Financial Instruments and Exchange Act

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

A financial instruments clearing organization must obtain the authorization of the Prime Minister if it seeks to reduce its stated capital.

A financial instruments clearing organization must notify the Prime Minister pursuant to the provisions of Cabinet Office Order if it seeks to increase its stated capital.

If a particular set forth in Article 156-3, paragraph (1), items (iii) through (v) changes, the financial instruments clearing organization must notify the Prime Minister of this, pursuant to the provisions of Cabinet Office Order, supplying a document specified in paragraph (2), item (i) or (iii) of that Article.

A person falling under any of the following items may not become the director, accounting advisor, company auditor, or executive officer of a financial instruments clearing organization.

a person specified by Cabinet Office Order as being unable to properly perform their duties due to a mental or physical disorder; or

a person falling under any of Article 82, paragraph (2), item (iii), (a) through (f).

The director, accounting advisor, company auditor, or executive officer of a financial instruments clearing organization loses that position upon coming to fall under the person provided for in the preceding paragraph.

If the director, accounting advisor, company auditor, or executive officer of a financial instruments clearing organization is discovered to have become a director, accounting advisor, company auditor, or executive officer by wrongful means or if the director, accounting advisor, company auditor, or executive officer of a financial instruments clearing organization violates a law or regulation or a disposition by a government agency which is based on a law or regulation, the Prime Minister may order the financial instruments clearing organization to dismiss that director, accounting advisor, company auditor, or executive officer.

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 financial instruments clearing organizations.

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 financial instruments clearing organization, its clearing member, or the person that a financial instruments clearing organization has entrusted with its business (including a person that has received entrustment from the person (including entrustment at two or more degrees of separation from the original entrustment); hereinafter the same applies in this Article), to report or submit materials that should serve as a reference with regard to the business or assets of the financial instruments clearing organization, and may have the relevant officials inspect the state of the business or assets, or the books, documents, and any other articles, of a financial instruments clearing organization or the person that a financial instruments clearing organization has entrusted with its business (but may only have the relevant officials inspect the person that a financial instruments clearing organization has entrusted with its business as is necessary in connection with the business or assets of the financial instruments clearing organization).

If the Prime Minister finds it to be necessary and appropriate in the public interest or for the protection of investors as concerns a financial instruments clearing organization's business operations or the state of its assets, the Prime Minister may, to the extent necessary, order the financial instruments clearing organization to change its business outline or its business methods, or otherwise take measures that are necessary for improving its business operations or the state of its assets.

If a financial instruments clearing organization is discovered to have fallen under any of the categories in the items of Article 156-4, paragraph (2) at the time it obtained its license, the Prime Minister may rescind the license.

If a financial instruments clearing organization violates a law or regulation, a disposition by a government agency which is based on a law or regulation, or a condition attached to the approval referred to in the proviso to Article 156-6, paragraph (2) or in Article 156-19, paragraph (1), the Prime Minister may rescind the license referred to in Article 156-2 or the approval referred to in the proviso to Article 156-6, paragraph (2) or in Article 156-19, paragraph (1), order the suspension of all or part of its business during a fixed period of no longer than six months, or order the dismissal of its officers.

A resolution to discontinue the financial instruments obligation assumption services of a financial instruments clearing organization or a resolution to dissolve a financial instruments clearing organization does not become effective without the authorization of the Prime Minister.

Notwithstanding the provisions of Article 87-2, paragraph (1) and Article 156-2, a financial instruments exchange may perform financial instruments obligation assumption services, etc. and business incidental thereto with the approval of the Prime Minister, pursuant to the provisions of Cabinet Office Order.

Notwithstanding the provisions of Article 87-2, paragraph (1), a financial instruments exchange engaged in the operation of a commodity market may perform commodity transaction debt assumption services, etc. and business incidental thereto with the approval of the Prime Minister, pursuant to the provisions of Cabinet Office Order.

If a financial instruments exchange engaged in the operation of a commodity market discontinues the business for which it has obtained the approval referred to in the preceding paragraph, it must notify the Prime Minister of this pursuant to the provisions of Cabinet Office Order.

The provisions of Article 156-6, paragraphs (4) and (5) apply mutatis mutandis to the approval referred to in paragraph (1) or (2).

If a financial instruments exchange that obtains the approval referred to in paragraph (1) of the preceding Article falls under any of the following items, the Prime Minister may rescind the approval:

it obtains the approval referred to in paragraph (1) of the preceding Article by wrongful means;

the license referred to in Article 80, paragraph (1) has been rescinded; or

it falls under any of the items of Article 134, paragraph (1).

If a financial instruments exchange engaged in the operation of a commodity market that has obtained the approval referred to in paragraph (2) of the preceding Article violates a law or regulation, a disposition by a government agency which is based on a law or regulation, or a condition attached to the approval referred to in that paragraph, the Prime Minister may rescind the approval referred to in that paragraph.

Notwithstanding the provisions of the preceding Section, a corporation incorporated based on foreign laws and regulations which performs services of the same type as financial instruments obligation assumption services in a foreign country may conduct financial instruments obligation assumption services if licensed by the Prime Minister pursuant to the provisions of this Section.

A person seeking the license referred to in the preceding Article must designate a domestic representative and submit a written license application to the Prime Minister, in which it states the following particulars:

its trade name or name;

the amount of stated capital or the total amount of contributions;

the location of its head office or principal office;

the location of its office in Japan, if any;

the titles and names of its officers;

the name and domestic address of its domestic representative; and

if the person conducts business other than financial instruments obligation assumption services, etc. and business incidental to this, the outline of that business.

The following documents must accompany the written license application referred to in the preceding paragraph:

a document pledging that the applicant does not fall under the purview of the requirements set forth in paragraph (2), items (i) through (iv) of the following Article;

the articles of incorporation (including anything equivalent thereto; hereinafter the same applies in this Chapter);

the business rules;

the balance sheet and profit and loss statement;

documents stating the expected income and expenditures;

a document outlining the method of securing the collateral needed to settle outstanding obligations (meaning outstanding obligations as prescribed in Article 156-20-9, paragraph (1); hereinafter the same applies in paragraph (1), item (v) of the following Article) and other arrangements for settling them, and outlining the facilities, personnel, and other systems for performing such settlement operations; and

beyond what is set forth in the preceding items, documents specified by Cabinet Office Order.

In the case referred to in the preceding paragraph, if the articles of incorporation or balance sheet has been prepared as an electronic or magnetic record or an electronic or magnetic record has been prepared for a profit and loss statement in lieu of a written document, the electronic or magnetic record (limited to those specified by Cabinet Office Order) may accompany the written license application in lieu of the written document.