Financial Instruments and Exchange Act

An incorporated financial instruments exchange disappearing in a consolidation-type merger must notify its shareholders and registered pledgees of shares as well as the holders of share options and registered pledgees of share options that a consolidation-type merger is to be implemented, and must indicate the names or trade names and addresses of any other financial instruments exchange disappearing in the consolidation-type merger and of the incorporated financial instruments exchange incorporated in the consolidation-type merger, within two weeks from the day of the resolution at the shareholders meeting set forth in Article 139-15, paragraph (1).

Public notice may be given in lieu of the notice under the provisions of the preceding paragraph.

The provisions of Article 940, paragraph (1) (limited to the part that involves item (i)) and paragraph (3) of the Companies Act apply mutatis mutandis if an incorporated financial instruments exchange disappearing in a consolidation-type merger makes the public notice referred to in the preceding paragraph through an electronic public notice. In such a case, the necessary technical replacement of terms is specified by Cabinet Order.

In implementing a consolidation-type merger, the following shareholders may demand an incorporated financial instruments exchange disappearing in the consolidation-type merger to purchase its shares at a fair price:

a shareholder that notifies the incorporated financial instruments exchange disappearing in the consolidation-type merger that it is against the consolidation-type merger prior to the shareholders meeting (including a class shareholders meeting) for approving the consolidation-type merger agreement, and that opposes the consolidation-type merger at the shareholders meeting (limited to a shareholder that is entitled to exercise voting rights at that shareholders meeting); and

a shareholder that is not entitled to exercise voting rights at such a shareholders meeting.

The provisions of Article 806, paragraphs (5) through (9); Article 807; Article 868, paragraph (1); Article 870, paragraph (2) (limited to the part that involves item (ii)); Article 870-2; the main clause of Article 871; Article 872 (limited to the part that involves item (v)); Article 872-2; the main clause of Article 873; Article 875; and Article 876 of the Companies Act apply mutatis mutandis to a demand under the preceding paragraph. In such a case, the necessary technical replacement of terms is specified by Cabinet Order.

In implementing a consolidation-type merger, a holder of share options in an incorporated financial instruments exchange disappearing in a consolidation-type merger may demand the incorporated financial instruments exchange disappearing in the consolidation-type merger to purchase its share options at a fair price.

The provisions of Article 808, paragraphs (5) through (10); Article 809; Article 868, paragraph (1); Article 870, paragraph (2) (limited to the part that involves item (ii)); Article 870-2; the main clause of Article 871; Article 872 (limited to the part that involves item (v)); Article 872-2; the main clause of Article 873; Article 875; and Article 876 of the Companies Act apply mutatis mutandis to a demand under the preceding paragraph. In such a case, the necessary technical replacement of terms is specified by Cabinet Order.

The provisions of Article 139-12 apply mutatis mutandis to an incorporated financial instruments exchange disappearing in a consolidation-type merger.

The provisions of Part II, Chapter I (excluding Article 27 (excluding items (iv) and (v)); Article 29; Article 31; Article 37, paragraph (3); Article 39; Section 6; and Article 49) of the Companies Act do not apply to the incorporation of an incorporated financial instruments exchange incorporated in a consolidation-type merger.

The financial instruments exchanges disappearing in a consolidation-type merger prepares the articles of incorporation of the incorporated financial instruments exchange established in the consolidation-type merger.

The incorporated financial instruments exchange incorporated in a consolidation-type merger must prepare documents or electronic or magnetic records in which the rights and obligations of the financial instruments exchanges disappearing in the consolidation-type merger to which the incorporated financial instruments exchange incorporated in the consolidation-type merger has succeeded as a result of the consolidation-type merger are stated or recorded, and other particulars specified by Cabinet Office Order as pertinent to the consolidation-type merger are stated or recorded, after the day of its establishment without delay.

During the six-month period starting from the day of its establishment, the incorporated financial instruments exchange incorporated in a consolidation-type merger must keep the documents or electronic or magnetic records referred to in the preceding paragraph at its head office.

The shareholder or creditor of an incorporated financial instruments exchange incorporated in a consolidation-type merger may make the following requests to the incorporated financial instruments exchange incorporated in the consolidation-type merger at any time during its business hours; provided, however, that in making the request set forth in item (ii) or (iv), the shareholder or creditor must pay the cost specified by the incorporated financial instruments exchange incorporated in the consolidation-type merger:

a request to inspect a document referred to in the preceding paragraph;

a request to be issued a certified copy or extract of a document referred to in the preceding paragraph;

a request to inspect a thing that displays the particulars that have been recorded in the electronic or magnetic records referred to in the preceding paragraph, through a means specified by Cabinet Office Order; and

a request to be provided with the particulars that have been recorded in the electronic or magnetic records referred to in the preceding paragraph by an electronic or magnetic means specified by Cabinet Office Order, or a request to be issued a document that states those particulars.

A merger in which financial instruments exchanges constitute all or part of the parties (limited to a merger in which the person surviving the merger or the person incorporated in the merger is a financial instruments exchange) does not become effective without the authorization of the Prime Minister.

A person seeking the authorization referred to in the preceding paragraph must submit a written application for authorization of a merger to the Prime Minister, in which it states the following particulars with regard to the financial instruments exchange surviving the merger or the financial instruments exchange incorporated in the merger (hereinafter collectively referred to as the "financial instruments exchange resulting from a merger" in this Division):

its name or trade name;

the locations of its offices, head office, branch offices, and any other business offices; and

the names of its officers, and the trade names or names of its members, etc.

Documents or electronic or magnetic records in which the content of a merger agreement (limited to those specified by Cabinet Office Order; hereinafter the same applies in this paragraph) are stated or recorded, and the articles of incorporation, operational rules, brokerage contract rules, and other documents or electronic or magnetic records specified by Cabinet Office Order with regard to the financial instruments exchange resulting from a merger must be attached to the written application for authorization of a merger referred to in the preceding paragraph.

When an application for authorization under paragraph (2) of the preceding Article is filed, the Prime Minister must examine whether the application conforms to the following criteria:

the provisions of the articles of incorporation, operational rules, and brokerage contract rules of the financial instruments exchange resulting from the merger conform to laws and regulations, and are sufficient for ensuring fair and smooth purchase and sales of securities and market derivatives transactions on the financial instruments exchange market, as well as for protecting investors;

the financial instruments exchange resulting from the merger has a sufficient personnel structure to run a financial instruments exchange market in an appropriate manner;

the financial instruments exchange resulting from the merger will be organized as a financial instruments exchange in a manner that conforms to the provisions of this Act; and

it is fully expected that the financial instruments exchange resulting from the merger will smoothly and appropriately succeed to business connected with the purchase and sale of securities and market derivatives transactions on the financial instruments exchange markets operated by the financial instruments exchanges that disappear as a result of the merger.

If, as a result of having conducted an examination pursuant to the provisions of the preceding paragraph, the Prime Minister finds that an application conforms to the criteria in that paragraph, the Prime Minister must authorize the merger, except in a case that falls under any of the following items:

a person falling under any of the provisions of Article 29-4, paragraph (1), item (ii), sub-items (b) through (i) of this Act or Article 331, paragraph (1), item (iii) of the Companies Act is an officer; or

the written application for authorization of the merger, or a document or electronic or magnetic record that is required to be attached to it contains a false statement or false record regarding a material particular.

A financial instruments exchange that is incorporated after obtaining the authorization referred to in Article 140, paragraph (1) is deemed to have obtained the licensed referred to in Article 80, paragraph (1) at the time of the incorporation.

The financial instruments exchange surviving an absorption-type merger succeeds to the rights and obligations of the financial instruments exchange disappearing in the absorption-type merger (including the rights and obligations that the financial instruments exchange disappearing in the absorption-type merger has in connection with business it conducts based on the authorization or any other disposition of a government agency) on the effective date.

The dissolution of a financial instruments exchange disappearing in an absorption-type merger as a result of the absorption-type merger may not be asserted against a third party until after the registration of the absorption-type merger.

A financial instruments exchange incorporated in a consolidation-type merger succeeds to the rights and obligations of the financial instruments exchanges disappearing in the consolidation-type merger on the day of its establishment (including the rights and obligations that the financial instruments exchanges disappearing in the consolidation-type merger have in connection with business they conduct based on the authorization or any other disposition of a government agency).

When a merger related to the authorization prescribed in Article 140, paragraph (1) is a merger where an incorporated commodity exchange (meaning the incorporated commodity exchange as defined in Article 2, paragraph (6) of the Commodity Derivatives Transaction Act; hereinafter the same applies in this Article) is part of the parties thereto and an incorporated financial instruments exchange is established as a result of the relevant merger, the relevant incorporated financial instruments exchange succeeds to the rights and obligations of the incorporated financial instruments exchange extinguished as a result of that merger (including the rights and obligations which that incorporated financial instruments exchange has in relation to its business, under authorization or any other disposition given by a government agency) on the day of the establishment.

In the cases prescribed in the provisions that are set forth in the following items, the members of an incorporated association-operated financial instruments exchange disappearing in an absorption-type merger, the members of an incorporated association-operated financial instruments exchange operated disappearing in a consolidation-type merger, or the shareholders of an incorporated financial instruments exchange disappearing in a consolidation-type merger, become shareholders of the shares prescribed in the provisions that are set forth in the relevant item, in accordance with the provisions on the particulars provided for in that item:

the provisions of Article 139, item (ii), (a):particulars set forth in item (iii) of that Article; and

the provisions of Article 139-2, paragraph (1), item (vi):particulars set forth in item (vii) of that paragraph.

Share options in an incorporated financial instruments exchange that disappears as a result of a merger disappear on the effective date.

The outstanding purchase and sales of securities and market derivatives transactions entered into on a financial instruments exchange market that was operated by a financial instruments exchange that has disappeared as a result of a merger are deemed to be transactions entered into on the financial instruments exchange market operated by the financial instruments exchange resulting from the merger, under the same conditions.

When a merger related to the authorization referred to in Article 140, paragraph (1) is a merger in which an incorporated commodity exchange is part of the parties to the merger and an incorporated commodity exchange extinguishes as a result of that merger, the provisions of this Act apply to transactions closed on a commodity market (meaning commodity market as defined in Article 2, paragraph (9) of the Commodity Derivatives Transaction Act; hereinafter the same applies in this paragraph) established by the incorporated commodity exchange extinguished as a result of that merger for which settlement has not been completed (limited to transactions falling under futures trading prescribed in Article 2, paragraph (3) of that Act concerning commodities or commodity index prescribed in paragraph (2) of that Article (excluding commodity index calculated based on the prices of commodities prescribed in paragraph (1) of that Article other than commodities)) by deeming the transactions as market derivatives transactions which have been closed on the financial instruments exchange market established by the financial instruments exchange resulting from a merger under the same conditions. In such a case, a commodity futures transactions dealer (meaning commodity futures transactions dealer as defined in Article 2, paragraph (23) of the Commodity Futures Trading Act; the same applies in Article 202, paragraph (2), item (iii)) that has conducted transactions which have been deemed to be the market derivatives transactions in that commodity market is deemed to be a financial instruments business operator that is a trading participant in the financial instruments exchange resulting from a merger within the scope of the purpose to complete the settlement of that transaction.

The provisions of the preceding paragraphs do not apply to the following cases:

the procedures under Article 101-4, as applied mutatis mutandis pursuant to Article 139-3, paragraph (6) or Article 139-4, paragraph (5), or the procedures under Article 139-12 (including as applied mutatis mutandis pursuant to Article 139-19) have not been completed; or

the absorption-type merger is suspended.