Small Enterprise Mutual Relief Projects Act

The purpose of this Act is, based on the spirit of mutual aid among small-scale enterprises, to establish a mutual aid system funded by their contributions with regard to the discontinuation, succession, etc. of the businesses of small-scale enterprises, and thereby to contribute to the promotion of the welfare of small-scale enterprises and the development of small enterprises.

①In this Act, a "small-scale enterprise" means a person who falls under any of the following items:

②In this Act, a "mutual aid contract" means a contract under which a small-scale enterprise promises to pay premiums to the Organization for Small and Medium Enterprises and Regional Innovation, JAPAN (hereinafter referred to as the "Organization"), and the Organization promises to pay mutual aid benefits, as provided for in this Act, in the event of the discontinuation, etc. of that person's business.

③In this Act, a "mutual aid policyholder" means an individual business operator and an officer of a company or a small and medium-sized enterprise organization (hereinafter referred to as a "company, etc.") who are parties to a mutual aid contract.

①A mutual aid contract may not be concluded by anyone other than a small-scale enterprise.

②A small-scale enterprise that is an individual business operator and concurrently an officer of a company, etc. may conclude a mutual aid contract only in one of the following capacities:

③A small-scale enterprise that is concurrently an officer of two or more companies, etc. (excluding a person prescribed in the preceding paragraph) may conclude a mutual aid contract only in the capacity of a small-scale enterprise that is an officer of any one of those companies, etc.

④A small-scale enterprise that is currently a mutual aid policyholder may not conclude a new mutual aid contract; provided, however, that this does not apply where a cause set out in one of the items of Article 9, paragraph (1) relating to that mutual aid contract has arisen for that person.

⑤The Organization must not refuse to conclude a mutual aid contract except in the following cases:

①A mutual aid contract is to be concluded by specifying the monthly premium.

②The monthly premium is to be 1,000 yen or more and an amount obtained by multiplying 500 yen by an integer, and must not exceed 70,000 yen per mutual aid policyholder.

An application for a mutual aid contract must state the monthly premium and, in the case of a mutual aid contract concluded by a mutual aid policyholder in the capacity of a small-scale enterprise that is an officer of a company, etc., the name of that company, etc.

When the Organization accepts an application for a mutual aid contract, the mutual aid contract is deemed to have been formed on the day of the application and takes effect from that day.

①Except in the case prescribed in the following paragraph, the Organization may not cancel a mutual aid contract.

②The Organization must cancel a mutual aid contract in the following cases:

③A mutual aid policyholder may cancel a mutual aid contract at any time.

④When any of the following grounds arises with respect to a mutual aid policyholder, the mutual aid contract is deemed to have been cancelled at the time the ground arises:

⑤The cancellation of a mutual aid contract takes effect only for the future.

①When a mutual aid policyholder applies to increase or decrease the monthly premium, the Organization must accept the application.

②An application under the preceding paragraph must state the monthly premium after the increase or decrease.

③The provisions of Article 6 apply mutatis mutandis to an increase or decrease in the monthly premium.

①Where any of the following grounds arises with respect to a mutual aid policyholder and the number of months of paid premiums of that person is six months or more, the Organization is to pay mutual aid benefits to that person (or, where the ground set out in item (i) or item (ii) is due to death, to the bereaved family of that person):

②The amount of mutual aid benefits to be paid by the Organization is the total amount of the premium-unit mutual aid benefit amounts corresponding to each division obtained when the premiums for each month paid by the mutual aid policyholder are successively divided into units of 500 yen (hereinafter referred to as a "premium unit").

③The premium-unit mutual aid benefit amount under the preceding paragraph is, according to the number of months of paid premiums for the premium unit set out in each of the following items, the amount specified in that item:

④The amount specified by Cabinet Order in item (ii), (a) of the preceding paragraph is to be determined on the basis of the total amount of the premiums paid and the investment income therefrom, taking into account the assumed interest rate, the expected number of occurrences of the grounds set out in the items of paragraph (1) and the expected number of cancellations of mutual aid contracts. In this case, that amount must satisfy the following requirements.

⑤The payment rate in (b) and (c) of paragraph (3), item (ii) is to be determined by the Minister of Economy, Trade and Industry for each fiscal year, by the end of the fiscal year preceding that fiscal year, after hearing the opinion of the Small and Medium-sized Enterprise Policy Council, on the basis of the rate obtained by dividing the amount calculated as provided by Order of the Ministry of Economy, Trade and Industry as the portion of the investment income up to that fiscal year that is to be applied to payment of the amount specified in paragraph (3), item (ii), (b) or Article 12, paragraph (4), item (ii), (b) in that fiscal year, by the amount calculated as provided by Order of the Ministry of Economy, Trade and Industry as the total amount of the hypothetical mutual aid benefit amounts or the hypothetical cancellation refund amounts (meaning the hypothetical cancellation refund amounts under (b) of that item) for the premium units that will have a reference month in that fiscal year, taking into account the expected amount of investment income from that fiscal year onward and other circumstances.

⑥Where a Cabinet Order is enacted or amended pursuant to the provisions of paragraph (3), item (ii), (a), the Cabinet Order may provide for measures necessary concerning the calculation of the amount of mutual aid benefits for mutual aid contracts that took effect before that enactment or amendment and with respect to which a ground set out in the items of paragraph (1) arises after that enactment or amendment, and for other necessary transitional measures accompanying that enactment or amendment.

Mutual aid benefits are to be paid as a lump sum.

①Notwithstanding the preceding Article, the Organization may, at the request of a mutual aid policyholder, pay all or part of the mutual aid benefits by installment payment; provided, however, that this does not apply in any of the following cases:

②Where a mutual aid policyholder intends to receive payment of part of the mutual aid benefits by installment payment, the request under the preceding paragraph must be made by specifying the amount of that part of the mutual aid benefits for which the policyholder intends to receive payment by installment payment (referred to in this Article as the "amount subject to installment payment").

③The payment months for mutual aid benefits paid by installment payment are January, March, May, July, September and November of each year; provided, however, that mutual aid benefits that should have been paid in the previous payment month are to be paid even in a month that is not a payment month.

④The period of payment of mutual aid benefits by installment payment (hereinafter referred to as the "installment payment period") is, at the election of the mutual aid policyholder, either 10 years or 15 years from the first payment month after the request under paragraph (1).

⑤The amount of the mutual aid benefits for each payment month (hereinafter referred to as the "installment mutual aid benefit") is the amount obtained by multiplying the amount of the mutual aid benefits (or, where part of the mutual aid benefits is paid by installment payment, the amount subject to installment payment) by the rate specified by Cabinet Order according to the installment payment period (referred to as the "installment payment rate" in paragraph (2) of the following Article).

⑥Where, pursuant to the provisions of paragraph (1), it has been decided that part of the mutual aid benefits is to be paid by installment payment, the amount obtained by subtracting the amount subject to installment payment from the full amount of those mutual aid benefits is to be paid as a lump sum.

①Where the Organization has decided to pay all or part of the mutual aid benefits by installment payment and a ground set out in the following items arises, the Organization is to pay in a lump sum, to the person specified in the relevant item, the total amount of the amounts equivalent to the present value of the installment mutual aid benefits whose payment months have not arrived by the time the ground arises (hereinafter referred to as "present value amounts"):

②The present value amount is the amount obtained by discounting the amount of the installment mutual aid benefit by the compound present value method, using the interest rate determined by the Minister of Economy, Trade and Industry as the interest rate that served as the basis for calculating the installment payment rate for that amount, according to the period from the most recent payment month after a ground set out in either item of the preceding paragraph arises to the payment month for that installment mutual aid benefit.

①The surviving family members entitled to receive payment of the mutual aid benefits prescribed in Article 9, paragraph (1) are the persons set out in the following items:

②The order of priority among the surviving family members entitled to receive payment of mutual aid benefits is the order of the items of the preceding paragraph, and, among the persons set out in items (ii), (iv) and (v) of that paragraph, the order in which they are listed in the relevant item; in this case, for parents, the order is adoptive parents and then biological parents, and for grandparents, the order is the adoptive parents of adoptive parents, the biological parents of adoptive parents, the adoptive parents of biological parents, and then the biological parents of biological parents.

③Where there are two or more persons of the same rank among the surviving family members entitled to receive payment of mutual aid benefits under the preceding paragraph, the mutual aid benefits are to be paid in equal shares divided by the number of those persons.

A person who has caused the death of a mutual aid policyholder through an intentional criminal act is not entitled to receive payment of mutual aid benefits, notwithstanding the preceding Article. The same applies to a person who, before the death of a mutual aid policyholder, caused the death, through an intentional criminal act, of a person who would be entitled to receive payment of mutual aid benefits upon the death of that policyholder.

①Where a mutual aid contract is cancelled and the number of months of paid premiums of the mutual aid policyholder is 12 months or more, the Organization is to pay a cancellation refund to the mutual aid policyholder.

②Where a mutual aid contract is cancelled pursuant to the provisions of Article 7, paragraph (2), item (ii), no cancellation refund is to be paid, notwithstanding the preceding paragraph; provided, however, that this does not apply where there are special circumstances specified by Order of the Ministry of Economy, Trade and Industry.

③The amount of the cancellation refund is, according to the cases set out in the following items, the amount specified in the relevant item:

④The premium-unit cancellation refund amount under item (ii) of the preceding paragraph is, according to the number of months of paid premiums for the premium unit set out in each of the following items, the amount specified in the relevant item:

⑤The provisions of the first sentence of Article 9, paragraph (4) apply mutatis mutandis to the ratio specified by Cabinet Order in paragraph (3), item (i) and the amount specified by Cabinet Order in item (ii), (a) of the preceding paragraph. In this case, the amount obtained by multiplying by the ratio specified by Cabinet Order prescribed in paragraph (3), item (i) must be less than the premium-unit cancellation refund amount prescribed in item (ii) of that paragraph, and the amount specified by Cabinet Order in item (ii), (a) of the preceding paragraph must be less than the amount specified by Cabinet Order in Article 9, paragraph (3), item (ii), (a).

⑥The provisions of Article 9, paragraph (6) apply mutatis mutandis where a Cabinet Order is enacted or amended pursuant to the provisions of paragraph (4), item (ii), (a). In this case, the phrase "the items of paragraph (1)" in Article 9, paragraph (6) is deemed to be replaced with "the items of Article 7, paragraph (4)", and the phrase "mutual aid benefits" is deemed to be replaced with "cancellation refunds".

Cancellation refunds are to be paid as a lump sum.

①Where, within one year after a ground set out in Article 9, paragraph (1), item (i) or item (ii) arises with respect to a mutual aid policyholder, that person becomes a mutual aid policyholder again without having requested payment of mutual aid benefits, and that person so applies, the numbers of months of paid premiums for the earlier and later mutual aid contracts are aggregated for each same premium unit. The same applies where, within one year after a mutual aid policyholder concerning a mutual aid contract concluded in the capacity of an individual small-scale enterprise (limited to one set out in Article 2, paragraph (1), item (iv)) cancels the mutual aid contract pursuant to the provisions of Article 7, paragraph (3) in a case specified by Order of the Ministry of Economy, Trade and Industry, or after a ground set out in the items of paragraph (4) of that Article arises with respect to a mutual aid policyholder, those persons (excluding a person who has transferred a conditional right pursuant to the proviso to Article 15) become mutual aid policyholders again without having requested payment of a cancellation refund, and those persons so apply.

②Where a person who has acquired the whole of the business of a mutual aid policyholder concerning a mutual aid contract concluded in the capacity of an individual small-scale enterprise (excluding a person for whom the number of months of paid premiums has ever been aggregated under this paragraph with respect to that mutual aid contract) alone by transfer or succeeded to it by inheritance (in either case, limited to the spouse or child of that mutual aid policyholder), and who has the right to receive payment of all of the mutual aid benefits, etc. concerning the mutual aid contract of that mutual aid policyholder (hereinafter in this paragraph and Article 15 referred to as the "former mutual aid contract") (including a person who has received the transfer of a conditional right pursuant to the proviso to Article 15), within one year from the date of that transfer or the commencement of the inheritance and without having requested payment of those mutual aid benefits, etc., concludes a mutual aid contract in the capacity of an individual small-scale enterprise, and that person so applies, the numbers of months of paid premiums for that former mutual aid contract and the newly concluded mutual aid contract are aggregated for each same premium unit.

The right to receive payment of mutual aid benefits, etc. may not be transferred, offered as security or seized; provided, however, that this does not apply where the right has been succeeded to by inheritance, where the right to receive payment of mutual aid benefits, etc. concerning the former mutual aid contract that is the subject of the aggregation is transferred to a person who intends to apply for aggregation under Article 13, paragraph (2) on the condition that the person makes that application, or where the right is seized by a disposition for delinquent national taxes (including a disposition made in the same manner).

Where there is a person who has received payment of mutual aid benefits, etc. by deception or other wrongful conduct, the Organization may have that person return those mutual aid benefits, etc.

Where the Organization is to pay mutual aid benefits, etc. to a mutual aid policyholder, a surviving family member of the policyholder or a former mutual aid policyholder, and there are mutual aid benefits, etc. to be returned under the preceding Article, premiums (including surcharges) to be paid, or loan principal or interest to be repaid concerning a loan to a mutual aid policyholder or former mutual aid policyholder under Article 15, paragraph (2), item (viii) of the Act on the Organization for Small & Medium Enterprises and Regional Innovation, Japan, Independent Administrative Agency (Act No. 147 of 2002; hereinafter referred to as the "Act on the Organization for Small & Medium Enterprises and Regional Innovation, Japan, Independent Administrative Agency"), the Organization may deduct these from those mutual aid benefits, etc.

①Where the Organization has made a loan to a mutual aid policyholder or former mutual aid policyholder under Article 15, paragraph (2), item (viii) of the Act on the Organization for Small & Medium Enterprises and Regional Innovation, Japan, Independent Administrative Agency, and there is still loan principal or interest to be repaid after the lapse of a period specified by Order of the Ministry of Economy, Trade and Industry after the due date for repayment of that loan, the Organization may, beginning with the premium unit with the smallest number of months of paid premiums among the premium units concerning the premiums paid by that mutual aid policyholder or former mutual aid policyholder, successively draw down the premiums paid for that premium unit and apply them to repayment of that loan principal or interest.

②For the purpose of applying Article 9, paragraph (1) and Article 12, paragraph (1) to a mutual aid policyholder or former mutual aid policyholder whose number of months of paid premiums has decreased because premiums were drawn down pursuant to the provisions of the preceding paragraph, that number of months of paid premiums is deemed not to have decreased.

①For each month from the month containing the day on which the mutual aid contract took effect through the month containing the day on which a ground set out in the items of Article 9, paragraph (1) arose or the day on which the mutual aid contract was cancelled, a mutual aid policyholder must pay the premium for that month at the monthly premium as of the last day of that month (for the month containing the day on which a ground set out in the items of that paragraph arose or the day on which the mutual aid contract was cancelled, as of the day on which that ground arose or the day of that cancellation), by the last day of the following month (for the premium for the month containing the day on which the mutual aid contract took effect, by the last day of the second month after the month containing the day on which the mutual aid contract took effect).

②The premium for each month may not be paid in installments.

③Notwithstanding the provisions of paragraph (1), a mutual aid policyholder may refrain from paying premiums only where the Organization has given its consent. In this case, the Organization must not give that consent except in cases specified by Order of the Ministry of Economy, Trade and Industry.

Where a mutual aid policyholder has paid a premium on or before the last day of the month preceding that month, the Organization may reduce its amount as provided by Order of the Ministry of Economy, Trade and Industry.

①Where a person who is to pay a premium fails to pay it by the payment due date, the Organization may have that person pay a surcharge.

②The amount of a surcharge must not exceed the amount calculated on the amount of the premium at the rate of 14.6 percent per annum, for the number of days from the day following the payment due date to the day preceding the date of payment.

Where the Organization finds that a person who is to pay a premium is unable to pay it by the payment due date due to a disaster or other unavoidable grounds, it may extend the payment due date.

①A person who has the right to receive payment of mutual aid benefits or a cancellation refund has the right to be paid, in priority to other creditors, out of the property of the Organization with respect to the amount of those mutual aid benefits or that cancellation refund (where there are sums of money that the Organization may deduct from those mutual aid benefits or that cancellation refund pursuant to the provisions of Article 16-2, the remaining amount after deducting those sums from those mutual aid benefits or that cancellation refund, respectively).

②The amount of the mutual aid benefits or the cancellation refund prescribed in the preceding paragraph is, where there is loan principal or interest which the Organization may repay by drawing down the premiums relating to those mutual aid benefits or that cancellation refund pursuant to the provisions of Article 16-3, paragraph (1), the amount calculated by drawing down those premiums pursuant to the provisions of that paragraph.

③The rank of the statutory lien under paragraph (1) is to be next after general statutory liens under the provisions of the Civil Code (Act No. 89 of 1896).

Where a fraction of less than 50 sen arises in the amount of mutual aid benefits, etc. or in the present value amount, it is to be rounded down, and where a fraction of 50 sen or more but less than 1 yen arises, it is to be rounded up to 1 yen.

①The right to receive payment of mutual aid benefits, etc. is extinguished by prescription if not exercised for five years from the time when it becomes exercisable, and the right to receive payment of premiums and the right to receive a refund of premiums are extinguished by prescription if not exercised for two years from the time when they become exercisable.

②Where a surviving family member who has the right to receive payment of mutual aid benefits is unable to request payment of the mutual aid benefits because it is unknown whether a person of a higher rank or of the same rank is alive or dead, or where that person is, the extinctive prescription of that right is not to be completed within six months from the day on which the request became possible.

In calculating a period relating to a request for payment of mutual aid benefits, etc. or a request for a refund of premiums, where the request is made by mail, or by correspondence delivery prescribed in Article 2, paragraph (2) of the Act on Correspondence Delivery by Private Business Operators (Act No. 99 of 2002) provided by a general correspondence delivery service provider prescribed in paragraph (6) of that Article or a specified correspondence delivery service provider prescribed in paragraph (9) of that Article, the number of days required for sending is not counted in that period.

①With regard to the management of surplus funds in operations belonging to the account for the operations set out in Article 18, paragraph (1), item (iv) of the Act on the Organization for Small & Medium Enterprises and Regional Innovation, Japan, Independent Administrative Agency (hereinafter referred to as "surplus funds of the small enterprise mutual aid account"), the Organization must prepare a basic policy stating the purpose of management and other matters specified by Order of the Ministry of Economy, Trade and Industry, and manage those funds in accordance with that basic policy.

②The basic policy under the preceding paragraph must not be contrary to this Act (including orders issued pursuant to it) or other laws and regulations.

③Where the Organization manages surplus funds of the small enterprise mutual aid account by the following methods, it must, as provided by Order of the Ministry of Economy, Trade and Industry, indicate to the counterparty to the contract concerning that management that the funds are to be managed in line with the purport of the basic policy under paragraph (1), on the basis of consultation:

The President, Vice President and directors of the Organization must, in the operations of managing surplus funds of the small enterprise mutual aid account, comply with laws and regulations, dispositions of the Minister of Economy, Trade and Industry made pursuant to laws and regulations, the business rules established by the Organization and other rules, and perform their duties faithfully for the Organization.

The President, Vice President and directors of the Organization must not engage in the following acts for the purpose of promoting the interests of themselves or of a third party other than the Organization:

①Where a dispute arises between the Organization and an applicant for a mutual aid contract, a mutual aid policyholder or a surviving family member of the policyholder concerning the formation of a mutual aid contract or the effect of its cancellation, mutual aid benefits, etc. or premiums, and a request is made by the applicant for a mutual aid contract, the mutual aid policyholder or the surviving family member, the Minister of Economy, Trade and Industry may provide mediation for the resolution of the dispute.

②The procedures for requesting mediation under the preceding paragraph and other matters necessary for mediation are specified by Order of the Ministry of Economy, Trade and Industry.

The amounts of premiums and mutual aid benefits, etc. are to be reviewed at least every five years on the basis of trends in, and projections of, the costs required for payment of mutual aid benefits, etc. and the amount of investment income.

The mayor of a municipality (including the head of a special ward and, for a designated city under Article 252-19, paragraph (1) of the Local Autonomy Act (Act No. 67 of 1947), a ward head or general ward head) may, as provided by the Municipal Ordinance of that municipality (including a special ward), provide free certification, to the Organization or to a person who has the right to receive payment of mutual aid benefits, etc. (excluding a mutual aid policyholder), concerning the family register of a person who has the right to receive payment of mutual aid benefits, etc.