Financial Instruments and Exchange Act

A person that, in a public offering or secondary distribution of securities that is subject to the main clause of Article 4, paragraph (1), the main clause of Article 4, paragraph (2) or the main clause of Article 4, paragraph (3) or of securities for which disclosure has already been made, causes securities to be acquired while using a prospectus referred to in Article 13, paragraph (1) that contains a false statement regarding a material particular, lacks a statement of a material particular that is required to be stated, or lacks a statement of material fact that is necessary to prevent it from being misleading, or while using materials that contain a false or misleading representation about a material particular, or that lack a representation of material fact that is necessary to prevent them from being misleading, is liable to compensate for damage sustained by a person that acquires the securities without knowing that the statement is false or has been omitted, that the representation is false or misleading, or that a representation has been omitted; provided, however, that this does not apply if the person that would be liable to compensate proves it did not know, and in the exercise of reasonable care could not have known, that the statement was false or had been omitted, or that the representation was false or misleading.

In the case referred to in the preceding paragraph, a statement regarding information on forecasts of future business activities and other uncertain information specified by Cabinet Office Order, among the particulars stated in the prospectus referred to in Article 13, paragraph (1), must not, in a case specified by Cabinet Office Order as one in which reasonableness is found to be ensured in light of the process of consideration leading to that statement on the part of the issuer that prepared the prospectus, be construed as falling under a false statement solely because a fact differing from that statement becomes known or because of any other circumstance specified by Cabinet Office Order.

If a securities registration statement contains a false statement regarding a material particular, lacks a statement of a material particular that is required to be stated, or lacks a statement of a material fact that is necessary to prevent it from being misleading, the person that submitted the securities registration statement is liable to compensate for damage sustained by a person that acquires the securities through the public offering or secondary distribution; provided, however, that this does not apply if the person that acquires the securities knows that the statement is false or has been omitted at the time the person offers to acquire the securities.

In the case referred to in the preceding paragraph, a statement regarding information on forecasts of future business activities and other uncertain information specified by Cabinet Office Order, among the particulars stated in a securities registration statement, must not, in a case specified by Cabinet Office Order as one in which reasonableness is found to be ensured in light of the process of consideration leading to that statement on the part of the person that submitted the securities registration statement, be construed as falling under a false statement solely because a fact differing from that statement becomes known or because of any other circumstance specified by Cabinet Office Order.

The preceding two paragraphs apply mutatis mutandis if a prospectus referred to in Article 13, paragraph (1) contains a false statement regarding a material particular, lacks a statement of a material particular that is required to be stated, or lacks a statement of a material fact that is necessary to prevent it from being misleading. In this case, in the preceding two paragraphs, the phrase "the person that submitted the securities registration statement" is deemed to be replaced with "the issuer that prepared the prospectus", and in paragraph (1), the phrase "through the public offering or secondary distribution" is deemed to be replaced with "through the public offering or secondary distribution after receiving the prospectus".

The amount of compensation for which a person is liable pursuant to the preceding Article is the amount calculated by deducting the amount specified in each of the following items from the amount that the claimant paid to acquire the securities:

the market value of the securities at the time the claimant claims damages pursuant to the preceding Article (or, if they have no market value, their estimated disposal value at such time); or

the disposal value of the securities, if they were disposed of before the time referred to in the preceding item.

If the person that would be liable to compensate pursuant to the preceding Article proves that all or part of the damage sustained by the claimant is due to circumstances other than the decline in the value of the securities that would have arisen from the securities registration statement or the prospectus containing a false statement regarding a material particular, lacking a statement of a material particular that is required to be stated, or lacking a statement of a material fact that is necessary to prevent it from being misleading, the person is not liable for the whole or such part of the compensation.

A claim for compensation under the provisions of Article 18 extinguishes by prescription in the following cases:

when compensation is not claimed for three years sarting from the time when the claimant comes to know, or in exercise of reasonable care could have come to know, that the securities registration statement or the prospectus includes a false statement regarding a material particular, lacks a statement of a material particular that is required to be stated, or lacks a statement of a material fact that is necessary to prevent it from being misleading; or

when compensation is not claimed for seven years (excluding, if an order for suspension under Article 10, paragraph (1) or Article 11, paragraph (1) has been issued, the period from the day on which the order for suspension is issued to the day on which the order is canceled) from the time when the notification under the provisions of Article 4, paragraphs (1) through (3) for the public offering or secondary distribution of the securities becomes effective or the prospectus is delivered.

If a securities registration statement contains a false statement regarding a material particular, lacks a statement of a material particular that is required to be stated, or lacks a statement of material fact that is necessary to prevent it from being misleading, the following persons are liable to compensate a person that acquires the relevant securities through a public offering or secondary distribution, for damage arising from the statement being false or having been omitted; provided, however, that this does not apply if the person that acquires the securities knows that the statement is false or has been omitted at the time the person offers to acquire the securities:

a person that, at the time of submission of the securities registration statement, is an officer (meaning a director, accounting advisor, company auditor, executive officer, or a person equivalent thereto; the same applies hereinafter, except in Article 163 to Article 167) of the company that submitted the securities registration statement, or an incorporator of that company (limited to cases in which the securities registration statement was submitted before the incorporation of the company);

the holder of the securities subject to the secondary distribution (or, if the holder had acquired the securities from their previous holder by entering into a contract specifying that the securities would be sold through a secondary distribution, the previous holder that is the other party to the contract);

a certified public accountant or the audit corporation that, in the audit certification provided for in Article 26-3, paragraph (1) in connection with the securities registration statement, certifies a statement in the documents under the audit certification which is false or has been omitted, as not being false or as not having been omitted;

a specified non-financial information audit certification provider that, in the specified non-financial information audit certification in connection with the securities registration statement, certifies specified non-financial information provided for in Article 26-4, paragraph (2), item (ii) that is subject to the specified non-financial information audit certification, in which a statement is false or has been omitted, as not being false or as not having been omitted; and

the financial instruments business operator or registered financial institution that concludes the wholesale underwriting contract with the issuer of the securities subject to the public offering or with either person specified in item (ii).

In the case referred to in the preceding paragraph, a person set forth in any of the following items is not liable for the compensation set forth in that paragraph, if that person proves the particular set forth in the relevant item:

the person specified in item (i) or (ii) of the preceding paragraph:it did not know, and in the exercise of reasonable care could not have known, that the statement was false or had been omitted;

a person or firm specified in item (iii) of the preceding paragraph:it did not intentionally or negligently provide such inappropriate certification; and

the person or firm specified in item (iv) of the preceding paragraph: it did not intentionally or negligently provide the certification under that item; and

the person or firm specified in item (v) of the preceding paragraph: it did not know, and, with respect to parts other than the part involving the documents on financial accounting provided for in Article 26-3, paragraph (1) and the specified non-financial information provided for in Article 26-4, paragraph (2), item (ii) that is subject to the specified non-financial information audit certification, in the exercise of reasonable care it could not have known, that the statement was false or had been omitted.

In the case referred to in paragraph (1), a statement regarding information on forecasts of future business activities and other uncertain information specified by Cabinet Office Order, among the particulars stated in a securities registration statement, must not, in a case specified by Cabinet Office Order as one in which reasonableness is found to be ensured in light of the process of consideration leading to that statement on the part of the company that submitted the securities registration statement, be construed as falling under a false statement solely because a fact differing from that statement becomes known or because of any other circumstance specified by Cabinet Office Order.

The provisions of paragraph (1) (limited to the portions pertaining to items (i) and (ii)), paragraph (2) (limited to the portion pertaining to item (i)) and the preceding paragraph apply mutatis mutandis if a prospectus referred to in Article 13, paragraph (1) contains a false statement regarding a material particular, lacks a statement of a material particular that is required to be stated, or lacks a statement of a material fact that is necessary to prevent it from being misleading. In this case, in paragraph (1), the phrase "through a public offering or secondary distribution" is deemed to be replaced with "through a public offering or secondary distribution after receipt of the prospectus"; in item (i) of that paragraph, the phrase "the company that submitted the securities registration statement" is deemed to be replaced with "the company that prepared the prospectus", the phrase "at the time of submission" is deemed to be replaced with "at the time of preparation", and the phrase "was submitted" is deemed to be replaced with "was prepared"; and in the preceding paragraph, the phrase "the company that submitted the securities registration statement" is deemed to be replaced with "the company that prepared the prospectus".

The term "wholesale underwriting contract" as used in paragraph (1), item (v) means one of the following contracts concluded on the occasion of a public offering or secondary distribution of securities:

a contract stipulating that the underwriter will acquire all or part of the relevant securities from the issuer or holder (excluding a financial instruments business operator or registered financial institution; the same applies in the following item and item (iii)), with the aim of having other persons acquire them;

a contract stipulating that if no other person acquires all or part of the relevant securities, the underwriter will acquire those that remain from the issuer or holder; or

if the relevant securities are share option certificates (including the securities specified by Cabinet Office Order as being equivalent to them; hereinafter the same applies in this item), a contract stipulating that if the person that has acquired those share option certificates does not exercise the share options (including the rights specified by Cabinet Office Order as being equivalent to them; hereinafter the same applies in this item) associated with all or part of those share option certificates, the underwriter itself or a third party will acquire the share option certificates associated with the unexercised share options from the issuer or holder and exercise them.