What is the Specially Permitted Business for Qualified Institutional Investors?
“We wish to launch a fund but the structure seems complicated and hard to understand.”
“I’d like to learn more about the Specially Permitted Business regime or LPS (Limited Partnership for Investment).”
We often hear comments like these.
In the world of funds, specialized knowledge of laws, taxation, and various structures is essential. Among them, the Specially Permitted Business for Qualified Institutional Investors and the LPS are two of the most important frameworks for launching a fund in Japan.
The Specially Permitted Business for Qualified Institutional Investors (hereinafter “SPBQII”) is a framework that allows fund managers to conduct investment management business without registering under the Financial Instruments and Exchange Act.
However, the scope is limited—fundraising is generally permitted only from certain investors, primarily professional investors such as Qualified Institutional Investors.
| Full-DIM | Pro-DIM | SPBQII | |
|---|---|---|---|
| Entry Regulation | Registration system | Registration system | Notification system |
| Scope of Business | Investment management | Investment management | Investment management (and Solicitation of Fund Interests) |
| Eligible Investors | No restriction (domestic/overseas) | Qualified investors only |
At least 1 Qualified Institutional Investor (QII) Up to 49 “Specially Permitted Investors |
| AUM Limit | None | Up to JPY 20 billion | None |
Key Features
No registration required: Unlike ordinary investment management business, which requires strict review and registration by the Financial Services Agency (FSA), SPBQII can be started simply by filing a notification.
Restricted investors: Fundraising from general investors (e.g., retail individuals) is not allowed.
High flexibility: Widely used for startup investments and private equity (PE) fund launches.
Advantages and Limitations
✅ Advantages
Enables speedy fund launches
Lower entry costs compared to full registration
❌ Limitations
Fundraising is restricted to specific investor categories
Failure to comply with notification obligations under the FIEA constitutes a legal violation
