Company Profile

http://www.tkao.com

Tokyo Kyodo Accounting Office

9F, Kokusai Building, 3-1-1 Marunouchi, Chiyoda-ku, Tokyo 100-0005 Japan

TEL : +81-3-5219-8777

FAX : +81-3-5219-8778

A pioneer in Japan’ s securitization industry, Tokyo Kyodo Accounting Office

(“TKAO”) takes pride in its prominent track record of providing high quality,

professional services that go beyond simply meeting our clients’ business

needs. TKAO consistently strives to be regarded as the best service provider

in relation to diverse financial transactions including but not limited to asset

securitizations, mergers & acquisitions and corporate reorganizations.

TKAO’s core goal is simple - to provide you, our client, with the most up-to-date

and value-added services by employing the most experienced, skilled and highly

trained professionals, and by harnessing the latest technologies.

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Our Practice

Organization

Since its pioneering days in 1993, TKAO has provided accounting, taxation, and financial consulting services to the finance sector. Today, TKAO’ s proven track record has lead to it being widely recognized as a reliable source of expertise and quality within Japan’s securitization industry.

The International Tax Review’ s annual survey has repeatedly over the past few years, voted TKAO as among “the best tax advisors in Japan”.“Services designed to meet the specific needs of clients”.“Professional and flexible service cultivated through years of assisting clients with a diversity of technical and other matters...”TKAO’ s commitment over the years, to provide each and every one of its clients with a truly customized service experience has in many ways defined its practice.

Business undertaken by TKAO’ s clients and the services that TKAO provides to them are essential elements underpinning the Japanese and global economies. Members of TKAO’ s staff are honored to be engaged in business that commands such significant and widespread influence and are commensurately proud to be serving such a distinguished client base.

One of TKAO’s key short-term aims is to build further on existing knowledge and expertise in the area of finance in order that it may continue to provide proactive and cutting edge services to its clients. At the same time, TKAO hopes to expand its business into new practice areas in order to compliment and fully support the changing needs of its corporate and individual clients.

TKAO is intent on continuing its pursuit of excellence and providing services that are second to none.

TKAO offers a range of professional accounting, taxation and related advisory services together with tailored financial solutions. An expert consultancy team provides advisory, asset valuation and assurance services such as due diligence, while a separate group is responsible for delivery of financial solutions and SPC management services.

A comprehensive mix of services combined with a collaborative approach to service delivery provides TKAO’s clients with a clear business advantage.

Clients utilizing TKAO’s SPC management services demand robust organizational structures and effective internal controls. To this end, TKAO’s front, middle and back offices have been carefully set up to operate as distinct functional groups, each with clearly defined responsibilities. As a result of the careful distinction between groups and duties, TKAO’s capability to safeguard client assets is significantly enhanced. TKAO’ s ceaseless pursui t of excel lence in SPC management and the confidence and trust that clients place in its operations is unrivaled in the finance industry and we intend to continue building on this reputation to earn even greater trust and confidence from our clients.

ServicesTKAO focuses primarily on servicing client needs relating to structured finance, corporate finance, wealth management, as well as international accounting and taxation, and is continually striving to improve the quality and relevance of these professional services. Additionally, TKAO aims to expand its services each year to cater for increasingly diverse client needs and to stay ahead of the market.

Historically, the majority of TKAO’s client base comprised major financial institutions and investment funds from a number of jurisdictions including, but not limited to Japan, America and Europe. In recent years that client base has expanded and diversified and now includes a large number of multinational enterprises as well as small and medium size companies and a growing number of high net worth individuals (HNWI’s).

CorporateFinance

Structured Finance

Wealth Management

InternationalTaxation

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Representative Partner

TKAO consistently strives to provide the highest quality service to clients in order to meet, and wherever possible exceed their expectations. TKAO also aims to contribute positively towards economic development.

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ceAccounting and Taxation Advisory Services Over the years TKAO has developed strong and extensive relations with a large number of domestic and international financial institutions. These businesses rely on TKAO’s structured finance experts to conduct valuations, perform agreed upon procedures (AUP) and provide accounting and taxation advice. However, the services selected by clients usually extend far beyond development of appropriate investment structures and arrangement of financing in respect of those structures.In addition to upstream services as described above, TKAO offers a comprehensive range of advisory services to assist clients with each phase of their structured finance transaction (refer summary diagram to the left which outlines key advisory services from upstream to downstream). Close collaboration between the two business units—one responsible for accounting and taxation advisory services and the other responsible for SPC management, ensures that TKAO delivers seamless professional services designed to meet the full spectrum of clients’ potential structured financing needs.

In addition to helping clients with individual transactions, TKAO also has vast experience in assisting clients with assessment, design and implementation of internal controls necessary for the effective operation of asset management activities. TKAO assists clients in this area through delivery of targeted consulting advice which may include for example, review of processes as well as accounting rules and fair valuation manuals, and/or more generally by hosting seminars and training sessions.

TKAO organizes its expert teams on a project-by-project basis to ensure that responses to clients are appropriate, timely and accurate. At the same time, TKAO ensures that the client is not inconvenienced by having to deal with multiple teams. TKAO’s carefully designed review processes ensure delivery of the highest standard professional advisory services.

A more detailed list of TKAO’ s advisory services typically selected by clients is shown on the following page. Please feel free to contact us should you require assistance with any of the matters listed, or with any other request that you may have. TKAO’ s professional staff are ready to assist you.

Accounting and Taxation Advisory Services - Advice in relation to:

1) Treatment to be applied when consolidating special purpose entities 2) Eligibility to apply off-balance sheet treatment to securitized real estate 3) Whether a lease is a finance lease or an operating lease for accounting and tax purposes 4) Eligibility to apply off-balance sheet treatment to securitized financial assets, etc., 　 and accounting treatment to be applied thereon 5) Assessment of tax implications relating to securitized monetary claims, etc. 6) Accounting and tax treatment to be applied to derivative products 7) Accounting and tax treatment for compound financial instruments　 (with or without a capital increase) 8) Trust accounting　　　・For settlor / trustee / beneficiary 9) Trust taxation rules　 ・Trusts with preferred and subordinated beneficiary interests / Employee 　　　　　　　　　　　　　　　　 Stock Ownership Plan (ESOP) / Trusts designed for liquidation of cross 　　　　　　　　　　　　　　　　 holding stocks / Self-settled Trust 10) Assessment of tax implications related to various limited partnerships such as 　 Japanese silent partnerships11) Assessment of tax implications related to Japanese special purpose corporations 　 (Tokutei Mokuteki Kaisha)12) Verification of fair market values for stated assets and liabilities for tax purposes 　 (assessment of potential risks associated with transfers being recognized as a 　　 non-deductible donation expense) 13) International Financial Reporting Standards (IFRS) and US Generally Accepted Accounting　 Principles (US GAAP)　・Accounting treatment applied under IFRS and US GAAP (assessment of differences in accounting treatment 　　between IFRS, US GAAP and Japan GAAP)　・Restatement of Japan GAAP financial statements to comply with IFRS

14) Capital adequacy ratios of financial institutions　・For banking institutions, assessment of implications stemming from Basel II Capital Adequacy Ratio requirements

　・Provision of advisory services regarding capital adequacy ratios for securities firms

15) International taxation

Assurance Services - Provision of assurance services including:

1) AUP on pools of receivables such as residential mortgage loans, lease receivables and　 consumer credit receivables 2) AUP on commercial mortgage-backed securities (CMBS) 3) AUP on credit default swap (CDS), etc. 4) Financial audits of investment funds and SPCs

Valuation of Securitized Products and their underlying receivables – classification by:

1) Type of financial product　・Receivables pools

　・Corporate bonds issued by SPCs or loans to SPCs which are backed by real estate

　・The following financial products backed by any of the above items:

　　ー Senior or mezzanine beneficial interests in the form of preferred beneficiary interests, corporate bonds,　　　 loans, etc.

　 ー Subordinate interests in the form of subordinated beneficiary interests, silent partnership interests, etc.

2) Purpose　・Investigation of specified asset values pursuant to the Asset Liquidation Law

　・Evaluation of the risks of asset transfers that form part of asset securitization or inter-group business 　　 transfers being considered as transactions that contain “donation income / donation expense” for tax purposes　・ Calculation of capital gains / losses at the time of securitization (in particular when a subordinate interest is 　　owned by the originator)

　・Evaluation of fair market values as disclosed in the notes to the financial statements at the end of a fiscal year

Provision of accounting and taxation services such as advice relating to the set-up of investment structures. Recommendations concerning appropriate valuation methods to be applied to structured products and their underlying assets such as receivables, etc.

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Upstream

Downstream

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Structured Finance

Conduct cash flow analysis in respect of proposed transactions, review profit/loss and tax amounts, and/or assurance services based on agreed upon procedures (AUP).

Comment on, and recommend amendments to transaction documents, mainly from an accounting and taxation perspective.

Assessment of transaction-specific fact patterns and provision of opinions concerning accounting and taxation treatment. Provision of valuations in respect of structured products or their underlying assets such as receivables, etc., at the time of transaction execution.

Provision of advice regarding appropriate disclosures to be made in transaction offering memorandums to ensure that they properly reflect the circumstances inherent in a transaction. This includes a review of text used to describe various accounting and taxation treatments as well as the potential tax risks.

Provision of ongoing SPC management advice concerning various accounting and taxation matters subsequent to the establishment of an investment structure. For example, recurring AUP services relating to credit default swap (CDS) contracts and periodic revaluation of securitized receivables, etc.

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Structured Finance

SPC Management

SPC management has remained a key pillar underpinning TKAO’s quality suite of services. TKAO’s SPC management business is characterized by a number of distinguishing factors as described below.

As a pioneer in SPC management in Japan and as a result of successfully managing several thousand SPCs since its inception, TKAO has earned an enviable track record in the industry. By providing services that cover a broad range of asset classes and investment structures, TKAO’s staff are well equipped to quickly understand and adapt to the unique circumstances of each transaction and in doing so, provide valuable insights and helpful advice. Expert teams have assisted clients in their dealings across a diverse range of asset classes including real estate, aircraft, ships, machinery, inventories, receivables, marketable securities (such as stocks, public bonds, corporate bonds), derivatives, and intellectual property such as movie content, shows and other events. Specialist staff have in-depth knowledge to assist clients with various transaction types including private finance initiative (PFI) projects, multi-seller asset-backed commercial paper (ABCP) programs and serial issues of repackaged bonds through the medium term note (MTN) program, among others. TKAO’s professional staff also provide SPC management services for numerous types of Japanese structures, including GK/ TK structures, partnerships such as nin-i kumiai (a Japanese general partnership), Japanese limited partnerships, and those incorporated overseas such as under the Companies Law of the Cayman Islands, and various other forms.

To mitigate the risk that fraud or error may occur within any of the SPC management or administrative services, TKAO continually strives to ensure that its organizational structures are appropriate and that its internal controls are robust. The emphasis that TKAO places on this critical area of the business also ensures that service delivery is stable and not reliant solely upon individual skills.

As a result of heightened expectations surrounding the need for transparent financial reporting and the various changes proposed due to the global introduction of IFRS, TKAO has broadened its scope of professional services to ensure that client’s needs in this area are appropriately dealt with. TKAO’s proactive and focused approach to these changes will ensure that client solutions will always be relevant and timely.

Whether conditions are favorable or adverse, as in the case when SPC asset values decline, liquidity tightens or where financial distress results in failure of service providers, TKAO is committed to providing practical and well-balanced solutions. Its expertise in the SPC management under various conditions ensures that the interests of investors are always properly protected.

SPC Management

　Upfront Services1) Closing Support Services

TKAO’s professional staff assist clients throughout all phases of a transaction from initial drafting of contracts to final execution, to ensure that each and every transaction closes successfully. Experienced in dealing with various types of transaction documents, the focus is on providing helpful advice to ensure that all relevant issues (whether related to tax, accounting or other issues) are incorporated into those documents to achieve the client’s intended aims.

2) A variety of services to support incorporation of SPCs, etc.

　Ongoing Phase through to and including Exit from / Liquidation of a transaction 1) Legal Services

TKAO’ s services include, but are not limited to, preparation of articles of incorporation, minutes of shareholders general meetings, business reports and annual reports and arrangement of public announcements. Additionally, where amendments are required to be made to documents in order to abide by applicable laws and regulations, action is taken to ensure projects remain compliant. Action is also taken where necessary to ensure that a robust governance framework is in place; one that complies with all applicable laws, regulations and relevant contracts. Listed below are some of the more common legal services requested by TKAO’s clients as part of standard SPC management activities:・Compliance with requirements of the Financial Services Agency and Local Finance Bureaus (including 　 notifications in accordance with Financial Instrument and Exchange Law, preparation of business reports, etc.)・Reporting to the Bank of Japan・Preparation of the articles of incorporation and minutes of general meetings of shareholders ・Preparation of public announcements (for financial statements disclosure, announcements are made using electronic data processing)・Preparation of annual reports (filing on EDINET or Electronic Disclosure for Investors Network—including preparation of XBRL data)・Compliance with various legal requirements under the Companies Laws of the Cayman Islands (if SPCs are Cayman entities)

2) Cash Management ServicesTKAO offers cash management services in accordance with the contractual provisions of the transaction in question. This includes:

・Cash transfers, bank accounts maintenance

・Calculation of and reporting on loan-to-value (LTV) ratios and debt-service-coverage ratios (DSCR)

・Calculation of and reporting on waterfall cash flows

・Calculation of and reporting on the amount of distributable profit

3) Taxation and Accounting ServicesTKAO offers a variety of services related to the preparation and filing of tax returns (including management of consumption tax related matters) and making tax payments, among others. In addition, it offers services to ensure that appropriate accounting rules are adopted that always reflect the most recent amendments to accounting standards, tax laws and regulations. Of course, TKAO’ s professional accountants also prepare accounting records. Standard services include:

・Preparation of accounting records

・Preparation and filing of corporate tax returns, consumption tax returns, etc.

・Preparation of various tax notification forms and documents

4) Reporting ServicesTKAO provides prompt and accurate financial reporting services that meet the needs of each client and the unique circumstances of each transaction.

・Preparation of financial reporting under International Financial Reporting Standards (IFRS)

・Preparation of financial reporting under US Generally Accepted Accounting Principles (US GAAP) ・Preparation of consolidated financial statements, etc.

5) Storage Service for Valuable ItemsTKAO offers a secure lock storage service for valuable items such as SPCs corporate seals and registered title deeds, etc. Access to the secure lock storage, which is most commonly used for corporate seals and bank passbooks, is tightly controlled via our corporate seal and passbook management system.

6) Provision of Corporate Address and Dispatch of Personnel as Representative DirectorAmong the most common services requested by clients is the dispatch of qualified personnel to act as representative director for a SPC. TKAO carefully selects qualified personnel for these positions based on their in-depth knowledge and experience in structured finance and their acute awareness of the need to conduct SPC business in an equitable manner. Additionally, TKAO can provide a corporate address for a SPC, this being a requirement for its incorporation.

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UpfrontServices

OngoingPhase

Project Closing/

Liquidation Phase

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Corporate Finance

With continuing globalization, increasing competition and the sub-optimal performance of the domestic economy, the operating environment for Japanese companies has become more exacting than ever. Survival requires strategic thinking and consideration of all feasible alternatives including mergers or acquisitions (M&A), corporate reorganizations, and/or restructuring of business units or group companies. As a result, there has been significant interest recently in tax and accounting advisory services necessary to support strategic decision making.

The growing prominence of corporate strategies including M&A, corporate reorganizations, group restructures, IPOs, de-listings and a multitude of financing alternatives, demands highly specialized services. TKAO’s experience in corporate finance is both deep and broad. Its professional staff have been involved in transactions that are as diverse in size and type as they are in country of origin. Client corporate finance activities are supported by a range of accounting and tax related services including advisory, corporate valuations and due diligence. In addition, TKAO’ s specialist knowledge and strength in structured finance ensures that client activities in this area are also well supported. TKAO provides structuring, taxation and financial reporting services, among others, to fully support the clients structured finance activities, whether the purchase of a target company or a complex array of other activities.

TKAO’s suite of comprehensive professional services is designed to provide clients with accurate and timely support throughout the life of their transaction or project. Project team members are organized in such a way as to ensure optimal support for the unique technical and administrative needs of each client transaction. TKAO takes great care to appoint appropriately qualified staff and where deemed necessary, a network of alliance partners is available to further enhance the value of a project.

Accounting and Taxation Advisory ServicesLegal, tax, and accounting issues play an extremely important role in corporate

finance. Corporate finance projects are usually complex and tend to require high

levels of technical knowledge, experience, and professional judgment. TKAO

combines its professional knowledge with relevant experience to provide support

for all facets of corporate finance projects. It applies leading-edge knowledge

and skill in the areas of legal, tax and accounting by analyzing actual and

potential issues inherent in transactions and providing recommendations to clients

that comprise the best possible solutions.

1) Help with achieving operational efficiency of group companies from accounting, tax, and legal perspectives

2) Recommendations regarding the optimal organizational structure following a careful analysis made prior to a corporate acquisition, or group reorganization (including but not limited to tax matters concerning corporate groups, corporate reorganization, consolidation, etc.)

3) Analysis of tax risks inherent in corporate revitalizations and recommendations concerning the optimal structure for corporate reorganization (legal reorganization, private reorganization, business transfer or company split, etc.)

4) Provision of advisory services regarding accounting and tax treatment at the time of making a corporate acquisition or corporate group reorganization

5) Accounting and tax advisory services including recommendations concerning appropriate treatments, and provision of optimal solutions in respect of de-listings and MBOs, etc.

6) Accounting and tax advisory services including recommendation of appropriate treatments for financing activities that utilize special structures such as class stocks or SPCs

Financial Valuation ServicesIn recent years the need for financial valuation services has moved beyond simple

third party valuations of target companies in preparation for acquisitions. It has

become increasingly important to understand the fair value of a business’ s net

worth and other assets in order to make informed decisions. For example, with

respect to corporate reorganizations, the requirement to disclose financial

instruments at fair value and the increased likelihood of unrealized intra-group

gains being taxed under relevant taxation legislation can have a significant impact

on the planning process and the ultimate decision.

TKAO has a number of qualified valuation staff capable of providing among other

things, independent professional valuations of target companies, business units,

various stocks or specific assets, in addition to calculation of the share exchange

ratio necessary for corporate restructuring.

1) Valuation of a company or business unit’s net worth2) Valuation at fair market values of various types of stock (common

stocks, preferred stocks, etc.)3) Assessment of the values of subordinated corporate bonds4) Assessment of the values of warrants and stock options5) Calculation of merger and share exchange ratios6) Valuation of property contributed in kind7) Purchase Price Allocation (PPA) – Recognition and evaluation of

intangible assets at the time of a corporate acquisition

Due Diligence ServicesWhen making investment decisions at the time of an acquisition, merger or

corporate revitalization, it is essential to analyze and assess in advance, the

nature and magnitude of various potential risks associated with the acquisition of

the target company. This is particularly important for making decisions related to

transaction execution, negotiations, price adjustments and structuring of the

investment to achieve the most appropriate legal form. TKAO’ s due diligence

services add real value by providing clients with reports detailing target company

financial and tax risks. Due diligence reports also recommend optimal acquisition

structures to support the development and execution of the business plan.

1) Preparation of balance sheets at current fair market value or for liquidation purposes

2) Analysis and assessment of the target company’s ability to generate normal earnings

3) Investigation into potential fraudulent activities and the possible application of creative accounting techniques

4) Review of the appropriateness of prior years’ financial statements5) Analysis and assessment of potential tax liabilities6) Investigation into the ability of target to repay debt7) Review of the feasibility and appropriateness of business plans8) Conduct independent review for other specific purposes

Other Support ServicesBy capitalizing on the professional knowledge and experience of its accounting

and tax specialists, TKAO provides customized, high quality services designed to

meet the unique and diverse needs of clients.

1) Support for the development of restructuring and business plans2) Assistance with the selection of potential target companies for

acquisition3) Assistance with planning in relation to or in the actual development

of corporate management systems4) Provision of administrative support for private equity (PE) and

turnaround funds

Corporate

Reorganization

Business Expansion Overseas M&A

AllianceDefense against

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Restructuring of Business Units

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DelistingManagement

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Initial Public Offering (IPO)Financing &

Financing Policy

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Corporate Strategy

Valuation Services

Other Support Services

Accounting and Taxation Advisory Services

Due Diligence Services

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Wealth Management

Now and in the future, Japan faces some of its greatest challenges including having to deal with a rapidly declining birth rate, an aging population, escalating budget deficits, mounting government debt, and prolonged deflation. Recently an unprecedented number of individuals have sought to take control of their financial future through development of a financial plan. An increasing number of High Net Worth Individuals (HNWI’s) have started to shift financial assets to investment opportunities overseas, in the search of higher-yielding financial products.

In the past, real estate comprised the major asset class in a typical HNWI’s investment portfolio. For the last couple of decades there has been a continuous shift from real estate to equity investments in companies founded by HNWIs. As a result it has become necessary to revise asset management strategies and to develop or amend family business succession plans. HNWIs investment styles as well as their target sectors and geographic areas have increasingly diversified, and it is likely that this trend will continue for years to come.

Development of Financial Products for Individual Investors

Individual investors have available to them a wide range of financial products such as investment trusts, commodity investment funds, hedge funds, derivative-embedded deposits or bonds, real estate (or real estate investment units including those held in REIT’ s) and insurance products. TKAO provides support services to help suppliers of these and other financial products develop new tax efficient products. It also provides advisory services in relation to the development of domestic/cross-border compatible financial products for individual investors and the development of domestic/ cross-border compatible investment structures specifically tailored to meet each individual investor’s needs.

Asset Portfolio Construction and Succession Planning

A business owner’s asset formation and succession planning can typically be divided into three phases:(i) The liquidity and value of his/her company’ s own stock can be greatly enhanced in a number of ways, for example, through an initial public offering (IPO).(ii) The listed shares of his/her own company are sold in the market with recognition of significant gains, the sales proceeds are reinvested in other

assets and wealth is typically created through diversification of the investment portfolio.(iii) The business owner retires from the position of representative director of his/her company and his/her successor then inherits the wealth and the

title of business owner as a result of the inheritance procedures being followed, or alternatively the wealth may be transferred in the form of a gift.

TKAO’s experience in providing advisory services on structured financial products to all types of clients, from arrangers, to individual and professional investors, ensures delivery of unparalleled service quality. By leveraging this experience TKAO can provide HNWI’s with a fully integrated service covering all facets of wealth management from wealth creation to succession planning. TKAO assists clients to select the most appropriate asset managers and investment products among other things, necessary to satisfy the countless unique issues faced by HNWI’s. Each service team is organized so as to guarantee delivery of advice that is targeted, flexible and equitable as one would expect from professional accounting and tax specialists.

Inheritance and Business Succession Planning

For company owners, succession planning is one of the most important issues and careful long-term planning is essential especially from a tax perspective. The proper resolution of issues, such as lowering the taxable value of shares, the transfer of shares to successors, and measures to ensure adequate funding is available for inheritance tax payments, help to ensure that business succession is ultimately successful. There has been an increase in the number of alternative methodologies being applied to business succession planning in recent years. For example, if a successor can not be found from within the family, one or more of the non-family board members or other appropriate parties may enter into a management buy-out (MBO). If a successor can not be found from within the family, and where an MBO is not a feasible option an acquisition by, or a merger with a third party (M&A) may be a viable solution. TKAO’s consulting services for inheritance and business succession planning focuses on the following:

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　Planning to Support Business StrategyIn assisting clients with succession planning, a key goal is to always provide guidance that satisfies the usual desire to grow a business on the one hand, with the often conflicting need to resolve inheritance and business succession issues on the other.

　Consulting Services on Cross-Border Inheritance and Business SuccessionTKAO offers consulting services related to cross-border inheritance and business succession. In-depth knowledge concerning international tax treaties and local tax laws ensures that the diverse needs of clients are met, including for example, Japanese owners of companies with international operations and HNWI’ s who have invested aggressively overseas.

STEP1Establishment of an asset holding company

Diversification and growth of portfolio

Enhanced risk management practices

Age: 30s Age: 40s to 50s Age: Late 50s and above

STEP2 STEP3

Envisaged Client Base

Key Service Capabilities

CompetitiveAdvantages

Tax Advisory Services based on HNWIs’ Typical Asset Formation Model

Most successful entrepreneurs tend to diversify their assets by investing overseas. When providing tax advisory services it is essential to possess both broad financial knowledge and in-depth knowledge of international taxation. Having a robust international network of trusted affiliates also provides a clear advantage.

　A Proven Track Record of providing Tax Advisory Services to HNWIs・Developed and executed a plan for tax-efficient inheritance of an unlisted company indirectly owned through a family-owned holding company 　(with gross assets of more than 10 billion yen) ・Developed and executed a tax-efficient asset succession plan for a non-resident Japanese owner of a foreign company・Developed and executed a tax-efficient asset succession plan by utilizing an overseas holding company holding shares in a Japanese listed company・Developed and successfully executed a tax strategy for the president of a Japanese listed company involving utilization of an asset holding company that held part of its

asset base offshore・Provided advisory services to restructure an overseas holding company owned by the president of a Japanese listed company ・Developed and executed a tax-efficient structure to facilitate the sale of a family-owned company in order that the family could take advantage of its emigration overseas・Established and managed an asset holding company (partly holding overseas assets) on behalf of the president of a listed company. Developed and successfully

executed a tax-efficient inheritance plan in respect of that asset holding company・Developed and executed a comprehensive management buyout (MBO) plan in respect of a listed company, that involved design of the MBO structure, financial

planning as well as management of the proceeds from disposal of stocks and development of a tax-efficient succession plan・Developed a plan for an artist to expand his business overseas that included creation of a retirement plan・Restructured several asset holding companies owned by the owner-family of a listed company and developed a tax-efficient succession plan for the family・Arranged to transfer individually held shares of a private, family-owned company to an asset holding company and developed a tax-efficient asset succession plan ・Provided taxation advisory services in relation to a variety of domestic and overseas financial products, including derivative and insurance based products・Aggregated a company’s stocks owned by members of an owner family, business partners, and others who were not involved in the management of the company ・Secured voting rights from dilution and saved funds for an heir’s inheritance tax payment by utilizing classified stocks・Developed and executed a plan to secure funds for an inheritance/gift tax payment by utilizing life insurance products・Created a director share purchase plan and an employee share purchase plan・Developed an asset succession plan by utilizing investment trust products ・Developed and executed a tax-efficient asset succession plan and maximized cash flows for an owner of real estate properties, by making changes to their investment portfolio mix・Developed and executed a plan for making a tax payment in kind

■Previously successful at IPO■Majority of client assets are stocks of 　his/her own company

■Increase in asset values resulting from business expansion■Aggressive growth in the amount and type of personal assets■Globalization of asset portfolio

■Stabilization of business(es) ■Focus shifts to preservation and succession

of personal assets

■Advisory services in relation to stocks of own company and potential tax savings thereon■Integration of the administrative and asset

management functions for various personal assets

■Broad-based knowledge about financial assets■Experience in business dealings with financial institutions■Considerable cross-border taxation knowledge

■Succession planning in relation to business and personal assets■Sophisticated risk management techniques

applied to personal assets

■Vast experience in provision of advisory services to HNWIs■Industry-leading expertise in provision of

asset management services for institutional investors

■Wide-ranging overseas network■Solid and reliable asset management infrastructure with over 100 staff■Expert staff highly experienced in the finance industry

■Highly experienced taxation experts and finance industry specialists■A broad network covering financial and

other institutions in Japan and abroad

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International TaxationTKAO provides a wide range of accounting and tax consulting services in relation to international trade and cross-border investments. TKAO utilizes a global network of reputable legal and accounting firms to develop solutions and resolve accounting and tax matters that originate in Japan as well as abroad.

Outbound Investment by Japanese Domiciled Companies

Doing business abroad can create numerous, sometimes unexpected challenges for a company. There are many cases where companies have been forced to retreat from their overseas operations because they were unable to overcome such obstacles. With respect to Japanese domiciled companies with international operations, TKAO specializes in maximizing their after-tax cash-flows and satisfying requirements relating to consolidated financial statements. Additionally, by analyzing global tax positions and other relevant issues related to these companies, TKAO recommends solutions and offers tailored business plans to meet a variety of specific requirements. For example, TKAO offers taxation advisory services to achieve optimal application of the 2009 Japanese tax law reforms concerning the exemption of foreign subsidiary dividends from taxable income, and provides consulting services on how to cope with anti-tax haven measures. It also helps clients develop plans for company restructures, including those related to overseas group companies, so that they can better cope with the ever-changing global operating environment.With regard to the 2009 Japanese tax law reforms concerning the exemption of foreign subsidiary dividends from taxable income, similar legislation has already been introduced in many foreign countries. As a result of these reforms the effective tax rate for Japanese companies with international operations may now be significantly lower than under the previous indirect foreign tax credit system. The enactment of this legislation is likely to have a major impact on the value of investments made abroad by Japanese companies as well as the number of restructuring plans contemplated. Under this legislation, 95% of dividends received from foreign subsidiaries (before deduction of local withholding taxes) are excluded from gross revenue for the purpose of calculating Japanese corporate income tax. At the same time, local withholding taxes on dividends paid in foreign countries are non-deductible and non-creditable for tax purposes in Japan. Therefore, it is extremely important to minimize the amount of withholding taxes paid on dividends in countries where foreign subsidiaries are located. Illustrated below are some examples of our proposals taking advantage of this new tax legislation:

Inbound Investments in Japan by Foreign Companies

TKAO has vast experience in providing assistance to foreign companies investing in Japan. Under the Japanese taxation system, the tax burden differs depending on investment structure and it is therefore important to adopt an investment structure that maximizes the investor’s after-tax return. The following summarizes differences in the tax burden as a result of adopting different investment structures in the case of a real estate investment:

Direct investment in foreign subsidiaries Structure involving a holding company based in the Netherlands

EU nations EU nations The Netherlands Japan

Withholding taxes imposed

No withholding taxes

No withholding taxes

Japan

Transfer Pricing Services

In order to survive and prosper in a drastically changing economic environment, many companies have accelerated their global expansion plans as they seek new investment and market opportunities. This trend which started with large companies is now being replicated by medium size companies. Whether large or small, the challenges faced by these companies as they enter foreign markets for the first time is immense. With increasing globalization, the ongoing trend in Japan and many other countries has been for tax authorities to develop and to rigidly enforce systems governing transfer pricing and associated taxation matters. As a result, taxpayers must meet increasingly burdensome documentation requirements. Companies with international operations are more likely to shift profits between parent companies and foreign subsidiaries in order to take advantage of participation exemption rules. This has dramatically increased the focus on transfer pricing by the tax authorities as they seek to test whether transfers of products and/or services between parent companies and their foreign subsidiaries are at arms length. Without proper planning and without taking appropriate steps in accordance with these plans, tax risks for companies could be significant and amount to tens of millions or even hundreds of millions of dollars, depending on the size of the companies concerned. TKAO’s specialist knowledge in this area combined with its global network of affiliated tax and legal firms ensures that corporate clients receive the best professional advice concerning optimal transfer prices, thereby mitigating potential tax risks. By carefully analyzing corporate group functions and supply chains, and by applying expert knowledge of relevant local transfer pricing laws, TKAO can also assist with development and implementation of tax efficient, global business restructuring plans.

　 Consulting Services related to Transfer Pricing1) Assessment of risks relating to transfer pricing2) Provision of assistance to meet various documentation requirements3) Support on the development of a global pricing policy4) Support on the implementation of a corporate reorganization plan, taking into account relevant transfer pricing issues5) Help in coping with a transfer pricing investigation, filing an objection or an administrative appeal, and in coping

with tax litigation6) Help with mutual agreement procedures (MAP) between relevant taxation authorities in Japan and in the country

where the Japanese subsidiary is located 7) Help in obtaining an advance pricing agreement (APA) between the taxpayer and the relevant Japanese (and

non-Japanese) tax authority

12 13

Foreign subsidiaries

Foreign subsidiaries

Parentcompany

Parentcompany

Withholding tax rates are determined in accordance with tax laws in the country in which the foreign subsidiary is located as well as the tax treaty between that country and Japan.

No local withholding taxes are levied on the payment of dividends up to a certain amount among EU nations. As a result, if a country in which foreign subsidiaries are located is one of the EU nations, no local withholding tax is levied on dividend payments to the Netherlands holding company up to a certain amount (if it is in the form of a cooperative). Dividends paid by the Netherlands holding company are exempt from withholding taxes according to tax laws in the Netherlands.

Direct Investment in Real Estate PropertiesReal Estate Investment Structure using Tokumei Kumiai (or Silent Partnership)

Investor’s Country of Residence

Investor’sCountry ofResidence

Investor Real EstateProperties

DividendsDividends DividendsDividends DividendsDividends

Under Japanese tax law, rental income from property and any gain on disposal of that property are subject to corporate income tax equal to 30% of taxable income. This is the case even if a foreign investor does not have a permanent establishment in Japan.

Under Japanese tax law, a silent partnership is viewed as a pass-through entity which enables it to avoid corporate tax. Cash distributions are subject to a 20% withholding tax.

Holdingcompany

Japan Japan

Rental income,Capital gains

CashDistribution

Rental income,Capital gains

InvestmentInvestmentInvestment

(Silent Partnership Agreement) InvestmentInvestment

Investor Manager Real EstateProperties

Investment(Silent Partnership Agreement)

Pro�

le

ProfileNijubashimae

Station

Marunouchi-Nakadori Ave

Hibiya Station

Yurakucho Station

Tokyo International Forum

Tokyo Kyodo Accounting Office(9F, Kokusai Building)

JR Tokyo Station

JR Yurakucho Station

http://www.tkao.com

Tokyo Kyodo Accounting Office

FoundedAddress

Scope of Business

Access

Subsidiary

August 1993

9F, Kokusai Building, 3-1-1 Marunouchi, Chiyoda-ku, Tokyo100-0005 Japan

　 Accounting and Tax Consulting Services

　 Valuations

　 Due Diligence and Other Assurance Services

　 Financial Advisory Services

　 Management of Special Purpose Entities

Five-minute walk from the Tokyo International Forum exit of JR Yurakucho Station

Direct access from Exit D1 of Yurakucho Station on the Tokyo Metro Yurakucho Line

Direct access from Exit B4 of Hibiya Station on the Toei Subway Mita Line

BTK Solution Co., Ltd.

　 http://www.btk.jp/

Scope of Business:・Develop software products that enable efficient and effective account processing for special purpose companies・Perform outsourced accounting services for special purpose companies・Perform other highly professional accounting servicesMain Shareholders:Tokyo Kyodo Accounting OfficeBusiness Trust Co., Ltd.

C

Tokyo Metro Chiyoda Line

YTokyo Metro Yurakucho Line

Toei Subway Mita Line