Medical Care Act

The auditor must attend the meeting of the board of directors and state their opinion when the auditor finds it necessary.

In the case prescribed in item (iv) of the preceding Article, when the auditor finds it necessary, the auditor may request the directors (in the case prescribed in the proviso of Article 93, paragraph (1) of the Act on General Incorporated Associations and General Incorporated Foundations as applied mutatis mutandis under Article 46-7-2, paragraph (1), the person with the authority to convene the meeting as prescribed in paragraph (2) of the same Article) to convene a meeting of the board of directors.

If a notice of convocation of a meeting of the board of directors is not issued within five days from the date of the request under the preceding paragraph setting the date of the meeting within two weeks from the date of the request, the auditor who made the request may convene a meeting of the board of directors.

The provisions of Articles 103 through 106 of the Act on General Incorporated Associations and General Incorporated Foundations apply mutatis mutandis to the auditors of a medical corporation as an association and a medical corporation as a foundation. In this case, the term "articles of incorporation" in Article 103, paragraph (1) of the same Act as applied mutatis mutandis to the auditors of a medical corporation as a foundation is to be replaced with "act of endowment", the terms "articles of incorporation" and "general meeting of members" in Article 105, paragraphs (1) and (2) of the same Act is replaced with "act of endowment" and "meeting of the board of councillors", respectively, and the term "general meeting of members" in paragraph (3) of the same Article is replaced with "meeting of the board of councillors".

A director or auditor of a medical corporation as an association, if they neglected their duties, are liable to compensate the relevant medical corporation for damages caused thereby.

When a director of a medical corporation as an association has conducted a transaction set forth in item (i) of Article 84, paragraph (1) of the Act on General Incorporated Associations and General Incorporated Foundations in violation of the same paragraph as applied mutatis mutandis by replacing the terms pursuant to Article 46-6-4, the amount of profit obtained by the director or a third party from the relevant transaction is presumed to be the amount of damage set forth in the preceding paragraph.

When a medical corporation as an association has suffered damage due to a transaction set forth in Article 84, paragraph (1) item (ii) or (iii) of the Act on General Incorporated Associations and General Incorporated Foundations as applied mutatis mutandis by replacing the terms pursuant to Article 46-6-4, any of the directors listed below is presumed to have neglected their duties:

a director set forth in Article 84, paragraph (1) of the Act on General Incorporated Associations and General Incorporated Foundations as applied mutatis mutandis by replacing the terms pursuant to Article 46-6-4;

a director who has decided that the medical corporation as an association is to conduct the relevant transaction; and

a director who voted in favor of the resolution for approval of the relevant transaction by the board of directors.

The provisions of the preceding three paragraphs apply mutatis mutandis to councillors or directors, or auditors of a medical corporation as a foundation.

The provisions of Articles 112 through 116 of the Act on General Incorporated Associations and General Incorporated Foundations apply mutatis mutandis to the liability of directors or auditors of a medical corporation as an association set forth in paragraph (1) of the preceding Article and the liability of councillors or directors or auditors of a medical corporation as a foundation set forth in paragraph (1) of the same Article as applied mutatis mutandis pursuant to paragraph (4) of the same Article. In this case, the term " Ministry of Justice Order" in Article 113, paragraph (1) item (ii) and paragraph (4) of the same Act as applied mutatis mutandis to the liability of these persons is replaced with "Order of the Ministry of Health, Labour and Welfare", the term "all members" in Article 112 of the same Act as applied mutatis mutandis to the liability of councillors or directors or auditors of a medical corporation as a foundation is replaced with "all councillors", the term "general meeting of members" in Article 113 of the same Act is replaced with "meeting of the board of councillors", the term "articles of incorporation" in the heading of Article 114 of the same Act and paragraphs (1) and (2) of the same Article is replaced with "act of endowment", the term "general meeting of members" in the same paragraph is replaced with "meeting of the board of councillors", the term "articles of incorporation" in paragraph (3) of the same Article is replaced with "act of endowment", the term "members" is replaced with "councillors", the terms "all members", "articles of incorporation" and "members" in paragraph (4) of the same Article is replaced with "all councillors", "act of endowment" and "councillors", respectively, the term "articles of incorporation" in paragraph (5) of the same Article and paragraphs (1) and (3) of Article 115 of the same Act is replaced with "act of endowment", the term "general meeting of members" in the same paragraph and paragraph (4) of the same Article is replaced with "meeting of the board of councillors", and any other necessary technical replacement of terms are prescribed by a Cabinet Order.

A medical corporation as an association may not adopt a resolution at a general meeting of members set forth in Article 113, paragraph (1) of the Act on General Incorporated Associations and General Incorporated Foundations as applied mutatis mutandis by replacing the terms under the preceding paragraph, unless two-thirds or more (in the case where a higher ratio is specified in the articles of incorporation, that ratio) of those present approve the resolution.

A medical corporation as a foundation may not adopt a resolution at a meeting of the board of councillors set forth in Article 113, paragraph (1) of the Act on General Incorporated Associations and General Incorporated Foundations as applied mutatis mutandis by replacing the terms under paragraph (1), unless two-thirds or more (in the case where a higher ratio is specified in the act of endowment, that ratio) of those present approve the resolution.

When a councillor, director or auditor (hereinafter referred to as "officer, etc." in this paragraph, the following Article and Article 49-3) of a medical corporation acted in bad faith or was grossly negligent in performing their duties, the relevant officer, etc. is liable to compensate for any damage caused to a third party thereby.

The provisions of the preceding paragraph apply when a person listed in each of the following items commits an act specified in the respective items; provided, however, that this does not apply in the case where the person proves that they have exercised due care in committing the relevant act:

director: Any of the following acts:

false statement about important particulars to be stated in documents to be prepared pursuant to the provisions of Article 51, paragraph (1);

false registration;

false public notice; and

auditor:False statement of material particulars to be stated in an audit report.

If an officer, etc. is liable to compensate for damage caused to the medical corporation or a third party, and other officers, etc. are also liable to compensate for the relevant damage, they are to be jointly and severally liable.

The provisions of Chapter VI, Section 2, Subsection 2 of the Act on General Incorporated Associations and General Incorporated Foundations apply mutatis mutandis to a medical corporation as an association. In this case, the term "Ministry of Justice Order" in Article 278, paragraph (1) of the same Act is replaced with "Order of the Ministry of Health, Labour and Welfare", the term "members at the time of incorporation, directors at the time of incorporation, officers, etc. (meaning officers, etc. prescribed in Article 111, paragraph (1); the same applies in paragraph (3)) or liquidators" is replaced with "directors or auditors", the terms "members at the time of incorporation, directors at the time of incorporation, officers, etc. or liquidators" and "Ministry of Justice Order" in paragraph (3) of the same Article are replaced with "directors or auditors" and "Order of the Ministry of Health, Labour and Welfare", respectively, and the term "liquidators and these persons" in Article 280, paragraph (2) and Article 280-2 of the same Act is replaced with "directors".

The provisions of Chapter VI, Section 2, Subsection 3 of the Act on General Incorporated Associations and General Incorporated Foundations apply mutatis mutandis to an action for dismissal of an officer, etc. of a medical corporation. In this case, the term "articles of incorporation" in Article 284 of the same Act is replaced with "articles of incorporation or act of endowment", and any other necessary technical replacement of terms are specified by a Cabinet Order.

The provisions of Chapter II, Section 3, Subsection 9 of the Act on General Incorporated Associations and General Incorporated Foundations apply mutatis mutandis to a medical corporation as an association and a medical corporation as a foundation. In this case, the term "officers, etc." in these provisions (excluding Article 118-3, paragraphs (1) and (3) of that Act) is replaced with "officers", the term "officers, etc." in paragraph (1) of that Article (other than in "officers, etc. liability insurance contract") is replaced with "officers", the term "Ministry of Justice Order" in that paragraph is replaced with "Order of the Ministry of Health, Labour and Welfare", the term "officers, etc. liability insurance contract" in that paragraph and paragraph (3) of that Article is replaced with "officers liability insurance contract", and any other necessary technical replacement of terms is to be prescribed by a Cabinet Order.

The accounting of a medical corporation is to be in accordance with accounting practices that are generally accepted as fair and appropriate, beyond the provisions of this Act and an Order of the Ministry of Health, Labour and Welfare under this Act.

A medical corporation must prepare accurate accounting books in a timely manner pursuant to the provisions of an Order of the Ministry of Health, Labour and Welfare.

A medical corporation must preserve its accounting books and important materials concerning its business for ten years from the time of closure of the accounting books.

A medical corporation, within two months after the end of each fiscal year, must prepare a business report, an inventory of property, a balance sheet, a profit and loss statement, a report on the status of transactions with related business operators (meaning a person who has a special relationship with the medical corporation or its officers specified by an Order of the Ministry of Health, Labour and Welfare, such as the spouse of the president being its representative), and other documents specified by an Order of the Ministry of Health, Labour and Welfare (hereinafter referred to as "business report, etc.").

A medical corporation (limited to those that meet the standards specified by an Order of the Ministry of Health, Labour and Welfare in consideration of the scale of their business activities and other circumstances) must prepare the balance sheet and profit and loss statement set forth in the preceding paragraph pursuant to an Order of the Ministry of Health, Labour and Welfare.

A medical corporation must preserve the balance sheet and profit and loss statement for ten years from the time of preparation of the relevant balance sheet and profit and loss statement.

A medical corporation must have its business report, etc. audited by an auditor pursuant to an Order of the Ministry of Health, Labour and Welfare.

A medical corporation set forth in paragraph (2) must have its inventory of property, balance sheet and profit and loss statement audited by a certified public accountant or an audit corporation, pursuant to an Order of the Ministry of Health, Labour and Welfare.

A medical corporation must obtain the approval of the board of directors for the business report, etc. audited by the auditor or certified public accountant or audit corporation set forth in the preceding two paragraphs.

The directors of a medical corporation as an association must submit the business report, etc. approved under paragraph (6) of the preceding Article to the general meeting of members.

Upon the notice of convocation of the general meeting of members set forth in the preceding paragraph, the directors must provide the members with the business report, etc. approved under paragraph (6) of the preceding Article pursuant to the provisions of an Order of the Ministry of Health, Labour and Welfare.

The business report, etc. (limited to the balance sheet and profit and loss statement) submitted pursuant to the provisions of paragraph (1) must be approved by the general meeting of members.

The directors must report the contents of the business report, etc. (excluding the balance sheet and profit and loss statement) submitted pursuant to the provisions of paragraph (1) to the general meeting of members.

The provisions of the preceding paragraphs apply mutatis mutandis to a medical corporation as a foundation. In this case, the term "general meeting of members" in the preceding paragraphs is replaced with "meeting of the board of councillors", and the term "members" in paragraph (2) is replaced with "councillors".

A medical corporation (limited to those that meet the standards specified by an Order of the Ministry of Health, Labour and Welfare in consideration of the scale of their business activities and other circumstances; the same applies in the following paragraph), pursuant to an Order of the Ministry of Health, Labour and Welfare, must publicize the business report, etc. (limited to the balance sheet and profit and loss statement) approved under paragraph (3) of that Article (including cases where it is applied mutatis mutandis by replacing the terms pursuant to paragraph (5) of that Article), without delay after the close of the general meeting of members that gave the approval under paragraph (3) of the preceding Article or the meeting of the board of councillors that gave the approval under paragraph (3) of that Article as applied mutatis mutandis by replacing the terms pursuant to paragraph (5) of that Article.

Notwithstanding the provisions of the preceding paragraph, it is sufficient for a medical corporation whose method of public notice is a method specified by an Order of the Ministry of Health, Labour and Welfare to publicize a summary of the business report, etc. prescribed in that paragraph.