Civil Code

If a contract for revolving guarantee under which the guarantor is a corporation does not provide for the maximum amount prescribed in Article 465-2, paragraph (1), a guarantee contract under which the principal obligation is an obligation arising from the right to reimbursement held by the guarantor of the contract for revolving guarantee against the principal obligor does not become effective.

If a contract for revolving guarantee under which the guarantor is a corporation and the scope of the principal obligation includes a loan obligation does not provide for the principal fixed date, or its provisions concerning the principal fixed date or any change of it would not become effective should the provisions of Article 465-3, paragraph (1) or paragraph (3) be applied, a guarantee contract under which the principal obligation is an obligation arising from the right to reimbursement held by the guarantor of the revolving guarantee contract against the principal obligor does not become effective. The same applies to a contract for revolving guarantee under which the scope of the principal obligation includes an obligation arising from the right to reimbursement.

The provisions of the preceding two paragraphs do not apply if the guarantor of a guarantee contract under which the principal obligation is an obligation arising from the right to reimbursement or of a contract for revolving guarantee under which the scope of the principal obligation includes an obligation arising from the right to reimbursement is a corporation.

A guarantee contract under which the principal obligation is a loan obligation assumed for business or a contract for a revolving guarantee under which the scope of the principal obligation includes a loan obligation assumed for business does not become effective unless the person intending to become a guarantor manifests, before the conclusion of the contract, the intention to perform the guarantee obligation by means of a notarial instrument prepared within one month before the day of conclusion of the contract.

The notarial instrument referred to in the preceding paragraph must be prepared in compliance with the following formalities:

the person intending to become a guarantor gives the notary oral instructions regarding the particulars specified in (a) or (b) below for the category of contract stated in this:

a guarantee contract (excluding the one stated in (b)):the obligee and obligor of the principal obligation, the principal of the principal obligation, whether any interest, penalty or damages in connection with the principal obligation or any other charges secondary to the obligation are provided for in the contract and, if so, its details, as well as the fact that the person intending to become a guarantor has the intention to pay the entire amount of the obligation if the principal obligor fails to perform the obligation (if the person intending to become a guarantor intends to assume the obligation jointly and severally with the principal obligor, the intention to pay the entire amount of the obligation, regardless of whether the obligee has made a demand to the principal obligor, whether the principal obligor is able to perform the obligation, or whether the principal obligor has any other guarantor); or

a contract for a revolving guarantee:the obligee and obligor of the principal obligation, the scope of the principal obligation, the maximum amount under the contract for revolving guarantee, whether the principal fixed date is provided for in the contract and, if so, its details, as well as the fact that the person intending to become a guarantor has the intention to pay the entire amount of the obligation with regard to the principal of the principal obligation and any interest, penalty, and damages in connection with the principal obligation and any other charges secondary to the obligation, which are to arise by the principal fixed date or the time when an event that causes the crystallization of the principal takes place, such as the events stated in the items of Article 465-4, paragraph (1) or the items of paragraph (2) of that Article, up to the maximum amount, if the principal obligor fails to perform the obligation (if the person intending to become a guarantor s to assume the obligation jointly and severally with the principal obligor, the intention to pay the entire amount of the obligation, regardless of whether the obligee has made a demand to the principal obligor, whether the principal obligor is able to perform the obligation, or whether the principal obligor has any other guarantor);

the notary takes dictation from the person intending to become the guarantor, and reads this aloud to, or allows its inspection by, the person intending to become the guarantor;

the person intending to become a guarantor signs and seals the instrument after having approved the accuracy of the dictation taken by the notary; provided, however, that if the person intending to become a guarantor is unable to sign, the notary may include a supplementary note giving the reason therefor in lieu of the signature of that person; and

the notary includes a supplementary note to the effect that the instrument has been prepared in compliance with the formalities stated in the preceding three items, and signs and seals the instrument.

The provisions of the preceding two paragraphs do not apply if the person intending to become a guarantor is a corporation.

If a person intending to become a guarantor of a guarantee contract or a contract for a revolving guarantee referred to in paragraph (1) of the preceding Article is unable to speak, the person must make a statement in front of the notary of the particulars specified in paragraph (2), item (i), (a) or (b) of that Article for the category of contract stated therein, through an interpreter or by that person's own hand, in lieu of the oral instructions referred to in the same item. In such a case, to apply the provisions of item (ii) of that paragraph, the term "oral instructions" in that item is deemed to be replaced with "statement through an interpreter or by that person's own hand".

If a person intending to become a guarantor of a guarantee contract or contract for revolving guarantee referred to in paragraph (1) of the preceding Article is unable to hear, the notary may convey the content of the dictation taken as prescribed in paragraph (2), item (ii) of that Article to the person intending to become a guarantor, through an interpreter, in lieu of the reading it aloud referred to in the same item.

If a notary prepares a notarial instrument in compliance with the formalities prescribed in the preceding two paragraphs, the notary must include a supplementary note to that effect on the instrument.

The provisions of Article 465-6, paragraphs (1) and (2) and the preceding Article apply mutatis mutandis to a guarantee contract under which the principal obligation is a loan obligation assumed for business or a guarantee contract under which the principal obligation is an obligation relating to the right to reimbursement held by a guarantor against the principal obligor under a revolving guarantee contract under which the scope of the principal obligation includes a loan obligation assumed for business. The same applies to a contract for revolving guarantee under which the scope of the principal obligation includes an obligation relating to that right to reimbursement.

The provisions of the preceding paragraph do not apply if the person intending to become a guarantor is a corporation.

The provisions of the preceding three Articles do not apply to a guarantee contract under which the person intending to become a guarantor is any of the following persons:

if the principal obligor is a corporation, its managing administrator, director, executive officer, or any person equivalent thereto; or

if the principal obligor is a corporation, any of the following persons:

a person that holds the majority of voting rights of all shareholders (excluding voting rights in respect of shares that do not allow voting rights to be exercised for all matters that may be resolved at a shareholders meeting; the same applies in this item below) of the principal obligor;

if the majority of voting rights of all shareholders of the principal obligor is held by another stock company: a person that holds the majority of voting rights of all shareholders of that other stock company; or

if the majority of voting rights of all shareholders of the principal obligor is held by another stock company and a person that holds the majority of voting rights of all shareholders of that other stock company: a person that holds the majority of voting rights of all shareholders of that other stock company;

if the principal obligor is a corporation that is not a stock company: a person equivalent to the person stated in (a), (b) or (c); or

a person that conducts business jointly with the principal obligor (excluding one that is a corporation; the same applies in this item below) or the principal obligor's spouse who actually engages in the business conducted by the principal obligor.

If the principal obligor requests a person to give guarantee for an obligation to be assumed for business as the principal obligation or give revolving guarantee for an obligation to be assumed for business that is included in the scope of the principal obligation, the principal obligor must provide the person so requested with information concerning the following particulars:

the status of assets, and income and expenditure;

whether the principal obligor has any obligation other than the principal obligation, and its amount and its status of performance; and

if the principal obligor has provided or intends to provide any other security for the principal obligation, an indication of this and the details of the security.

If, because the principal obligor fails to provide information concerning the particulars stated in the items of the preceding paragraph or provides information that is factually inaccurate, the person requested to guarantee misunderstands these particulars and manifests the intention to offer or accept the offer of a guarantee contract based on the misunderstanding, the guarantor may rescind the guarantee contract if the obligee knew or could have known that the principal obligor failed to provide information concerning these particulars or provided information that was factually inaccurate.

The provisions of the preceding two paragraphs do not apply if the person that gives guarantee is a corporation.

A claim may be assigned; provided, however, that this does not apply if its nature does not permit the assignment.

Even if a party to a claim manifests the intention to prohibit or restrict the assignment of the claim (referred to as the "manifestation of intention to restrict assignment" below), the validity of the assignment of the claim is not impaired.

In the case prescribed in the preceding paragraph, the obligor may refuse to perform the obligation to a third party such as the assignee that knew or did not know due to gross negligence that the manifestation of intention to restrict assignment was made, and may duly assert against the third party any event that results in extinguishment of the obligation such as payment to the assignor.

The provisions of the preceding paragraph do not apply if the obligor does not perform the obligation, and the third party prescribed in that paragraph makes a demand to the obligor for the performance to the assignor by specifying a reasonable period of time, but the obligor does not perform the obligation within that period.

If a claim for payment of money subject to the manifestation of intention to restrict assignment is assigned to a third party, the obligor may deposit the amount of money equivalent to the full amount of the claim with an official depository having jurisdiction over the place of performance of the obligation (including the current domicile of the assignor if the place of performance of the obligation is determined on the basis of the current domicile of the obligee; the same applies in the following Article).

An obligor that has made a deposit pursuant to the provisions of the preceding paragraph must notify the assignor and the assignee of the deposit without delay.

Only the assignee is entitled to request the refund of the money deposited pursuant to the provisions of paragraph (1).

In the case prescribed in paragraph (1) of the preceding Article, if an order commencing bankruptcy proceeding is issued with regard to the assignor, the assignee (limited to the one that has acquired the full amount of the claim referred to in that paragraph and that may duly assert the assignment of the claim against a third party such as the obligor) may have the obligor deposit the amount of money equivalent to the full amount of the claim with an official depository having jurisdiction over the place of performance of the obligation even if the assignee knew or did not know due to gross negligence that the manifestation of intention to restrict assignment was made. In such a case, the provisions of paragraphs (2) and (3) of that Article apply mutatis mutandis.

The provisions of Article 466, paragraph (3) do not apply to an attaching obligee that has conducted enforcement against a claim that is subject to the manifestation of intention to restrict assignment.

Notwithstanding the provisions of the preceding paragraph, if a third party such as the assignee knew or did not know due to gross negligence that the manifestation of intention to restrict assignment was made, and the obligee of the assignee or other third party conducted enforcement against the claim referred to in that paragraph, the obligor may refuse to perform the obligation and duly assert against an attaching obligee any event that results in extinguishing the obligation such as payment to the assignor.

Notwithstanding the provisions of Article 466, paragraph (2), the manifestation of intention to restrict assignment which is made by a party with regard to a claim for deposits in a deposit account or a claim for savings in a saving account (referred to as a "claim for deposits" below) may be duly asserted against a third party such as the assignee that knew or did not know due to gross negligence that the manifestation of intention to restrict assignment was made.

The provisions of the preceding paragraph do not apply to an attaching obligee that has conducted enforcement against a claim for deposits that is subject to the manifestation of intention to restrict assignment.