Financial Instruments and Exchange Act

A person that becomes the holder of subject voting rights exceeding five percent of all shareholders' voting rights in an incorporated financial instruments exchange (hereinafter referred to as the "holder of subject voting rights" in this paragraph) must submit a statement of holdings in subject voting rights to the Prime Minister, pursuant to the provisions of Cabinet Office Order and without delay, in which the holder states the subject voting rights holding rate (meaning the rate arrived at by dividing the number of subject voting rights held by the holder of subject voting rights by the number representing all shareholders' voting rights in the incorporated financial instruments exchange), the purpose of the holding, and the matters otherwise specified by Cabinet Office Order.

The provisions of paragraph (5) of the preceding Article apply mutatis mutandis when the provisions of the preceding paragraph are applicable.

If the Prime Minister suspects that a statement of holdings in subject voting rights which is referred to in paragraph (1) of the preceding Article contains a false statement or omits a statement as to a particular that is required to be stated, the Prime Minister may order the person submitting the statement of holdings in subject voting rights to submit reports or materials that should serve as a reference, or may have the relevant officials inspect the documents and other articles of that person (but only as is necessary in connection with the statements contained in the statement of holdings in subject voting rights).

An incorporated financial instruments exchange must make available for public inspection its total number of issued shares, the number that represents all shareholders' voting rights, and other matters specified by Cabinet Office Order, pursuant to the provisions of Cabinet Office Order.

The provisions of the proviso to Article 331, paragraph (2) of the Companies Act (including as applied mutatis mutandis pursuant to Article 335, paragraph (1) of that Act) and of Article 332, paragraph (2) (including as applied mutatis mutandis pursuant to Article 334, paragraph (1) of that Act); Article 336, paragraph (2); and the proviso to Article 402, paragraph (5) of that Act do not apply to an incorporated financial instruments exchange.

An incorporated financial instruments exchange must obtain the authorization of the Prime Minister if it seeks to reduce its stated capital.

An incorporated financial instruments exchange must notify the Prime Minister pursuant to the provisions of Cabinet Office Order if it seeks to increase its stated capital.

The provisions of Article 98, paragraphs (4) and (5) apply mutatis mutandis to the officers of an incorporated financial instruments exchange.

In liquidation proceedings, bankruptcy proceedings, rehabilitation proceedings, reorganization proceedings, or recognition and assistance proceedings for an incorporated financial instruments exchange, the court may request the opinion of, or an inspection or investigation by the Prime Minister.

If the Prime Minister finds it to be necessary, the Prime Minister may state an opinion to the court during the proceedings prescribed in the preceding paragraph.

An incorporated financial instruments exchange may set in place a self-regulatory committee pursuant to the provisions of its articles of incorporation, unless self-regulatory services are entrusted to a self-regulatory organization.

A self-regulatory committee makes the decisions about matters related to the self-regulatory services of the incorporated financial instruments exchange that has in place that self-regulatory committee (hereinafter referred to as a "specified incorporated financial instruments exchange" in this Division).

A self-regulatory committee is deemed to be entrusted by the board of directors with decisions about matters related to self-regulatory services.

Notwithstanding the provisions of Article 362, paragraph (4), Article 399-13, paragraphs (4) through (6), and Article 416, paragraph (4) of the Companies Act, the self-regulatory committee of a specified incorporated financial instruments exchange may not entrust executive officers or directors with a decision about a matter related to self-regulatory services.

Notwithstanding the provisions of Article 362, paragraph (4), Article 399-13, paragraphs (4) through (6), and Article 416, paragraph (4) of the Companies Act, the board of directors of a specified incorporated financial instruments exchange may not entrust the authority to select the members of a self-regulatory committee provided for in paragraph (2) of the following Article or to remove the members of a self-regulatory committee provided for in Article 105-7, paragraph (1), to an executive officer or director.

A self-regulatory committee must be composed of three or more members, and the majority of those members must be outside directors.

Members of the self-regulatory committee are selected from among the directors of a specified incorporated financial instruments exchange by a resolution at the board of directors meeting.

The resolution referred to in the preceding paragraph is adopted by a majority (or, if a higher proportion is provided for in the articles of incorporation, at least such a proportion) of the attending directors, and by a majority of the attending outside directors, at a meeting where the majority (or, if a higher proportion is provided for in the articles of incorporation, at least such a proportion) of the directors that are entitled to participate in the vote, are present.

The self-regulatory committee has a self-regulatory committee chairperson, and this chairperson is designated from among the outside directors based on a vote among the members of the self-regulatory committee.

The chairperson of the self-regulatory committee presides over the affairs of the self-regulatory committee.

The self-regulatory committee must designate a person from among the members of the self-regulatory committee to act as a proxy in handling the duties of the chairperson of the self-regulatory committee in the event that the chairperson is unable to attend to them, in advance.

The term of office of a self-regulatory committee member continues until the conclusion of the annual shareholders meeting for the last business year that ends within one year from the time of the member's selection.

The members of a self-regulatory committee may be reselected only four times.

The member of a self-regulatory committee may be removed by a resolution at the board of directors meeting of the specified incorporated financial instruments exchange.

The resolution referred to in the preceding paragraph is adopted by a majority (or, if a higher proportion is provided for in the articles of incorporation, at least such a proportion) of the attending directors, and by a majority of the attending members of the self-regulatory committee, at a meeting where the majority (or, if a higher proportion is provided for in the articles of incorporation, at least such a proportion) of the directors that are entitled to participate in the vote, are present.

If there is a vacant position that results in a shortfall in the number of members of a self-regulatory committee provided for in Article 105-5, paragraph (1), a member of the self-regulatory committee that has left the position due to the expiration of the term of office or because the member resigned, continues to have rights and obligations as a member of the self-regulatory committee until a newly selected self-regulatory committee member (including a person as referred to in the following paragraph that will temporarily perform the duties of a member of the self-regulatory committee) assumes that position.

In the case prescribed in the preceding paragraph, if the court finds it to be necessary, it may appoint a person to temporarily perform the duties of a member of the self-regulatory committee, at the petition of an interested party.

If the court appoints a person to temporarily perform the duties of a member of a self-regulatory committee as referred to in the preceding paragraph, it may set the amount of remuneration that the specified incorporated financial instruments exchange is to pay to that person.

The provisions of Article 868, paragraph (1); Article 870, paragraph (1) (limited to the part that involves item (i)); Article 871; Article 872 (limited to the part that involves item (iv)); Article 874 (limited to the part that involves item (i)); Article 875; and Article 876 of the Companies Act apply mutatis mutandis if the petition referred to in paragraph (4) is filed. In such a case, the necessary technical replacement of terms is specified by Cabinet Order.

The provisions of Article 105-5, paragraph (3) apply mutatis mutandis if a specified incorporated financial instruments exchange which is a company with a board of company auditors or a company with supervisory committee reaches a decision on the contents of proposals regarding the appointment and dismissal of directors to be submitted to the shareholders at a shareholders meeting.

Notwithstanding the provisions of Article 105-4, paragraphs (2) and (3), if the representative director or representative executive officer of a specified incorporated financial instruments exchange finds it to be particularly necessary for ensuring the public interest or the protection of investors, and there is an urgent necessity in light of the circumstances, the representative director or representative executive officer may make a decision to delist or a decision about any other matter related to self-regulatory services that is specified by Cabinet Office Order.

If a specified incorporated financial instruments exchange decides to delist or makes a decision about any other matter related to self-regulatory services that is specified by Cabinet Office Order pursuant to the provisions of the preceding paragraph, the representative director or the representative executive officer of the specified incorporated financial instruments exchange must promptly report this to the self-regulatory committee.

If the executive officer or director of a specified incorporated financial instruments exchange acts or is likely to act in a way that violates a decision of the self-regulatory committee with regard to self-regulatory services, and if that act is likely to substantially compromise the appropriate operation of self-regulatory services, a member of the self-regulatory committee may demand the executive officer or director to cease engaging in that act.

In the case referred to in the preceding paragraph, if the court issues a provisional disposition ordering the executive officer or director referred to in that paragraph to cease engaging in that act, the court is not to make the executive officer or director provide collateral.

A specified incorporated financial instruments exchange must obtain the consent of the self-regulatory committee if it seeks to change or discontinue a particular that is prescribed in the operational rules or other rules of the incorporated financial instruments exchange, and that is specified by Cabinet Office Order as being related to self-regulatory services.

The self-regulatory committee is convened by the chairperson of the self-regulatory committee prescribed in Article 105-5, paragraph (4) (or by the person that acts as a proxy in handling the duties of the chairperson of the self-regulatory committee as prescribed in Article 105-5, paragraph (6), if the chairperson of the self-regulatory committee is unable to attend to those duties; the same applies to the following Article and Article 105-14).

The member of a self-regulatory committee may demand that the chairperson of the self-regulatory committee convene a meeting of the self-regulatory committee by specifying the purpose of a self-regulatory committee meeting and the reasons for the convocation.

To convene a meeting of the self-regulatory committee, the chairperson of the self-regulatory committee must give a notice of the meeting to each member of the self-regulatory committee, no later than one week prior to the day of the self-regulatory committee meeting (or, if a shorter period has been specified by the self-regulatory committee, such a period).

Notwithstanding the provisions of the preceding paragraph, with the consent of all members of the self-regulatory committee, a meeting of the self-regulatory committee may be held without taking the convocation procedures for meetings.

If the executive officer, director, accounting advisor, or accounting auditor of a specified incorporated financial instruments exchange is so requested by the self-regulatory committee, the officer, director, accounting advisor, or accounting auditor must attend a meeting of the self-regulatory committee and explain a matter regarding which the self-regulatory committee requests an explanation.

A self-regulatory committee resolution is adopted by a majority of the attending members of the self-regulatory committee, and by a majority of the attending members of the self-regulatory committee that are outside directors, at a meeting where the majority of the members of the self-regulatory committee that are entitled to participate in the vote, are present.

A member of the self-regulatory committee with a special interest in the resolution referred to in the preceding paragraph may not participate in the vote.

The minutes of a self-regulatory committee meeting must be prepared pursuant to the provisions of Cabinet Office Order, and if the minutes are prepared in writing, the members of the self-regulatory committee present at the meeting must sign them or have their names and seals affixed to them.

Following the adoption of a resolution under paragraph (1), the member of a self-regulatory committee that the self-regulatory committee selects must report the content of the resolution to the board of directors without delay.

If the minutes prescribed in the paragraph (3) are prepared as electronic or magnetic records, the relevant persons must use the measures in lieu of signing or having their names and seals affixed which are specified by Cabinet Office Order must be taken, for the particulars that are recorded in the electronic or magnetic records.

Beyond what is provided for in the preceding paragraphs, meeting procedures and necessary particulars otherwise relevant to the operation of the self-regulatory committee are specified by the self-regulatory committee.