on the TSE Mothers market(currently the Growth Market).
2. On December 15, 2021, Net Protections Holdings Inc., a
BNPL service provider, listed on the first section of theTSE (Prime Market).
3.
On September 7, 2021, it was announced that Paidy Inc.,a BNPL service provider, would be acquired by PayPal
Holdings, Inc. for JPY 30 billion.
4.
On July 13, 2021, it was announced that pring Inc., apayment service provider, would be acquired by Google.

32

Fintech Regulation

3.1 Please briefly describe the regulatory framework(s)for fintech businesses operating in your jurisdiction, andthe type of fintech activities that are regulated.

As fintech can involve a wide variety of businesses, the financial
regulations that may apply depends on the specific details of eachbusiness. Depending on the services provided by the business,registration or notification may be required under financial
regulations. The main financial regulations are listed below.
A business operator who intends to start a remittance businessmust pay attention to regulations under the Payment Services
Act. Business operators other than banks must be registered or
licensed as a funds transfer service provider under the Payment
Services Act in order to carry out exchange transactions. Underthe revised Payment Services Act, which came into effect in May
2021, the funds transfer service is divided into three categories:
Type 1 Funds Transfer Service; Type 2 Funds Transfer Service;
and Type 3 Funds Transfer Service.
Type 1 funds transfer service providers can handle highvalue remittances of JPY 1 million or more, but they mustobtain a stricter licence than registration in order to start thisbusiness. In addition, the Payment Services Act prohibits Type
1 funds transfer service providers from accepting funds without
specific remittance instructions regarding the amount and dateof remittance, and from accepting funds beyond the periodrequired for the funds transfer. Type 2 fund transfer service
providers can handle remittances of JPY 1 million or less, butmust obtain registration. The Payment Services Act stipulates
that Type 2 fund transfer service providers are obligated todeposit in trust an amount equivalent to the accumulated funds,
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Chuo Sogo LPC

and to pay out funds unrelated to remittance when the depositedfunds exceed JPY 1 million. Type 3 fund transfer service
providers can handle remittances of JPY 50,000 or less, butmust obtain registration. Type 3 fund transfer service providers
are permitted to manage funds entrusted by users in deposits
and savings separately from their own funds, unlike Type 2
fund transfer service providers, however Type 3 fund transfer
service providers are obligated to undergo an external audit by acertified public accountant or an auditing firm if they choose to
manage their funds through deposits and savings.
A business operator who intends to start a business related toprepaid electronic money/points is required to register or make a
notification under the Payment Services Act if the business intends
to issue “prepaid payment instruments”. There are two types ofprepaid payment instruments: “prepaid payment instruments for
one’s own business”; and “prepaid payment instruments for athird-party business”. “Prepaid payment instruments for one’s
own business” are those that can be used only when purchasing
goods or services from the issuer itself. Issuers of “prepaid
payment instruments for one’s own business” must notify the
Local Finance Bureau if the total unused balance exceeds JPY 10
million as of March 31 or September 30 in any given year (either ofthese two dates, the so-called “Base Date”). The notification must
be made within two months from the Base Date. On the other
hand, “prepaid payment instruments for a third-party business”
are prepaid payment instruments other than “prepaid payment
instruments for one’s own business”, and the issuer is required toregister in advance with the Local Finance Bureau.
BNPL refers to a service that allows consumers to pay forthe goods they purchase at a future date. In Japan, there isno direct regulation of BNPL; however, businesses utilising
BNPL financing may be subject to the Installment Sales Act,
which regulates businesses operating instalment payment
services. Specifically, the Installment Sales Act stipulates thatbusinesses that operate instalment payment services for a period
over two months must be registered as businesses involved
in “Intermediation of Comprehensive Credit Purchases” or“Intermediation of Individual Credit Purchases”.
Businesses that want to provide a crowdfunding platform forsoliciting investments on the internet need to pay attention tofinancial regulations. There are three types of crowdfunding:donations; purchases; and investments. Of these, businesses
that engage in donation-type or purchase-type crowdfunding
do not need to report under the Financial Instruments andExchange Act. On the other hand, businesses that operate
investment-type crowdfunding are required to register or makea notification under the Financial Instruments and ExchangeAct, depending on the method of investment from investors.
There are various types of investment-related robo-advisors,
and whether registration under the Financial Instruments andExchange Act is required depends on the specific content
of the services provided. For example, a business operator
that provides investment advice to investment managementcompanies must be registered as an investment advisory/agency
business because it advises on what investment decisions tomake based on the analysis of the value of securities or the valueof financial products. On the other hand, a business operator
that provides asset management services to general investors
must be registered as an investment management business inorder to place orders for transactions with securities companies.
Furthermore, when providing a fully automated service togeneral investors, the business operator is also required toregister as a Type I Financial Instruments Business.
There are various types of insurtech, and whether a licenceor registration under the Insurance Business Act is required
depends on the specific content of the services provided.
Specifically, if the business to be conducted falls under the
Fintech 2024

category of an “insurance business”, the business operator mustobtain a licence or registration under the Insurance BusinessAct. Under the Insurance Business Law, the term “insurance
business” refers to insurance which, among other things, (a) was
offered in consideration of payment of insurance premiums,and (b) promised to make compensation for damages thatmight occur due to certain accidents. Furthermore, a business
operator of a business involved in “insurance solicitation”
must also be registered. The Insurance Business Law defines“insurance solicitation” as “acting as an agent or intermediaryfor the conclusion of insurance contracts”.
3.2 Is there any regulation in your jurisdiction
specifically directed at cryptocurrencies or
cryptoassets?

A business operator that operates a crypto-asset exchange business must be registered as a crypto-asset exchange service provider
under the Payment Services Act. A crypto-asset exchange service
entails (1) buying and selling crypto assets or exchanging themfor other crypto assets, (2) acting as intermediary, brokerage oragency for such activities, (3) managing of users’ money in relation to those activities, and (4) managing crypto assets for others.
Even after registration, crypto-asset exchanges are subject tovarious regulations aimed at user protection and establishinganti-money laundering (AML) measures. For example, a cryptoasset exchange service provider is obligated to explain to usersthat crypto assets are not based on legal tender and that the value
may fall below the purchase price. In addition, crypto-asset
exchange service providers must manage users’ assets separately,
and are obligated to undergo external audits by certified public
accountants or audit firms. In addition, with respect to AML
measures, crypto-asset exchanges are obliged to (a) confirm thetime of each transaction, (b) create and store records, and (c)report suspicious transactions to the authorities under the Act
on Prevention of Transfer of Criminal Proceeds.
3.3 Are financial regulators and policy-makers inyour jurisdiction receptive to fintech innovation andtechnology-driven new entrants to regulated financial
services markets, and if so how is this manifested? Are
there any regulatory ‘sandbox’ options for fintechs inyour jurisdiction?

The JFSA has adopted a positive attitude toward fintech trends.
In fact, the JFSA has established the Fintech Support Desk tasked
with providing a streamlined process for fintech businesses.
Furthermore, in 2018, the Japanese government created aregulatory sandbox system to encourage business activities using
new technologies and business models. This system enables
rapid demonstration by creating an environment in which newtechnologies can be demonstrated without being subject to theapplication of existing regulations.
3.4 What, if any, regulatory hurdles must fintech
businesses (or financial services businesses offering
fintech products and services) which are establishedoutside your jurisdiction overcome in order to accessnew customers in your jurisdiction?

Foreign fintech companies, if based in Japan, are subject tothe same licensing or registration requirements that apply to
Japanese companies. And even if they are only based overseas,
foreign fintech companies that serve Japanese customers arelikely to be considered to have activities in Japan.

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Japan

42 Other Regulatory Regimes /Non-Financial Regulation
4.1 Does your jurisdiction regulate the collection/use/transmission of personal data, and if yes, what is thelegal basis for such regulation and how does this apply
to fintech businesses operating in your jurisdiction?

Yes; in Japan, the Act on the Protection of Personal Information
regulates the collection/use/transmission of personal data.
All businesses that handle one or more types of personal
information are subject to the Act on the Protection of Personal
Information. Consequently, fintech businesses that handle
personal information are subject to this law.
4.2 Do your data privacy laws apply to organisations
established outside of your jurisdiction? Do your data
privacy laws restrict international transfers of data?

The Act on the Protection of Personal Information applies tobusiness operators in a foreign country that acquire personal
information while providing products or services to persons
in Japan. However, business operators located in a foreigncountry who are subject to the Act on the Protection of Personal
Information are exempted from the application of some of its
provisions, including, for example, the obligation to confirm
and record when receiving personal data from a third party.
Before a company may provide personal data to a third party
in a foreign country, it must, as a general rule, obtain the consent
of the person to the effect that the provision to the third party
in a foreign country is permitted. However, in certain cases,
such as when the third party to whom the information is to beprovided is located in a country that has received an adequacy
decision from Japan, or when the third party has established acertain system, said consent is not necessary.
4.3 Please briefly describe the sanctions that apply for
failing to comply with your data privacy laws.

If a business operator handling personal information violates
the Personal Information Protection Law, the Personal
Information Protection Commission can collect reports,
conduct on-site inspections, give guidance and advice, and issue
recommendations and orders to the business operator.
Business operators will be subject to criminal penalties if they
do not respond to the Commission’s request for report collection
or on-site inspection, make a false report in response to therequest for report collection, or violate the Commission’s orders.
4.4 Does your jurisdiction have cyber security laws
or regulations that may apply to fintech businesses
operating in your jurisdiction?

In November 2014, the government enacted the Basic Act
on Cybersecurity, a law that provides a basic framework forcybersecurity. Under this law, the Japanese government musttake steps to implement cybersecurity policies, including
legislative, fiscal and tax measures.
The Ministry of Internal Affairs and Communications
publishes laws related to cybersecurity on its website; forexample, it has published the Act on Prohibition of UnauthorizedComputer Access and the Act on Regulation of Transmission ofSpecified Electronic Mail.

4.5 Please describe any AML and other financial crime
requirements that may apply to fintech businesses inyour jurisdiction.

“Specified business operators” under the Act on Preventionof Transfer of Criminal Proceeds (e.g. insurance companies,
financial instruments business operators, fund transfer service
providers, and crypto-asset exchange service providers) mustcomply, among other things, with the requirements to (1) verify
at the time of transaction, (2) create and record transactions,(3) report suspicious transactions, and (4) establish a system tocomply with these obligations.
In addition, “specified business operators” must also comply
with AML/CFT measures described in the “Guidelines for AntiMoney Laundering and Combating the Financing of Terrorism”
formulated by the JFSA.
4.6 Are there any other regulatory regimes that may
apply to fintech businesses operating in your jurisdiction(for example, AI)?

There are no other pieces of legislation in Japan that apply
specifically to the fintech sector.

52

Accessing Talent

5.1 In broad terms, what is the legal framework aroundthe hiring and dismissal of staff in your jurisdiction?
Are there any particularly onerous requirementsor restrictions that are frequently encountered bybusinesses?

In Japan, there are various types of work, including full-time,permanent employment, fixed-term employment, dispatch
work, part-time fixed-term employment, part-time permanent
employment, and outsourcing.
Dismissals are generally difficult for an employer in Japan.
A dismissal is invalid as an “abuse of rights” if there is noobjectively reasonable cause, or the dismissal is not reasonable
under socially accepted conventions (Article 16 of the Labour
Contract Act). Types of dismissal are broadly divided into
three categories: (1) reorganisation dismissal, (2) disciplinary
dismissal, and (3) ordinary dismissal, and the framework for
judgments regarding the validity of dismissal differs for each
type. Also, discrimination on the basis of nationality, creed,social status or gender is prohibited.
In addition, there are various restrictions when an employer
refuses to renew a fixed-term employment. For example, if
a fixed-term employment is regarded as an indefinite-term
employment, or if there is a reasonable expectation of continued
employment, the employer cannot refuse to renew the contract
unless there is an objective rational reason and it is reasonable
under socially accepted conventions. Furthermore, if an employment period has been for more than five years in total as a resultof renewal(s), the contract may be changed to an indefinite-term
employment contract upon application by the employee at thetime of the next contract renewal.
5.2 What, if any, mandatory employment benefits must
be provided to staff?

In Japan, companies are required to provide the following benefits
to employees: health insurance; employee pension insurance;
unemployment insurance; workers’ accident compensation
insurance; long-term care insurance; and contributions for
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Chuo Sogo LPC

children and childcare. The ratio of company and employee
contributions is different depending on the types of benefits,
and the employee’s contribution is deducted from the company’s
monthly salary and paid to the government by the company. The
approximate cost to the company for the required benefits is
14–18% of the salary paid to an employee.
In addition, under the Labour Standards Act, workers who
have been continuously employed for six months or more andhave worked at least 80% of all working days are entitled to a
maximum of 20 days of annual paid leave depending on thenumber of years of continuous employment.
5.3 What, if any, hurdles must businesses overcome
to bring employees from outside your jurisdiction into
your jurisdiction? Is there a special route for obtaining
permission for individuals who wish to work for fintech
businesses?

Foreign nationals are required to have a status of residence towork in Japan.
The status of residence other than Permanent Resident, Spouseor Child of Japanese National, Spouse or Child of Permanent
Resident, and Long-Term Resident is granted based on thenature of the work a foreigner intends to perform in Japan. This
status is granted to persons with advanced knowledge and skills,
including highly skilled professionals, business managers, persons
providing legal/accounting services, medical services, researchers,
instructors, engineers/specialists in humanities/international
services, intra-company transferees, nursing care providers,entertainers, skilled labourers, specified skilled workers, andtechnical intern trainees. Notably, various preferential measures,such as relaxed requirements for permanent residence permits, aregranted to highly skilled professionals. If a foreigner meets therequirements of the “Point Calculation Chart” published by the
Immigration Bureau and reaches a total of 70 points or more, they
will be recognised as highly skilled professionals.
There is no special route for obtaining permission for individuals
who wish to work for fintech businesses. However, under the policyof strategically attracting financial human resources to Japan, theJuly 2021 amendment to the Point Calculation Chart provides that,in the calculation of the point system for determining eligibility forthe highly skilled professional, foreigners who engage in Type II
Financial Instruments Business, Investment Advisory and Agency
Business, or Investment Management Business will be given 10
points in addition to other points based on other factors such as
work history, education and annual income.

62

Technology

6.1 Please briefly describe how innovations andinventions are protected in your jurisdiction.

In Japan, the laws dealing with intellectual property (IP) protect
innovations and inventions. For example, under the Patent Act,
inventions are protected for 20 years from the date of filing.
The Copyright Act protects literary, academic, artistic, musicaland computer program creations without filing, and the term ofprotection begins at the time of creation and lasts for 70 years
after the creator’s death. The Unfair Competition Prevention
Act protects trade secrets, such as know-how and customer lists,and regulates acts of unfair competition (such as theft).
In addition, business entities can protect their own confidential
information related to innovations and inventions by agreeing
with their business partners on the handling of information in
non-disclosure agreements, joint development agreements, anddevelopment consignment agreements.
Fintech 2024

6.2 Please briefly describe how ownership of IP
operates in your jurisdiction.

As a general rule, the right to obtain a patent is vested in theinventor, i.e., an individual such as an employee. However,
the right to obtain a patent for an employee invention can be
attributed to a company from the beginning by stipulating inan employment agreement or employment regulations that theemployer has the right to obtain a patent. However, the employee
who is the inventor can seek to receive from the company areasonable profit on the employee’s invention as remuneration.
On the other hand, copyrights and moral rights, as a generalrule, belong to the individual who created the work. Exceptionally,
however, copyrights will belong to the employer if (a) the work iscreated based on the employer’s initiative, (b) the work is createdby the employees in the course of their duties, (c) the work is
published under the name of the employer (this requirement does
not need to be met for the copyright of a computer program),and (d) neither an employment agreement nor employment
regulations provide otherwise. Regardless of the exceptions,the usual practice is to stipulate in an employment agreement or
employment regulations that the copyright is transferred fromthe employee to the employer. In addition, moral rights, i.e.,
the right to make a work public, the right to attribution, and theright to integrity, are separate from copyrights and cannot betransferred. Therefore, it is usual for companies to agree with
employees that the employees will not exercise their moral rights.
6.3 In order to protect or enforce IP rights in yourjurisdiction, do you need to own local/national rights or
are you able to enforce other rights (for example, do any
treaties or multi-jurisdictional rights apply)?

Basically, the territoriality principle applies in Japan. Therefore,
in order to exercise patent or trademark rights in Japan, it isnecessary to file an application and obtain patent or trademark
rights in Japan. Under the Paris Convention for the Protectionof Industrial Property, those who filed an application for a patentin a member country can claim a right of priority for the patentin Japan if they file an application in Japan within 12 months.
As a result, the filing date in the member country can be deemedas the filing date in Japan. Under the Patent Cooperation Treaty,filing an international application in a member country has
the same effect as filing an application in any other member
country, including Japan. Thereafter, if the company completes
the domestic application procedure in Japan within 30 months
and the Japanese Patent Office grant a patent, they can exercise
rights in Japan based on the patent.
On the other hand, with regard to copyrights, based ontreaties such as the Berne Convention, the Universal Copyright
Convention, and the WIPO Copyright Treaty, even works fromforeign member countries are protected in Japan under the
Copyright Act.
6.4 How do you exploit/monetise IP in your jurisdiction
and are there any particular rules or restrictions
regarding such exploitation/monetisation?

IP can be exploited or monetised in Japan by means ofassignment, licensing or grant of security.
■
Assignment: The transfer of patent rights does not takeeffect unless the transfer is registered. On the other
hand, it is not necessary for the transfer of copyrights to
be in writing. However, in practice, the copyright transfer

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Japan

■

agreement is always made in writing as it is necessary to
specifically list the transfer of rights as stipulated in Articles
27 and 28 of the Copyright Act. Also, a copyright transfer
cannot be asserted against a third party without registration,
so important copyright transfers are likely to be registered.
Licences: In principle, there is no legal requirement thatlicensing of IP rights be made in writing. However, licensing
is usually done by entering into a licensing agreement. In
addition, when granting an “exclusive licence” to a patent■(i.e., a right that allows only the licensee to use the patented
invention), the licensee is required to sign a licensing
agreement, and the licence must be registered at the Japanese
Patent Office.
Security interests: A grant of a security interest in patentrights does not take effect unless it is registered. Regarding
copyrights, in practice, the creation of a security interest is
made in writing. In addition, registration is required forthe perfection of the security interest.

Fintech 2024

Chuo Sogo LPC

Koji Kanazawa has advised various financial institutions/fintech startups in all aspects of their operations, with a focus on financial regulatory
matters. He has experience working at the JFSA, and has worked on compliance/risk management issues of financial institutions/fintech
startups, including AML/CFT, countermeasures against anti-social forces, and personal data protection. He has represented both Japaneseand overseas clients, including banks, insurance companies, asset management companies, investment funds, credit card companies, leasing
companies and non-bank finance companies. Such representation extends to complex financial regulatory matters (including issues relating
to the Banking Act, the Insurance Business Act, the Financial Instruments and Exchange Act, the Money Lending Control Act, the Investment
Act and the Asset Securitization Act), structured finance and litigations arising from the sales of financial instruments.
Chuo Sogo LPC
Hibiya Kokusai Building, 18th floor
2-2-3 Uchisaiwaicho, Chiyoda-ku
Tokyo 100-0011
Japan

Tel:
Email:
LinkedIn:+81 3 3539 1877
kanazawa_k@clo.gr.jp
www.linkedin.com/in/kojikanazawa

Katsuya Hongyo represents Japanese and overseas clients, including banks, insurance companies, asset management companies, andfintech startups. His practice focuses on financial regulation, such as the Banking Act, the Financial Instruments and Exchange Act, thePayment Services Act, the Money Lending Act, finance, M&As, compliance/risk management, and litigation, drawing in large part on his
experience working as a visiting attorney at Kirkland & Ellis LLP in Chicago and as a seconded attorney at the JFSA.
During his secondment, he revised financial regulations to enable banks to invest in trading companies that expand local SMEs’ sales channels
and clarify requirements for banks to deal with crypto assets or operate information banking businesses. He also partly drafted the Act on
Special Provisions of the Antimonopoly Act, making it easier for banks to integrate their business. He also responded to inquiries from banks
for an interpretation of banking regulations.
Chuo Sogo LPC
Hibiya Kokusai Building, 18th floor
2-2-3 Uchisaiwaicho, Chiyoda-ku
Tokyo 100-0011
Japan

Tel:
Email:
LinkedIn:+81 3 3539 1877
hongyo_k@clo.gr.jp
www.linkedin.com/in/katsuya-hongyo

Shun Komiya represents domestic and foreign clients, including banks, insurance companies and fintech companies. Based on his experienceon secondment to the JFSA, he provides legal advice to banks, insurance companies and fintech companies on new business, financial
regulations, financing, M&A, compliance risk management and litigation. He also provides legal advice to non-financial venture companies.
While on secondment to the JFSA, he was engaged in AML/CFT-related activities such as responding to the FATF’s 4th Mutual Examination
with Japan, and contributed to the advancement of AML/CFT in Japan. He was also involved in the deregulation of banks’ business scope
regulations and investment regulations, which encouraged banks to take on new business challenges. He also handled inquiries from banks
regarding the interpretation of the Banking Law and other financial regulations.
Chuo Sogo LPC
Hibiya Kokusai Building, 18th floor
2-2-3 Uchisaiwaicho, Chiyoda-ku
Tokyo 100-0011
Japan

Chuo Sogo Law Office is a full-service law firm comprising upwards of 70
lawyers in offices located in the financial and business centres of Tokyo,
Osaka and Kyoto. For over 50 years, the firm has been assisting internationaland domestic clients in an efficient and cost-effective manner. The firm’s
lawyers graduated from top Japanese and U.S. law schools. As a memberof Globalaw, a leading network of some 100 law firms worldwide, Chuo
Sogo serves clients virtually anywhere in the world. The firm’s main areasof practice are commercial law, finance, compliance/risk management,
M&As, corporate reorganisations, insurance and reinsurance, labour law,transportation, IP, securitisation matters, bankruptcy/business rehabilitation,
real estate, international business, tax, administrative law, organised crimecountermeasures, and litigation and dispute resolution. Notably, Chuo
Sogo boasts a number of attorneys who, at some point in their career, wereseconded to some departments of the JFSA, including the bank supervision
division, insurance company supervision division, securities businesssupervision division, the policy planning division for financial markets, and
the AML/CFT division. They can provide practical advice based on theircutting-edge knowledge of Japanese financial regulations.
In addition, the firm has a total of 11 practice groups. The financial
practice group has approximately 30 attorneys, some of whom have been

Fintech 2024

Tel:
Email:
URL:+81 3 3539 1877
komiya_s@clo.gr.jp
www.clo.jp/english/lawyers/234

seconded to the JFSA, and partners with extensive finance experience, whoshare their knowledge with younger associates and disseminate practicalinformation externally. The corporate practice group’s startup team shares
the latest insights on legal support for various startups, including fintechs.
In recent years, the team has been researching various regulatory matters,
including Japanese financial regulations, and how to take advantage of
the Japanese government’s grey-zone elimination system and sandbox
system. Other practice groups, such as the Intellectual Property PracticeGroup and the Labor Practice Group, are also studying the state-of-the-art
cases in their respective fields. When a fintech has legal needs in multiple
areas, attorneys from the relevant practice groups are assigned to form an
optimal team to provide the fintech with the best solution.
www.clo.jp173

The International Comparative Legal Guide (ICLG) series brings
key cross-border insights to legal practitioners worldwide,
covering 58 practice areas.
•

Fintech 2024 features one expert analysis chapter and 43 Q&A
jurisdiction chapters covering key issues, including:• The Fintech Landscape• Funding For Fintech• Fintech Regulation• Other Regulatory Regimes / Non-Financial Regulation• Accessing Talent• Technology

The International Comparative Legal Guides are published by: