Act on Mutual Relief System for the Prevention of Bankruptcies of Small and Medium-sized Enterprises
中小企業倒産防止共済法
A mutual aid scheme that small and medium-sized enterprises pay premiums into, so that a business whose trading partner goes bankrupt can borrow from it and not be brought down too.
- Text in force since
- Promulgated
- Articles
- 25
- Amendments on the way
- 0
What this law does
- When a business that a member trades with goes bankrupt (倒産, as Article 2(2) defines it), the Organization for Small and Medium Enterprises and Regional Innovation, JAPAN () lends the member mutual aid benefits (共済金) on request, free of interest, repayable over a period a Cabinet Order (政令) sets by the amount of up to 10 years including a grace period, and without security or a guarantor except in cases a Ministry of Economy, Trade and Industry Order (経済産業省令) sets. A member is a small and medium-sized enterprise that has been in business continuously for at least a year and has made a mutual aid contract (共済契約) with the Organization; it can hold only one contract at a time. The Organization may pay an early repayment allowance (早期償還手当金) to a member that finishes repaying a loan ahead of schedule having met every repayment date, and, when the scheme has surplus funds, a full repayment allowance (完済手当金) to one that repays it all on time.(Art. 9(1), Art. 10(1), Art. 10(2), Art. 3(1), Art. 3(2), Art. 10(6), Art. 11-2(1)) (the provisions it rests on)
Read the full overview
- A trading partner is bankrupt (倒産) when a petition is filed to open bankruptcy, rehabilitation or reorganization proceedings or a special liquidation for it; when a clearing house announces to the financial institutions that clear bills through it a fact about the partner that is grounds for those institutions to stop financial dealings; when an electronic monetary claim recording institution (電子債権記録機関) under the Electronically Recorded Monetary Claims Act (電子記録債権法) makes such an announcement, if its rules provide for such stops and at least the number of financial institutions a Ministry of Economy, Trade and Industry Order sets take part in it; or when a procedure that Order names is begun, one aimed at having debts reduced, waived or deferred because excessive debts make the business hard to continue, and whose start date can be fixed.(Art. 2(2)) (the provisions it rests on)
- A member can borrow if, by the day of the bankruptcy, the contract had been in effect for at least six months and at least six months of premiums had been paid, the request comes within six months of it, the member is still a small and medium-sized enterprise, it is not itself bankrupt or in a like situation a Ministry of Economy, Trade and Industry Order sets, and the sum is not below an amount that Order sets. It can borrow what it asks, up to the lower of ten times its premiums paid (less one-tenth of the loans it has already received, premiums already used to repay them, and some recently raised or late premiums) and its receivables from that partner that have become hard to collect — to which, where the trading relationship meets requirements that Order sets, an emergency sum worked out under it is added. Its loans outstanding, the new one included, may not exceed an amount a Cabinet Order sets.(Art. 9(1), Art. 9(2)) (the provisions it rests on)
- The monthly premium (掛金) is 5,000 yen or a multiple of it, up to one-fortieth of the premium limit (掛金納付制限額), which is one-tenth of the loan ceiling a Cabinet Order sets; the Organization must accept a request to raise it, but may accept one to lower it only in cases a Ministry of Economy, Trade and Industry Order sets. Each month's premium is due, in one payment, by the end of that month (the first two months' by the end of the month after next), and none may be paid that would take the premium total (掛金総額) — premiums paid less one-tenth of loans received and premiums used to repay them — past that limit; premiums paid ahead of time may be reduced as that Order sets, and count as paid on the first day of their month. Members who pay premiums are given special treatment in corporation tax or income tax, which a separate Act, the Act on Special Measures Concerning Taxation (租税特別措置法), sets.(Art. 4(2), Art. 8(1), Art. 8(2), Art. 14(1), Art. 14(2), Art. 14(3), Art. 11(4), Art. 15(1), Art. 15(2), Art. 21(1)) (the provisions it rests on)
- A member may cancel at any time, and the contract is treated as cancelled when the member dies, is dissolved, splits off its whole business or transfers it, unless a successor takes the contract over. Once at least 12 months of premiums have been paid, cancellation brings a cancellation refund (解約手当金): the premiums paid, less one-tenth of the loans received and the premiums used to repay loans, times a ratio a Cabinet Order sets by the months paid, the reason for cancelling and other factors. No refund is paid where the Organization cancelled for deception, unless a special circumstance a Ministry of Economy, Trade and Industry Order sets applies.(Art. 7(3), Art. 7(4), Art. 11(1), Art. 11(2), Art. 11(3), Art. 11(4)) (the provisions it rests on)
- A member that needs business funds for a time can also borrow a temporary loan (一時貸付金), up to an amount a Ministry of Economy, Trade and Industry Order sets within the refund it would receive if it cancelled then, but not where the amount would be below a minimum that Order sets. It carries interest at a rate that Order sets, is repaid within a period of up to two years that Order sets, and needs no security or guarantor.(Art. 10-2(1), Art. 10-2(2), Art. 10-2(3), Art. 10-2(4)) (the provisions it rests on)
Who may joinBankruptcy of a trading partnerMonthly premiumLoans of mutual aid benefitsLoan termsTemporary loansCancellation refundTaking over a contract
Amendments
A Japanese law is changed by another law or order that rewrites it — an . No amendment to this law is waiting to come into force. Its latest amendments are below. This law's amendments page lists every amendment e-Gov records and, for those whose changes this site has read, shows them provision by provision, in Japanese and English.
5 amendments already in force
1 April 2020
The text on this site
Act on the Arrangement of Related Acts upon the Enforcement of the Act Partially Amending the Civil Code
民法の一部を改正する法律の施行に伴う関係法律の整備等に関する法律
25 September 2018
Act Partially Amending the Act on Strengthening Industrial Competitiveness, etc.
産業競争力強化法等の一部を改正する法律
23 May 2018
Act Partially Amending the Act on Strengthening Industrial Competitiveness, etc.
産業競争力強化法等の一部を改正する法律
2 June 2017
Act on the Arrangement of Related Acts upon the Enforcement of the Act Partially Amending the Civil Code
民法の一部を改正する法律の施行に伴う関係法律の整備等に関する法律
1 October 2011
e-Gov gives no title for this amendment
Who it applies to
It applies to
- Companies with capital of 300 million yen or less, and companies and individuals with 300 regular employees or fewer, whose main business is in manufacturing, construction, transport or another sector the Act does not list separately.(Art. 2(1)(i)) (the provisions it rests on)
- In wholesale, companies with capital of 100 million yen or less, and companies and individuals with 100 regular employees or fewer; in services, capital of 50 million yen or less, or 100 employees or fewer; in retail, capital of 50 million yen or less, or 50 employees or fewer.(Art. 2(1)(ii), Art. 2(1)(ii-2), Art. 2(1)(ii-3)) (the provisions it rests on)
3 more
- In a sector a Cabinet Order names, companies within the capital, and companies and individuals within the headcount, that the Cabinet Order sets for that sector.(Art. 2(1)(iii)) (the provisions it rests on)
- Enterprise associations (企業組合), cooperative partnerships (協業組合), and business cooperatives (事業協同組合) and other associations set up under special Acts that meet requirements a Cabinet Order sets.(Art. 2(1)(iv), Art. 2(1)(v), Art. 2(1)(vi)) (the provisions it rests on)
- The Organization, which makes the contracts, lends and pays under them, and must not refuse a contract, or a successor's taking one over, except on the grounds the Act lists.(Art. 2(2), Art. 3(3), Art. 12(2)) (the provisions it rests on)
Special rules and exceptions (4)
- Where a member dies, merges, splits off its whole business or transfers it, the heir, the company that takes it over or the transferee can take over the contract by applying to the Organization within a period a Ministry of Economy, Trade and Industry Order sets. The Organization must agree unless that successor is not a small and medium-sized enterprise, will not take on what the member owes the Organization, or has a ground on which a contract can be refused. After a takeover, a monthly premium above one-fortieth of the premium limit is cut to that amount, and a premium total above the limit is cut to it and the excess paid back — less the part of an outstanding temporary loan above what the successor could borrow, with its interest and penalties.(Art. 12(1), Art. 12(2), Art. 12(3), Art. 12(4), Art. 12(5)) (the provisions it rests on)
- A member whose premium total (掛金総額) has reached 40 times the monthly premium may stop paying premiums by notifying the Organization.(Art. 14(4)) (the provisions it rests on)
- A member that has borrowed mutual aid benefits may, with the Organization's agreement, stop paying premiums during the loan's grace period; the Organization agrees only where it accepts there is an unavoidable reason.(Art. 14(5)) (the provisions it rests on)
- A member whose loans outstanding plus ten times its premium total (掛金総額) have reached the loan ceiling a Cabinet Order sets may, by notifying the Organization, stop paying premiums until that sum falls below the ceiling.(Art. 14(6)) (the provisions it rests on)
How it is enforced (7)
- The Act has no criminal penalties (罰則): it sets the terms of the contract between the Organization and its members, and the Organization applies them itself — refusing or cancelling contracts, withholding loans, charging penalties and surcharges and reclaiming what was obtained by deception.(Art. 2(2), Art. 3(3), Art. 7(2), Art. 9(4), Art. 10(3), Art. 10-2(5), Art. 16(1), Art. 13(1)) (the provisions it rests on)
- The Organization may refuse a contract only where the applicant's contract was cancelled by it in the past year, the applicant obtained or tried to obtain a loan or a payment under the scheme by deception in the past year, or a ground a Ministry of Economy, Trade and Industry Order sets as a risk to the proper running of the scheme applies.(Art. 3(3)) (the provisions it rests on)
- The Organization can cancel a contract only where the member has failed to pay premiums for at least the number of months a Ministry of Economy, Trade and Industry Order sets, without a reason that Order accepts, or has obtained or tried to obtain a loan or a payment by deception; in those cases it must. A cancellation takes effect only for the future.(Art. 7(1), Art. 7(2), Art. 7(5)) (the provisions it rests on)
- The Organization may refuse all or part of a loan where the member is behind on repaying an earlier one, or acted in bad faith or with gross negligence in coming to hold the receivables or in their becoming hard to collect. From a new loan it may deduct the part of an outstanding temporary loan that exceeds what it could lend now, with that part's interest and penalties.(Art. 9(4), Art. 9(5)) (the provisions it rests on)
- A member that repays a loan or a temporary loan late may be charged a penalty (違約金), and one that pays a premium late a surcharge (割増金), each of no more than 14.6% a year of the overdue sum for the days late. Where a disaster or other unavoidable cause stops a member repaying a mutual aid loan or paying a premium on time, the Organization may put back the repayment date or extend the premium deadline; the Act gives no such relief for a temporary loan.(Art. 10(3), Art. 10-2(5), Art. 16(1), Art. 10(4), Art. 17(1)) (the provisions it rests on)
- Where a loan, a temporary loan or a penalty is still unpaid a period a Ministry of Economy, Trade and Industry Order sets after the due date, the Organization may use the premiums paid to cover it. It may make anyone who obtained a loan or a payment by deception pay it back, and may deduct what it is owed from a refund or an allowance it pays.(Art. 10(5), Art. 10-2(6), Art. 13(1), Art. 10(7), Art. 11(5), Art. 11-2(4)) (the provisions it rests on)
- Those entitled to a cancellation refund or a full repayment allowance are paid from the Organization's assets before its other creditors, after the general statutory liens of the Civil Code (民法). The right to either lapses five years after it could first be exercised, and the right to collect premiums after two years.(Art. 18(1), Art. 18(3), Art. 19(1)) (the provisions it rests on)
How it connects to other laws
Cites this lawLawThis law cites it
It also names 2 laws not yet held here.
Where the translation comes from
- 219
The Ministry of Justice's translation is shown only where the Japanese it translates matches the law in force today. Everywhere else the English is a machine translation, marked on the paragraph itself.
Only the Japanese is the law, and no lawyer has reviewed the machine translation.
Sources
Everything this page rests on
- e-Gov (Digital Agency)中小企業倒産防止共済法 — the text in force from 2020-04-01Original
- e-Gov (Digital Agency)中小企業倒産防止共済法 — revision historyOriginal
- Japanese Law Translation, Ministry of Justice中小企業倒産防止共済法 — its English title as the Ministry of Justice's translation database lists itOriginal
- Machine translation, not official
- Machine translation, corrected on review, not official
- Written for this site with AIEnglish titles of amending laws, written for this site
- Written for this site with AIDescriptions of each law, written for this site
- Worked out by this site from e-Gov's text