Medical Care Act

A medical corporation must have three or more directors and one or more auditors as its officers; provided, however, that if the approval of the prefectural governor has been obtained, it is sufficient to have one or two directors.

Officers of a medical corporation as an association is to be elected by a resolution of a general meeting of members.

Officers of a medical corporation as a foundation is to be elected by a resolution of the board of councillors.

The relationship between a medical corporation and its officers is to be governed by the provisions concerning delegation.

The provisions of Article 46-4, paragraph (2) apply mutatis mutandis to officers of a medical corporation.

A medical corporation must include as directors the administrators of all hospitals, clinics, long-term care health facilities or integrated facilities for medical and long-term care it has established (including hospitals, etc. it manages as a designated administrator)provided, however, that in the case where a medical corporation has established two or more hospitals, clinics, long-term care health facilities or integrated facilities for medical and long-term care and approval is obtained from the prefectural governor, it is not obliged to include as directors some of the administrators (excluding the administrators of hospitals, etc. it manages as a designated administrator).

The directors set forth in the main clause of the preceding paragraph are to lose their positions as directors when they resign from their positions as administrators.

Auditors must not concurrently serve as directors or employees of the medical corporation.

The term of office of an officer must not exceed two years; provided, however, that this must not preclude reappointment.

An officer of a medical corporation as an association may be dismissed at any time by a resolution of the general meeting of members.

An officer who has been dismissed pursuant to the provisions of the preceding paragraph may claim compensation for damages caused by the dismissal from the medical corporation as an association unless there are justifiable grounds for such dismissal.

A medical corporation as an association may not adopt a resolution at a general meeting of members set forth in paragraph (1) (limited to the case of dismissal of auditors) unless two-thirds or more of those present (or, if a higher ratio is specified in the articles of incorporation, that ratio) approve the resolution.

When an officer of a medical corporation as a foundation falls under any of the following, the officer may be dismissed by a resolution of the board of councillors:

when the officer has violated or neglected their duties; or

when the officer is unable to properly perform their duties due to a mental or physical disorder.

A medical corporation as a foundation may not adopt a resolution at a meeting of the board of councillors set forth in the preceding paragraph (limited to the case of dismissal of auditors) unless two-thirds or more of those present (or, if a higher ratio is specified in the act of endowment, that ratio) approve the resolution.

In the event a situation arises in which the number of officers is less than the number prescribed in this Act or the articles of incorporation or act of endowment, an officer who has retired due to expiration of the term of office or resignation is to continue to have the rights and obligations as an officer until a newly elected officer (including a person who is to perform the duties of a temporary officer set forth in the following paragraph) assumes office.

In the case prescribed in the preceding paragraph, if there is a risk of damage due to delay in the business of the medical corporation, the prefectural governor must appoint a person to perform the duties of a temporary officer at the request of an interested party or by the authority of the governor.

If more than one-fifth of positions of directors or auditors are vacant, the vacancy must be filled within one month.

The provisions of Article 72 and Article 74 (excluding paragraph (4)) of the Act on General Incorporated Associations and General Incorporated Foundations apply mutatis mutandis to the election and dismissal of officers of a medical corporation as an association and a medical corporation as a foundation. In this case, the term "and the particulars listed in Article 38, paragraph (1), item (i)" in paragraph (3) of the same Article as applied mutatis mutandis to the election and dismissal of officers of a medical corporation as an association is replaced with "and the date, time and place of the relevant general meeting of members", the term "general meeting of members" in Article 72 and Article 74, paragraphs (1) through (3) of the same Act as applied mutatis mutandis to the election and dismissal of officers of a medical corporation as a foundation is replaced with "meeting of the board of councillors", and the term "and the particulars listed in Article 38, paragraph (1), item (i)" in the same paragraphs is replaced with "and the date, time and place of the relevant meeting of the board of councillors".

One of the directors of a medical corporation (excluding a medical corporation prescribed in the following paragraph) is the president, who is to be elected from among the directors who are physicians or dentists; provided, however, that in the case where approval has been obtained from the prefectural governor, the president may be elected from among the directors who are neither physicians nor dentists.

In the case of a medical corporation that has one director with approval under the proviso of Article 46-5, paragraph (1), the relevant director is deemed to be the president with regard to the application of the provisions of this Chapter (excluding paragraph (3) of the following Article).

The president has the authority to represent the medical corporation and to perform any and all judicial or extrajudicial acts concerning the business of the medical corporation.

The restrictions placed on the authority set forth in the preceding paragraph can not be asserted against a bona fide third party.

The provisions of Article 46-5-3, paragraphs (1) and (2) apply mutatis mutandis to the case where the position of the president is vacant.

A director who discovers that there is a fact that is likely to cause significant damage to the medical corporation must immediately report the relevant fact to the auditor.

The provisions of Article 78, Article 80, Articles 82 through 84, Article 88 (excluding paragraph (2)) and Article 89 of the Act on General Incorporated Associations and General Incorporated Foundations apply mutatis mutandis to the directors of a medical corporation as an association and a medical corporation as a foundation. In this case, the term "general meeting of members" in Article 84, paragraph (1) of the same Act as applied mutatis mutandis to the relevant directors is replaced with "board of directors", the term "significant" in Article 88, paragraph (1) of the same Act is replaced with "irrecoverable", the term "articles of incorporation" in Article 83 of the same Act as applied mutatis mutandis to the directors of a medical corporation as a foundation is replaced with "act of endowment", the term "general meeting of members" is replaced with "meeting of the board of councillors", the term "members" in the heading of Article 88 of the same Act and paragraph (1) of the same Article is replaced with "councillors", the term "articles of incorporation" in the same paragraph and Article 89 of the same Act is replaced with "act of endowment", the term "general meeting of members" in the same Article is replaced with "meeting of the board of councillors", and any other necessary technical replacement of terms are to be prescribed by a Cabinet Order.

The board of directors is composed of all directors.

The board of directors performs the following duties:

deciding the execution of business of the medical corporation;

supervising the execution of the duties by the directors; and

electing and dismissing the president.

The board of directors may not delegate the following particulars and other important decisions on the execution of business to the directors:

disposal and acceptance of important assets;

borrowing a large amount of money;

selection and dismissal of employees with important roles;

establishment, change and abolition of secondary offices and other important organizations;

in the case of a medical corporation as an association, exemption from liability under Article 47, paragraph (1) based on the provisions of the articles of incorporation pursuant to the provisions of Article 114, paragraph (1) of the Act on General Incorporated Associations and General Incorporated Foundations as applied mutatis mutandis pursuant to Article 47-2, paragraph (1); or

in the case of a medical corporation as a foundation, exemption from liability under Article 47, paragraph (1) as applied mutatis mutandis pursuant to Article 47, paragraph (4) based on the provisions of the act of endowment pursuant to the provisions of Article 114, paragraph (1) of the Act on General Incorporated Associations and General Incorporated Foundations as applied mutatis mutandis pursuant to Article 47-2, paragraph (1).

The provisions of Articles 91 through 98 (excluding the items of Article 91, paragraph (1) and Article 92, paragraph (1)) of the Act on General Incorporated Associations and General Incorporated Foundations apply mutatis mutandis to the board of directors of a medical corporation as an association and a medical corporation as a foundation. In this case, the terms "the following directors" in Article 91, paragraph (1) of the same Act as applied mutatis mutandis to the relevant board of directors and "the directors listed in the items of the preceding paragraph" in paragraph (2) of the same Article is replaced with "the president", and the term " Ministry of Justice Order" in Article 95, paragraphs (3) and (4) and Article 97, paragraph (2), item (ii) of the same Act is replaced with "Order of the Ministry of Health, Labour and Welfare", while the term "articles of incorporation" in Article 91, paragraph (2), Article 93, paragraph (1), Article 94, paragraph (1), Article 95, paragraphs (1) and (3), and Article 96 of the same Act as applied mutatis mutandis to the board of directors of a medical corporation as a foundation is replaced with "act of endowment", the term "members, when necessary to exercise their rights, with the permission of the court" in Article 97, paragraph (2) of the same Act is replaced with "councillors, at any time during the business hours of the medical corporation as a foundation", and any other necessary technical replacement of terms are prescribed by a Cabinet Order.

With regard to the permission set forth in Article 97, paragraphs (2) and (3) of the Act on General Incorporated Associations and General Incorporated Foundations as applied mutatis mutandis by replacing the terms under the preceding paragraph, the provisions of Article 287, paragraph (1), Article 288, Article 289 (limited to the part pertaining to item (i)), the main clause of Article 290, Article 291 (limited to the part pertaining to item (ii)), the main clause of Article 292, Article 294 and Article 295 of the same Act apply mutatis mutandis.

The duties of the auditors are as follows:

to audit the business of the medical corporation;

to audit the status of the property of the medical corporation;

to prepare an audit report on the status of the business or property of the medical corporation for each fiscal year and submit it to the general meeting of members or the board of councillors and the board of directors within three months after the end of the relevant fiscal year;

to report to the prefectural governor, the general meeting of members or the board of councillors, or the board of directors, if, as a result of the audit prescribed in item (i) or (ii), it is found that there is any wrongful act concerning the business or property of the medical corporation or any material fact in violation of laws and regulations, or the articles of incorporation or act of endowment;

in the case of an auditor of a medical corporation as an association, to convene a general meeting of members when it is necessary to make a report under the provisions of the preceding item;

in the case of an auditor of a medical corporation as a foundation, to request the president to convene a meeting of the board of councillors when it is necessary to make a report under the provisions of item (iv);

in the case of an auditor of a medical corporation as an association, to investigate proposals, documents and other items specified by an Order of the Ministry of Health, Labour and Welfare (referred to as "proposals, etc." in the following item) that the directors intend to submit to the general meeting of members. In this case, if it is found that there is a violation of laws and regulations or the articles of incorporation, or that there are extremely unjust particulars, to report the results of the investigation to the general meeting of members; and

in the case of an auditor of a medical corporation as a foundation, to investigate proposals, etc. that the directors intend to submit to the board of councillors. In this case, if it is found that there is a violation of laws and regulations or the act of endowment, or that there are extremely unjust particulars, to report the results of the investigation to the board of councillors.