Financial Instruments and Exchange Act

If a notifier of specially permitted services transfers the whole of its business linked with specially permitted services for qualified institutional investors, etc., or is subject to a merger, company split (limited to one in which the whole of business is succeeded to), or inheritance, the person that acquires the whole of business, the corporation surviving the merger, the corporation incorporated in the merger, or the corporation or heir that succeeds to the whole of business in the company split (or, if there are two or more heirs and they reach an agreement in which they decide which of the heirs is to succeed to business, that person) succeeds to the position of a notifier of specially permitted services, unless that person is a financial instruments business operator, etc.

A person that succeeds to the position of a notifier of specially permitted services pursuant to the provisions of the preceding paragraph must notify the Prime Minister of this without delay.

If a notifier of specially permitted services comes to fall under any of the following items, it must notify the Prime Minister of this without delay:

it suspends or resumes specially permitted services for qualified institutional investors, etc.;

it discontinues specially permitted services for qualified institutional investors, etc.; or

it falls under any other case specified by Cabinet Office Order.

If a notifier of specially permitted services is a corporation, and that corporation is dissolved for reasons other than a merger, the liquidator (or, if the dissolution is due to an order to commence bankruptcy proceedings, the bankruptcy trustee) must notify the Prime Minister of this without delay.

Before a financial instruments business operator, etc. engages in specially permitted services for qualified institutional investors, etc. (excluding one that has Article 29 or Article 33-2 registration for performing an act set forth in the items of Article 63, paragraph (1) on a regular basis), it must notify the Prime Minister of this, the particulars set forth in Article 63, paragraph (2), items (v) and (vii), and any other matters specified by Cabinet Office Order, pursuant to the provisions of Cabinet Office Order.

The provisions of Article 63, paragraphs (5), (6), (8) through (10), (12), and (13), paragraph (3) of the preceding Article, and the following Article to Article 63-6 apply mutatis mutandis to a financial instruments business operator, etc. that makes a notification under the provisions of the preceding paragraph. In this case, in these provisions, the term "notifier of specially permitted services" is deemed to be replaced with "financial instruments business operator, etc." the term "under paragraph (2)" is deemed to be replaced with "under Article 63-3, paragraph (1)", the term "paragraph (2) or (8)" in paragraph (6) of that Article is deemed to be replaced with "Article 63-3, paragraph (1) or paragraph (8) as applied mutatis mutandis pursuant to paragraph (2) of that Article", the term " any particular set forth in the items of paragraph (2)" in paragraph (8) of that Article is deemed to be replaced with "a particular set forth in paragraph (2), item (v) or (vii) or other particulars specified by Cabinet Office Order", and the term "under paragraph (2)" in paragraph (9) of that Article is deemed to be replaced with "under Article 63-3, paragraph (1)", respectively, and any other necessary technical replacement of terms is specified by Cabinet Order.

If a financial instruments business operator, etc. engages in the business set forth in any of the following items, the provisions prescribed in the relevant item do not apply:

the business of performing the act set forth in Article 63, paragraph (1), item (i): the provisions of Section 2, Subsection 1 (excluding Article 36-3, Article 37, Article 37-3, Article 37-4, Article 38 (limited to the part that involves items (i), (ii), and (ix)), Article 39 (excluding paragraphs (4) and (6)), Article 40, Article 40-3, and Article 40-3-2); and

the business of performing the act set forth in Article 63, paragraph (1), item (ii): the provisions of Section 2, Subsection 1 (excluding Article 36-3, Article 37, Article 37-3, Article 37-4, Article 38 (limited to the part that involves items (i), (ii), and (ix)), Article 39 (excluding paragraphs (4) and (6)), and Article 40), and Subsection 3 (excluding Article 42, Article 42-2, Article 42-4, and Article 42-7).

A notifier of specially permitted services must prepare and archive books and documents for its services pursuant to the provisions of Cabinet Office Order.

Each business year, pursuant to the provisions of Cabinet Office Order, a notifier of specially permitted services must prepare a business report and submit it to the Prime Minister within three months after the end of the business year (if the notifier of specially permitted services is a foreign corporation or an individual domiciled in a foreign country, the period specified by Cabinet Order).

Each business year, pursuant to the provisions of Cabinet Office Order, a notifier of specially permitted services must prepare explanatory documents stating those of the particulars stated in the business report referred to in the preceding paragraph which are specified by Cabinet Office Order as particulars that are found to be necessary in terms of investor protection, and must keep them at its principal business office or office and all of its business offices or offices for specially permitted services for qualified institutional investors, etc. and make them available for public inspection, or disclose them using the internet or through other means pursuant to the provisions of Cabinet Office Order, during the one-year period beginning from the day on which the period specified by Cabinet Order elapses following the end of each business year.

If the Prime Minister finds it to be necessary and appropriate in the public interest or for the protection of investors as concerns business operations of a notifier of specially permitted services, the Prime Minister may, to the extent necessary, order the notifier of specially permitted services to take measures that are necessary for improving its business operations.

If a notifier of specially permitted services violates a law or regulation or a disposition made by a government agency which is based on a law or regulation, in connection with specially permitted services for qualified institutional investors, etc., the Prime Minister may order the notifier of specially permitted services to suspend all or a part of the services during a fixed period of no longer than six months.

If a notifier of specially permitted services violates a law or regulation or a disposition made by a government agency which is based on a law or regulation, in connection with specially permitted services for qualified institutional investors, etc., and the purpose of supervision cannot be achieved by any other method, the Prime Minister may order the notifier of specially permitted services to discontinue the services.

Irrespective of the category of proceeding for hearing statements of opinions under Article 13, paragraph (1) of the Administrative Procedure Act, before seeking to issue a disposition under the provisions of the preceding three paragraphs, the Prime Minister must conduct a hearing.

If the Prime Minister decides to issue a disposition under the provisions of paragraphs (1) through (3), the Prime Minister must notify the notifier of specially permitted services of this in writing.

If the Prime Minister orders the suspension of all or a part of specially permitted services for qualified institutional investors, etc. pursuant to paragraph (2) or discontinuation of specially permitted services for qualified institutional investors, etc. pursuant to paragraph (3), the Prime Minister must issue public notice of this pursuant to the provisions of Cabinet Office Order.

When the Prime Minister finds it to be necessary and appropriate in the public interest or for the protection of investors, the Prime Minister may order a notifier of specially permitted services, a person that conducts transactions with a notifier of specially permitted services, or the person that a notifier of specially permitted services has entrusted with its business (including a person that has received entrustment from the person (including entrustment at two or more degrees of separation from the original entrustment); hereinafter the same applies in this Article) to submit reports or materials that should serve as a reference with regard to the business of the notifier of specially permitted services, or may have the relevant officials enter the business office, office, or any other facilities of the notifier of specially permitted services or of the person that a notifier of specially permitted services has entrusted with its business to ask questions (for a person that the notifier of specially permitted services has entrusted with business, limited to questions that are necessary in connection with the business of the notifier of specially permitted services) about the state of their business or to inspect their books, documents, and any other articles (for a person that the notifier of specially permitted services has entrusted with business, limited to inspection that is necessary in connection with the business of the notifier of specially permitted services).

Beyond what is provided for in this Section, procedures for notification in connection with specially permitted services for qualified institutional investors, etc. and necessary particulars otherwise relevant to the application of the provisions of this Section are specified by Cabinet Order.