Aoyama Sogo Accounting Firm～TheInnovation Speed Quality

latest in alternative investments～

C h a i r m a n ' s

Vol.352024.7.31

C o l u m n“Becoming a Leading AssetManagement Center for the World”
Summer is here and we hope you are in good healthand good spirits. In recent news, new Japanese bills
have been issued for the first time in 20 years. In thesame week, the Nikkei Stock Average marked a newhigh of 42,000 yen. The GPIF also recorded a 45-trillionyen return last year. Just based on such news, it seems
Japan is hitting its stride.
When I had just entered the workforce in 1989, theNikkei Stock Average recorded 38,915 yen on the last
day of trading. I never thought this mark would beeclipsed during my time, so I am actually a bit anxious.
As explained recently, our goal is to become abusiness platform. In related news, last September inNew York, Prime Minister Kishida announced to theworld of Japan’s vision in becoming a Leading AssetManagement Center. The initiative includes ① Plans
for “Special zones for financial and asset management”
and ② Deregulating the outsourcing of middle andback-office operations to allow new participants in asset
management.

Our clients, which include alternative asset funds
have been popular as they are unaffected by market
prices. Since many of these products are custom-made,they require significant expertise by us as well. In that
respect, we believe we are making a strong contribution
towards Japan’s vision of becoming a Leading AssetManagement Center.
However, to assist more funds, we need to overcome
the labor shortage. Our digital transformation efforts
have led us to nearly completing a practical system. Thissystem will dramatically change the fundamentals ofour business model. We believe this system will provide
a continuous and steady quality of services.
I also asked generative AI if the Leading AssetManagement Center vision (“Vision”) contributed tohigher share prices. The reply was that the use of thenew NISA may have contributed in part. Other more
likely factors may include, strong corporate earnings,
share buy-backs, resolution of mutual stock holdings,
the prospect of Donald Trump being re-elected in thisyear’s presidential election, and the resolution of theJapan-U.S. interest rate difference arising from the U.S.
account deficit. AI seems to have determined that theVision’s positive impact is still a ways ahead (maybe adifferent AI would give a different result).
This summer is expected to be very hot, and I findmyself seeking the refuge of air conditioning andsummer resorts. Our firm will continue to chug alongwith our many efforts.
From our firm to yours, we hope you stay hydrated, staycool, and overcome another hot summer.

by Kazuhiro Matsuzawa, Chairman

Copyright(c)2024 Aoyama Sogo Accounting Firm Co., Ltd. All rights reserved.

Aoyama Sogo Accounting Firm

～TheInnovation Speed Quality

latest in alternative investments～

Vol.352024.7.31

A n n o u n c e m e n t

ASA Platform K.K. is our newest
group company
Previously, ASA Group had announced our SDG(Smart Data Guideway) plan to digitally transform ouraccounting and fund administration services. On June18, 2024, our firm began a joint venture withPEREGRINE CONSULTING K.K. (“PEREGRINE”).
With representative director Miyuki Tani (formerMorgan Stanley Capital K.K.) at the helm who agreed
with our vision, PEREGRINE holds a domestic license ofa digital platform (called “TDL”) that supports realestate investments from acquisition to time of sale. The
ASA Platform began with the hopes of alleviating thelabor shortage and to provide investors, fund managers,
and assets managers with a more sustainable
investment environment.
As with any new system, it requires time and energy
to fully utilize it. However, combining PEREGRINE’ssystem with ASA Group’s vast experience in fundadministration and experienced personnel with TDL willallow our clients to benefit from our services throughseamless
implementationandmanagement.
Additionally, by outsourcing non-core work in fundmanagement to the ASA Platform, our clients canallocate their precious resources to their business. As aresult, ASA Platform will support our client’s growth andprovide a sustainable investment environment.
Going beyond the scope of ASA Group’s previousservices, we hope our platform becomes the industry
standard for real estate funds. We are happy to answer
any questions or requests. (asap_all@aoyama.ac)

by Kenichi Shimizu, ASA Platform K.K.

Copyright(c)2024 Aoyama Sogo Accounting Firm Co., Ltd. All rights reserved.

Aoyama Sogo Accounting Firm

～TheInnovation Speed Quality

latest in alternative investments～

J a p a nR E

Vol.352024.7.31

F u n d s

The Use of the Specified Joint Real
Estate Ventures Act
On June 17, the Osaka and Tokyo metropolitan
governments issued a 30-day business suspension andorder for improvement on Toshi-Souken Invest Fund,Inc. (Osaka city), the operator of the small-lot
investment product “Everyone is a Landlord” issued
under the Specified Joint Real Estate Ventures Act, andon the sales company “Everyone is a landlord” (Tokyo).
“GATEWAY NARITA”, a mixed-use commercial projectnear Narita Airport is planned to be built for 200 billion
yen over 5 years on development-use land (45 million sq.
m = 10 times the size of Tokyo Dome). It was offeredwith a 7% expected annual return. One of the funds
involved seemingly made a significant change to theconstruction plans and did not sufficiently explain toinvestors about its impact. The violation was forincorrectly including land that had not obtained adevelopment permit.
According to press releases from both companies,
they will make improvements on the government orderand also accept any cancellation requests from investors.
(According to the news, one day after the administrative
order was announced, about 470 investors requested
cancellation amounting to about 2.8 billion yen)(image: Gateway Narita website)

It was only after I heard this news that I learned ofthis project. I was interested more in the investment
details like land price, total investment amount, location,
progress of development, and expected return than theviolation itself.

Also, it’s worth noting that the Specified Joint Real
Estate Ventures Act was never quite popular from theonset, but one of the few participants was the realestate
conglomerate
SumitomoRealtyandDevelopment, which utilized not REIT, but SURF, a
popular small-lot product under the Act. That businessended several years ago. Now, the security token issued
through the Act has gained attention but will be
regulated under the Financial Instruments and ExchangeAct. It seems that the Specified Joint Real Estate
Ventures Act will continue to face an inconvenientbusiness environment.
by Shigeru Hirai, Fund Services Division

Copyright(c)2024 Aoyama Sogo Accounting Firm Co., Ltd. All rights reserved.

Aoyama Sogo Accounting Firm

～TheInnovation Speed Quality

latest in alternative investments～

T a x

Vol.352024.7.31

U p d a t e

Recent Tax Reform on Stock Options
In this article, I will be explaining the recent tax
reform on stock options.
Under the income tax law, the compensation in-kind
you receive from your workplace will be taxable asemployment income at the time of receipt. If thatcompensation in-kind are stock options with a transferrestriction (non-qualified taxation), the stock options
are non-transferrable to another person before they are
exercised. Thus, upon receipt, they are not recognized
as income, and taxed as employment income only at thetime when options are exercised, stocks are obtained,
and economic profit/income is recognized.
For stock options that satisfy specific requirements(qualified taxation), under a special measure, the tax on
employment income will be deferred on the stock
obtained upon exercise and taxed as capital gain when
the obtained stock is sold. The qualified taxation
requirements are primarily these eight: ①Eligible
grantees ② exercise window ③ exercise price ④
exercise price limit ⑤ transfer restriction ⑥ form of
issuance ⑦ requirements for receiving stock ⑧ methodof managing stock.

Under the 2024 tax reform, the following changes willease taxation on stock options (namely, the easementof requirements for qualified taxation).
(1) Regarding the “requirement ① Eligible grantees”,
the scope of eligible grantees who are external highskilled workers has expanded. Additionally, the previous
requirements such as having directorship experience ata non-listed company and work experience
requirements for national license holders are eliminated.

(2) Regarding the “requirement ④ exercise limitamount”, the annual exercise limit which was previously
12 million yen is raised to 24 million yen for “options
granted by a Kabushiki Kaisha that has been establishedfor less than 5 years”, and up to 36 million yen for“options granted by a Kabushiki Kaisha that has been
established for more than 5 years but less than 20 years,
and non-listed companies or companies that became
publicly listed for less than 5 years”.
(3) Regarding the “requirement ⑧ management
method of stock”, in addition to entrusting stock to abrokerage, management with the issuing company isnow possible.
by Masaaki Kidokoro, Knowledge Management Office

Copyright(c)2024 Aoyama Sogo Accounting Firm Co., Ltd. All rights reserved.

Aoyama Sogo Accounting Firm

～TheInnovation Speed Quality

latest in alternative investments～

F r o mt h e

Vol.352024.7.31

E d i t o r

In recent years, ASA Group has undergone changes
including reorganization, new company formation, newbusiness lines, new system development, as well as areassessment of recruiting practices. Hopefully, theseefforts will advance our company in the next quarter
century. To decide on a course of action, it is essential
to have an eye for the future and unwavering strategy
and decision-making.
In recent years, global events and the global economy
have been dramatically changing, making it perhaps
difficult to navigate management and make decisions.
So, how should we make decisions?
A while ago, the late baseball coach Katsuya Nomura,quoted the words from Edo period master swordsman,
Matsura Seizan as “There is mystery in winning. There isno mystery in losing.” When you lose, there is usually areason. Even when you win, there were likely risk
factors that may have contributed to a loss. The point he
was likely trying to make was to be aware ofpreconceived notions and complacency. Perhaps thekey in these everchanging times is to continue withconsistent effort to build “management that doesn’tlose”.
by Jun Murata, Editor-in-chief

Copyright(c)2024 Aoyama Sogo Accounting Firm Co., Ltd. All rights reserved.