Trust shares in a Venture Capital Investment Trust (“VCIT”) may be issued to the bearer or as registered shares.  Regulations governing the transfer of shares in a VCIT are provided in Article 16 of the Communiqué (no. III-48.3) on Principles and Rules applicable to Venture Capital Mutual Trusts (“Communiqué”). Regulations therein are defined on the basis of whether or not shares are preferential. Therefore, Article 15 of the Communiqué should be first checked and reviewed with respect to the preferential share issue in a VCIT.

A VCIT that offers its shares to the public is banned to issue any preferential share other than the ones that entitle to nominate the absolute majority of the number of board members (Article 15 thereof). After a VCIT is offered to the public, it is no longer authorized to create a preference that would entitle to nominate candidates for board membership. Notwithstanding the foregoing, the preference to nominate board members may be revoked by the Capital Markets Board in a publicly traded trust if the trust makes a loss for five consecutive years –except for circumstances that are dictated by, or reasonable due to, its operations as far as the financial statements issued in line with the terms and conditions defined by the CMB show.