Financial Instruments and Exchange Act

If there is no one to perform the duties of a board member or inspector and the Prime Minister finds it to be necessary, the Prime Minister may appoint a provisional board member or provisional inspector.

It is prohibited for the officer or employee of an authorized association, or for a person that has held any of these positions, to divulge or misappropriate any secret learned in the course of duty.

It is prohibited for the officer or employee of an authorized association, or for a person that has held any of these positions, to use information learned in the course of duty for a purpose other than the business uses of the authorized association for which the information is provided.

If the Prime Minister finds it to be necessary and appropriate in the public interest or for the protection of investors in connection with an authorized association's articles of incorporation or other rules, its trade practices, or its business operations or the state of its assets, the Prime Minister may, to the extent necessary, order the authorized association to change its articles of incorporation or other rules, to change its trade practices, or otherwise take measures that are necessary from a supervisory perspective. In such a case, irrespective of the category of proceeding for hearing statements of opinion under Article 13, paragraph (1) of the Administrative Procedure Act, the Prime Minister must conduct a hearing.

If an authorized association violates a law or regulation, a disposition by a government agency which is based on a law or regulation, or its articles of incorporation or other rules (hereinafter referred to as a "law or regulation, etc." in this Article); or, even though an association member, a financial instruments intermediary service provider, or an issuer of over-the-counter traded securities or tradable securities has violated a law or regulation, etc. or engaged in an act that is contrary to the principle of good faith in transactions as specified in the articles of incorporation or other rules, the authorized association fails to exercise the powers accorded it under this Act, an order based on this Act, or its articles of incorporation or other rules, or to take other necessary measures to cause the person to observe laws and regulations, etc. or the principle of good faith in transactions; and the Prime Minister finds it to be necessary and appropriate in the public interest or for the protection of investors, the Prime Minister may rescind its authorization for incorporation, order the suspension of all or part of the business during a fixed period of no longer than one year, order a change to its business methods, issue an order prohibiting performance of part of its business, order the dismissal of its officers, or order it to take any necessary measures that are specified in the articles of incorporation or other rules.

Irrespective of the category of proceeding for hearing statements of opinion under Article 13, paragraph (1) of the Administrative Procedure Act, before seeking to order the suspension of all or part of the business, to order a change of business methods, to issue an order prohibiting performance of part of the business, or to issue an order to take any necessary measures that are specified in the articles of incorporation or other rules pursuant to the provisions of the preceding paragraph, the Prime Minister must conduct a hearing.

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 an authorized association, an issuer of over-the-counter traded securities or tradable securities, or the person that an authorized association 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 submit reports or materials that should serve as a reference with regard to the business or assets of the authorized association, and may have the relevant officials inspect the state of the business or assets, or the books, documents, and any other articles, of an authorized association or the person that an authorized association has entrusted with its business (but may only have the relevant officials inspect the person that an authorized association has entrusted with its business as is necessary in connection with the business or assets of the authorized association).

An authorized association must submit the following documents to the Prime Minister within three months from the day on which each business year begins:

the business summary report for the previous business year and the business plan for the current business year;

the inventory of property as of the end of the previous business year; and

the statement of accounts for the previous business year and the budget statements for the current business year.

If an investor files for the resolution of a complaint involving business carried out by an association member or a financial instruments intermediary service provider, in addition to providing the claimant with the necessary advice and investigating the circumstances to which the complaint pertains based on its consultation with the claimant, the authorized association must notify the association member or financial instruments intermediary service provider of the substance and content of the complaint and request that it process the complaint expeditiously.

If an authorized association finds that it is necessary in connection with the resolution of a complaint under a filing referred to in the preceding paragraph, it may request the relevant association member or financial instruments intermediary service provider to provide a written or oral explanation or submit materials.

If an association member or financial instruments intermediary service provider has had a request under the preceding paragraph from an authorized association, it must not refuse this request without just cause for doing so.

An authorized association must fully inform its association members and financial instruments intermediary service providers about any filing as referred to in paragraph (1), the circumstances to which the complaint pertains, and the outcome of its resolution.

The provisions of paragraph (1) do not apply if an authorized association has obtained a designation under Article 156-39, paragraph (1) and the filing referred to in paragraph (1) is for a complaint in the category of dispute resolution services (meaning a category of dispute resolution services as prescribed in Article 156-38, paragraph (13); the same applies in paragraph (9) of the following Article (including as applied mutatis mutandis pursuant to Article 79-13) to which that designation pertains).

If there is a dispute about a purchase and sale or other transaction of securities or about a derivatives transaction, etc. conducted by an association member or a financial instruments intermediary service provider, any of the parties to the transaction may file for mediation with an authorized association, for the purpose of attempting to resolve that dispute.

If an authorized association receives a filing under the preceding paragraph, it must appoint a mediator that has the relevant knowledge and experience and that has no special interest in the parties to the dispute subject to that filing (hereinafter referred to as the "case" in this Article), and must refer the case to mediation by that mediator; provided, however, that a mediator must not mediate if the mediator finds that the case is not suited for mediation due to its nature, or that the party has filed for mediation for unjust purposes and without due cause.

A mediator may hear the opinions of the parties and witnesses, request them to submit reports, and request the parties to submit books, documents, and any other articles that should serve as reference; and may prepare the mediation proposal that is needed to resolve the case and recommend that the parties accept it, as the mediator finds appropriate.

In the cases referred to in the preceding three paragraphs, if a financial instruments intermediary service provider is a party, its entrusting financial instruments business operator, etc. is also deemed to be a party.

If an association member or a financial instruments intermediary service provider has had a request under the provisions of paragraph (3), it must not refuse this request without just cause.

An authorized association may collect from the parties all or part of the expenses incurred in relation to mediation.

It is prohibited for a mediator or former mediator to divulge or misappropriate any secret learned in the course of duty.

It is prohibited for a mediator or former mediator to use information learned in the course of duty for a purpose other than the business use of the authorized association for which the information is provided.

The provisions of paragraph (1) do not apply if an authorized association has obtained a designation under Article 156-39, paragraph (1) and the dispute referred to in paragraph (1) is in the category of dispute resolution services to which that designation pertains.

An authorized association may entrust the complaint resolution services prescribed in Article 77, paragraph (1) and the mediation services prescribed in paragraph (1) of the preceding Article to a person that has a financial basis and personnel structure sufficient for performing these services in an appropriate manner.

Notwithstanding the provisions of the preceding paragraph, an authorized association may not entrust the complaint resolution services and mediation services referred to in that paragraph to a person that falls under any of the following items:

a person that has been sentenced pursuant to any provisions of this Act, for whom two years have not passed since the day on which the person finished serving that sentence or ceased to be subject to its enforcement;

a person whose authorization has been rescinded pursuant to Article 74, paragraph (1), for whom two years have not passed since the date of rescission; or

a person that has a person falling under any of the following persons as an officer who conducts its business:

a person that has been sentenced to imprisonment or a heavier punishment or has been sentenced pursuant to any provisions of this Act, for whom two years have not passed since the day on which the person finished serving that sentence or ceased to be subject to its enforcement; or

a person that, during the 30 days before the date of rescission, was the officer of an authorized association whose authorization has been rescinded pursuant to Article 74, paragraph (1), and for whom two years have not passed since the date of rescission.

A person entrusted with services pursuant to the provisions of paragraph (1) may not further entrust the services under that entrustment.

The provisions of the preceding two Articles apply mutatis mutandis to the services entrusted by an authorized association pursuant to the provisions of paragraph (1).

An authorized association must endeavor to facilitate the sound development of the financial instruments business and the protection of investors through the dissemination of financial knowledge and through educational and publicity campaigns.

An authorized association must make registrations pursuant to the provisions of Cabinet Order.

An authorized association is established by a registration of its incorporation being recorded in connection with the location of its principal office.

The particulars that must be registered pursuant to the provisions of paragraph (1) may not be duly asserted against a third party until after their registration.