Financial Instruments and Exchange Act

An authorized association is dissolved for the following reasons:

the occurrence of a cause specified by the articles of incorporation;

a general meeting resolution;

the number of association members falls to five or below;

an order to commence bankruptcy proceedings; or

the rescission of the authorization for incorporation of the authorized association.

A general meeting resolution concerning the dissolution of an authorized association does not become effective without the authorization of the Prime Minister.

If an authorized association has been dissolved pursuant to the provisions of paragraph (1), item (i) or (iii), the former representative must notify the Prime Minister of this without delay.

If an order to commence bankruptcy proceedings or an order to terminate bankruptcy proceedings is issued with regard to an authorized association, or if the rescission of an order to commence bankruptcy proceedings, or an order to discontinue bankruptcy proceedings, becomes final and binding with regard to an authorized association, the court clerk must notify the Prime Minister of this.

Beyond what is provided for in the preceding paragraphs, necessary particulars relevant to the dissolution of an authorized association are specified by Cabinet Order.

Procedures for the implementation of the provisions of Article 67 through the preceding Article and particulars that are otherwise necessary for their enforcement are specified by Cabinet Office Order.

The Prime Minister, pursuant to the provisions of Cabinet Order, may certify a general incorporated association that has been incorporated by a financial instruments business operator and that is found to satisfy the following requirements, to conduct the services set forth in the following paragraph, at the application of such a general incorporated association:

its aim is to ensure fair and smooth purchase and sales and other transactions of securities and to ensure fair and smooth derivatives transactions, etc., as well as contributing to the sound development of the financial instruments business and to the protection of investors;

its articles of incorporation stipulate that its members be financial instruments business operators;

it has established the necessary methods of business implementation for it to perform the services prescribed in the following paragraph properly and reliably; and

it has the necessary knowledge, ability, and financial basis for performing the services prescribed in the following paragraph properly and reliably.

A general incorporated association certified pursuant to the preceding paragraph (hereinafter referred to as a "certified financial instruments business association" in this paragraph and the following Article) is to conduct the following services:

providing its members and financial instruments intermediary service providers (limited to those whose entrusting financial instruments business operators, etc. are its members; hereinafter the same applies in this Section) with guidance, recommendations, and other services in order to have them comply the provisions of this Act and other laws and regulations while operating in financial instruments business;

conducting the necessary investigations and providing the necessary guidance, recommendations, and other services for ensuring the propriety of contracts and of asset management, and for otherwise protecting investors with regard to the financial instruments business in which its members and financial instruments intermediary service providers operate;

investigating members' and financial instruments intermediary service providers' compliance with this Act, orders that are based on this Act, dispositions that are based on this Act or on such orders, the articles of incorporation and other rules, and the principle of good faith in transactions;

resolving complaints filed by investors with regard to the financial instruments business in which its members and financial instruments intermediary service providers operate;

resolving disputes arisen from the financial instruments business in which its members and financial instruments intermediary service providers operate;

carrying out the registration work that is done pursuant to Article 64-7, paragraph (1) (including as applied mutatis mutandis pursuant to Article 66-25) or Article 64-7, paragraph (2);

establishing the necessary rules and providing other services for ensuring propriety in its members' and financial instruments intermediary service providers' solicitation in respect of purchase and sales and other transactions of securities;

conducting public relations aimed at investors and providing other services that are necessary for the certified financial instruments business association to achieve its purpose; and

services beyond what is set forth in the preceding items, which contribute to the sound development of the financial instruments business and to the protection of investors.

beyond what is set forth in the items of paragraph (2) of the preceding Article, a certified financial instruments business association (hereinafter referred to as a "certified association" in this Chapter) must endeavor to further the sound development of the financial instruments business and the protection of investors through the dissemination of financial knowledge, and through awareness-raising activities and publicity activities.

A certified association must make the membership list available for public inspection.

A person that is not a certified association must not use a term in its name which could give rise to the misconception that it is a certified financial instruments business association.

In a case set forth in any of the following items, the member of a certified association must report the particulars prescribed in that item to the certified association, pursuant to the provisions of Cabinet Office Order:

a purchase and sale of listed share certificates, etc. is made outside of a financial instruments exchange market and on the member's own account, or a purchase and sale of listed share certificates, etc. is made outside of a financial instruments exchange market and the member provides intermediation, brokerage, or agency for it:the class, issue, price, volume, and other particulars specified by Cabinet Office Order, with regard to the listed share certificates, etc. that are subject to the purchase and sale; and

the member makes an offer to sell or purchase listed share certificates, etc. to a large number of persons simultaneously outside of a financial instruments exchange market, or in any other case specified by Cabinet Office Order:the class, issue, price, volume, and other particulars specified by Cabinet Office Order, with regard to the listed share certificates, etc. subject to the offer to sell or purchase.

Pursuant to the provisions of Cabinet Office Order and based on the reports under the provisions of the preceding Article, a certified association must notify its members of, and disclose to the public, the daily trading volume and the highest price, lowest price, closing price, and other particulars, for each day and for each issue, in respect of purchase and sales of listed share certificates, etc. outside a financial instruments exchange market (limited to those made by its member on their own accounts, and those for which its members provide intermediation, brokerage, or agency; the same applies in the following Article).

Pursuant to the provisions of Cabinet Office Order, a certified association must report the daily trading volume and the highest price, lowest price, closing price, and other particulars, for each day and for each issue, in respect of purchase and sales of listed share certificates, etc. outside of a financial instruments exchange market, to the Prime Minister.

The provisions of Article 77 apply mutatis mutandis to the resolution of investors' complaints by a certified association. In this case, in that Article, the term "association member" is deemed to be replaced with "member".

The provisions of Article 77-2 apply mutatis mutandis to mediation conducted by a certified association. In this case, in paragraphs (1) and (5) of that Article, the term "association member" is deemed to be replaced with "member".

A certified association may entrust the complaint resolution services prescribed in Article 77, paragraph (1) as applied mutatis mutandis pursuant to Article 78-6 and the mediation services prescribed in Article 77-2, paragraph (1) as applied mutatis mutandis pursuant to the preceding Article to a person that has the financial basis and personnel structure to perform these services in an appropriate manner.

Notwithstanding the provisions of the preceding paragraph, the complaint resolution services and mediation services referred to in that paragraph may not be entrusted to a person that falls under any of the following items:

a person that has been sentenced pursuant to any provisions of this Act, if two years have not yet passed since the day on which the person finished serving that sentence or ceased to be subject to its enforcement;

a person whose recognition has been rescinded pursuant to Article 79-6, paragraph (2), if two years have not yet passed since the date of the rescission; or

a person that has a person falling under any of the following persons as an officer that conducts its business:

a person that has been sentenced to imprisonment or a heavier punishment or has been sentenced pursuant to any provisions of this Act, if two years have not yet passed since the day on which the person finished serving that sentence or ceased to be subject to its enforcement; or

a person that, during the 30 days prior to the date of rescission, was the officer of a corporation whose recognition has been rescinded pursuant to Article 79-6, paragraph (2), if two years have not yet passed since the date of the rescission.

A person entrusted with services pursuant to paragraph (1) may not further entrust the services under that entrustment.

The provisions of Article 77 as applied mutatis mutandis pursuant to Article 78-6, and Article 77-2 as applied mutatis mutandis pursuant to the preceding Article, apply to the services performed by the person that a Certified Association entrusts with its services pursuant to paragraph (1).

The provisions of Article 72 apply to the officers and employees of a certified association, and to any person that has held any of these positions.

Beyond the matters set forth in the items of Article 11, paragraph (1) of the Act on General Incorporated Associations and General Incorporated Foundations (Act No. 48 of 2006) and the provisions of the articles of incorporation as set forth in Article 78, paragraph (1), item (ii), a certified association must stipulate in its articles of incorporation that if a member violates this Act, an order that is based on this Act, a disposition that is based on this Act or on such an order, or the articles of incorporation or other rules of the certified association, or if a member engages in an act that is contrary to the principle of good faith in transactions, the certified association will impose a surcharge on the member, order the suspension or restriction of its rights as a member as provided in the articles of incorporation, or expel it from the certified association.

A certified association must establish rules concerning the following particulars and must obtain the authorization of the Prime Minister for the same. The same applies if the certified association seeks to change the rules:

the particulars of the services prescribed in Article 78, paragraph (2); and

the particulars of the classes of share certificates, corporate bond certificates with share options, or securities specified by Cabinet Office Order (excluding securities listed on a financial instruments exchange and over-the-counter traded securities) with no prohibition on solicitation being carried out in respect of purchase and sales and other transactions.

A certified association must notify the Prime Minister of any change in its officers or members without delay.