Financial Instruments and Exchange Act

A specified non-financial information audit certification provider must, pursuant to the provisions of Cabinet Office Order, prepare and retain materials specified by Cabinet Office Order and other documents when conducting specified non-financial information audit certification.

A specified non-financial information audit certification provider must, within three months after the end of each business year, prepare financial statements (meaning a balance sheet, a profit and loss statement and other documents specified by Cabinet Office Order as necessary and appropriate to show the state of the assets and the profits and losses of the specified non-financial information audit certification provider) and a business report stating an overview of the business pertaining to the specified non-financial information audit certification business and other particulars specified by Cabinet Office Order, and submit these documents to the Prime Minister.

A specified non-financial information audit certification provider must retain the documents referred to in the preceding paragraph for 10 years from the time it prepared them.

Each business year, a specified non-financial information audit certification provider must prepare explanatory documents stating the particulars specified by Cabinet Office Order as pertinent to the state of its business and assets, and must, pursuant to the provisions of Cabinet Office Order, keep those explanatory documents at all of its business offices and offices at which it conducts the specified non-financial information audit certification business and make them available for public inspection, or disclose them using the internet or through other means, during the one-year period beginning from the day on which the period specified by Cabinet Order elapses following the end of each business year.

If a specified non-financial information audit certification provider comes to fall under any of the following items, the person prescribed in that item must notify the Prime Minister to that effect within 30 days from that date:

when it has discontinued the specified non-financial information audit certification business (including when it has caused another to succeed to all of its business (limited to business pertaining to the specified non-financial information audit certification business; hereinafter the same applies in this item) by a company split, or has transferred all of its business): the corporation that has discontinued the specified non-financial information audit certification business, or has caused another to succeed to or transferred it;

when a corporation that is a specified non-financial information audit certification provider is extinguished by a merger: the person who was the officer representing that corporation;

when a corporation that is a specified non-financial information audit certification provider dissolves as a result of an order to commence bankruptcy proceedings: the bankruptcy trustee; or

when a corporation that is a specified non-financial information audit certification provider dissolves for reasons other than a merger or an order to commence bankruptcy proceedings: the liquidator.

If a specified non-financial information audit certification provider comes to fall under any of the items of the preceding paragraph, its registration under Article 26-6 ceases to be effective.

If a specified non-financial information audit certification provider falls under any of the following items, the Prime Minister may order it to improve the operational control system provided for in Article 26-13, order the suspension of all or part of its business for a period fixed within two years, or rescind its registration under Article 26-6:

when, due to the intentional act of a person in charge of business execution, it has conducted audit certification treating specified non-financial information to be stated in a covered disclosure document of a specified submitter, the statement of which is false or lacking, as not false or lacking;

when, through the failure of a person in charge of business execution to exercise due care, it has conducted audit certification treating specified non-financial information to be stated in a covered disclosure document of a specified submitter, the statement of a material particular of which is false or in which the statement of a material particular that is required to be stated is lacking, as not false or lacking;

when it violates this Act or an order under this Act, or the operation of its specified non-financial information audit certification business is found to be extremely inappropriate;

when it comes to fall under any of the items of Article 26-9 (excluding items (ix) and (x));

when it has received its registration under Article 26-6 by wrongful means.

If an officer of a specified non-financial information audit certification provider (for a foreign corporation, this is limited to an officer stationed at its domestic business office or office, or its domestic representative; hereinafter the same applies in this paragraph) comes to fall under any of Article 26-9, item (ix), (a) through (e), is discovered to have fallen under any of (a) through (e) of that item at the time of the registration referred to in Article 26-6, or violates a law or regulation or a disposition by a government agency which is based on a law or regulation, in connection with the specified non-financial information audit certification business, the Prime Minister may order the specified non-financial information audit certification provider to dismiss that officer.

The provisions of the preceding paragraph apply mutatis mutandis to a person in charge of business execution. In this case, in that paragraph, the phrase "Article 26-9, item (ix), (a) through (e)" is deemed to be replaced with "Article 26-9, item (x), (a) through (d)", the phrase "(a) through (e) of that item" is deemed to be replaced with "(a) through (d) of that item", and the phrase "violates a law or regulation or a disposition by a government agency which is based on a law or regulation, in connection with the specified non-financial information audit certification business" is deemed to be replaced with "comes to fall under item (i) or (ii) of the preceding paragraph".

If the Prime Minister is unable to ascertain the location of the business offices or offices of a specified non-financial information audit certification provider or is unable to ascertain the whereabouts of the officer representing the specified non-financial information audit certification provider, the Prime Minister, pursuant to the provisions of Cabinet Office Order, may issue public notice of that fact and rescind the registration of the specified non-financial information audit certification provider if no filing is made by the specified non-financial information audit certification provider even after 30 days past the day of the public notice.

The provisions of Chapter III of the Administrative Procedure Act do not apply to a disposition under the preceding paragraph.

If the Prime Minister has ordered the improvement of the operational control system, or ordered the suspension of all or part of the business, pursuant to paragraph (1) of the preceding Article, or has rescinded the registration under Article 26-6 pursuant to that paragraph or paragraph (4) of that Article, the Prime Minister must issue public notice to that effect.

When an application is filed by a specified non-financial information audit certification provider for the deletion of the registration under Article 26-6, or if a registration under Article 26-6 loses its validity pursuant to the provisions of Article 26-23, paragraph (2), or the Prime Minister rescinds a registration under Article 26-6 pursuant to the provisions of Article 26-24, paragraph (1) or (4), the Prime Minister must delete that registration.

When the Prime Minister finds it to be necessary and appropriate in the public interest or for the protection of investors, the Prime Minister may order a specified non-financial information audit certification provider, a specified submitter that has received the specified non-financial information audit certification of that specified non-financial information audit certification provider, a person that has been entrusted with business by that specified non-financial information audit certification provider (including a person that has received entrustment from that person (including entrustment at two or more degrees of separation from the original entrustment); hereinafter the same applies in this paragraph), or an affiliated corporation of that specified non-financial information audit certification provider (meaning a subsidiary corporation of that specified non-financial information audit certification provider, a corporation that has that specified non-financial information audit certification provider as its subsidiary corporation, or a subsidiary corporation of a corporation that has that specified non-financial information audit certification provider as its subsidiary corporation (excluding that specified non-financial information audit certification provider); hereinafter the same applies in this paragraph) to submit reports or materials that should serve as a reference with regard to the business of that specified non-financial information audit certification provider, or may have the relevant officials inspect the state of business, documents, or other articles of that specified non-financial information audit certification provider, a specified submitter that has received the specified non-financial information audit certification of that specified non-financial information audit certification provider, a person that has been entrusted with business by that specified non-financial information audit certification provider, or an affiliated corporation of that specified non-financial information audit certification provider (but, for a person that has been entrusted with business by that specified non-financial information audit certification provider or an affiliated corporation of that specified non-financial information audit certification provider, limited to inspection that is necessary in connection with the business of that specified non-financial information audit certification provider).

The term "subsidiary corporation" as used in the preceding paragraph means another corporation in which a corporation holds the majority of the voting rights held by all the shareholders, etc. (meaning the voting rights held by all the shareholders, all the members, all the association members, all the partners, or all the contributors, and, in the case of a stock company, excluding voting rights pertaining to shares for which voting rights cannot be exercised on any of the matters on which a resolution may be made at a shareholders meeting, and including voting rights pertaining to shares deemed to carry voting rights pursuant to the provisions of Article 879, paragraph (3) of the Companies Act; the same applies hereinafter). In such a case, another corporation in which a corporation and one or more of its subsidiary corporations, or one or more of the subsidiary corporations of that corporation, hold the majority of the voting rights held by all the shareholders, etc. is deemed to be a subsidiary corporation of that corporation.

When the Prime Minister seeks to refuse a registration under Article 26-6, the Prime Minister must notify the applicant for registration and have the relevant official hold a hearing concerning that applicant.

Irrespective of the category of proceeding for hearing statements of opinion under Article 13, paragraph (1) of the Administrative Procedure Act, when the Prime Minister seeks to take a disposition based on the provisions of Article 26-24, paragraph (1), the Prime Minister must conduct a hearing.

When the Prime Minister has decided to make or not to make a registration under Article 26-6, or to take a disposition based on the provisions of Article 26-24, paragraph (1) or (2) (including as applied mutatis mutandis pursuant to paragraph (3) of that Article), the Prime Minister must notify the applicant for registration or the specified non-financial information audit certification provider to that effect in writing.

The Prime Minister may, pursuant to the provisions of Cabinet Order, upon application, certify a general incorporated association that has been established by specified non-financial information audit certification providers and is found to satisfy the following requirements as a body that conducts the operations prescribed in the following paragraph:

its purpose is to ensure the proper conduct of the specified non-financial information audit certification business and to contribute to its sound development and to the protection of investors;

there is a provision in its articles of incorporation to the effect that specified non-financial information audit certification providers are its members;

it has established the methods of implementing operations necessary for it to perform the operations prescribed in the following paragraph properly and reliably; and

it has the knowledge and ability, and the financial basis, sufficient to perform the operations prescribed in the following paragraph properly and reliably.

A general incorporated association certified pursuant to the provisions of the preceding paragraph (referred to as a "certified specified non-financial information audit certification business association" in this Subsection) is to conduct the following operations:

guidance, recommendations, and other operations toward its members for having them comply with the provisions of this Act and other laws and regulations concerning the specified non-financial information audit certification business conducted by its members;

investigations, guidance, recommendations, and other operations necessary for ensuring propriety of the specified non-financial information audit certification business conducted by its members and otherwise protecting investors;

investigation of the status of its members' compliance with this Act, orders under this Act, dispositions based on these, and the articles of incorporation and other rules;

resolving complaints filed by investors with regard to the specified non-financial information audit certification business conducted by its members;

training for the persons in charge of business execution of its members;

establishing rules necessary for ensuring propriety of the specified non-financial information audit certification business conducted by its members and other operations;

public relations to investors and other operations necessary for achieving the purpose of the certified specified non-financial information audit certification business association; and

operations that contribute to the sound development of the specified non-financial information audit certification business or to the protection of investors, beyond what is set forth in the preceding items.