The syndicated loan and securitization markets have been active recently due to the removal of nonperforming loans from the balance sheets of financial institutions, and the need to identify alternative funding sources for firms affected by the 1997 Asian financial crisis and to diversify risks and secure returns for investors.

In general, Japan's legal framework for asset-backed securities transactions includes a number of laws. Their applicability depends on the type of underlying assets that are securitized. Listed below are some of the salient laws governing securitization transactions.

• The Securities and Exchange Law (amended as the Financial Instruments and Exchange Law) is the fundamental law governing securities and securitization transactions in Japan.
• The Japanese Civil Code stipulates that a notary’s certification to each debtor is required to complete asset transfers for non-negotiable instruments (e.g., loans and receivables).
• The Law of Regulating Business for Specific Claims (known as MITI Law) permits leasing and credit companies to complete an asset transfer with a special purpose company through public notice. The law hastened the growth of receivables securitization in Japan by enabling originators to avoid the high costs of individual notification required under the Civil Code.
• The Law Concerning Securitization of Specified Assets by Special Purpose Companies established special purpose companies as issuing bodies for asset-backed securities. Amended in 2000, the law expands the range of assets that can be securitized and establishes a trust-type scheme as an alternate vehicle for asset securitization.

There are no full-text English translations of these laws currently available.