A Tokutei Mokuteki Kaisha (TMK) is a Special Purpose Company under Japan’s Act on Securitization of Assets. It is primarily used for real estate investment, asset-backed securitization, and structured finance.

---

Key Characteristics

Legal Form and Regulation

●Incorporated as a joint stock company (Kabushiki Kaisha) but given special status under the Act.

●Must file and have approved an Asset Securitization Plan with the competent local finance bureau.

Purpose Restriction

●Can only engage in activities listed in its approved plan, such as acquiring, holding, and disposing of specified assets (often real estate or receivables).

Limited Liability

●Shareholders’ liability is limited to their investment.

Tax Advantages

●If certain conditions are met (e.g., distributing at least 90% of distributable profits to investors), the TMK can deduct such distributions from taxable income.

●This “conduit” treatment effectively avoids entity-level corporate tax, similar to REITs.

Common Uses

●Real estate acquisition for securitization projects.

●Holding trust beneficial interests or other income-generating assets.

●Often paired with bond issuance or preferred equity to raise funds from institutional investors.

In a case of Investment from Singapore/Hong Kong, the effective tax rate will be around 13% in Japan.