Financial Instruments and Exchange Act

If the Prime Minister finds, in a case where Article 50-2, paragraph (8) (including as applied mutatis mutandis pursuant to Article 56, paragraph (1) and Article 57-9; the same applies in Article 57-30, paragraph (1)) applies, that the completion of customer transactions and the return or transfer of customer property under that provision are hindered because the management of the business of a financial instruments business operator is extremely inappropriate, the Prime Minister may take a disposition ordering that financial instruments business operator to have its business and property administered by a customer property administrator (hereinafter referred to as a "disposition ordering administration" in this Section and Article 207-5, paragraph (2), item (i)).

When the Prime Minister has taken a disposition ordering administration, the Prime Minister must give public notice of this in the Official Gazette.

If the Prime Minister finds that a disposition ordering administration is no longer necessary, the Prime Minister must rescind that disposition ordering administration.

The provisions of paragraph (2) of the preceding Article apply mutatis mutandis to the case referred to in the preceding paragraph.

When a disposition ordering administration has been taken, the right to represent the financial instruments business operator subject to that disposition ordering administration (hereinafter referred to as a "financial instruments business operator under management") and to execute its business and manage and dispose of its property (limited to the extent necessary for the completion of customer transactions and the return or transfer of customer property under the provisions of Article 50-2, paragraph (8)) is vested exclusively in the customer property administrator.

The Prime Minister must appoint one or more customer property administrators simultaneously with a disposition ordering administration.

The Prime Minister may order a customer property administrator to take measures necessary for the management of the business and property of the financial instruments business operator under management that relate to the administrator's duties.

If the Prime Minister finds it necessary, the Prime Minister may appoint a further customer property administrator even after having appointed a customer property administrator pursuant to the provisions of paragraph (2), and may dismiss a customer property administrator if the Prime Minister finds that the customer property administrator is not appropriately managing the business and property of the financial instruments business operator under management.

When the Prime Minister has appointed a customer property administrator pursuant to the provisions of paragraph (2) or the preceding paragraph, or has dismissed a customer property administrator pursuant to the provisions of that paragraph, the Prime Minister must notify the financial instruments business operator under management to that effect and give public notice of this in the Official Gazette.

The provisions of Articles 69, 70 and 80, and Article 81, paragraphs (1) and (5) of the Corporate Reorganization Act (Act No. 154 of 2002) apply mutatis mutandis to customer property administrators, and the provisions of Article 78 of the Act on General Incorporated Associations and General Incorporated Foundations apply mutatis mutandis to financial instruments business operators under management. In this case, the phrase "permission of the court" in the proviso to Article 69, paragraph (1) of the Corporate Reorganization Act is deemed to be replaced with "approval of the Prime Minister", the phrase "trustee representative" in Article 70 of that Act is deemed to be replaced with "customer property administrator representative", the phrase "permission of the court" in paragraph (2) of that Article is deemed to be replaced with "approval of the Prime Minister", the term "court" in Article 81, paragraph (1) of that Act is deemed to be replaced with "Prime Minister", the phrase "trustee representative" in paragraph (5) of that Article is deemed to be replaced with "customer property administrator representative", and the phrase "representative director or other representative" in Article 78 of the Act on General Incorporated Associations and General Incorporated Foundations is deemed to be replaced with "customer property administrator".

A corporation may become a customer property administrator or a customer property administrator representative.

A financial instruments business operator and an association (meaning an authorized financial instruments firms association or a certified financial instruments business association prescribed in Article 78, paragraph (2); the same applies in the following paragraph and Article 207-5, paragraph (1)) may, notwithstanding the provisions of this Act or other laws and regulations, become a customer property administrator or a customer property administrator representative and perform its duties.

When requested by the Prime Minister to become a customer property administrator, a financial instruments business operator and an association must not refuse without justifiable grounds.

When the Prime Minister has taken a disposition ordering administration, the Prime Minister must immediately notify the district court having jurisdiction over the location of the head office or principal office of the financial instruments business operator under management to that effect, and, attaching a certified copy of the relevant written order to the written request, request the registry office at the location of the head office or principal office of the financial instruments business operator under management to register it.

The name and address of the customer property administrator must also be registered in the registration referred to in the preceding paragraph.

The provisions of paragraph (1) apply mutatis mutandis to the case where a change has occurred in the matters prescribed in the preceding paragraph and to the case where a disposition ordering administration has been rescinded.

If the Prime Minister finds it necessary, the Prime Minister may request a customer property administrator to submit reports or materials on the state of the business and assets of the financial instruments business operator under management that relate to the administrator's duties.

When necessary to perform duties, a customer property administrator may request reports from the officers of the financial instruments business operator under management (including, if an officer is a corporation, the person who is to perform its duties) and its accounting auditors (including, if an accounting auditor is a corporation, the members who are to perform its duties), as well as its employees and persons who formerly held those positions, on the state of the business and assets of the financial instruments business operator under management (in the case of persons who formerly held those positions, limited to matters they could have come to know during the period when they were engaged in the business of that financial instruments business operator under management), or inspect the books, documents, and other articles of the financial instruments business operator under management.

When necessary to perform duties, a customer property administrator may make inquiries to, or request cooperation from, government agencies, public bodies and other persons.

A customer property administrator and a customer property administrator representative (hereinafter referred to as "customer property administrator, etc." in this Article) must not divulge any secret that they have come to know in the course of their duties. The same applies after a customer property administrator, etc. has left office.

If a customer property administrator, etc. is a juridical person, its officers and employees engaged in the duties of the customer property administrator, etc. must not divulge any secret that they have come to know in the course of their duties. The same applies after those officers or employees cease to be engaged in the duties of the customer property administrator, etc.

If necessary to perform their duties, a customer property administrator must file an action or take other necessary measures in order to enforce civil liability based on a breach of duty, in the course of their duties, by an officer or accounting auditor of a financial instruments business operator under management, or by a person who was any of these.

If, in the course of performing their duties, a customer property administrator believes that a crime has been committed, they must take required measures toward filing an accusation.

When a customer property administrator conducts a transaction with a financial instruments business operator under management for themselves or for a third party, they must obtain the approval of the Prime Minister. In this case, the provisions of Article 108 of the Civil Code do not apply.

An act performed without obtaining the approval referred to in the preceding paragraph is void; provided, however, that this cannot be asserted against a third party in good faith.

If a director (or, for a company with supervisory committee, a director other than a director who is a supervisory committee member; the same applies in this paragraph through paragraph (3)) or an executive officer of a financial instruments business operator under management that is a stock company has committed or attempted to commit an act that obstructs the performance of the duties of the customer property administrator, or if it is otherwise necessary in order to perform their duties, a customer property administrator may, notwithstanding Article 339, paragraph (1) of the Companies Act (including as applied with replacement of terms pursuant to Article 347, paragraph (1) of that Act) and Article 403, paragraph (1) of that Act, dismiss a director or executive officer of the financial instruments business operator under management that is a stock company, with the permission of the court.

If, in seeking to dismiss a director or executive officer of a financial instruments business operator under management pursuant to the preceding paragraph, the dismissal would result in a shortfall in the number of directors or executive officers specified by an Act or the articles of incorporation, the customer property administrator may, notwithstanding Article 329, paragraph (1) and Article 402, paragraph (2) of the Companies Act, appoint a director or executive officer of the financial instruments business operator under management, with the permission of the court.

A director or executive officer of a financial instruments business operator under management who has been appointed pursuant to the preceding paragraph retires, respectively, at the conclusion of the annual shareholders meeting first convened after the end of management by the customer property administrator of that financial instruments business operator under management, or at the conclusion of the first meeting of the board of directors held after that annual shareholders meeting concludes.

If the permission prescribed in paragraph (1) or (2) (hereinafter referred to as "substitute permission" in this Article and the following Article) has been granted, a resolution at a shareholders meeting or class shareholders meeting, or at a board of directors' meeting, is deemed to have been adopted on the matters pertaining to that substitute permission.

A case pertaining to substitute permission falls under the jurisdiction of the district court that has jurisdiction over the location of the head office of the financial instruments business operator under management.

When the court has made a decision granting substitute permission, it must serve its electronic judgment (meaning the electronic judgment prescribed in Article 57, paragraph (1) of the Non-Contentious Case Procedures Act (Act No. 51 of 2011) (limited to that recorded in a file pursuant to paragraph (3) of that Article); the same applies in the following Article) on the financial instruments business operator under management and give public notice of a summary of the decision.

The public notice under the preceding paragraph is to be given by publication in the Official Gazette.

A decision granting substitute permission takes effect from the time when it is served on the financial instruments business operator under management pursuant to paragraph (6).

A shareholder may file an immediate appeal against a decision granting substitute permission within an unextendable period of two weeks from the date of the public notice referred to in paragraph (6).

The provisions of Article 5, Article 6, Article 7, paragraph (2), Article 40, Article 41, Article 56, paragraph (2), and Article 66, paragraphs (1) and (2) of the Non-Contentious Case Procedures Act do not apply to a case pertaining to substitute permission.

If substitute permission has been granted, there must be attached to the written application for registration of the matters pertaining to that substitute permission a certified copy or extract of the written decision granting that substitute permission, or a document stating the matters recorded in the electronic judgment for which a court clerk has certified that the content of the document is identical to the matters recorded in that electronic judgment.

No registration and license tax is imposed on a registration under Article 57-32.