Recently in Japan, Islamic finance has been attracting the attention of many potential market players. In December 2010, the Financial Services Agency of Japan officially announced its aim to ’promote the development of an environment for the issuance of Islamic bonds in Japan’ in its action plan for a new growth strategy.
In line with this initiative, legal reform to facilitate the issuance of sukuk through the utilisation of a certain type of trust is anticipated, and potential issuers, arrangers and other market players have commenced their study with respect to the possibility of Japanese sukuk transactions.
Upon completion of such legal reform, actual sukuk issuance is expected to follow thereafter.
Islamic finance transactions, including sukuk, will however be novel to Japan and therefore numerous legal issues will need to be addressed. This article briefly outlines some typical Islamic finance transactions within the context of Japanese law to illustrate how these transactions might be structured in Japan.