Financial Instruments and Exchange Act (Any data that the title of a law indicates to be a "Tentative translation" has not yet been proofread or corrected by a native English speaker or legal translation expert; this data may be revised in the future.Tentative translation)
Act No. 25 of April 13, 1948
Chapter I General Provisions (Article 1 and Article 2)
Chapter II Disclosure of Corporate Affairs (Article 2-2 - Article 27)
Chapter II-2 Disclosure in a Tender Offer
Section 1 Tender Offers for Share Certificates, etc. by Persons Other Than the Issuer (Article 27-2 - Article 27-22)
Section 2 Tender Offers for Listed Share Certificates, etc. by the Issuer (Article 27-22-2 - Article 27-22-4)
Chapter II-3 Disclosure of the Status of Large-Volume Holdings in Share Certificates, etc. (Article 27-23 - Article 27-30)
Chapter II-4 Special Provisions, etc. on Carrying Out Procedures Via an Electronic Data Processing System for Disclosure (Article 27-30-2 - Article 27-30-11)
Chapter II-5 Provision or Disclosure of Specified Information on Securities (Article 27-31 - Article 27-35)
Chapter III Financial Instruments Business Operators
Section 1 General Provisions
Subsection 1 General Rules (Article 28)
Subsection 2 Financial Instruments Business Operators (Article 29 - Article 31-5)
Subsection 3 Major Shareholders (Article 32 - Article 32-4)
Subsection 4 Registered Financial Institutions (Article 33 - Article 33-8)
Subsection 5 Professional Investors (Article 34 - Article 34-5)
Section 2 Services
Subsection 1 General Rules (Article 35 - Article 40-7)
Subsection 2 Special Provisions on Investment Advisory Business (Article 41 - Article 41-5)
Subsection 3 Special Provisions on Investment Management Business (Article 42 - Article 42-8)
Subsection 4 Special Provisions on Securities, etc. Management (Article 43 - Article 43-4)
Subsection 5 Special Provisions on Electronic Public Offering Services (Article 43-5)
Subsection 6 Preventive Measures against Adverse Effects (Article 44 - Article 44-4)
Subsection 7 Miscellaneous Provisions (Article 45)
Section 3 Accounting
Subsection 1 Financial Instruments Business Operators Engaged in Type I Financial Instruments Business (Article 46 - Article 46-6)
Subsection 2 Financial Instruments Business Operators Not Engaged in Type I Financial Instruments Business (Article 47 - Article 47-3)
Subsection 3 Registered Financial Institutions (Article 48 - Article 48-3)
Subsection 4 Special Provisions on Foreign Corporations (Article 49 - Article 49-5)
Section 4 Supervision (Article 50 - Article 57)
Section 4-2 Special Provisions on Special Financial Instruments Business Operators, etc.
Subsection 1 Special Financial Instruments Business Operators (Article 57-2 - Article 57-11)
Subsection 2 Designated Parent Companies (Article 57-12 - Article 57-25)
Subsection 3 Miscellaneous Provisions (Article 57-26 - Article 57-27)
Section 5 Special Provisions for Foreign Companies Related to Financial Instrument Business
Subsection 1 Foreign Securities Services Providers (Article 58 and Article 58-2)
Subsection 2 Permission for Some Underwriting Activities (Article 59 - Article 59-6)
Subsection 3 Permission for On-Exchange Transaction Services (Article 60 - Article 60-13)
Subsection 4 Permission of Electronic Over-the-Counter Transactions of Derivatives Business (Article 60-14)
Subsection 5 Persons Engaging in Investment Advisory Business or Investment Management Business in a Foreign State (Article 61)
Subsection 6 Establishment of Facilities for Collecting Information (Article 62)
Section 6 Special Provisions on Specially Permitted Services for Qualified Institutional Investors, etc. (Article 63 - Article 63-4)
Section 7 Sales Representatives (Article 64 - Article 64-9)
Section 8 Miscellaneous Provisions (Article 65 - Article 65-6)
Chapter III-2 Financial Instruments Intermediary Service Providers
Section 1 General Provisions (Article 66 - Article 66-6)
Section 2 Services (Article 66-7 - Article 66-15)
Section 3 Accounting (Article 66-16 - Article 66-18)
Section 4 Supervision (Article 66-19 - Article 66-23)
Section 5 Miscellaneous Provisions (Article 66-24 - Article 66-26)
Chapter III-3 Credit Rating Agencies
Section 1 General Provisions (Article 66-27 - Article 66-31)
Section 2 Services (Article 66-32 - Article 66-36)
Section 3 Accounting (Article 66-37 - Article 66-39)
Section 4 Supervision (Article 66-40 - Article 66-45)
Section 5 Miscellaneous Provisions (Article 66-46 - Article 66-49)
Chapter IV Financial Instruments Firms Associations
Section 1 Associations of Authorized Financial Instruments Firms
Subsection 1 Incorporation and Services (Article 67 - Article 67-20)
Subsection 2 Association Members (Article 68 and Article 68-2)
Subsection 3 Management (Article 69 - Article 72)
Subsection 4 Supervision (Article 73 - Article 76)
Subsection 5 Miscellaneous Provisions (Article 77 - Article 77-7)
Section 2 Certified Financial Instruments Business Associations
Subsection 1 Certification and Services (Article 78 - Article 79)
Subsection 2 Supervision (Article 79-2 - Article 79-6)
Section 3 Certified Investor Protection Organization (Article 79-7 - Article 79-19)
Chapter IV-2 Investor Protection Fund
Section 1 General Provisions (Article 79-20 - Article 79-25)
Section 2 Members (Article 79-26 - Article 79-28)
Section 3 Incorporation (Article 79-29 - Article 79-33)
Section 4 Management (Article 79-34 - Article 79-48)
Section 5 Services (Article 79-49 - Article 79-62)
Section 6 Dues (Article 79-63 - Article 79-67)
Section 7 Finance and Accounting (Article 79-68 - Article 79-74)
Section 8 Supervision (Article 79-75 - Article 79-77)
Section 9 Dissolution (Article 79-78 - Article 79-80)
Chapter V Financial Instruments Exchanges
Section 1 General Provisions (Article 80 - Article 87-9)
Section 2 Financial Instruments Incorporated Associations, Self-Regulatory Organizations, and Stock Companies That Operate Financial Instruments Exchange Markets
Subsection 1 Financial Instruments Incorporated Associations
Division 1 Incorporation (Article 88 - Article 88-22)
Division 2 Registration (Article 89 - Article 90)
Division 3 Members (Article 91 - Article 96)
Division 4 Administration (Article 97 - Article 99)
Division 5 Dissolution (Article 100 - Article 100-25)
Division 6 Organizational Conversion (Article 101 - Article 102)
Subsection 1-2 Self-Regulatory Organizations
Division 1 Incorporation (Article 102-2 - Article 102-7)
Division 2 Registration (Article 102-8 - Article 102-11)
Division 3 Members (Article 102-12 and Article 102-13)
Division 4 Self-Regulatory Services (Article 102-14 - Article 102-20)
Division 5 Administration (Article 102-21 - Article 102-34)
Division 6 Dissolution (Article 102-35 - Article 102-39)
Subsection 2 A Stock Company That Operetes Financial Instruments Exchange Markets
Division 1 General Provisions (Article 103 - Article 105-3)
Division 2 Self-Regulatory Committees (Article 105-4 - Article 106-2)
Division 3 Major Shareholders (Article 106-3 - Article 106-9)
Division 4 Financial Instruments Exchange Holding Companies (Article 106-10 - Article 109)
Section 3 The Purchase and Sale of Securities, etc. on a Financial Instruments Exchange Market (Article 110 - Article 133-2)
Section 4 Dissolution of a Financial Instruments Exchange
Subsection 1 Dissolution (Article 134 and Article 135)
Subsection 2 Merger
Division 1 General Rules (Article 136)
Division 2 Merger between an Incorporated Association-Operated Financial Instruments Exchange and an Incorporated Association-Operated Financial Instruments Exchange (Article 137 and Article 138)
Division 3 Merger between an Incorporated Association-Operated Financial Instruments Exchange and a Stock Company-Operated Financial Instruments Exchange (Article 139 and Article 139-2)
Division 4 Merger Procedures for an Incorporated Association-Operated Financial Instruments Exchange (Article 139-3 - Article 139-6)
Division 5 Merger Procedures for Stock-Operated Financial Instruments Exchanges (Article 139-7 - Article 139-21)
Division 6 The Coming Into Effect of a Merger (Article 140 - Article 147)
Section 5 Supervision (Article 148 - Article 153-5)
Section 6 Miscellaneous Provisions (Article 154 and Article 154-2)
Chapter V-2 Foreign Financial Instruments Exchanges
Section 1 General Provisions (Article 155 - Article 155-5)
Section 2 Supervision (Article 155-6 - Article 155-10)
Section 3 Miscellaneous Provision (Article 156)
Chapter V-3 Financial Instruments Clearing Organizations, etc.
Section 1 Financial Instruments Clearing Organizations (Article 156-2 - Article 156-20)
Section 2 Foreign Financial Instruments Clearing Organizations (Article 156-20-2 - Article 156-20-15)
Section 3 Interoperation between a Financial Instruments Clearing Organization and Other Financial Instruments Clearing Organizations, etc. (Article 156-20-16 - Article 156-20-22)
Section 4 Miscellaneous Provisions (Article 156-20-23 and Article 156-22)
Chapter V-4 Securities Finance Companies (Article 156-23 - Article 156-37)
Chapter V-5 Designated Dispute Resolution Organization
Section 1 General Provisions (Article 156-38 - Article 156-41)
Section 2 Services (Article 156-42 - Article 156-54)
Section 3 Supervision (Article 156-55 - Article 156-61)
Chapter V-6 Trade Repositories
Section 1 Centralization of Clearing (Article 156-62)
Section 2 Archiving and Reporting Transaction Information (Article 156-63 - Article 156-66)
Section 3 Trade Repositories (Article 156-67 - Article 156-84)
Chapter V-7 Specified Financial Indicator Calculation Agents (Article 156-85 - Article 156-92)
Chapter VI Regulations on Transactions, etc. of Securities (Article 157 - Article 17-2)
Chapter VI-2 Administrative Surcharges
Section 1 Payment Order (Article 172 - Article 177)
Section 2 Administrative Hearing Proceedings (Article 178 - Article 185-17)
Section 3 Litigation (Article 185-18)
Section 4 Miscellaneous Provisions (Article 185-19 - Article 185-21)
Chapter VII Miscellaneous Provisions (Article 186 - Article 196-2)
Chapter VIII Penal Provisions (Article 197 - Article 209-3)
Chapter VIII-2 Special Provisions on Procedures Concerning Confiscation (Article 209-4 - Article 209-7)
Chapter IX Investigations in Criminal Cases (Article 210 - Article 226)
Supplementary Provisions
Chapter I General Provisions
(Purpose)
Article 1 The purpose of this Act is to ensure fairness in, inter alia, the issuance of Securities and transactions of Financial Instruments, etc. and to facilitate the smooth distribution of Securities, as well as to achieve fair price formation for Financial Instruments, etc. through the full utilization of the functions of the capital markets, by, inter alia, streamlining systems for the disclosure of corporate affairs, specifying the necessary particulars relevant to persons conducting Financial Instruments Business, and ensuring the appropriate operation of Financial Instruments Exchanges, thereby contributing to the sound development of the national economy and the protection of investors.
(Definitions)
Article 2 (1) The term "Securities" as used in this Act means the following:
(i) national government bonds;
(ii) municipal bonds;
(iii) debentures issued by a corporation pursuant to a special Act (excluding those set forth in the following item and item (xi));
(iv) specified corporate bonds prescribed in the Act on the Securitization of Assets (Act No. 105 of 1998);
(v) corporate bond certificates (including those issued by a mutual company; the same applies hereinafter);
(vi) investment securities issued by a corporation incorporated pursuant to a special Act (excluding those set forth in the following item, item (viii) and item (xi));
(vii) preferred equity investment certificates prescribed in the Act on Preferred Equity Investment by Cooperative Financial Institutions (Act No. 44 of 1993; hereinafter referred to as the "Act on Preferred Equity Investment");
(viii) preferred equity securities and securities indicating a right to subscribe for preferred equity which are prescribed in the Act on the Securitization of Assets;
(ix) share certificates and share option certificates;
(x) beneficiary certificates of an investment trust or foreign investment trust which are prescribed in the Act on Investment Trusts and Investment Corporations (Act No. 198 of 1951);
(xi) investment securities, investment equity subscription right certificates, or investment corporation bond certificates or foreign investment securities prescribed in the Act on Investment Trusts and Investment Corporations;
(xii) beneficiary certificates of loan trusts;
(xiii) beneficiary certificates of special purpose trusts prescribed in the Act on the Securitization of Assets;
(xiv) beneficiary certificates of beneficiary certificate-issuing trusts prescribed in the Trust Act (Act No. 108 of 2006);
(xv) promissory notes specified by Cabinet Office Ordinance which have been issued by a corporation in order to raise the funds necessary for business;
(xvi) mortgage securities prescribed in the Mortgage Securities Act (Act No. 15 of 1931);
(xvii) securities or certificates issued by a foreign state or foreign person, and which have the nature of the securities and certificates set forth in items (i) to (ix) inclusive or item (xii) to the preceding item inclusive (excluding those specified in the following item);
(xviii) securities or certificates which are specified by Cabinet Office Ordinance, which are issued by a foreign person, and which indicate a beneficial interest in a trust that holds the loan claims of a person operating in the banking business or a person otherwise providing money loans on a regular basis, or indicate any other similar rights;
(xix) securities or certificates that indicate the right to a transaction specified in paragraph (21), item (iii) which is conducted on a Financial Instruments Market, in accordance with the standards and means prescribed by the person operating the Financial Instruments Market, right to a transaction that is conducted on a foreign Financial Instruments Market (meaning a foreign Financial Instruments Market provided for in paragraph (8), item (iii), sub-item (b); hereinafter the same applies in this item) and which is similar to the transaction specified in paragraph (21), item (iii) (excluding those pertaining to Financial Instruments (limited to those listed in paragraph (24), item (iii)-2) or Financial Indicators (limited to the prices of said Financial Instruments and the figures calculated based thereon), or the right to a transaction specified in paragraph (22), item (iii) or (iv) which is conducted in neither a Financial Instruments Market nor a foreign Financial Instruments Market (such rights are hereinafter referred to as "Options");
(xx) securities or certificates which the person with whom securities or certificates set forth in the preceding items has been deposited issues in a state other than the state in which the deposited securities or certificates were issued, and which indicate a right to the deposited securities or certificates; and
(xxi) securities or certificates other than those set forth in the preceding items, which are specified by Cabinet Order as those with regard to which, in consideration of transferability and other factors, it is found to be necessary to ensure the public interest or the protection of investors.
(2) The rights that must be indicated on Securities set forth in items (i) to (xv) inclusive of the preceding paragraph, on Securities set forth in item (xvii) of that paragraph (excluding those with the nature of Securities set forth in item (xvi) of that paragraph), and on Securities set forth in item (xviii) of that paragraph; and the rights that must be indicated on the Securities set forth in item (xvi) of that paragraph, Securities set forth in item (xvii) of that paragraph (limited to those with the nature of Securities set forth in item (xvi) of that paragraph), and Securities set forth in items (xix) to (xxi) inclusive of that paragraph which are specified by Cabinet Office Ordinance (hereinafter collectively referred to as "Rights That Must Be Indicated on Securities" in this and the following paragraphs) are deemed to be the Securities indicating these rights even if Securities indicating these rights have not been issued; the Electronically Recorded Monetary Claims (meaning the Electronically Recorded Monetary Claims set forth in Article 2, paragraph (1) of the Electronically Recorded Monetary Claims Act (Act No. 102 of 2007); hereinafter the same applies in this paragraph) specified by Cabinet Order as those which, in consideration of transferability and other circumstances, it is found to be necessary to deem corporate bond certificates or any other Securities specified in the items of the preceding paragraph (referred to as the "Specified Electronically Recorded Monetary Claims" in item (vii) and the following paragraph), are deemed to be such Securities; the rights set forth in the following items are deemed to be the relevant Securities even if they are not rights which must be indicated on securities or certificates; and the provisions of this Act apply:
(i) a beneficial interest in a trust (excluding a beneficial interest that must be indicated on the beneficiary certificates of an investment trust specified in item (x) of the preceding paragraph and a beneficial interest that must be indicated on Securities set forth in any of items (xii) to (xiv) inclusive of that paragraph);
(ii) rights that are claimable against a foreign person and which have the nature of the rights specified in the preceding item (excluding rights that must be indicated on the beneficiary certificates of a foreign investment trust specified in item (x) of the preceding paragraph and rights that must be indicated on Securities set forth in item (xvii) or item (xviii) of that paragraph);
(iii) the membership rights of a general partnership company or limited partnership company (limited to rights specified by Cabinet Order) or membership rights of a limited liability company;
(iv) the membership rights of a foreign corporation which have the nature of rights specified in the preceding item;
(v) among the rights based on a partnership contract provided for in Article 667, paragraph (1) of the Civil Code (Act No. 89 of 1896), a silent partnership agreement provided for in Article 535 of the Commercial Code (Act No. 48 of 1899), a limited partnership agreement for investment provided for in Article 3, paragraph (1) of the Limited Partnership Act for Investment (Act No. 90 of 1998), or a limited liability partnership agreement provided for in Article 3, paragraph (1) of the Limited Liability Partnership Act (Act No. 40 of 2005), membership rights in an incorporated association or other rights (excluding rights based on foreign laws and regulations) the holder of which (hereinafter referred to as an "Equity Holder" in this item) can receive dividends of profits arising from business that is conducted using the money (including anything specified by Cabinet Order as being similar to money) invested or contributed by the Equity Holder (such business is hereinafter referred to as "Invested Business" in this item) or a distribution of the assets of the Invested Business, which do not fall under one of the following categories (excluding rights that must be indicated on Securities set forth in the items of the preceding paragraph and rights deemed to be Securities pursuant to the provisions of this paragraph (excluding this item)):
(a) rights of an Equity Holder in cases specified by Cabinet Order as those in which all of the Equity Holders participate in the Invested Business;
(b) rights of an Equity Holder, if it is provided that Equity Holders will not receive dividends of profits or a distribution of the assets of the Invested Business in an amount exceeding the amount invested or contributed by them (excluding rights set forth in sub-item (a));
(c) rights based on an insurance contract in which a person that engages in the insurance business prescribed in Article 2, paragraph (1) of the Insurance Business Act (Act No. 105 of 1995) is the insurer, a mutual aid contract concluded with a cooperative prescribed in Article 5 of the Agricultural Cooperatives Act (Act No. 132 of 1947) which engages in the services prescribed in Article 10, paragraph (1), item (x) of that Act, a mutual aid contract concluded with a cooperative prescribed in Article 4 of the Consumer Cooperatives Act (Act No. 200 of 1948) which engages in the mutual aid services prescribed in Article 10, paragraph (2) of that Act, a mutual aid contract concluded with a cooperative prescribed in Article 2 of the Fisheries Cooperatives Act (Act No. 242 of 1948) which engages in the services prescribed in Article 11, paragraph (1), item (xi), Article 93, paragraph (1), item (vi)-2 or Article 100-2, paragraph (1), item (i) of that Act, a mutual aid contract concluded with a cooperative prescribed in Article 3 of the Small and Medium-Sized Enterprise Cooperatives Act (Act No. 181 of 1949) which engages in the mutual aid services prescribed in Article 9-2, paragraph (7) of that Act, or a specified joint real estate venture contract prescribed in Article 2, paragraph (3) of the Specified Joint Real Estate Ventures Act (Act No. 77 of 1994) (excluding rights set forth in sub-items (a) and (b)); or
(d) rights other than those set forth in sub-items (a) to (c) inclusive, which are specified by Cabinet Order as rights in connection with which there is found to be no compromise to the public interest or to the protection of Equity Holders even if the rights are not deemed to be Securities;
(vi) rights based on foreign laws and regulations which are similar to those specified in the preceding item; or
(vii) rights other than Specified Electronically Recorded Monetary Claims and the rights set forth in the preceding items, which are specified by Cabinet Order as rights in connection with which it is found that, in consideration of their economic nature being similar to Securities prescribed in the preceding paragraph and rights set forth in the preceding items and in consideration of other circumstances, it is necessary and appropriate to ensure the public interest or the protection of investors, by deeming these rights to be Securities.
(3) The term "Public Offering of Securities" as used in this Act means, among solicitations of offers to acquire newly issued Securities (including acts specified by Cabinet Office Ordinance as being similar to such solicitation (such acts are referred to as "Acts Similar to Solicitation of Offers to Acquire" in the following paragraph); hereinafter referred to as "Solicitation of Offers to Acquire"), the Solicitation of Offers to Acquire in cases provided for in item (i) or item (ii) below, which is issued with regard to Securities set forth in paragraph (1), Rights That Must Be Indicated on Securities, or Specified Electronically Recorded Monetary Claims that are deemed to be Securities under the preceding paragraph (such Securities or rights are referred to as "The Paragraph (1) Securities" in the following paragraph, paragraph (6) of this Article, paragraphs (4) and (5) of the following Article, and Article 23-13, paragraph (4)); and the Solicitation of Offers to Acquire in cases provided for in item (iii) below, which is issued with regard to rights that are deemed to be Securities under the items of the preceding paragraph (such rights are referred to as "The Paragraph (2) Securities" in the following paragraph, paragraphs (4) and (5) of the following Article, and Article 23-13, paragraph (4)); the term "Private Placement of Securities" means Solicitation of Offers to Acquire which does not come within the purview of a Public Offering of Securities:
(i) cases specified by Cabinet Order as those in which the Solicitation of Offers to Acquire is issued (unless the solicitation is issued only to Professional Investors) to a large number of persons (other than Qualified Institutional Investors (meaning persons specified by Cabinet Office Ordinance as having expert knowledge of and experience with investment in Securities; the same applies hereinafter), if Qualified Institutional Investors are included in the persons to which the Solicitation of Offers to Acquire is issued, and the Solicitation of Offers to Acquire constitutes a case specified by Cabinet Order as one in which there is little likelihood of the relevant Securities being transferred from the Qualified Institutional Investor that acquires them to any person other than a Qualified Institutional Investor);
(ii) cases in which the Solicitation of Offers to Acquire is other than as specified in the preceding item, and in which it does not fall under any of the following sub-items:
(a) a Solicitation of Offers to Acquire issued only to Qualified Institutional Investors and constituting a case specified by Cabinet Order as one in which there is little likelihood of the relevant Securities being transferred from the person that acquires them to any person other than a Qualified Institutional Investor; and
(b) a Solicitation of Offers to Acquire issued only to Professional Investors and falling under all of the following requirements (excluding the cases specified in sub-item (a)):
1. the other party to the Solicitation of Offers to Acquire is not the State, the Bank of Japan, or a Qualified Institutional Investor, and the Solicitation of Offers to Acquire is issued by a Financial Instruments Business Operator , etc. (meaning a Financial Instruments Business Operator, etc. as prescribed in Article 34; the same applies in the following paragraph, Article 4, paragraph (1), item (iv) and paragraph (3), Article 27-32-2, and Article 27-34-2) based on entrustment by customers or on its own behalf;
2. the Solicitation of Offers to Acquire comes under the purview of cases specified by Cabinet Order as those in which there is little likelihood of the relevant Securities being transferred from the person that acquires them to any person other than a Professional Investor, etc. (meaning a Professional Investor or Non-Resident (meaning a non-resident as defined in Article 6, paragraph (1), item (vi) of the Foreign Exchange and Foreign Trade Act (Act No. 228 of 1949)), and limited to those specified by Cabinet Order; the same applies hereinafter).
(c) a Solicitation of Offers to Acquire falling under neither the case specified in the preceding item, nor sub-items (a) and (b) of this item (except if the Solicitation of Offers to Acquire meets the requirements that are specified by Cabinet Order in consideration of the status, etc. of the issuance and solicitation of Securities of the same class as the relevant Securities), and constituting a case specified by Cabinet Order as one in which there is little likelihood of the relevant Securities being held by a large number of persons.
(iii) cases specified by Cabinet Order as those in which, in response to the Solicitation of Offers to Acquire, a considerably large number of persons will come to hold the Securities connected with the solicitation.
(4) The term "Secondary Distribution of Securities" as used in this Act means, among offers to sell and solicitation of offers to purchase already-issued Securities (excluding offers and solicitation coming under the purview of Acts Similar to the Solicitation of Offers to Acquire and any other offer or solicitation specified by Cabinet Office Ordinance; hereinafter referred to as an "Offer to Sell, etc."), Offers to Sell, etc. in cases provided for in item (i) or item (ii), which are made with regard to The Paragraph (1) Securities; and Offers to Sell, etc. in cases provided for in item (iii), which are made with regard to The Paragraph (2) Securities (excluding an Offer to Sell, etc. that involves the purchase and sale of Securities on a Financial Instruments Exchange Market, a transaction equivalent thereto, and any other Securities transactions specified by Cabinet Order):
(i) cases specified by Cabinet Order as those in which the Offer to Sell, etc. is made (unless the offer is made only to Professional Investors) to a large number of persons (other than Qualified Institutional Investors, if Qualified Institutional Investors are included in the persons to which the Offer to Sell, etc. is made, and if the Offer to Sell, etc. constitutes a case specified by Cabinet Order as one in which there is little likelihood of the relevant Securities being transferred from the Qualified Institutional Investor that acquires them to any person other than a Qualified Institutional Investor);
(ii) cases in which the Offer to Sell, etc. is other than as specified in the preceding item, and in which it does not fall under any of the following sub-items:
(a) an Offer to Sell, etc. made only to Qualified Institutional Investors and constituting a case specified by Cabinet Order as one in which there is little likelihood of the relevant Securities being transferred from the person that acquires them to any person other than a Qualified Institutional Investor;
(b) an Offer to Sell, etc. made only to Professional Investors and falling under all of the following requirements (excluding the cases specified in sub-item (a)):
1. the other party to the Offer to Sell, etc. is not the State, the Bank of Japan, or a Qualified Institutional Investor, and the Offer to Sell, etc. is made by a Financial Instruments Business Operator, etc. based on entrustment by a customer or on its own behalf;
2. the Offer to Sell, etc. comes under the purview of cases specified by Cabinet Order as those in which there is little likelihood of the relevant Securities being transferred from the person that acquires them to any person other than a Professional Investor, etc.
(c) an Offer to Sell, etc. falling under neither the case specified in the preceding item, nor sub-items (a) and (b) of this item (except if the Offer to Sell, etc. meets the requirements that are specified by Cabinet Order in consideration of the status, etc. of the issuance and solicitation of Securities of the same class as the relevant Securities), and constituting a case specified by Cabinet Order as one in which there is little likelihood of the relevant Securities being held by a large number of persons.
(iii) cases specified by Cabinet Order as those in which, in response to the Offer to Sell, etc., a considerably large number of persons will come to hold the Securities connected with the offer.
(5) The term "Issuer" as used in this Act means the person that issues, or seeks to issue, Securities (or the person specified by Cabinet Office Ordinance with regard to the Securities specified by Cabinet Office Ordinance); and rights other than those which must be indicated on securities or certificates, but which are deemed to be Securities pursuant to paragraph (2), are deemed to have been issued as Securities by the person specified by Cabinet Office Ordinance for each kind of right, at the time specified by Cabinet Office Ordinance.
(6) The term "Underwriter" as used in this Act (excluding Chapter V) means a person that, at the time of a Public Offering, Secondary Distribution, or Private Placement of Securities, or the time of an exclusive Offer to Sell, etc. to Professional Investors (meaning an Offer to Sell, etc. The Paragraph (1) Securities which falls under paragraph (4), item (ii), sub-item (b) (excluding an Offer to Sell, etc. involving the purchase and sale of Securities on a Financial Instruments Exchange Market, a transaction equivalent thereto, and any other transaction of Securities specified by Cabinet Order; the same applies hereinafter) involving Securities, does either of the things set forth in the following items:
(i) acquires all or part of the relevant Securities with the aim of having other persons acquire them; or
(ii) concludes a contract stipulating that if no other person acquires all or part of the relevant Securities, the Underwriter will acquire those that remain.
(iii) in cases where the Securities are share option certificates (including Securities specified by Cabinet Office Ordinance as being equivalent thereto; hereinafter the same applies in this item), the person who acquired the share option certificates concludes a contract to acquire, when they do not exercise share options (including the rights specified by Cabinet Office Ordinance as being equivalent thereto; hereinafter the same applies in this item) for all or part of those share option certificates, the share option certificates pertaining to said unexercised share options in order for said person or a third party to exercise those share options.
(7) The term "Securities Registration Statement" as used in this Act means the statement referred to in Article 5, paragraph (1) (including as applied mutatis mutandis pursuant to Article 5, paragraph (5); the same applies hereinafter), documents accompanying it pursuant to Article 5, paragraph (13), and any amended statement as under Article 7, paragraph (1), Article 9, paragraph (1) or Article 10, paragraph (1).
(8) The term "Financial Instruments Business" as used in this Act means performance of any of the following acts (excluding those that are specified by Cabinet Order as acts which, in consideration of their content and other factors, are found not to compromise the protection of investors, and the acts set forth in item (xii), (xiv), and (xv) of this paragraph and in the items of Article 28, paragraph (8), when performed by a bank, a Cooperative Financial Institution defined in Article 2, paragraph (1) of the Act on Preferred Equity Investment (hereinafter referred to as a "Cooperative Financial Institution") or other financial institution specified by Cabinet Order) on a regular basis:
(i) the purchase and sale of Securities (excluding those falling under the category of Derivatives Transactions; the same applies hereinafter), Market Transactions of Derivatives (excluding Market Transactions of Derivatives pertaining to Financial Instruments (limited to those listed in paragraph (24), item (iii)-2) or Financial Indicators (limited to the prices of the Financial Instruments and the figures calculated based thereon) (hereinafter referred to as "Commodity-Related Market Transactions of Derivatives")) or Foreign Market Derivatives Transaction (excluding the purchase and sale of Securities falling under item (x));
(ii) intermediation, brokerage (excluding Brokerage for Clearing of Securities, etc.), or agency for the purchase and sale of Securities, Market Transactions of Derivatives, or Foreign Market Derivatives Transactions (excluding intermediation, brokerage, or agency for the purchase and sale of Securities which fall under item (x));
(iii) intermediation, brokerage, or agency for entrustment of the following transactions:
(a) the purchase and sale of Securities or Market Transactions of Derivatives on a Financial Instruments Exchange Market;
(b) the purchase and sale of Securities or Foreign Market Derivatives Transactions on a foreign Financial Instruments Market (meaning a market in a foreign state which is similar to a Financial Instruments Exchange Market; the same applies hereinafter).
(iv) Over-the-Counter Transactions of Derivatives of Derivatives or intermediation, brokerage (excluding Brokerage for Clearing of Securities, etc.), or agency for it (hereinafter referred to as "Over-the-Counter Transactions of Derivatives, etc.");
(v) Brokerage for Clearing of Securities, etc.;
(vi) the underwriting of Securities (meaning doing any of the things set forth in an item of paragraph (6) at the time of a Public Offering, Secondary Distribution, Private Placement of Securities, or exclusive Offer to Sell, etc. to Professional Investors);
(vii) the Public Offering or Private Placement of Securities (limited to those set forth in the following items):
(a) beneficiary certificates of investment trusts specified in paragraph (1), item (x) which are connected to the beneficial interest in an Investment Trust Managed Under Instructions from the Settlor provided for in Article 2, paragraph (1) of the Act on Investment Trusts and Investment Corporations;
(b) beneficiary certificates of foreign investment trusts specified in paragraph (1), item (x);
(c) Securities specified in paragraph (1), item (xvi);
(d) Securities specified in paragraph (1), item (xvii) which have the nature of Securities specified in item (xvi) of that paragraph;
(e) rights that must be indicated on the Securities specified in sub-item (a) or sub-item (b) above, or rights that must be indicated on the Securities under sub-item (c) or sub-item (d) above which are specified by Cabinet Office Ordinance, which are deemed to be Securities pursuant to paragraph (2);
(f) rights specified in paragraph (2), item (v) or item (vi) which are deemed to be Securities pursuant to that paragraph; and
(g) the Securities other than those set forth in sub-items (a) to (f) inclusive which are specified by Cabinet Order.
(viii) Secondary Distribution of Securities or exclusive Offer to Sell, etc. to Professional Investors;
(ix) the handling of a Public Offering or Secondary Distribution of Securities, or the handling of a Private Placement of Securities or exclusive Offer to Sell, etc. to Professional Investors;
(x) the purchase and sale of Securities or intermediation, brokerage, or agency for it, using an electronic data processing system, conducted through any of the following price formation methods or other similar methods, with a large number of persons participating simultaneously as parties on one side of the transaction or as parties on both sides of the transaction (excluding those specified by Cabinet Order as transactions that are found to be inappropriate in terms of investor protection if conducted outside a Financial Instruments Exchange Market or an Over-the-Counter Securities Market (meaning an Over-the-Counter Securities Market provided for in Article 67, paragraph (2)));
(a) by auction (but only if the trading volume of Securities does not exceed the criteria specified by Cabinet Order);
(b) for Securities listed on a Financial Instruments Exchange, by using the trading price of the Securities on the Financial Instruments Exchange Market that is operated by the relevant Financial Instruments Exchange;
(c) for Securities registered under Article 67-11, paragraph (1) (hereinafter referred to as "Over-the-Counter Traded Securities"), by using the trading price of the Securities which is published by the Authorized Financial Instruments Firms Association to which the Securities are registered;
(d) by using the price decided by negotiation between the customers; and
(e) methods other than those set forth in sub-item (a) to (d) inclusive, which are specified by Cabinet Office Ordinance.
(xi) conclusion of a contract in which one of the parties promises to provide the other party with oral, written (excluding newspapers, magazines, books, or any other written work that is issued for sale to many and unspecified persons and which many and unspecified persons can buy as needed), or any other form of advice about the following things, and the other party promises to pay remuneration for this (such a contract is hereinafter referred to as an "Investment Advisory Contract"), and provision of advice under such Investment Advisory Contract;
(a) the value, etc. of Securities (meaning the value of Securities, the amount receivable for Options on Securities (meaning the right to conduct a transaction provided for in Article 28, paragraph (8), item (iii), sub-item (c) on a Financial Instruments Market in accordance with the standards and means prescribed by the person operating the Financial Instruments Market, the right to conduct a transaction similar to the transaction provided for in Article 28, paragraph (8), item (iii), sub-item (c) on a foreign Financial Instruments Market, or the right to conduct a transaction set forth in item (iv), sub-item (c) or sub-item (d) of that paragraph without using a Financial Instruments Market or foreign Financial Instruments Market), and the movement of Securities indicators (meaning the price or interest rate of Securities and anything else specified by Cabinet Office Ordinance as being equivalent thereto, or figures calculated based thereon)); or
(b) investment decisions (meaning decisions on the classes, issues, volumes, or prices of Securities targeted for investment, as well as whether the Securities are purchased or sold and by what method and at what timing, and decisions on what should be the contents and timing of any Derivatives Transactions that are conducted; the same applies hereinafter) based on an analysis of the values, etc. of Financial Instruments (meaning the value of Financial Instruments(in the case of those listed in paragraph (xxiv), item (iii)-2, limited to those listed on a Financial Instruments Exchange), amount receivable for Options, and movement of Financial Indicators(in the case of those pertaining to the Financial Instruments listed in that item, limited to those listed on a Financial Instruments Exchange); the same applies hereinafter).
(xii) conclusion of the following contracts, and the management of money or any other property (including instructions for that management; the same applies hereinafter), based on such contract, as an investment in Securities or in rights connected with Derivatives Transactions, based on investment decisions that are grounded in an analysis of the values, etc. of Financial Instruments;
(a) an entrustment contract for the asset management provided for in Article 188, paragraph (1), item (iv) of the Act on Investment Trusts and Investment Corporations, concluded with a registered investment corporation as defined in Article 2, paragraph (13) of that Act; or
(b) a contract other than what is set forth in sub-item (a), in which one of the parties is fully or partly entrusted by the other party with the discretion to make investment decisions based on an analysis of the values, etc. of Financial Instruments, and is also entrusted with the authority necessary to make investments on behalf of the other party based on such investment decisions (such a contract is hereinafter referred to as a "Discretionary Investment Contract").
(xiii) agency or intermediation for the conclusion of an Investment Advisory Contract or a Discretionary Investment Contract;
(xiv) the management (excluding management that falls under the category of act set forth in (xii)) of money or other property contributed by a person that holds rights indicated on the Securities specified in paragraph (1), item (x) or other rights specified by Cabinet Order, as an investment in Securities or in rights connected with Derivatives Transactions, based on investment decisions that are grounded in an analysis of the values, etc. of Financial Instruments;
(xv) the management (excluding management that falls under the category of act set forth in (xii)) of money or other property invested or contributed by a person that holds the following rights or other rights specified by Cabinet Order, as an investment mainly in Securities or in rights connected with Derivatives Transactions, based on investment decisions that are grounded in an analysis of the values, etc. of Financial Instruments;
(a) rights indicated on the Securities specified in paragraph (1), item (xiv) or Securities specified in item (xvii) of that paragraph (limited to those that have the nature of the Securities specified in item (xiv) of that paragraph);
(b) rights set forth in paragraph (2), item (i) or (ii); or
(c) rights set forth in paragraph (2), item (v) or (vi).
(xvi) the acceptance of deposits of money or securities or the certificates set forth in the items of paragraph (1) from customers, in connection with an act set forth in items (i) to (x) inclusive of this paragraph (in the case of conducting the acts listed in item (ii), (iii) or (v) pertaining to Commodity-Related Market Transactions of Derivatives, including acceptance from the customer of deposits of commodities (meaning those listed in paragraph (24), item (iii)-2; hereinafter the same applies in this item), or securities or certificates issued pertaining to the deposited commodity in relation to these acts);
(xvii) the transfer of bonds, etc. in response to the opening of an account in order to carry out a transfer of the bonds, etc. defined in Article 2, paragraph (1) of the Act on Transfer of Corporate Bonds, etc. (Act No. 75 of 2001); or
(xviii) acts specified by Cabinet Order as being similar to the acts set forth in the preceding items.
(9) The term "Financial Instruments Business Operator " as used in this Act means a person registered by the Prime Minister pursuant to Article 29.
(10) The term "Prospectus" as used in this Act means a document describing the business and other particulars of an Issuer of Securities, which is prepared for a Public Offering or Secondary Distribution of Securities, a General Solicitation for Involving Securities Acquired by a Qualified Institutional Investor as defined in Article 4, paragraph (2) (excluding those falling under the category of Secondary Distribution of Securities), or a General Solicitation Involving Securities Acquired by a Professional Investor as set forth in Article 4, paragraph (3) (excluding those falling under the category of a Secondary Distribution of Securities), and which is delivered, or is to be delivered upon request, to the other party to the Public Offering or Secondary Distribution.
(11) The term "Financial Instruments Intermediary Service" as used in this Act means services that fall under the category of any of the following acts (excluding the act provided for in item (iv) below if performed by a person engaged in Investment Management Business as defined in Article 28, paragraph (4)), which are provided for and under entrustment from a Financial Instruments Business Operator (limited to a person that engages in the Type I Financial Instruments Business provided for in Article 28, paragraph (1) or Investment Management Business provided for in Article 28, paragraph (4)) or a registered financial institution (meaning a bank, Cooperative Financial Institution, or other financial institution specified by Cabinet Order, which is registered as under Article 33-2; the same applies hereinafter):
(i) intermediation for the purchase and sale of Securities (excluding intermediation set forth in paragraph (8), item (x));
(ii) the intermediation set forth in paragraph (8), item (iii);
(iii) the act set forth in paragraph (8), item (ix); or
(iv) the intermediation set forth in paragraph (8), item (xiii).
(12) The term "Financial Instruments Intermediary Service Provider" as used in this Act means a person registered by the Prime Minister pursuant to Article 66.
(13) The term "Authorized Financial Instruments Firms Association" as used in this Act means a person incorporated based on the provisions of Chapter IV, Section 1, Subsection 1.
(14) The term "Financial Instruments Market" as used in this Act means a market on which the purchase and sale of Securities or Market Transactions of Derivatives are conducted. (excluding a market in which only Commodity-Related Market Transactions of Derivatives are conducted)
(15) The term "Financial Instruments Incorporated Association" as used in this Act means a membership association incorporated based on the provisions of Chapter V, Section 2, Subsection 1 for the purpose of operating a Financial Instruments Market.
(16) The term "Financial Instruments Exchange" as used in this Act means a Financial Instruments Incorporated Association or stock company which operates a Financial Instruments Market after being licensed by the Prime Minister pursuant to Article 80, paragraph (1).
(17) The term "Financial Instruments Exchange Market" as used in this Act means a Financial Instruments Market operated by a Financial Instruments Exchange.
(18) The term "Financial Instruments Exchange Holding Company" as used in this Act means a stock company whose Subsidiary Companies (meaning a Subsidiary Company as set forth in Article 87-3, paragraph (3)) include a stock company that operates a Financial Instruments Exchange Market (hereinafter referred to as a "Stock Company-Operated Financial Instruments Exchange"), which is incorporated after obtaining the authorization of the Prime Minister pursuant Article 106-10, paragraph (1) or which has obtained the authorization of the Prime Minister pursuant to that paragraph or the proviso to paragraph (3) of that Article.
(19) The term "Trading Participant" as used in this Act means a person that is allowed to participate in the purchase and sale of Securities or Market Transactions of Derivatives on a Financial Instruments Exchange Market, based on a trading license under Article 112, paragraph (1) paragraph (2), or Article 113, paragraph (1) or paragraph (2).
(20) The term "Derivatives Transactions" as used in this Act means Market Transaction of Derivatives, Over-the-Counter Transactions of Derivatives or Foreign Market Derivatives Transaction.
(21) The term "Market Transactions of Derivatives" as used in this Act means the following transactions as conducted on a Financial Instruments Market in compliance with the standards and means prescribed by the person that operates the Financial Instruments Market:
(i) a transaction comprising a purchase and sale in which the parties promise to deliver and take delivery of a Financial Instrument and its value at a fixed time in the future, which the parties may settle by delivering and taking delivery of the difference in values if they sell or buy back the underlying Financial Instrument;
(ii) a transaction comprising the parties' promises to pay and receive an amount of money calculated based on the difference between the numerical value of a Financial Indicator upon which the parties agree in advance (hereinafter referred to as the "Agreed Figure") and the actual numerical value of the Financial Indicator at a fixed time in the future (hereinafter referred to as the "Actual Figure");
(iii) a transaction comprising the first party's promise to grant the second party the option of effecting one of the following transactions between them by a unilateral manifestation of the second party's intention alone, and the second party's promise to pay the value of that option:
(a) the purchase and sale of Financial Instruments (excluding a transaction provided for in item (i)); or
(b) a transaction provided for in one of the preceding two items or in the following item to item (vi) inclusive (including any transaction designated by the Financial Instruments Exchange that is equivalent to a transaction specified in the preceding item or item (iv)-2).
(iv) a transaction comprising the parties' mutual promise that, for the amount of money they have set as the principal, the first party will pay money to the second based on the rate of change in the interest rate, etc. (meaning the interest rate or any other rate specified by Cabinet Office Ordinance as being equivalent thereto; the same applies hereinafter) of an agreed-upon Financial Instrument (excluding those set forth in Article 2, paragraph (24), item (iii) and item (iii)-2) or based on the rate of change in an agreed-upon Financial Indicator (excluding interest rates, etc. of Financial Instruments (excluding those set forth in Article 2, paragraph (24), item (iii) and item (iii)-2) and figures calculated based on them; hereinafter the same applies in this item and item (v) of the following paragraph) during the period they have agreed to, and the second party will pay money to the first based on the rate of change in the interest rate, etc. of an agreed-upon Financial Instrument (excluding those set forth in these items) or based on the rate of change in an agreed-upon Financial Indicator during the period they have agreed to (including transactions in which the parties promise that, in addition to paying such amounts, they will also pay or deliver and receive money or Financial Instruments equivalent to the amount they have set as the principal);
(iv)-2 transactions wherein the parties mutually promise that, for the Financial Instruments (limited to those listed in paragraph (24), item (iii)-2; hereinafter the same applies in this item) of the quantity the parties have agreed to, one of the parties will pay the amount of money calculated based on the rate of change in the agreed period of a Financial Indicator pertaining to said Financial Instruments agreed with the other party, and the other party will pay the amount of money calculated based on the rate of change in the agreed period of the Financial Indicator agreed with the former party;
(v) a transaction comprising the first party's promise to pay money to the second, and the second party's promise to pay money to the first if one of the following causes that the parties have stipulated in advance occurs (including transactions comprising the first party's promise to transfer a Financial Instrument, the rights connected to a Financial Instrument, or a monetary claim (other than a claim that constitutes a Financial Instrument or the rights connected to a Financial Instrument), but excluding transactions set forth in item (ii) to the preceding item):
(a) a cause involving the credit status of a corporation or other similar cause as specified by Cabinet Order; or
(b) a cause on whose occurrence it is impossible or extremely difficult for either party to exert an influence, and which is specified by Cabinet Order as something that may have material impact on the business activities of the parties or other business persons or firms (excluding causes specified in sub-item (a)).
(vi) transactions similar to a transaction set forth in the preceding items and specified by Cabinet Order.
(22) The term "Over-the-Counter Transactions of Derivatives" as used in this Act means the following transactions as conducted neither on a Financial Instruments Market nor on a foreign Financial Instruments Market (except those that are specified by Cabinet Order as transactions which, in consideration of their content and other related factors, are found not to compromise the public interest or the protection of investors).
(i) a transaction comprising a purchase and sale in which the parties to the purchase and sale promise to deliver and take delivery of a Financial Instrument (other than one set forth in paragraph (24), item (iii)-2 and item (v); the same applies in item (iii) and item (vi)) and its value at a fixed time in the future, and which the parties may settle by delivering and taking delivery of the difference in values if they sell back or buy back the underlying Financial Instrument or if they take some other action that is specified by Cabinet Order;
(ii) a transaction comprising the parties' promises to pay and receive an amount of money calculated based on the difference between the Agreed Figure(excluding a figure of a Financial Indicator pertaining to the Financial Instruments listed in paragraph (24), item (iii)-2 or item (v)) and the Actual Figure (excluding a figure of a Financial Indicator pertaining to the Financial Instruments listed in those items) or any transaction similar thereto; and
(iii) a transaction comprising the first party's promise to grant the second party the option of effecting one of the following transactions between them by a unilateral manifestation of the second party's intention alone, and the second party's promise to pay the value of that option, or any transaction similar thereto:
(a) the purchase and sale of Financial Instruments (excluding the transactions specified in item (i)); or
(b) a transaction provided for in the preceding two items or items (v) to (vii) inclusive;
(iv) a transaction comprising, on one side, the first party's promise to grant the second party the option of effecting a transaction by a unilateral manifestation of the second party's intention alone, in which the parties pay and receive the amount of money calculated based on the difference between the numerical value that they have agreed in advance to use as the Agreed Figure for the relevant Financial Indicator if the second party manifests the intention to effect the transaction, and the Actual Figure of the Financial Indicator(excluding a Financial Indicator pertaining to the Financial Instruments listed in paragraph (24), item (iii)-2 or item (v)) at the time the second party manifests that intention, and, on the other side, the second party's promise to pay the value of that option, or any transaction similar thereto;
(v) a transaction comprising the parties' mutual promise that, for the amount they have set as the principal, the first party will pay money to the second based on the interest rate, etc. of an agreed-upon Financial Instrument (excluding one as set forth in Article 2, paragraph (24), item (iii) , item (iii)-2 and item (v)) or based on the rate of change in an agreed-upon Financial Indicator during the period they have agreed to, and the second party will pay money to the first based on the interest rate, etc. of an agreed-upon Financial Instrument (excluding those set forth in these items) or based on the rate of change in an agreed-upon Financial Indicator during the period they have agreed to (including transactions in which the parties promise that, in addition paying such amounts, they will also pay or deliver and receive money or Financial Instruments (excluding those listed in item (iii)-2 and item (v) of that paragraph) equivalent to the amount they have set as the principal), or any transaction similar thereto;
(vi) a transaction comprising the first party's promise to pay money to the second, and the second party's promise to pay money to the first if one of the following causes that the parties have stipulated in advance occurs (including transactions comprising the first party's promise to transfer a Financial Instrument, the rights connected to a Financial Instrument, or a monetary claim (other than a claim that constitutes a Financial Instrument or the rights connected to a Financial Instrument), but excluding the transactions set forth in item (ii) to the preceding item inclusive), or any transaction similar thereto:
(a) a cause involving the credit status of a corporation or other similar cause as specified by Cabinet Order; or
(b) a cause on whose occurrence it is impossible or extremely difficult for either party to exert an influence, and which is specified by Cabinet Order as something that may have a material impact on the business activities of the parties or other persons or firms (excluding causes specified in sub-item (a)).
(vii) a transaction other than what is set forth in the preceding items, but which has an economic nature similar thereto and is specified by Cabinet Order as a transaction regarding which it is found to be necessary to ensure the public interest or the protection of investors.
(23) The term "Foreign Market Derivatives Transaction " as used in this Act means a transaction that is conducted on a foreign Financial Instruments Market and is similar to a Market Transaction of Derivatives (excluding those pertaining to the Financial Instruments (limited to those listed in item (iii)-2 of the following paragraph) or Financial Indicators (limited to the prices of the Financial Instruments and the figures calculated based thereon)).
(24) The term "Financial Instruments" as used in this Act means the following:
(i) Securities;
(ii) rights such as claims based on a deposit contract, or securities or certificates indicating such rights, which are specified by Cabinet Order (excluding those specified in the preceding item);
(iii) currencies;
(iii)-2 Commodities (meaning commodities prescribed in Article 2, paragraph (1) of the Commodity Futures Trading Act (Act No. 239 of 1950) specified by Cabinet Order as those which are deemed unlikely to be adversely affected, in terms of proper price formation, by the Market Transactions of Derivatives pertaining to that Commodity and are deemed conducive to the national economy if the Market Transactions of Derivatives pertaining to that Commodity are conducted in a Financial Instruments Exchange Market, by taking into consideration the existence or non-existence of measures for the stabilization of price of that Commodity in accordance with the provisions of laws and regulations and other conditions of price formation and supply and demand of that Commodity; the same applies hereinafter);
(iv) assets other than what is set forth in each of the preceding items, of which there are many of the same kind, which have substantial price volatility, and which are specified by Cabinet Order as assets in connection with which it is found necessary to secure the protection of investors with regard to Derivatives Transactions (or other similar transactions) thereof (excluding commodities defined in Article 2, paragraph (1) of the Commodity Futures Act); and
(v) standardized instruments used by a Financial Instruments Exchange for the purpose of facilitating Market Transactions of Derivatives by standardizing interest rates, the maturity period, or other conditions of Financial Instruments set forth in item (i) or item (ii) or the preceding item and specified by Cabinet Office Ordinance.
(25) The term "Financial Indicator" as used in this Act means the following:
(i) the price of a Financial Instrument or the interest rate, etc. of a Financial Instrument (excluding those specified in item (iii) and item (iii)-2 of the preceding paragraph);
(ii) the numerical values associated with the results of meteorological observations published by the Meteorological Agency and others;
(iii) among indicators on whose fluctuation it is impossible or extremely difficult for a person to exert an influence and which may have material impact on the business activities of business firms (excluding indicators provided for in the preceding item) and statistical values associated with social or economic conditions, the indicators and values specified by Cabinet Order as those in connection with which it is found to be necessary to ensure protection for investors with regard to Derivatives Transactions (or other similar transactions) related thereto (excluding commodity indices provided for in Article 2, paragraph (2) of the Commodity Futures Act which are calculated based on the prices of commodities defined in paragraph (1) of that Article other than Commodities); and
(iv) numerical values calculated based on anything provided for in the preceding three items.
(26) The term "Foreign Financial Instruments Exchange" as used in this Act means a person that has obtained the authorization of the Prime Minister pursuant to Article 155, paragraph (1).
(27) The term "Brokerage for Clearing of Securities, etc." as used in this Act means a subject transaction (meaning a "subject transaction" as defined in the following paragraph; hereinafter the same applies in this paragraph) that is effected by a Financial Instruments Business Operator or registered financial institution under entrustment from a customer and for the account of the customer in accordance with the business rules of the Financial Instruments Clearing Organization or Foreign Financial Instruments Clearing Organization, which is effected on the condition that the obligation that arises from the subject transaction will be assumed by the Financial Instruments Clearing Organization (if such Financial Instruments Clearing Organization performs collaborative Financial Instruments Obligation Assumption Services prescribed in Article 156-20-16, paragraph (1), this includes the collaborating Clearing Organization, etc. set forth in said paragraph) or the Foreign Financial Instruments Clearing Organization, and which satisfies either of the following requirements:
(i) the subject transaction is effected by the customer on behalf of the Financial Instruments Business Operator or registered financial institution; or
(ii) the customer specifies the other party to the subject transaction and other particulars specified by Cabinet Office Ordinance in advance, at the time of the entrustment.
(28) The term "Financial Instruments Obligation Assumption Services" as used in this Act means taking over, novating, or in any other way bearing, on a regular basis, the obligations of a Financial Instruments Business Operator, registered financial institution, or Securities Finance Company (hereinafter referred to as a "Business Counterparty to Financial Instruments Obligation Assumption Services" in this paragraph) which arise from subject transactions (meaning the purchase and sale of Securities, Derivatives Transactions (except those that are specified by Cabinet Order as transactions which, in consideration of the status of the transactions, the impact exerted on Japan's capital market, and other circumstances, are found not to compromise the public interest or the protection of investors), or transactions specified by Cabinet Order as incidental or related thereto) effected by, a Business Counterparty to Financial Instruments Obligation Assumption Services.
(29) The term "Financial Instruments Clearing Organization" as used in this Act means a person that engages in Financial Instruments Obligation Assumption Services after being licensed by the Prime Minister or obtaining the approval of the Prime Minister pursuant to Article 156-2 or Article 156-19, paragraph (1), and the term "Foreign Financial Instruments Clearing Organization" as used in this Act means a person that engages in Financial Instruments Obligation Assumption Service after being licensed by the Prime Minister pursuant to Article 156-20-2.
(30) The term "Securities Finance Company" as used in this Act means a person that has been licensed by the Prime Minister pursuant to Article 156-24.
(31) The term "Professional Investor" as used in this Act means the following:
(i) Qualified Institutional Investors;
(ii) the State;
(iii) the Bank of Japan; and
(iv) Investor Protection Funds prescribed in Article 79-21 and other corporations specified by Cabinet Office Ordinance beyond those set forth in the preceding three items.
(32) The term "Specified Financial Instruments Exchange Market" as used in this Act means a Financial Instruments Exchange Market on which, pursuant to the provisions of Article 117-2, paragraph (1), it is prohibited to make a Purchase for a General Investor as defined in that paragraph.
(33) The term "Specified Listed Securities" as used in this Act means Securities listed only on a Specified Financial Instruments Exchange Market.
(34) The term "Credit Rating" as used in this Act means a grade which indicates, through symbols or figures (including anything specified by Cabinet Office Ordinance as being similar thereto), the results of an assessment of the credit status of a Financial Instrument or a corporation (including anything specified by Cabinet Office Ordinance as being similar thereto) (such assessment is hereinafter referred to as "Creditworthiness" in this paragraph) (such grade excludes grades specified by Cabinet Office Ordinance as being determined mainly in consideration of any particular other than Creditworthiness).
(35) The term "Credit Rating Services" as used in this Act means engagement in the act of determining Credit Ratings and providing them or making them available for inspection (excluding acts specified by Cabinet Office Ordinance as those that are found to have little likelihood of resulting in insufficient investor protection, in light of the scope of the other party to the act and any other circumstances) on a regular basis.
(36) The term "Credit Rating Agency" as used in this Act means a person registered by the Prime Minister pursuant to Article 66-27.
(37) The term "Financial Instruments Exchange Engaged in the Operation of a Commodity Market" as used in this Act means a Stock Company-Operated Financial Instruments Exchange that operates the necessary market for effecting Commodity Futures Transactions (meaning Futures Transactions prescribed in Article 2, paragraph (3) of the Commodity Futures Act; the same applies hereinafter), with the authorization referred to in the proviso to Article 87-2, paragraph (1).
(38) The term "Commodity Exchange" as used in this Act means an Incorporated Association-Operated Commodity Exchange Operated as an (meaning an Incorporated Association–Operated Commodity Exchange as prescribed in Article 2, paragraph (5) of the Commodity Futures Act) or a Stock Company-Operated Commodity Exchange (meaning a Stock Company-Operated Commodity Exchange as prescribed in paragraph (6) of that Article and limited to those specified by Cabinet Order as being subject to restrictions that are found to be of the same level as restrictions on a Stock Company-Operated Financial Instruments Exchange).
(39) The term "Commodity Exchange Holding Company" as used in this Act means a Commodity Exchange Holding Company as defined in Article 2, paragraph (11) of the Commodity Futures Act (limited to those specified by Cabinet Order as being subject to restrictions that are found to be of the same level as restrictions on a Financial Instruments Exchange Holding Company).
(40) The term "Specified Financial Indicator" as used in this Act means a Financial Indicator specified by the Prime Minister as that which, in light of the mode of the Derivatives Transactions or transactions of Securities pertaining to said Financial Indicator, a decline in its credibility could have a material impact on Japan's capital market.
Chapter II Disclosure of Corporate Affairs
(Reorganization and Other Terms Used in This Chapter)
Article 2-2 (1) The term "Reorganization" as used in this Chapter means merger, company split, share exchange, or other act involving the organization of a company which is specified by Cabinet Order.
(2) The term "Procedures Related to the Issuance of Securities During a Reorganization" as used in this Chapter means the Keeping of Documents, etc. (meaning the keeping of the documents or electronic or magnetic records under Article 782, paragraph (1) of the Companies Act (Act No. 86 of 2005) or the keeping of the documents or electronic or magnetic records under Article 803, paragraph (1) of that Act; the same applies in the following paragraph) connected with a Reorganization in which new Securities are issued (including cases specified by Cabinet Office Ordinance as being similar thereto (such cases are referred to as "Procedures for Cases Similar to the Issuance of Securities During a Reorganization" in the following paragraph)), and other acts specified by Cabinet Order.
(3) The term "Procedures Related to the Delivery of Securities During a Reorganization" as used in this Chapter means the Keeping of Documents, etc. connected to a Reorganization in which existing Securities are delivered (excluding cases that fall under the category of Procedures for Cases Similar to the Issuance of Securities During a Reorganization), and other acts specified by Cabinet Order.
(4) The term "Specified Procedures Related to the Issuance of Securities During a Reorganization" as used in this Chapter means, among Procedures Related to the Issuance of Securities During a Reorganization, those that fall under cases specified in item (i) or (ii) below if the Procedures Related to the Issuance of Securities During a Reorganization involve The Paragraph (1) Securities, and those that fall under cases specified in item (iii) if the Procedures Related to the Issuance of Securities During a Reorganization involve The Paragraph (2) Securities:
(i) cases specified by Cabinet Order as those in which a large number of persons are holders of share certificates (including share option certificates and other Securities specified by Cabinet Order) whose issuer is a company that, due to a Reorganization, will become a Company Disappearing in an Absorption-Type Merger (meaning a Company Disappearing in an Absorption-Type Merger as defined in Article 749, paragraph (1), item (i) of the Companies Act), or a Wholly Owned Subsidiary Company in a Share Exchange (meaning the Wholly Owned Subsidiary Company in a Share Exchange as defined in Article 768, paragraph (1), item (i) of that Act), or whose issuer is any other company specified by Cabinet Order (referred to as the "Reorganizing Company" in Article 4, paragraph (1), item (ii), sub-item (a)) (such holders are hereinafter referred to as the "Reorganizing Company's Shareholders, etc.")(such cases exclude those in which the Reorganizing Company's Shareholders, etc. consist exclusively of Qualified Institutional Investors);
(ii) cases other than those provided for in the preceding item, which do not fall under any of the following:
(a) cases in which the Reorganizing Company's Shareholders, etc. consist exclusively of Qualified Institutional Investors, and which are specified by Cabinet Order as those in which there is little likelihood of the Securities that are subject to the Procedures Related to the Issuance of Securities During a Reorganization being transferred from a person that acquires them to any person other than a Qualified Institutional Investor; or
(b) cases other than those specified in the preceding item (i) or in sub-item (a) (excluding cases satisfying the requirements that are specified by Cabinet Order in consideration of the status, etc. of issuance and delivery of Securities of the same class as the Securities subject to the Procedures Related to the Issuance of Securities During the Reorganization), which are specified by Cabinet Order as those in which there is little likelihood of the Securities that are subject to said Procedures Related to the Issuance of Securities During the Reorganization being held by a large number of persons.
(iii) cases specified by Cabinet Order as those in which the Reorganizing Company's Shareholders, etc. constitute a considerably large number of persons.
(5) The term "Specified Procedures Related to the Delivery of Securities During a Reorganization" as used in this Chapter means, among the Procedures Related to the Delivery of Securities During a Reorganization, those that fall under cases specified in item (i) or item (ii) if the Procedures Related to the Delivery of Securities During a Reorganization involve The Paragraph (1) Securities, and those that fall under cases specified in item (iii) if the Procedures Related to the Delivery of Securities During a Reorganization involve The Paragraph (2) Securities:
(i) cases specified by Cabinet Order as those in which the Reorganizing Company's Shareholders, etc. constitute a large number of persons (excluding cases in which the Reorganizing Company's Shareholders, etc. consist exclusively of Qualified Institutional Investors); and
(ii) cases other than those provided for in the preceding item, which do not fall under any of the following:
(a) cases in which the Reorganizing Company's Shareholders, etc. consist exclusively of Qualified Institutional Investors, and which are specified by Cabinet Order as those in which there is little likelihood of the Securities that are subject to the Procedures Related to the Delivery of Securities During a Reorganization being transferred from a person that acquires them to any person other than a Qualified Institutional Investor; and
(b) cases other than those specified in the preceding item or in sub-item (a) (excluding cases satisfying the requirements that are specified by Cabinet Order in consideration of the status, etc. of issuance and delivery of Securities of the same class as the Securities subject to the Procedures Related to the Delivery of Securities During a Reorganization), which are specified by Cabinet Order as those in which there is little likelihood of the Securities that are subject to said Procedures Related to the Delivery of Securities During a Reorganization being held by a large number of persons; and
(iii) cases specified by Cabinet Order as those in which the Reorganizing Company's Shareholders, etc. constitute a considerably large number of persons.
(Exempted Securities)
Article 3 The provisions of this Chapter do not apply to the following Securities:
(i) Securities set forth in Article 2, paragraph (1), items (i) and (ii);
(ii) Securities set forth in Article 2, paragraph (1), items (iii), (vi), and (xii) (excluding Securities that are specified by Cabinet Order as Securities with regard to which the public interest or the protection of investors makes it necessary and appropriate for corporate affairs to be disclosed); and
(iii) rights set forth in the items of Article 2, paragraph (2) which are deemed to be Securities pursuant to the provisions of Article 2, paragraph (2) (excluding the following rights (hereinafter referred to as "Rights in a Securities Investment Business, etc." in Article 24, paragraph (1))):
(a) among the rights set forth in Article 2, paragraph (2), item (v), those specified by Cabinet Order as a right in Invested Business (meaning Invested Business as defined in Article 2, paragraph (2), item (v)) that is mainly conducted through investment in Securities;
(b) among the rights set forth in Article 2, paragraph (2), items (i) to (iv) inclusive, (vi), or (vii), those specified by Cabinet Order as being similar to the rights set forth in sub-item (a) above; and
(c) other rights specified by Cabinet Order.
(iv) corporate bond certificates for which the government guarantees the redemption of the principal or the payment of interest; and
(v) Securities specified by Cabinet Order other than those set forth in the preceding items.
(Notification of Public Offering or Secondary Distribution)
Article 4 (1) It is not permitted for a person to conduct a Public Offering of Securities (including Specified Procedures Related to the Issuance of Securities During a Reorganization; the same applies hereinafter in this Chapter and the following Chapter, except in Article 13 and Article 15, paragraphs (2) to (6) inclusive) or a Secondary Distribution of Securities (excluding those falling under the category of General Solicitation Involving for Securities Acquired by a Qualified Institutional Investor as defined in the following paragraph or of General Solicitation Involving Securities Acquired by a Professional Investor as defined in paragraph (3), but including Specified Procedures Related to the Delivery of Securities During a Reorganization; hereinafter the same applies in this paragraph) unless the Issuer has filed a notification of the Public Offering or Secondary Distribution of Securities with the Prime Minister; provided, however, that this does not apply to a Public Offering or Secondary Distribution of Securities that falls under one of the following items:
(i) a Public Offering or Secondary Distribution of Securities in a case specified by Cabinet Order as one in which the other parties thereto have already obtained or can easily obtain information about the particulars set forth in the items of paragraph (1) of the following Article for the relevant Securities;
(ii) a Public Offering or Secondary Distribution of Securities for which the pertinent Procedures Related to the Issuance of Securities During a Reorganization or Procedures Related to the Delivery of Securities During a Reorganization fall under either of the following cases (excluding a Public Offering or Secondary Distribution as specified in the preceding item)
(a) cases not falling under a case in which disclosure has been made with regard to share certificates (including share option certificates and other Securities specified by Cabinet Order) whose issuer is the Reorganization Company; or
(b) a case in which disclosure has been made with regard to the Securities that will be newly issued in connection with the Procedures Related to the Issuance of Securities During a Reorganization, or a case in which disclosure has been made with regard to previously issued Securities subject to the Procedures Related to the Delivery of Securities During a Reorganization.
(iii) a Secondary Distribution of Securities in a case in which disclosure has been made with regard to the Securities (excluding a Secondary Distribution provided for in the preceding two items);
(iv) a Secondary Distribution of Securities that have already been issued in a foreign state or of Securities specified by Cabinet Order as being equivalent thereto (limited to those conducted by a Financial Instruments Business Operator, etc.), which satisfies the requirement that information on the trading price of the Securities in Japan can be easily obtained and any other requirements specified by Cabinet Order (excluding a Secondary Distribution provided for in the preceding three items); or
(v) a Public Offering or Secondary Distribution of Securities with a total issue value or total distribution value of less than 100 million yen, which is specified by Cabinet Office Ordinance (excluding those specified in the preceding items).
(2) It is not permitted for a person to issue a solicitation with a view to delivering existing securities (meaning an Offer to Sell, etc. or Procedures Related to the Delivery of Securities During a Reorganization; the same applies hereinafter) that involves Securities that have been involved in a solicitation with a view to issuing new securities (meaning the Solicitation of Offers to Acquire or the Procedures Related to the Issuance of Securities During a Reorganization; the same applies hereinafter) or a solicitation with a view to delivering existing securities falling under any of the following cases (in the case set forth in item (ii), limited to the Securities acquired by Qualified Institutional Investors that have been excluded from the large number of persons pursuant to Article 2, paragraph (3), item (i), and in the case set forth in item (iv), limited to the Securities acquired by Qualified Institutional Investors that have been excluded from the large number of persons pursuant to paragraph (4), item (i) of that Article), and that involves a Qualified Institutional Investor soliciting persons other than Qualified Institutional Investors (such a solicitation is hereinafter referred to as a "General Solicitation Involving Securities Acquired by a Qualified Institutional Investor"), unless the Issuer of the Securities has filed a notification of the relevant General Solicitation Involving for Securities Acquired by the a Qualified Institutional Investor with the Prime Minister; provided, however, that this does not apply to a case in which disclosure has been made with regard to the Securities, or to a case in which the General Solicitation Involving for Securities Acquired by the Qualified Institutional Investor will be issued for a compelling reason specified by Cabinet Office Ordinance, or otherwise satisfies the requirements specified by Cabinet Office Ordinance:
(i) the case set forth in Article 2, paragraph (3), item (ii), sub-item (a);
(ii) the case set forth in Article 2, paragraph (3), item (ii), sub-item (c) (but only if it comes to no longer fall under the case set forth in item (i) of that paragraph due to the Qualified Institutional Investors being excluded from the large number of persons pursuant to that item);
(iii) the case set forth in Article 2, paragraph (4), item (ii), sub-item (a);
(iv) the case set forth in Article 2, paragraph (4), item (ii), sub-item (c) (but only if it comes to no longer fall under the case set forth in item (i) of that paragraph due to the Qualified Institutional Investors being excluded from the large number of persons pursuant to that item);
(v) the case set forth in Article 2-2, paragraph (4), item (ii), sub-item (a); and
(vi) the case set forth in Article 2-2, paragraph (5), item (ii), sub-item (a).
(3) It is not permitted for a person to issue a solicitation with a view to delivering existing securities that involves Securities falling under any of the following items (excluding Securities falling under any of the items of Article 24, paragraph (1) or Securities specified by Cabinet Order as those which it is found are unlikely to be held by a large number of Professional Investors; hereinafter referred to as the "Securities for Professional Investors"), but that does not involve a Financial Instruments Business Operator, etc. being entrusted to solicit Professional Investors, etc. (with the exception of a solicitation issued to the State, the Bank of Japan, or Qualified Institutional Investors, and also with the exception of solicitation specified by Cabinet Order; hereinafter referred to as a "General Solicitation Involving Securities Acquired by a Professional Investor"), unless the Issuer of Securities has filed a notification of the relevant General Solicitation Involving Securities Acquired by a Professional Investor with the Prime Minister; provided, however, that this does not apply in a case in which disclosure has been made with regard to the Securities for Professional Investors and in any other case that is specified by Cabinet Office Ordinance as one in which the non-filing of a notification for a General Solicitation Involving Securities Acquired by a Professional Investor does not damage the public interest or result in insufficient investor protection:
(i) Securities for which the Solicitation of Offers to Acquire fell under the case specified in Article 2, paragraph (3), item (ii), sub-item (b) (hereinafter referred to as a "Exclusive Solicitation of Offers to Acquire Targeting Professional Investors");
(ii) Securities for which the Offer to Sell, etc. was an exclusive Offer to Sell, etc. to Professional Investors;
(iii) Securities issued by an Issuer of the Securities provided for in either of the preceding two items, which are specified by Cabinet Office Ordinance as being the same class of Securities as those provided for in either of the preceding two items; or
(iv) Specified Listed Securities and other Securities specified by Cabinet Order as having equivalent distribution statuses thereto.
(4) If a Public Offering or Secondary Distribution of Securities (including a General Solicitation Involving Securities Acquired by a Qualified Institutional Investor (excluding those falling under the category of a Secondary Distribution of Securities), a General Solicitation Involving Securities Acquired by a Professional Investor (excluding those falling under the category of a Secondary Distribution of Securities), and Procedures Related to the Delivery of Securities During a Reorganization; hereinafter the same applies in this Chapter and the following Chapter, except in the following paragraph and paragraph (6) of this Article, Article 13, and Article 15, paragraphs (2) to (6) inclusive) will be made for the shareholders (including preferred equity investors provided for in the Act on Preferred Equity Investment) that have been stated or recorded in the shareholder register (including the preferred equity investor register provided for in the Act on Preferred Equity Investment) as of a certain date, the notification for the Public Offering or Secondary Distribution under the preceding three paragraphs must be made 25 days prior; provided, however, that this does not apply in the cases that are specified by Cabinet Office Ordinance in consideration of the issue price or distribution price of the Securities or other factors.
(5) Materials that are used for a Public Offering or Secondary Distribution of Securities specified in paragraph (1), item (v), for a General Solicitation for Involving Securities Acquired by a Qualified Institutional Investor which is excluded from the application of the main clause of paragraph (2) pursuant to the proviso to that paragraph, or for a General Solicitation Involving Securities Acquired by a Professional Investor which is excluded from the application of the main clause of paragraph (3) pursuant to the proviso to that paragraph, which falls under the category of a Secondary Distribution of Securities, or which does not fall under the category of a Secondary Distribution of Securities and does not fall under a case in which disclosure has been made (hereinafter referred to as a "Specified Public Offering" in this paragraph and the following paragraph), and materials that are used in causing the Securities in a Specified Public Offering to be acquired or in selling such Securities, must indicate that the main clause of paragraph (1), the main clause of paragraph (2) or the main clause of paragraph (3) does not apply to said Specified Public Offering.
(6) Whenever a Specified Public Offering or Secondary Distribution of Securities set forth in paragraph (1), item (iii) (hereinafter collectively referred to as a "Specified Public Offering, etc." in this paragraph) is conducted, the Issuer of the Securities in the Specified Public Offering, etc. shall submit a written notice of the Specified Public Offering, etc. to the Prime Minister pursuant to the provisions of Cabinet Office Ordinance, before the Specified Public Offering, etc. begins; provided, however, that this does not apply to a Secondary Distribution of Securities as set forth in paragraph (4) whose total distribution value is less than 100 million yen in a case in which disclosure has been made, nor to a Secondary Distribution of Securities as set forth in paragraph (1), item (iii) conducted by a person other than the Issuer of said Securities or a person specified by Cabinet Office Ordinance, nor to a Public Offering or Secondary Distribution of Securities as set forth in item (v) of that paragraph whose total issue value or total distribution value is less than the amount specified by Cabinet Office Ordinance.
(7) As set forth in sub-items (a) and (b) of item (ii) and item (iii) of paragraph (1), paragraph (2), paragraph (3) and the preceding two paragraphs, a case in which disclosure has been made means one of the following cases:
(i) a notification under paragraph (1) is in effect for a Public Offering or Secondary Distribution which has already been conducted with regard to the relevant Securities (excluding one that falls under the category of a General Solicitation Involving Securities Acquired by a Qualified Institutional Investor or a General Solicitation Involving Securities Acquired by a Professional Investor); a notification under paragraph (2) is in effect for a General Solicitation Involving Securities Acquired by a Qualified Institutional Investor which has already been conducted with regard to said Securities; or a notification under paragraph (3) is in effect for a General Solicitation Involving Securities Acquired by a Professional Investor which has already been conducted with regard to said Securities (unless the proviso to Article 24, paragraph (1) is applicable (including as applied mutatis mutandis pursuant to Article 24, paragraph (5) and as these provisions apply mutatis mutandis pursuant to Article 27) to the Issuer of the Securities); or
(ii) cases specified by Cabinet Office Ordinance as being equivalent to the cases provided for in the preceding item.
(Submission of Securities Registration Statements)
Article 5 (1) If an Issuer seeking to file a notification for a Public Offering or Secondary Distribution of Securities under paragraphs (1) to (3) inclusive of the preceding Article (excluding a Public Offering or Secondary Distribution of Securities for regulated Securities (meaning Securities specified by Cabinet Order as those for which the information materially influencing investors' investment decisions is information on asset management or other similar business that the Issuer conducts; hereinafter the same applies in this paragraph, paragraph (5), paragraph (10) and paragraph (11)of this Article, Article 7, paragraph (4) and Article 24); hereinafter the same applies in this paragraph and the following paragraph) is a company (including a foreign company; the same applies hereinafter, except in Article 50-2, paragraph (9), Article 66-40, paragraph (5) and Article 156-3, paragraph (2), item (iii)) (including if the company will be incorporated by the issuance of said Securities (excluding regulated Securities; hereinafter the same applies in this paragraph to paragraph (4) inclusive)), it must submit a statement to the Prime Minister in which it states the following particulars, pursuant to the provisions of Cabinet Office Ordinance; provided, however, that, if it is necessary to conduct the Public Offering of Securities before deciding their issue price or in other cases specified by Cabinet Office Ordinance, the Issuer may submit the statement without giving the issue price or other particulars in item (i) that are specified by Cabinet Office Ordinance:
(i) the particulars of the Public Offering or Secondary Distribution; and
(ii) the trade name of the company, the financial condition of the corporate group (meaning the group consisting of the relevant company and persons (limited to companies and other entities specified by Cabinet Office Ordinance) satisfying the requirements that Cabinet Office Ordinance specifies, as other companies in which the relevant company holds majority voting rights or as persons that are otherwise closely related to the relevant company; the same applies hereinafter) to which the company belongs and the company's own financial condition and other material particulars about the company's business, and other particulars that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors.
(2) In its statement, a person not falling under any of the following items which seeks to submit a statement set forth in the preceding paragraph for a Public Offering or a Secondary Distribution of Securities to which the main clause of paragraph (1), the main clause of paragraph (2), or the main clause of paragraph (3) of the preceding Article applies, the total issue value or the total distribution value of which is less than 500 million yen and which is specified by Cabinet Office Ordinance for this purpose (such a Public Offering or Secondary Distribution of Securities is referred to as "Low Value Public Offering, etc." in Article 24, paragraph (2)), may state the particulars set forth in Article 24, paragraph (2), item (ii) which is specified by Cabinet Office Ordinance as being pertinent with regard to the relevant company, instead of stating the particulars set forth in that item:
(i) an Issuer of Securities that fall under any of the categories specified in Article 24, paragraph (1), item (i), (ii) or (iv);
(ii) a person that submits or is required to submit a statement under the preceding paragraph in which it states the particulars set forth in item (ii) of the preceding paragraph for a Public Offering or Secondary Distribution of Securities to which the main clause of paragraph (1), the main clause of paragraph (2), or the main clause of paragraph (3) of the preceding Article has been applied (excluding the persons specified in the preceding item); or
(iii) a person that has already submitted an Annual Securities Report (meaning a report as set forth in Article 24, paragraph (1); hereinafter the same applies in this Article and Article 7) in which it states the particulars set forth in the main clause of Article 24, paragraph (1), a Quarterly Securities Report as set forth in Article 24-4-7, paragraph (1) or (2) (hereinafter referred to as a "Quarterly Securities Report" in this Article) which it states the particulars set forth in Article 24-4-7, paragraph (1), or a Semiannual Securities Report (meaning a report as set forth in Article 24-5, paragraph (1); hereinafter the same applies in this Article, Article 7, paragraph (4) and Article 24, paragraph (2)) which it states the particulars set forth in Article 24-5, paragraph (1) (excluding a person provided for in the preceding two items).
(3) If a person that has continuously filed Annual Securities Reports as specified by Cabinet Office Ordinance during the period specified by Cabinet Office Ordinance seeks to file a notification under paragraphs (1) to (3) inclusive of the preceding Article, instead of stating the particulars set forth in paragraph (1), item (ii), such person, pursuant to the provisions of Cabinet Office Ordinance, may interfile a copy of its latest Annual Securities Report and the accompanying documents, a copy of any Quarterly Securities Report or Semiannual Securities Report submitted after the submission of the Annual Securities Report, and a copy of any amended report connected with the foregoing reports in the statement set forth in paragraph (1), and enter in that statement any facts specified by Cabinet Office Ordinance which come into play after the submission of the Annual Securities Report.
(4) If a person that satisfies all of the requirements set forth below seeks to file a notification under paragraphs (1) to (3) inclusive of the preceding Article, and the person enters in the statement set forth in paragraph (1), pursuant to the provisions of Cabinet Office Ordinance, that reference should be made to the latest Annual Securities Report and accompanying documents, the Quarterly Securities Report, Semiannual Securities Report, or Extraordinary Report (meaning a report as set forth in Article 24-5, paragraph (4)) submitted after the submission of the Annual Securities Report, or any amended report connected with them (hereinafter collectively referred to as "Reference Documents"), the person is deemed to have stated the particulars set forth in item (ii) of paragraph (1) in the statement:
(i) the person must have continuously filed Annual Securities Reports as specified by Cabinet Office Ordinance during the period specified by Cabinet Office Ordinance; and
(ii) the person must satisfy the criteria specified by Cabinet Office Ordinance as a person with regard to which information about the particulars set forth in paragraph (1), item (ii) is widely available to the public, with regard to the status of transactions on Financial Instruments Exchange Markets in issued Securities of which the person is the issuer.
(5) The provisions of paragraph (1) to the preceding paragraph inclusive apply mutatis mutandis if the Securities for which the notification set forth in paragraph (1) is filed are regulated Securities. In this case, in paragraph (1), the phrase "excluding a Public Offering or Secondary Distribution of Securities" is deemed to be replaced with "limited to a Public Offering or Secondary Distribution of Securities" and the phrase "said Securities (excluding regulated Securities; hereinafter the same applies in this paragraph to paragraph (4) inclusive)" is deemed to be replaced with "said Securities"; in item (ii) of that paragraph, the phrase "trade name of the company, the financial condition of the corporate group (meaning the group consisting of the relevant company and persons (limited to companies and other entities specified by Cabinet Office Ordinance) satisfying the requirements that Cabinet Office Ordinance specifies, as other companies in which the relevant company holds majority voting rights or as persons that are otherwise closely related to the relevant company; the same applies hereinafter) to which the company belongs and the company's own financial condition and other material particulars of the company's business" is deemed to be replaced with "financial condition of its asset management or other similar business conducted by the company and other material particulars of the company's assets"; in paragraph (2), the phrase "a Public Offering or Secondary Distribution of Securities" is deemed to be replaced with "a Public Offering or Secondary Distribution of regulated Securities"; in item (i) of that paragraph, the phrase "Securities falling under any of the categories" is deemed to be replaced with "regulated Securities falling under any of the categories of Securities"; in item (ii) of that paragraph, the phrase "Public Offering or Secondary Distribution of Securities" is deemed to be replaced with "Public Offering or Secondary Distribution of regulated Securities"; in item (iii) of that paragraph, the phrase "the main clause of Article 24, paragraph (1)" is deemed to be replaced with "the main clause of Article 24, paragraph (1) as applied mutatis mutandis pursuant to Article 24, paragraph (5)", the phrase "Article 24-4-7, paragraph (1) or (2)" is deemed to be replaced with "Article 24-4-7, paragraph (1) or (2) as applied mutatis mutandis pursuant to Article 24-4-7, paragraph (3)", the phrase "the particulars set forth in Article 24-4-7, paragraph (1)" is deemed to be replaced with "the particulars set forth in Article 24-4-7, paragraph (1) as applied mutatis mutandis pursuant to Article 24-4-7, paragraph (3)", and the phrase "the particulars set forth in Article 24-5, paragraph (1)" is deemed to be replaced with "the particulars set forth in Article 24-5, paragraph (1) as applied mutatis mutandis pursuant to Article 24-5, paragraph (3)"; and any other necessary technical replacement of terms is specified by Cabinet Order.
(6) In the cases specified by Cabinet Office Ordinance as cases where the public interest or protection of investors would not be impaired, a foreign company required to submit a statement under paragraph (1) (hereinafter referred to as "Statement-filing Foreign Company") may submit, instead of the statement set forth in that paragraph, the following documents pursuant to the provisions of a Cabinet Office Ordinance:
(i) A document containing the particulars set forth in paragraph (1), item (i); and
(ii) Reference Documents Disclosed in a Foreign State (meaning those having been made available for public inspection in that foreign state based on laws and regulations under that foreign state (including the rules provided for by the operator of a Foreign Financial Instruments Market or other person specified by Cabinet Office Ordinance); the same applies hereinafter in Articles 24, paragraph (8), Article 24-4-7, paragraph (6) and Article 24-5, paragraph (7)) or documents similar to the statement set forth in paragraph (1) which are prepared in English.
(7) When the documents set forth in item (ii) of the preceding paragraph are submitted, Japanese translations of the summary of the particulars specified by Cabinet Office Ordinance as those necessary and appropriate for the public interest or protection of investors among the particulars stated in said documents and documents stating the particulars specified by Cabinet Office Ordinance as those necessary and appropriate for the public interest or protection of investors among the particulars not stated in said documents, and other documents specified by Cabinet Office Ordinance (such documents are hereinafter collectively referred to as "Supplementary Documents" in the following paragraph and Article 13, paragraph (2), item (i)) must be attached to said documents as specified by Cabinet Office Ordinance.
(8) The provisions of this Act and orders given thereunder (hereinafter referred to as the "Financial Instruments and Exchange Act and Related Regulations" in this Chapter to Chapter II-IV inclusive) applies to cases where a Statement-filing Foreign Company submits the documents listed in the items of paragraph (6) (hereinafter referred to as "Foreign Company Statements" in this Chapter) and Supplementary Documents thereof under the provisions of the preceding two paragraphs, by deeming the Foreign Company Statements and Supplementary Documents thereof to be the statement set forth in paragraph (1) and deeming submission of the former to be submission of the latter.
(9) The Prime Minister must, when they find that a Statement-filing Foreign Company which submitted Foreign Company Statements does not satisfy the requirements for being allowed to submit Foreign Company Statements under the provision of paragraph (6), notify thereof to the Statement-filing Foreign Company. In this case, a hearing must be held irrespective of the categories of procedures for hearing statements of opinion under Article 13, paragraph (1) of the Administrative Procedure Act (1993 Act No.88).
(10) With regard to Public Offering or Secondary Distribution of Regulated Securities (limited to those specified by Cabinet Office Ordinance by taking into consideration the status of their Public Offering or Secondary Distribution; hereinafter the same applies in this Article and Article 7, paragraph (4)), if a Public Offering or Secondary Distribution of the Regulated Securities has already been being conducted continuously for the period specified by Cabinet Office Ordinance, a company required to submit a statement pursuant to paragraph (1) (hereinafter referred to as a "Company Submitting a Regulated Securities Registration Statement" in this Article and Article 7) may submit, instead of the statement set forth in that paragraph, a document containing the matters listed in item (i) of that paragraph (hereinafter referred to as a "Document Containing Matters related to Public Offering, etc.." in this Article and Article 7, paragraph (3)) pursuant to the provisions of Cabinet Office Ordinance; provided, however, that this shall be limited to the case where the Public Offering or Secondary Distribution has been being conducted until immediately preceding the submission of the Document Containing Matters related to Public Offering, etc.
(11) A Company Submitting a Regulated Securities Registration Statement which is to submit a Document Containing Matters related to Public Offering, etc.. pursuant to the preceding paragraph must submit the Document Containing Matters related to Public Offering, etc.. together with the Annual Securities Report and documents attached thereto in respect of the Specified Period (meaning a Specified Period as defined in Article 24, paragraph (1) as applied mutatis mutandis by replacing certain terms pursuant to paragraph (5) of that Article; hereinafter the same applies in this paragraph and Article 7, paragraph (4)) immediately preceding the Specific Period for the Regulated Securities that includes the day of the submission.
(12) The provisions of the Financial Instruments and Exchange Act and Related Regulations applies to cases where a Company Submitting a Regulated Securities Registration Statement submits a Document Containing Matters related to Public Offering, etc. and an Annual Securities Report and documents attached thereto under the provisions of the preceding two paragraphs, by deeming the Document Containing Matters related to Public Offering, etc. and the Annual Securities Report to be the statement set forth in paragraph (1) and deeming submission of the former to be submission of the latter.
(13) The articles of incorporation or other documents that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors must accompany the statement set forth in paragraph (1).
(Submission of Statements and Other Documents to a Financial Instruments Exchange, etc.)
Article 6 An Issuer of the Securities set forth in the following items shall submit a copy of the statement and other documents set forth in paragraph (1) and paragraph (10) of the preceding Article to the person specified in the relevant item without delay after filing the notification under Article 4, paragraphs (1) to (3) inclusive:
(i) Securities listed on a Financial Instruments Exchange: said Financial Instruments Exchange; and
(ii) Securities specified by Cabinet Order as having equivalent distribution statuses to the Securities referred to in the preceding item: the Authorized Financial Instruments Firms Association specified by Cabinet Order.
(Voluntary Submission of Amended Statements)
Article 7 (1) If, on or after the day on which a notification under Article 4, paragraphs (1) to (3) inclusive is filed and before the day on which that notification comes into effect, a material particular that is required to be stated in a statement or other document under Article 5, paragraph (1) or paragraph (13) changes or any other circumstance arises that is specified by Cabinet Office Ordinance as necessitating that the content of such documents be amended in the public interest or for the protection of investors, the person filing the notification (or, if it is after a company is incorporated through the issuance of the Securities for which the notification was filed, the company; the same applies hereinafter) must submit an amended statement to the Prime Minister. The same also applies in the absence of such a reason, if the person filing the notification finds there to be something in the statement or other document that necessitates an amendment.
(2) The provisions of Article 5, paragraphs (6) to (9) inclusive applies mutatis mutandis to cases where a Statement-filing Foreign Company submits an amendment of the Foreign Company Statements under the provision of the preceding paragraph.
(3) The provisions of the Financial Instruments and Exchange Act and Related Regulations applies to cases where a Company Submitting a Regulated Securities Registration Statement (limited to cases where it submits a Document Containing Matters related to Public Offering, etc. and an Annual Securities Report and documents attached thereto under the provisions of Article 5, paragraphs (10) and (11); the same applies in the following paragraph and paragraph (5)) submits an amendment report for the Annual Securities Report under paragraph (1) as applied mutatis mutandis by replacing certain terms pursuant to Article 24-2, paragraph (1), by deeming the amendment report to be the amendment report set forth in paragraph (1) for a document that has been deemed to be the statement set forth in Article 5, paragraph (1) pursuant to paragraph (12) of that Article, and deeming submission of the former to be submission of the latter.
(4) The provisions of the Financial Instruments and Exchange Act and Related Regulations applies to cases where a Company Submitting a Regulated Securities Registration Statement submits, with regard to Regulated Securities pertaining to a document that has been deemed to the statement set forth in Article 5, paragraph (1) pursuant to paragraph (12) of that Article (limited to those for which Public Offering or Secondary Distribution has already been being conducted continuously), a Semiannual Securities Report (or an Annual Securities Report, in cases where the Specific Period for the Regulated Securities does not exceed six months) (hereinafter referred to as a "Semiannual Securities Report, etc." in this paragraph and the following paragraph), by deeming the Semiannual Securities Report, etc. to be the amendment report set forth in paragraph (1) for the statement, and deeming submission of the former to be submission of the latter.
(5) The provisions of paragraph (3) applies mutatis mutandis to cases where a Company Submitting a Regulated Securities Registration Statement (limited to one that has submitted the Semiannual Securities Report, etc. set forth in the preceding paragraph) submits an amendment report for the Semiannual Securities Report, etc. under paragraph (1) as applied mutatis mutandis by replacing certain terms pursuant to Article 24-5, paragraph (5) (Article 24-2, paragraph (1) in cases where the Semiannual Securities Report, etc. is an Annual Securities Report).
(Effective Date of Notifications)
Article 8 (1) A notification under Article 4, paragraphs (1) to (3) inclusive comes into effect on the day on which 15 days have elapsed since the day on which the Prime Minister accepted the statement under Article 5, paragraph (1) (or, if the particulars referred to in the proviso to Article 5, paragraph (1) are not stated in the statement, the amended statement under paragraph (1) of the preceding Article which is connected with said particulars; the same applies in the following paragraph).
(2) With regard to the application of the preceding paragraph if an amended statement under the preceding Article is submitted within the period set forth in paragraph (1) of the preceding paragraph, the statement set forth in Article 5, paragraph (1) is deemed to be accepted by the Prime Minister on the day that the Prime Minister accepts the amended statement.
(3) If the Prime Minister finds that the statement or other documents under Article 5, paragraph (1) or paragraph (13) or paragraph (1) of the preceding Article are easily understandable to the public or finds that information about the particulars set forth in Article 5, paragraph (1), item (ii) with regard to the person that submitted the statement and other documents is already widely available to the public, the Prime Minister may designate a period for the person which is shorter than that referred to in paragraph (1), or may notify the person that the notification under Article 4, paragraphs (1) to (3) inclusive will become effective immediately or on the day after the day on which the Prime Minister accepts the statement referred to in paragraph (1). In such a case, a notification under Article 4, paragraphs (1) to (3) inclusive becomes effective on the day on which the shorter period has elapsed if a shorter period has been designated, or immediately or on the following day if the person has been so notified.
(4) The provisions of paragraph (2) apply mutatis mutandis if a shorter period is designated as under the preceding paragraph.
(Order to Submit an Amended Statement Due to a Formal Deficiency)
Article 9 (1) If the Prime Minister finds a formal deficiency in a statement or other document under Article 5, paragraph (1) or paragraph (13) or Article 7, paragraph (1) or finds such statement or other document to insufficiently state a material particular that is required to be stated, the Prime Minister may order the person that submitted it to submit an amended statement. 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.
(2) The provisions of Article 5, paragraphs (6) to (8) inclusive applies mutatis mutandis to cases where a Statement-filing Foreign Company submits an amendment of the Foreign Company Statements under the provision of the preceding paragraph.
(3) Notwithstanding the provisions of Article, if the disposition under the preceding paragraph(1) has been reached, the notification under Article 4, paragraphs (1) to (3) inclusive becomes effective on the day on which the period designated by the Prime Minister has elapsed.
(4) The provisions of paragraphs (2) to (4) inclusive of the preceding Article apply mutatis mutandis in the case referred to in the preceding paragraph.
(5) The disposition under paragraph (1) may not be reached on or after the day on which the notification under Article 4, paragraphs (1) to (3) inclusive becomes effective; provided, however, that this does not apply to any amended statement submitted pursuant to Article 7, paragraph (1) on or after that day.
(Order to Submit an Amended Statement and Order Suspending the Validity of a Notification Due to a False Statement, etc.)
Article 10 (1) If the Prime Minister discovers that a Securities Registration Statement contains a false statement about a material particular, omits a statement as to a material particular that is required to be stated, or omits a statement of material fact that is necessary to prevent it from being misleading, the Prime Minister, at any time, may order the person submitting the Securities Registration Statement to submit an amended statement, and if the Prime Minister finds it to be necessary, the Prime Minister may order the suspension of the validity of a notification under Article 4, paragraphs (1) to (3) inclusive. 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.
(2) The provisions of Article 5, paragraphs (6) to (8) inclusive applies mutatis mutandis to cases where a Statement-filing Foreign Company submits an amendment of the Foreign Company Statements under the provision of the preceding paragraph.
(3) The provisions of paragraphs (2) and (3) of the preceding Article apply mutatis mutandis if an order to submit an amended statement under the preceding paragraph is issued before the notification under Article 4, paragraphs (1) to (3) inclusive comes into effect.
(3) If an order for suspension under paragraph (1) is issued and an amended statement under that paragraph is submitted, and if the Prime Minister finds the amended statement to be appropriate, the Prime Minister is to cancel the order for suspension under that paragraph.
(Suspension of the Validity of Notifications Made Within One Year After the Submission of a Securities Registration Statement Containing a False Statement)
Article 11 (1) If a Securities Registration Statement contains a false statement about a material particular 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 issue an order against the person submitting the Securities Registration Statement with regard to said Securities Registration Statement or with regard to any other statement as set forth in Article 5, paragraph (1), Shelf Registration Statement as set forth in Article 23-3, paragraph (1), or Shelf Registration Supplements as set forth in Article 23-8, paragraph (1) which the person submitting said Securities Registration Statement submits within one year of the day on which the person submitted said Securities Registration Statement, ordering the suspension of the validity of the notification or of the Shelf Registration under the relevant Shelf Registration Statement or Shelf Registration Supplements, or may extend the period stipulated in Article 8, paragraph (1) (including as applied mutatis mutandis pursuant to Article 23-5, paragraph (1)), for the period that the Prime Minister considers appropriate in the public interest or for the protection of investors. 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.
(2) If a disposition under the preceding paragraph is reached and the Prime Minister finds that the content of an amended statement submitted pursuant to Article 7, paragraph (1) or paragraph (1) of the preceding Article in relation to the false statement referred to in the preceding paragraph is appropriate, and that allowing the acquisition or sale of Securities issued by the person that submitted the Securities Registration Statement through a Public Offering or Secondary Distribution will not compromise the public interest or the protection of investors, the Prime Minister may cancel the disposition under the preceding paragraph.
(Submission of a Copy of an Amended Statement to a Financial Instruments Exchange, etc.)
Article 12 The provisions of Article 6 apply mutatis mutandis when an amended statement is submitted pursuant to Article 7, paragraph (1), Article 9, paragraph (1) or Article 10, paragraph (1).
(Preparation of the Prospectus and Prohibition against the Use of a Prospectus Containing a False Statement)
Article 13 (1) The Issuer of Securities whose Public Offering or Secondary Distribution (including General Solicitation Involving Securities Acquired by a Qualified Institutional Investor (excluding anything falling under the category of a Secondary Distribution of Securities) and also including General Solicitation Involving Securities Acquired by a Professional Investor excluding anything falling under the category of a Secondary Distribution of Securities); hereinafter the same applies in this Article and paragraphs (2) to (4) inclusive and paragraph (6) of Article 15) is subject to the main clause of Article 4, paragraph (1), the main clause of Article 4, paragraph (2) or the main clause of Article 4, paragraph (3), shall prepare a Prospectus for such Public Offering or Secondary Distribution. The same applies to an Issuer of Securities whose Secondary Distribution (excluding one with a total distribution value of less than 100 million yen or one that falls under the categories specified by Cabinet Office Ordinance) falls under a Case In Which Disclosure Has Been Made (meaning a Case In Which Disclosure Has Been Made as referred to in Article 4, paragraph (7); hereinafter the same applies in this Chapter) (such Securities are hereinafter referred to as "Securities for Which Disclosure Has Already Been Made" in this Chapter). ; provided, however, that this shall not apply to cases where the Public Offering of said Securities is conducted by Public Offering of share option certificates (limited to those conducted by Allotment of Share Options without Contribution specified in Article 277 of the Companies Act to which the main clause of paragraph (1), the main clause of paragraph (2) or the main clause of paragraph (3) of Article 4 is applicable) which satisfies all of the following requirements:
(i) Said share option certificates are listed on a Financial Instruments Exchange, or after issuance thereof, are scheduled to be listed without delay; and
(ii) The fact that a notification under the main clause of paragraph (1), the main clause of paragraph (2) or the main clause of paragraph (3) of Article 4 had been made in relation to said share option certificates and any other particulars specified by Cabinet Office Ordinance are published in a daily newspaper that publishes particulars on current affairs after that notification was made without delay.
(2) For the category of cases set forth in one of the following items, the details of the particulars that are specified in that item must be stated in the Prospectus referred to in the preceding paragraph; provided, however, that if a statement under the main clause of Article 5, paragraph (1) has been submitted pursuant to the proviso to Article 5, paragraph (1), without the issue price or any other particular specified by Cabinet Office Ordinance being stated among those in item (i) of that paragraph (hereinafter referred to as the "Issue Price, etc." in this paragraph and Article 15, paragraph (5)), the Prospectus in the case set forth in item (i), below, is not required to state the Issue Price, etc.:
(i) if the Prospectus must be delivered pursuant to the main clause of Article 15, paragraph (2): for a category of Securities specified in the following sub-item (a) or (b), the particulars set forth in the relevant sub-item:
(a) Securities whose Public Offering or Secondary Distribution is subject to the main clause of Article 4, paragraph (1), the main clause of Article 4, paragraph (2), or the main clause of Article 4, paragraph (3): the following particulars:
1. among those set forth in the items of Article 5, paragraph (1), (in cases where Foreign Company Statements and Supplementary Documents thereof are submitted under the provisions of paragraphs (6) and (7) of that Article for said Public Offering or Secondary Distribution, matters that should be stated therein under said provisions; hereinafter the same applies in this paragraph), the particulars specified by Cabinet Office Ordinance as having a very material influence on investors' investment decisions; and
2. particulars specified by Cabinet Office Ordinance other than those set forth in the items of Article 5, paragraph (1).
(b) Securities for Which Disclosure Has Already Been Made: the following particulars:
1. the particulars set forth in sub-item (a)1., above; and
2. particulars specified by Cabinet Office Ordinance other than those set forth in the items of Article 5, paragraph (1).
(ii) if the Prospectus must be delivered pursuant to Article 15, paragraph (3): for a category of Securities specified in the following sub-item (a) or (b), the particulars specified in the relevant sub-item:
(a) Securities whose Public Offering or Secondary Distribution is subject to the main clause of Article 4, paragraph (1), the main clause of Article 4, paragraph (2), or the main clause of Article 4, paragraph (3): the following particulars:
1. among those set forth in the items of Article 5, paragraph (1), the particulars specified by Cabinet Office Ordinance as having a material influence on investors' investment decisions; and
2. particulars specified by Cabinet Office Ordinance other than those set forth in the items of Article 5, paragraph (1).
(b) Securities for Which Disclosure Has Already Been Made: the following particulars:
1. the particulars set forth in sub-item (a)1., above; and
2. particulars specified by Cabinet Office Ordinance other than those set forth in the items of Article 5, paragraph (1).
(iii) if the Prospectus must be delivered pursuant to the main clause of Article 15, paragraph (4): the particulars stated in the amended statement under Article 7, paragraph (1).
(3) If, in a Prospectus under item (i) or (ii) of the preceding paragraph that a person submitting a notification to which the provisions of Article 5, paragraph (4) apply (including as applied mutatis mutandis pursuant to paragraph (5) of that Article; the same applies hereinafter) is required to prepare or that a person satisfying all of the requirements specified in the items of Article 5, paragraph (4) is required to prepare in connection with Securities for Which Disclosure Has Already Been Made, the relevant person has stated that reference should be made to the Reference Documents, said person is deemed to have stated the particulars set forth in Article 5, paragraph (1), item (ii).
(4) It is prohibited for any person to use a Prospectus referred to in paragraph (1) that contains a false statement or omits a statement as to a detail that is required to be stated, for a Public Offering or Secondary Distribution of Securities that is subject to the main clause of Article 4, paragraph (1), the main clause of Article 4, paragraph (2), or the main clause of Article 4, paragraph (3), or for a Public Offering or Secondary Distribution of Securities for Which Disclosure Has Already Been Made.
(5) It is prohibited for any person to make a false or misleading representation in documents, drawings, sounds, or other materials (this includes anything that shows the contents of information that has been recorded in electronic or magnetic records (meaning records used in computer data processing which are created in electronic form, magnetic form, or any form that is otherwise impossible to perceive through the human senses alone; the same applies hereinafter), if such materials have been prepared as electronic or magnetic records; the same applies in Article 17) other than the Prospectus referred to in paragraph (1), which are used for the purpose of a Public Offering or Secondary Distribution of Securities that is subject to the main clause of Article 4, paragraph (1), the main clause of Article 4, paragraph (2), or the main clause of Article 4, paragraph (3) or for a Public Offering or Secondary Distribution Securities for Which Disclosure Has Already Been Made.
Article 14 Deleted
(Prohibition of Transactions in Securities Prior to a Notification Coming into Effect, and Delivery of Prospectus)
Article 15 (1) It is prohibited for an Issuer, person that conducts a Secondary Distribution of Securities, Underwriter (including a person that, with regard to a General Solicitation Involving Securities Acquired by a Qualified Institutional Investor (except in a Case In Which Disclosure Has Been Made with regard to the Securities for which the general solicitation is issued) or with regard to a General Solicitation Involving Securities Acquired by a Professional Investor (except in a Case In Which Disclosure Has Been Made with regard to the Securities for which the general solicitation is issued), conducts any of the acts specified in the items of Article 2, paragraph (6); hereinafter the same applies in this Chapter), Financial Instruments Business Operator, registered financial institution, or Financial Instruments Intermediary Service Provider to cause Securities to be acquired whose Public Offering or Secondary Distribution is subject to the main clause of Article 4, paragraph (1), the main clause of Article 4, paragraph (2), or the main clause of Article 4, paragraph (3), nor may it sell such Securities through a Public Offering or Secondary Distribution, unless the notification under the main clause of Article 4, paragraph (1), the main clause of Article 4, paragraph (2), or the main clause of Article 4, paragraph (3) has become effective.
(2) When an Issuer, person that conducts a Secondary Distribution of Securities, Underwriter, Financial Instruments Business Operator, registered financial institution, or Financial Instruments Intermediary Service Provider causes Securities referred to in the preceding paragraph, or Securities for Which Disclosure Has Already Been Made, to be acquired through a Public Offering or Secondary Distribution, or when it sells such Securities through a Public Offering or Secondary Distribution, it shall deliver a Prospectus that states the particulars specified in Article 13, paragraph (2), item (i) to the other person in advance or at the same time; provided, however, that this does not apply in the following cases:
(i) the Securities are acquired by or sold to a Qualified Institutional Investor (unless the Qualified Institutional Investor requests to be delivered the Prospectus by the time it acquires or is sold the Securities through the Public Offering or Secondary Distribution); or
(ii) the Securities are acquired by or sold to a person set forth in the following, and such person has consented not to be delivered the Prospectus (unless the consenting person requests to be delivered the Prospectus by the time it acquires or is sold the Securities through the Public Offering or Secondary Distribution):
(a) a person that already holds the same issue of Securities as the relevant Securities; or
(b) a person living with the consenting person has already received the Prospectus or is reliably expected to receive the Prospectus.
(iii) cases referred to in the proviso to Article 13, paragraph (1).
(3) When an Issuer, person that conducts a Secondary Distribution of Securities, Underwriter, Financial Instruments Business Operator, registered financial institution, or Financial Instruments Intermediary Service Provider causes Securities referred to in paragraph (1) (limited to those specified by Cabinet Order; hereinafter the same applies in this paragraph), or Securities for Which Disclosure Has Already Been Made, to be acquired through a Public Offering or Secondary Distribution, or when it sells such Securities through a Public Offering or Secondary Distribution, if the counterparty requests to be delivered a Prospectus that states the particulars specified in Article 13, paragraph (2), item (ii) by the time the counterparty acquires or is sold the Securities through the Public Offering or Secondary Distribution, the Issuer, person that conducts the Secondary Distribution of Securities, Underwriter, Financial Instruments Business Operator, registered financial institution, or Financial Instruments Intermediary Service Provider shall deliver said Prospectus immediately.
(4) When an Issuer, person that conducts a Secondary Distribution of Securities, Underwriter, Financial Instruments Business Operator, registered financial institution, or Financial Instruments Intermediary Service Provider causes Securities referred to in paragraph (1) or Securities for Which Disclosure Has Already Been Made to be acquired through a Public Offering or Secondary Distribution, or when it sells such Securities through a Public Offering or Secondary Distribution, if an amended statement under Article 7, paragraph (1) has been submitted in connection with the statement referred to in the main clause of Article 5, paragraph (1) for the relevant Securities, the Issuer, person that conducts the Secondary Distribution of Securities, Underwriter, Financial Instruments Business Operator registered financial institution, or Financial Instruments Intermediary Service Provider shall deliver a Prospectus that states the particulars specified in Article 13, paragraph (2), item (iii) in advance, or at the same time; provided, however, that this does not apply in the cases specified in the items of paragraph (2).
(5) The main clause of the preceding paragraph does not apply if an indication that the Issue Price, etc. will be announced separately and the means of its announcement (limited to means specified by Cabinet Office Ordinance) are stated in a Prospectus referred to under paragraph (2) which has been delivered without the Issue Price, etc. being stated pursuant to the proviso to Article 13, paragraph (2), and if the Issue Price, etc. has actually been announced by said means.
(6) The provisions of paragraph (2) to the preceding paragraph apply mutatis mutandis if the remainder of the Securities referred to in paragraph (1) that are not acquired by any person through a Public Offering or Secondary Distribution (excluding Securities that fall under any of the categories specified in Article 24, paragraph (1), items (i) and (ii)) is caused to be acquired or is sold other than through a Public Offering or Secondary Distribution within three months (excluding, if an order for suspension under Article 10, paragraph (1) or Article 11, paragraph (1) has been issued, the period from the day on which the order for suspension was issued until the day on which the order was canceled) from the day on which the notification under Article 4, paragraphs (1) to (3) inclusive for the Public Offering or Secondary Distribution came into effect.
(Compensatory Liability of Violators)
Article 16 A person violates the preceding Article in causing Securities to be acquired is liable to compensate the person that acquires the Securities for damage arising from the violation.
(Compensatory Liability of a Person Using a Prospectus Containing a False Statement)
Article 17 A person that, in a Public Offering or Secondary Distribution of Securities that is subject to the main clause of Article 4, paragraph (1), the main clause of Article 4, paragraph (2) or the main clause of Article 4, paragraph (3) or of Securities for Which Disclosure Has Already Been Made, causes Securities to be acquired while using a Prospectus referred to in Article 13, paragraph (1) that contains a false statement about a material particular, omits a statement as to a material particular that is required to be stated, or omits a statement of material fact that is necessary to prevent it from being misleading, or while using materials that contain a false or misleading representation about a material particular, or that omit a representation of material fact that is necessary to prevent them from being misleading, is liable to compensate for damage sustained by a person that acquires the Securities without knowing that the statement is false or has been omitted, that the representation is false or misleading, or that a representation has been omitted; provided, however, that this does not apply if the person that would be liable to compensate proves it did not know, and in the exercise of reasonable care could not have known, that the statement was false or had been omitted, or that the representation was false or misleading.
(Compensatory Liability of the Person Submitting a Securities Registration Statement Containing a False Statement)
Article 18 (1) If a Securities Registration Statement contains a false statement about a material particular, omits a statement as to a material particular that is required to be stated, or omits a statement of material fact that is necessary to prevent it from being misleading, the person that submitted the Securities Registration Statement is liable to compensate for damage sustained by a person that acquires the Securities through the Public Offering or Secondary Distribution; provided, however, that this does not apply if the person that acquires the Securities knows that the statement is false or has been omitted at the time the person offers to acquire the Securities.
(2) The preceding paragraph applies mutatis mutandis if a Prospectus referred to in Article 13, paragraph (1) contains a false statement about a material particular, omits a statement as to a material particular that is required to be stated, or omits a statement of material fact that is necessary to prevent it from being misleading. In this case, in the preceding paragraph, the phrase "the person that submitted the Securities Registration Statement" is deemed to be replaced with "the Issuer that prepared the Prospectus" and the phrase "through the Public Offering or Secondary Distribution" is deemed to be replaced with "through the Public Offering or Secondary Distribution after receiving the Prospectus."
(Amount of Compensatory Liability Person Submitting a Securities Registration Statement That Contains a False Statement, etc.)
Article 19 (1) The amount of compensation for which a person is liable pursuant to the preceding Article is the amount calculated by deducting the amount specified in each of the following items from the amount that the claimant paid to acquire the Securities:
(i) the market value of the Securities at the time the claimant claims damages pursuant to the preceding Article (or, if they have no market value, their estimated disposal value at such time); or
(ii) the disposal value of the Securities, if they were disposed of before the time referred to in the preceding item.
(2) If the person that would be liable to compensate pursuant to the preceding Article proves that the whole or part of the damage sustained by the claimant is due to circumstances other than the decline in the value of the Securities that would have arisen from the Securities Registration Statement or the Prospectus containing a false statement about a material particular, omitting a statement as to a material particular that is required to be stated, or omitting a statement of material fact that is necessary to prevent it from being, the person is not liable for the whole or such part of the compensation.
(Prescription of the Right to Claim Compensation from the Person Submitting a Securities Registration Statement That Contains a False Statement, etc.)
Article 20 A claim for compensation under Article 18 extinguishes if compensation is not claimed within three years of when the claimant comes to know, or in exercise of reasonable care could have come to know, that the Securities Registration Statement or the Prospectus includes a false statement about a material particular, omits a statement as to a material particular that is required to be stated, or omits a statement of material fact that is necessary to prevent it from being misleading. The same applies if compensation is not claimed within seven years (excluding, if an order for suspension under Article 10, paragraph (1) or Article 11, paragraph (1) has been issued, the period from the day on which the order for suspension is issued to the day on which the order is canceled) of the time that the notification under Article 4, paragraphs (1) to (3) inclusive for the relevant Public Offering or Secondary Distribution of the Securities comes into effect or the Prospectus is delivered.
(Compensatory Liability of the Officers, etc. of a Company Submitting a Statement That Contains a False Statement)
Article 21 (1) If a Securities Registration Statement contains a false statement about a material particular, omits a statement as to a material particular that is required to be stated, or omits a statement of material fact that is necessary to prevent it from being misleading, the following persons are liable to compensate a person that acquires the relevant Securities through a Public Offering or Secondary Distribution, for damage arising from the statement being false or having been omitted; provided, however, that this does not apply if the person that acquires the Securities knows that the statement is false or has been omitted at the time the person offers to acquire the Securities:
(i) a person that, at the time of submission of the Securities Registration Statement, is an officer (meaning a director, accounting advisor, company auditor, executive officer, or a person equivalent thereto; the same applies hereinafter, except in Article 163 to Article 167 inclusive) of the company that submitted the Securities Registration Statement, or an incorporator of said company (limited to cases in which the Securities Registration Statement was submitted before the incorporation of the company);
(ii) the holder of the Securities subject to the Secondary Distribution (or, if the holder had acquired the Securities from their previous holder by entering into a contract specifying that the Securities would be sold through a Secondary Distribution, the previous holder that is the other party to the contract);
(iii) a certified public accountant or the auditing firm that, in the audit certification provided for in Article 193-2, paragraph (1) in connection with the Securities Registration Statement, certifies a statement in the documents under the audit certification which is false or has been omitted, as not being false or as not having been omitted; and
(iv) the Financial Instruments Business Operator or registered financial institution that concludes the Original Underwriting Contract with the Issuer of the Securities subject to the Public Offering or with either person specified in item (ii).
(2) In the case referred to in the preceding paragraph, a person set forth in one of the following items is not liable for the compensation set forth in that paragraph, if said person proves the particular set forth in the relevant item:
(i) the person specified in item (i) or (ii) of the preceding paragraph: it did not know, and in the exercise of reasonable care could not have known, that the statement was false or had been omitted;
(ii) a person or firm specified in item (iii) of the preceding paragraph: it did not intentionally or negligently provide such inappropriate certification; and
(iii) the person or firm specified in item (iv) of the preceding paragraph: it did not know, and, with respect to parts other than the part involving documents related to financial accounting provided for in Article 193-2, paragraph (1), in the exercise of reasonable care it could not have known, that the statement was false or had been omitted.
(3) The provisions of items (i) and (ii) of paragraph (1) and item (i) of the preceding paragraph apply mutatis mutandis if a Prospectus referred to in Article 13, paragraph (1) contains a false statement about a material particular, omits a statement as to a material particular that is required to be stated, or omits a statement of material fact that is necessary to prevent it from being misleading. In this case, in paragraph (1), the phrase "through the relevant Public Offering or Secondary Distribution" is deemed to be replaced with "through the relevant Public Offering or Secondary Distribution after receipt of the Prospectus", the phrase "the company that submitted the Securities Registration Statement" is deemed to be replaced with "the company that prepared the Prospectus", the phrase "at the time of submission" is deemed to be replaced with "at the time of preparation", and the phrase "was submitted" is deemed to be replaced with "was prepared".
(4) The term "Original Underwriting Contract" as used in paragraph (1), item (iv) means either of the following contracts as concluded for a Public Offering or Secondary Distribution of Securities:
(i) a contract stipulating that the Underwriter will acquire all or part of the relevant Securities from the Issuer or holder (excluding a Financial Instruments Business Operator or registered financial institution; the same applies in the following item and item (iii)), with the aim of having other persons acquire them; or
(ii) a contract stipulating that if no other person acquires all or part of the relevant Securities, the Underwriter will acquire those that remain from the Issuer or holder.; or
(iii) in cases where the Securities are share option certificates (including the Securities specified by Cabinet Office Ordinance as being equivalent thereto; hereinafter the same applies in this item), the person who acquired said share option certificates concludes a contract to acquire, when he/she does not exercise share options (including the rights specified by Cabinet Office Ordinance as being equivalent thereto; hereinafter the same applies in this item) for all or part of said share option certificates, the share option certificates pertaining to said unexercised share options from the issuer or holder thereof in order for said person or a third party to exercise said share options.
(Compensatory Liability of a Person Submitting a Document That Contains a False Statement, etc.)
Article 21-2 (1) If a document set forth in one of the items of Article 25, paragraph (1) (excluding items (v) and (ix)) (hereinafter referred to as a "Document" in this Article) contains a false statement about a material particular, omits a statement as to a material particular that is required to be stated, or omits a statement of material fact that is necessary to prevent it from being misleading, the person submitting the Document is liable to compensate a person that, during the period the Document is being made available for public inspection as required by Article 25, paragraph (1), acquires or disposes of Securities issued by the person submitting the Document (excluding a document set forth in Article 25, paragraph (1), item (xii)) or by a person whose Parent Company, etc. (meaning a Parent Company, etc. as defined by Article 24-7, paragraph (1)) is the person submitting the Document (limited to a document set forth in Article 25, paragraph (1), item (xii)) other than through a Public Offering or Secondary Distribution, for damage arising from the statement being false or having been omitted (hereinafter collectively referred to as being a "False Statement, etc." in this Article), to an extent not exceeding the amount calculated in accordance with the rule provided in Article 19, paragraph (1); provided, however, that this does not apply if the person that acquires or disposes of the Securities knows of the False Statement, etc. at the time of the acquisition or disposal.
(2) In the case referred to in the preceding paragraph, if the person that would be liable to compensate proves that he/she did not intentionally or negligently make the False Statement, etc. in the relevant Document, the person is not liable for the compensation under the provisions of that paragraph.
(3) In the case referred to in the main clause of paragraph (1), if the fact that a false statement, etc. in the relevant Document is contained is disclosed, a person that has acquired the relevant Securities within the one year prior to the day of the disclosure of the existence of the false statement, etc. (hereinafter referred to as the "Disclosure Date" in this paragraph) and that continues to hold the Securities on the Disclosure Date, may assert the amount calculated by deducting the average market value (or, if no market value exists, the estimated disposal value; hereinafter the same applies in this paragraph) during the one month after the Disclosure Date from the average market value during one month prior to the Disclosure Date, to be the amount of damage arising from the Document's False Statement, etc.
(4) The term "disclosure of the existence of a false statement, etc." as used in the preceding paragraph means that the person submitting the Document or a person that has statutory authority over the person submitting the Document has taken measures to put the material particular that is required to be stated and that the Document's false statement, etc. concerns or the material fact that is necessary to prevent the Document from being misleading in connection with the same, into a form that allows for a large number of persons to learn of it through public inspection provided in Article 25, paragraph (1) or through other means.
(5) In the case referred to in paragraph (3), if the person that would be liable to compensate proves that the whole or part of the damage sustained by the claimant was due to circumstances other than the decline in the value of the Securities that could have arisen from the Document's false statement, etc., the person is not liable for the whole or such part of the compensation.
(6) In a case referred to in paragraph (3) other than one referred to in the preceding paragraph, if the court finds that the whole or part of the damage sustained by the claimant was due to circumstances other than the decline in the value of the Securities that could have arisen from the Document's false statement, etc., but that it is extremely difficult to prove the amount of damage arising from such other circumstances due to the nature thereof, based on the entire import of oral arguments and the results of an examination of evidence, the court may determine an appropriate amount as the amount of damage for which the relevant person is not liable to compensate.
(Prescription of the Right to Claim Compensation from a Person Submitting a Document That Contains a False Statement, etc.)
Article 21-3 The provisions of Article 20 apply mutatis mutandis to a claim for compensation under the preceding Article. In this case, in Article 20, the phrase "Article 18" is deemed to be replaced with "Article 21-2", the phrase "the Securities Registration Statement or the Prospectus" is deemed to be replaced with "a document set forth in one of the items of Article 25, paragraph (1) (excluding items (v) and (ix))", the phrase "three years" is deemed to be replaced with "two years", and the phrase "within seven years (excluding, if an order for suspension under Article 10, paragraph (1) or Article 11, paragraph (1) has been issued, the period from the day on which the order for suspension is issued to the day on which the order is canceled) of the time that the notification under Article 4, paragraphs (1) to (3) inclusive for the relevant Public Offering or Secondary Distribution of the Securities comes into effect or the Prospectus is delivered" is deemed to be replaced with "within five years of the time that the document is submitted".
(Compensatory Liability of the Officers, etc. of a Company Submitting a Statement That Contains a False Statement, etc.)
Article 22 (1) If a Securities Registration Statement contains a false statement about a material particular, omits a statement as to a material particular that is required to be stated, or omits a statement of material fact that is necessary to prevent it from being misleading, persons set forth in Article 21, paragraph (1), items (i) and (iii) are liable to compensate a person that, without knowing that the statement is false or has been omitted, acquires or disposes of Securities issued by the person submitting the Securities Registration Statement other than through a Public Offering or Secondary Distribution, for damage arising from the statement being false or having been omitted.
(2) The provisions of Article 21, paragraph (2), items (i) and (ii) apply mutatis mutandis to a person that would be liable for the compensation set forth in the preceding paragraph.
(Prohibition on Presuming the Veracity of a Securities Registration Statement)
Article 23 (1) No person may deem, based on a notification under Article 4, paragraphs (1) to (3) inclusive for a Public Offering or Secondary Distribution of Securities having been made and having come into effect, nor based on the an order for suspension under Article 10, paragraph (1) or Article 11, paragraph (1) having been canceled, that the Prime Minister certifies a statement contained in the Securities Registration Statement submitted for the notification to be true and accurate, that the Prime Minister certifies that the Securities Registration Statement does not omit a statement as to a material particular, or that the Prime Minister guarantees or recognizes the value of the Securities.
(2) No person may make a representation that is in violation of the provisions of the preceding paragraph.
(Replacement of Terms for Application of Relevant Provisions When Reference Should Be Made to Reference Documents)
Article 23-2 With regard to the application of Article 7, Articles 9 to 11 inclusive, Articles 17 to 21 inclusive, Article 22, and the preceding Article if a statement to which Article 5, paragraph (4) is applicable is submitted or an amended statement is submitted in connection with such a statement, or if a Prospectus to which Article 13, paragraph (3) is applicable is prepared, in Article 7 paragraph (1), the phrase "a statement or other document under Article 5, paragraph (1) or paragraph (6)" is deemed to be replaced with "a statement or other document under Article 5, paragraph (1) or paragraph (6) (including the Reference Documents for the statement, if it is one to which Article 5, paragraph (4) is applicable (including as applied mutatis mutandis pursuant to Article 5, paragraph (5); the same applies in Articles 9 to 11 inclusive); the same applies in this paragraph)"; in Article 9, paragraph (1), the phrase "a statement or other document under Article 5, paragraph (1) or paragraph (6) or Article 7, paragraph (1)," is deemed to be replaced with "a statement or other document under Article 5, paragraph (1) or paragraph (6) or Article 7 (including the Reference Documents for the statement or amended statement, if it is a statement to which Article 5, paragraph (4) is applicable or an amended statement under Article 7, paragraph (1), that has been submitted in connection with such a statement)"; in Article 10, paragraph (1), the term " Securities Registration Statement" is deemed to be replaced with " Securities Registration Statement (including the Reference Documents for the statement or amended statement, if it is a statement to which Article 5, paragraph (4) is applicable or an amended statement under Article 7, paragraph (1), paragraph (1) of the preceding Article or this paragraph which has been submitted in connection with such a statement)"; in Article 10, paragraph (4), the term "amended statement" is deemed to be replaced with "amended statement (including the Reference Documents for the amended statement, if it is connected with a statement to which Article 5, paragraph (4) is applicable)"; in Article 11, paragraph (1), the phrase "a Securities Registration Statement contains" is deemed to be replaced with "a Securities Registration Statement (or a Securities Registration Statement or Reference Documents for that Securities Registration Statement, if it is a statement to which Article 5, paragraph (4) is applicable or an amended statement under Article 7 paragraph (1),, Article 9, paragraph (1) or paragraph (1) of the preceding Article which has been submitted in connection with such a statement) contains"; in Article 11, paragraph (2), the term "amended statement" is deemed to be replaced with "amended statement (including the Reference Documents for the amended statement, if it is connected with a statement to which Article 5, paragraph (4) is applicable)"; in Article 17, the term "Prospectus" is deemed to be replaced with "Prospectus (including the Reference Documents for the Prospectus, if it is a Prospectus to which Article 13, paragraph (3) is applicable)"; in Article 18, paragraph (1), the phrase "a Securities Registration Statement contains" is deemed to be replaced with "a Securities Registration Statement (or a Securities Registration Statement or Reference Documents for that Securities Registration Statement, if it is a statement to which Article 5, paragraph (4) is applicable or an amended statement under Article 7, Article 9, paragraph (1) or Article 10, paragraph (1) which has been submitted in connection with such a statement) contains"; in Article 18, paragraph (2), the phrase "a Prospectus referred to in Article 13, paragraph (1) contains" is deemed to be replaced with "a Prospectus referred to in Article 13, paragraph (1) (or a Prospectus or Reference Documents for that Prospectus, if it is a Prospectus to which Article 13, paragraph (3) is applicable) contains"; in Article 19, paragraph (2) and the first sentence of Article 20, the term " Securities Registration Statement" is deemed to be replaced with " Securities Registration Statement (including the Reference Documents for the Securities Registration Statement, if it is a statement to which Article 5, paragraph (4) is applicable or an amended statement under Article 7 paragraph (1),, Article 9, paragraph (1) or Article 10, paragraph (1) which has been submitted in connection with such a statement)" and the term "Prospectus" is deemed to be replaced with "Prospectus (or a Prospectus or Reference Documents for that Prospectus, if it is a Prospectus to which Article 13, paragraph (3) is applicable)"; in Article 21, paragraph (1), the phrase "a Securities Registration Statement contains" is deemed to be replaced with "a Securities Registration Statement (or a Securities Registration Statement or Reference Documents for that Securities Registration Statement, if it is a statement to which Article 5, paragraph (4) is applicable or an amended statement under Article 7, paragraph (1), Article 9, paragraph (1) or Article 10, paragraph (1) which has been submitted in connection with such a statement) contains"; in Article 21, paragraph (3), the phrase "a Prospectus referred to in Article 13, paragraph (1) contains" is deemed to be replaced with "a Prospectus referred to in Article 13, paragraph (1) (or a Prospectus or Reference Documents for the Prospectus, if it is a Prospectus to which Article 13, paragraph (3) is applicable) contains"; in Article 22, paragraph (1), the phrase "a Securities Registration Statement contains" is deemed to be replaced with "a Securities Registration Statement (or a Securities Registration Statement or Reference Documents for that Securities Registration Statement, if it is a statement to which Article 5, paragraph (4) is applicable or an amended statement under Article 7,paragraph (1),, Article 9, paragraph (1) or Article 10, paragraph (1) which has been submitted in connection with such a statement) contains"; and in paragraph (1) of the preceding Article, the term " Securities Registration Statement" is deemed to be replaced with "Registration Statement (including the Reference Documents for the statement or amended statement, if it is a statement to which Article 5, paragraph (4) is applicable or an amended statement under Article 7, paragraph (1), Article 9, paragraph (1) or Article 10, paragraph (1) which has been submitted in connection with such a statement)."
(Submission of a Shelf Registration Statement)
Article 23-3 (1) If an Issuer of Securities that is planning a Public Offering or Secondary Distribution satisfies the requirements specified in Article 5, paragraph (4) and the total issue value or the total distribution value of the Securities for which the Issuer is planning the Public Offering or Secondary Distribution (hereinafter referred to as the "Planned Amount of Issuance") is 100 million yen or more (if the Securities for which the Issuer is planning the Public Offering or Secondary Distribution are share option certificates, this includes when the amount calculated by adding the total amount to be paid in upon the exercise of share options under said share option certificates to the Planned Amount of Issuance is 100 million yen or more), the Issuer of Securities may register said Public Offering or Secondary Distribution of Securities by submitting a document that, pursuant to the provisions of Cabinet Office Ordinance, states the particulars that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors, including the period for which the Issuer is planning the Public Offering or Secondary Distribution of the Securities (hereinafter referred to as the "Planned Issuance Period"), the class of the Securities, the Planned Amount of Issuance or the maximum outstanding balance, and the names of principal Financial Instruments Business Operators and registered financial institution Institutions that plan to underwrite the Securities (such document is hereinafter referred to as a "Shelf Registration Statement") to the Prime Minister; provided, however, that this does not apply if the Issuer is planning a Secondary Distribution or Securities that have been the subject of a solicitation with a view to issuing new securities or a solicitation with a view to delivering existing securities that fell under the category of an Exclusive Solicitation to Qualified Institutional Investors set forth in Article 23-13, paragraph (1) (limited to an Exclusive Solicitation to Qualified Institutional Investors to which the main clause of Article 23-13, paragraph (1) is applicable) (excluding a Case In Which Disclosure Has Been Made with regard to the Securities), a Secondary Distribution of Securities for Professional Investors (excluding a Case In Which Disclosure Has Been Made with regard to the Securities), or a Secondary Distribution of Securities that have been the subject of a solicitation with a view to issuing new securities that fell under the category of a Solicitation to a Small Number of Investors set forth in Article 23-13, paragraph (4) (limited to a Solicitation to a Small Number of Investors to which the main clause of Article 23-13, paragraph (4) is applicable) (excluding a Case In Which Disclosure Has Been Made for the Securities).
(2) The preceding paragraph applies only if, in addition to the particulars specified by Cabinet Office Ordinance which are referred to in said paragraph, the Shelf Registration Statement referred to in said paragraph states, pursuant to the provisions of Cabinet Office Ordinance, that reference should be made to the latest Reference Documents for said Issuer with regard to the particulars set forth in Article 5, paragraph (1), item (ii), and only if such Shelf Registration Statement is accompanied by the documents that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors.
(3) The provisions of Article 4, paragraph (1) to (3) inclusive do not apply to a Public Offering or Secondary Distribution of the Securities for which a registration under paragraph (1) (hereinafter referred to as a "Shelf Registration") has been made.
(4) A company that is the Issuer of Securities for which a Shelf Registration has been made may continue to submit Annual Securities Reports and accompanying documents under Article 24, paragraph (1) (including as applied mutatis mutandis pursuant to Article 24, paragraph (5); hereinafter the same applies in this paragraph), even after the obligation to submit an Annual Securities Report under Article 24, paragraph (1) extinguishes, if their submission is necessary to satisfy the requirements set forth in Article 5, paragraph (4).
(Submission of an Amended Shelf Registration Statement)
Article 23-4 If, on or after the day on which a Shelf Registration was made and before the day on which the Shelf Registration ceases to be effective, new documents are submitted that are of the same type as the Reference Documents to which the Shelf Registration Statement states, pursuant to paragraph (2) of the preceding Article, that reference should be made (excluding the case where the Shelf Registration Statement states the due date for the submission of said same type of documents and the said same type of documents are submitted by the due date) or any other circumstance arises that is specified by Cabinet Office Ordinance as necessitating that the content of the Shelf Registration Statement and accompanying documents (hereinafter collectively referred to as "Shelf Registration Documents" in this Article) be amended in the public interest or for the protection of investors, the person that made the Shelf Registration (hereinafter referred to as the "Shelf Registrant") must submit an Amended Shelf Registration Statement to the Prime Minister pursuant to the provisions of Cabinet Office Ordinance. The same also applies in the absence of such a circumstance, if the Shelf Registrant finds there to be something in the Shelf Registration Documents that necessitates an amendment. In this, the Shelf Registrant may not make an amendment in order to increase the Planned Amount of Issuance or the maximum outstanding balance, change the Planned Issuance Period, or change any other particular specified by Cabinet Office Ordinance.
(Effective Date of a Shelf Registration Statement)
Article 23-5 (1) The provisions of Article 8 apply mutatis mutandis to effectuation of a Shelf Registration Statement. In this case, in Article 8, paragraph (1), the phrase "the statement under Article 5, paragraph (1) (or, if the particulars referred to in the proviso to Article 5, paragraph (1) are not stated in the statement, the amended statement under the paragraph (1) of preceding Article which is connected with said particulars; the same applies in the following paragraph)" is deemed to be replaced with "Shelf Registration Statement provided for in Article 23-3, paragraph (1) (hereinafter referred to as a 'Shelf Registration Statement' in this Article to Article 23 inclusive)"; in Article 8, paragraph (2), the phrase "an amended statement under paragraph (1) of the preceding Article" is deemed to be replaced with "an Amended Shelf Registration Statement under Article 23-4" and the phrase "the statement set forth Article 5, paragraph (1)" is deemed to be replaced with "the Shelf Registration Statement"; and in Article 8, paragraph (3), the phrase "statement or other document under Article 5, paragraph (1) or, paragraph (13) or paragraph (1) of the preceding Article" is deemed to be replaced with "Shelf Registration Statement and accompanying documents or an Amended Shelf Registration Statement under Article 23-4 submitted before the day on which the Shelf Registration prescribed in Article 23-3, paragraph (3) (hereinafter referred to as a 'Shelf Registration' in this Article to Article 23) comes into effect" and the phrase "person submitting the statement and other documents" is deemed to be replaced with "person submitting that document".
(2) If, pursuant to the preceding Article, an Amended Shelf Registration Statement is submitted on or after the day on which a Shelf Registration comes into effect 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 order the suspension of the validity of the Shelf Registration during a fixed period of no longer than 15 days designated thereby.
(Planned Issuance Period for Securities under Shelf Registration)
Article 23-6 (1) The Planned Issuance Period for Securities under Shelf Registration is the period that is specified by Cabinet Office Ordinance of up to two years from the day on which the Shelf Registration comes into effect.
(2) A Shelf Registration ceases to be effective on the day on which the Planned Issuance Period under the preceding paragraph has elapsed.
(Submission of a Written Withdrawal of Shelf Registration)
Article 23-7 (1) If a Public Offering or Secondary Distribution has ended for Securities comprising the entire Planned Amount of Issuance before the day on which the Planned Issuance Period set forth in paragraph (1) of the preceding Article elapses, the Shelf Registrant shall withdraw the Shelf Registration by submitting a written withdrawal of Shelf Registration in which it indicates this to the Prime Minister, pursuant to the provisions of Cabinet Office Ordinance.
(2) Notwithstanding the provisions of paragraph (2) of the preceding Article, in a case referred to in the preceding paragraph, the Shelf Registration ceases to be effective on the day on which the Prime Minister accepts the written withdrawal of Shelf Registration.
(Submission of Shelf Registration Supplements)
Article 23-8 (1) It is prohibited for an Issuer, person that engages in the Secondary Distribution of Securities, Underwriter, Financial Instruments Business Operator, or registered financial institution to cause Securities whose Public Offerings or Secondary Distributions have been registered in advance through a Shelf Registration to be acquired through Public Offerings or Secondary Distributions, or to sell such Securities through Public Offerings or Secondary Distributions, unless the Shelf Registration has come into effect and a document stating the total issue value or total distribution value, conditions of issuance or distribution of the Securities, and any other particulars that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors (hereinafter referred to as "Shelf Registration Supplement") has been submitted to the Prime Minister for each Public Offering or Secondary Distribution, pursuant to the provisions of Cabinet Office Ordinance; provided however, that this does not apply to Public Offerings or Secondary Distributions specified by Cabinet Office Ordinance if the total issue value or total distribution value of each Public Offering or Secondary Distribution is less than 100 million.
(2) Notwithstanding the provisions of the preceding paragraph, the Issuer, person that engages in the Secondary Distribution of Securities, Underwriter, Financial Instruments Business Operator, or registered financial institution may cause short-term corporate bonds provided for in Article 66, item (i) of the Act on Book-entry Transfer of Corporate Bonds, etc. or any other bonds, etc. specified by Cabinet Order that are among the book-entry bonds, etc. set forth in Article 129, paragraph (1) of that Act (limited to those with an outstanding balance that is made available for public inspection by the Book-Entry Transfer Institution (meaning a Book-Entry Transfer Institution provided for in Article 2, paragraph (2) of that Act) that deals in the relevant book-entry bonds, etc.), whose Public Offerings or Secondary Distributions have been registered in advance through a Shelf Registration, to be acquired through Public Offerings or Secondary Distributions or to sell such bonds, etc. through Public Offerings or Secondary Distributions, if the Shelf Registration has come into effect.
(3) If a Public Offering or Secondary Distribution of Securities will be made only to shareholders that are stated or recorded in the shareholder register as of a certain date, the Shelf Registration Supplement for said Public Offering or Secondary Distribution must be submitted by 10 days prior to that date; provided, however, that this does not apply in the cases that are specified by Cabinet Office Ordinance in consideration of the issue price or distribution price or other circumstances.
(4) The provisions of Article 4, paragraphs (5) and (6) apply mutatis mutandis to a Public Offering or Secondary Distribution of Securities to which the proviso to paragraph (1) is applicable. In this case, in Article 4, paragraph (5), the phrase "in a Specified Public Offering" is deemed to be replaced with "in a Public Offering or Secondary Distribution" and the phrase "apply to said Specified Public Offering" is deemed to be replaced with "apply to said Public Offering or Secondary Distribution"; and in Article 4, paragraph (6), the phrase "the Securities in the Specified Public Offering, etc.," is deemed to be replaced with "said Securities", the phrase "the Specified Public Offering, etc. begins" is deemed to be replaced with "the Public Offering or Secondary Distribution begins", the phrase "a written notice of the Specified Public Offering, etc." is deemed to be replaced with "a written notice of the Public Offering or Secondary Distribution", and the phrase "a Secondary Distribution of Securities set forth in paragraph (4) whose total distribution value is less than 100 million yen in a Case In Which Disclosure Has Been Made, nor to a Secondary Distribution of Securities as set forth in paragraph (1), item (iii) conducted by a person other than the Issuer of said Securities or a person specified by Cabinet Office Ordinance, nor to a Public Offering or Secondary Distribution of Securities as set forth in item (v) of that paragraph whose total issue value" is deemed to be replaced with "a Public Offering or Secondary Distribution whose total issue value".
(5) As well as stating, pursuant to the provisions of Cabinet Office Ordinance and in addition to the particulars specified by Cabinet Office Ordinance which are referred to in paragraph (1), that reference should be made to the latest Reference Documents on the Issuer with regard to the particulars set forth in Article 5, paragraph (1), item (ii), the Shelf Registration Supplements referred to in paragraph (1) must be accompanied by the documents that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest for the protection of investors.
(Order to Submit an Amended Shelf Registration Statement Due to a Formal Deficiency, etc.)
Article 23-9 (1) If the Prime Minister finds a formal deficiency in a Shelf Registration Statement (including Reference Documents for that Registration Statement) or accompanying document or in an Amended Shelf Registration Statement under Article 23-4 (including Reference Documents for that Amended Registration Statement), or finds one of these documents to insufficiently state a material particular that is required to be stated therein, the Prime Minister may order the person submitting the document to submit an Amended Shelf Registration Statement. 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.
(2) Notwithstanding the provisions of Article 8 as applied mutatis mutandis pursuant to Article 23-5, paragraph (1), if a disposition under the preceding paragraph is reached before the day on which the Shelf Registration comes into effect, the Shelf Registration comes into effect on the day on which the period designated by the Prime Minister elapses following the day on which the Prime Minister accepts the Shelf Registration Statement for that Shelf Registration.
(3) In a case referred to in the preceding paragraph, if an Amended Shelf Registration Statement under Article 23-4 is submitted during the period designated by the Prime Minister, the Shelf Registration Statement is deemed to have been accepted by the Prime Minister on the day on which the Prime Minister accepts the Amended Shelf Registration Statement.
(4) In a case referred to in the preceding paragraph, if the Prime Minister finds that an Amended Shelf Registration Statement under Article 23-4 is easily understandable to the public or finds that information about the particulars set forth in Article 5, paragraph (1), item (ii) with regard to the person that submitted the Amended Shelf Registration Statement is already widely available to the public, the Prime Minister may designate a period that is shorter than that which the Prime Minister has designated as under paragraph (2). In such a case, the Shelf Registration comes into effect on the day on which the shorter period has elapsed.
(5) The provisions of paragraph (3) apply mutatis mutandis if the shorter period under the preceding paragraph is designated and an Amended Shelf Registration Statement under Article 23-4 is submitted during that shorter period.
(Order to Submit an Amended Shelf Registration Statement Due to a False Statement, etc.)
Article 23-10 (1) If the Prime Minister finds that a Shelf Registration Statement (including Reference Documents for that Shelf Registration Statement) or accompanying document, an Amended Shelf Registration Statement under Article 23-4 or paragraph (1) of the preceding Article (including Reference Documents for that Amended Shelf Registration Statement), or a Shelf Registration Supplement (including a Reference Document for a Shelf Registration Supplement) or accompanying document contains a false statement about a material particular, omits a statement as to a material particular that is required to be stated, or omits a statement of material fact that is necessary to prevent it from being misleading, the Prime Minister, at any time, may order the person submitting the document to submit an Amended Shelf Registration Statement. 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.
(2) The provisions of paragraphs (2) to (5) inclusive of the preceding Article apply mutatis mutandis if an order is issued to submit an Amended Shelf Registration Statement under the preceding paragraph before the day on which the Shelf Registration comes into effect.
(3) If the Prime Minister finds it to be necessary upon reaching a disposition under paragraph (1) on or after the day that a Shelf Registration comes into effect the Prime Minister may order the suspension of the validity of the Shelf Registration.
(4) If an order for suspension under the preceding paragraph is issued and an Amended Shelf Registration Statement under paragraph (1) is submitted, and if the Prime Minister finds the Amended Shelf Registration Statement to be appropriate, the Prime Minister cancels the order for suspension under the preceding paragraph.
(5) The provisions of the preceding paragraphs apply mutatis mutandis if the Prime Minister finds that an Amended Shelf Registration Statement submitted pursuant to paragraph (1) (including Reference Documents referenced therein) contains a false statement about a material particular, omits a statement as to a material particular that is required to be stated, or omits a statement of material fact that is necessary to prevent it from being misleading.
(Suspension of the Validity of a Shelf Registration Due to a False Statement)
Article 23-11 (1) If a Shelf Registration Statement or an accompanying document, an Amended Shelf Registration Statement under Article 23-4, Article 23-9, paragraph (1) or paragraph (1) of the preceding Article (including as applied mutatis mutandis pursuant to Article 23-10, paragraph (5)), a Shelf Registration Supplement or an accompanying document, or a Reference Document for any of the foregoing documents, contains a false statement about a material particular 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 issue an order against the person submitting that document, with regard to any Shelf Registration Statement or accompanying document, Amended Shelf Registration Statement, or Shelf Registration Supplement or accompanying document (hereinafter collectively referred to as a "Shelf Registration Document, etc." in this Article), or with regard to any statement as set forth in Article 5, paragraph (1), Shelf Registration Statement, or Shelf Registration Supplement, that the person submitting the relevant Shelf Registration Document, etc. submits within one year of the day on which the person submits said Shelf Registration Document, etc., ordering the suspension of the validity of the Shelf Registration under the Shelf Registration Document, etc., the validity of the notification under such a statement, or the validity of the Shelf Registration under such a Shelf Registration Statement or Shelf Registration Supplement, or may extend the period stipulated in Article 8, paragraph (1) (including as applied mutatis mutandis pursuant to Article 23-5, paragraph (1)), for the period that the Prime Minister considers appropriate in the public interest or for the protection of investors. 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.
(2) If a disposition under the preceding paragraph is reached and the Prime Minister finds that the content of an Amended Shelf Registration Statement (including Reference Documents referenced therein) submitted pursuant to Article 23-4 or paragraph (1) of the preceding Article (including as applied mutatis mutandis pursuant to Article 23-10, paragraph (5)) in relation to the false statement referred to in the preceding paragraph is appropriate, and that allowing the acquisition or sale of Securities issued by the person that submitted the Shelf Registration Documents through a Public Offering or Secondary Distribution will not compromise the public interest or the protection of investors, the Prime Minister may cancel the disposition under the preceding paragraph.
(Mutatis Mutandis Application, etc. of Relevant Provisions for Shelf Registration Statements, etc.)
Article 23-12 (1) The provisions of Article 6 apply mutatis mutandis if a Shelf Registration Statement and accompanying documents, an Amended Shelf Registration Statement under Article 23-4, Article 23-9, paragraph (1) or Article 23-10, paragraph (1) (including as applied mutatis mutandis pursuant to Article 23-10, paragraph (5)) or Shelf Registration Supplements and accompanying documents are submitted.
(2) The provisions of Article 13, paragraph (1) apply mutatis mutandis to the Issuer of Securities for which a Shelf Registration is filed, the main clause of Article 13, paragraph (2) applies mutatis mutandis to the Prospectus prepared by the Issuer of Securities for which a Shelf Registration is filed, and the provisions of Article 13, paragraphs (4) and (5) apply mutatis mutandis to a Public Offering or Secondary Distribution of Securities for which a Shelf Registration is filed. In this case, in the main clause of Article 13, paragraph (2), the phrase "For a category set forth in one of the following items, the details of the particulars that are specified in that item" is deemed to be replaced with "The details that are required to be stated in a Shelf Registration Statement, an Amended Shelf Registration Statement under Article 23-4, or Shelf Registration Supplements, and the details specified by Cabinet Office Ordinance".
(3) The provisions of Article 15, paragraphs (2) and (6) apply mutatis mutandis to a Public Offering or Secondary Distribution of Securities for which a Shelf Registration is filed. In this case, in Article 15, paragraph (2), the phrase "a Prospectus that states the particulars specified in Article 13, paragraph (2), item (i)" is deemed to be replaced with "the Prospectus referred to in Article 13, paragraph (1) as applied mutatis mutandis pursuant to Article 23-12, paragraph (2)"; and in Article 15, paragraph (6), the phrase "paragraph (2) to the preceding paragraph" is deemed to be replaced with "paragraph (2)", the phrase "Article 10, paragraph (1) or Article 11, paragraph (1)" is deemed to be replaced with "Article 23-10, paragraph (3) or Article 23-11, paragraph (1)", and the phrase "the notification under Article 4, paragraphs (1) to (3) inclusive for the Public Offering or Secondary Distribution came into effect" is deemed to be replaced with "the Shelf Registration Supplements are submitted for a Shelf Registration that has been filed for the Public Offering or Secondary Distribution and has already come into effect".
(4) The provisions of Article 16 apply mutatis mutandis to a person that violates the provisions of Article 23-8, paragraph (1) or (2), or Article 15, paragraph (2) or (6) as applied mutatis mutandis pursuant to the preceding paragraph in causing Securities to be acquired.
(5) The provisions of Articles 17 to 21 inclusive, Article 22, and Article 23 apply mutatis mutandis to a Public Offering or Secondary Distribution of Securities for which a Shelf Registration is filed. In this case, in Article 17, the phrase "Prospectus referred to in Article 13, paragraph (1)" is deemed to be replaced with "Prospectus referred to in Article 13, paragraph (1) as applied mutatis mutandis pursuant to Article 23-12, paragraph (2) (including Reference Documents referenced therein)"; in Article 18, paragraph (1), the phrase "a Securities Registration Statement contains" is deemed to be replaced with "Shelf Registration Documents, an Amended Shelf Registration Statement under Article 23-4, Article 23-9, paragraph (1) or Article 23-10, paragraph (1) (including as applied mutatis mutandis pursuant to Article 23-10, paragraph (5)) (hereinafter referred to as an 'Amended Shelf Registration Statement'), Shelf Registration Supplements and accompanying documents, or Reference Documents for any of these documents (hereinafter referred to as 'Shelf Registration Documents, etc.') contain", the phrase "the Securities Registration Statement" is deemed to be replaced with "Shelf Registration Documents, Amended Shelf Registration Statement, Shelf Registration Supplements, or accompanying documents for any of these", the phrase "a Prospectus referred to in Article 13, paragraph (1) contains" in Article 18, paragraph (2) is deemed to be replaced with "a Prospectus referred to in Article 13, paragraph (1) (including Reference Documents for that Prospectus) contains"; in Article 19, paragraph (2), the phrase "the Securities Registration Statement" is deemed to be replaced with "the Shelf Registration Documents, etc." and the phrase "the Prospectus" is deemed to be replaced with "the Prospectus (including Reference Documents for that Prospectus)"; in Article 20, the phrase "the Securities Registration Statement" is deemed to be replaced with "the Shelf Registration Documents, etc.", the phrase "the Prospectus contains" is deemed to be replaced with "the Prospectus (including Reference Documents for that Prospectus) contains", the phrase "Article 10, paragraph (1) or Article 11, paragraph (1)" is deemed to be replaced with "Article 23-10, paragraph (3) or Article 23-11, paragraph (1)", and the phrase "from the time that the notification under Article 4, paragraphs (1) to (3) inclusive for the relevant Public Offering or Secondary Distribution of the Securities comes into effect" is deemed to be replaced with "from the time that the Shelf Registration Supplements are submitted for a Shelf Registration that has been filed for the relevant Public Offering or Secondary Distribution and has already come into effect"; in the non-itemized part of Article 21, paragraph (1), the phrase "a Securities Registration Statement contains" is deemed to be replaced with "Shelf Registration Documents, etc. contain"; in items (i) and (iii) of Article 21, paragraph (1), the phrase "the Securities Registration Statement" is deemed to be replaced with "the Shelf Registration Documents, Amended Shelf Registration Statement, Shelf Registration Supplements, or accompanying documents for any of these"; in Article 21, paragraph (3), the phrase "a Prospectus referred to in Article 13, paragraph (1) contains" is deemed to be replaced with "Prospectus referred to in Article 13, paragraph (1) (including Reference Documents for that Prospectus)"; in Article 22, paragraph (1), the phrase "a Securities Registration Statement contains" is deemed to be replaced with "the Shelf Registration Documents, etc. contain" and the phrase "the Securities Registration Statement" is deemed to be replaced with "the Shelf Registration Documents, Amended Shelf Registration Statement, Shelf Registration Supplements, or accompanying documents for any of these"; and in Article 23, the phrase "a notification under Article 4, paragraphs (1) to (3) inclusive for a Public Offering or Secondary Distribution of Securities having been made and having come into effect" is deemed to be replaced with "a Shelf Registration having come into effect and Shelf Registration Supplements for it having been submitted (or, for a Public Offering or Secondary Distribution of Securities referred to in Article 23-8, paragraph (2), based on the Shelf Registration for it having come into effect)", the phrase "Article 10, paragraph (1) or Article 11, paragraph (1)" is deemed to be replaced with "Article 23-10, paragraph (3) or Article 23-11, paragraph (1)", the phrase "the Securities Registration Statement" is deemed to be replaced with "the Shelf Registration Documents, etc."; and the term "the notification" is deemed to be replaced with "the Shelf Registration".
(6) The provisions of paragraphs (2) and (3) and the provisions of Article 17, Article 18, paragraph (2) and Article 21, paragraph (3) as applied mutatis mutandis pursuant to the preceding paragraph do not apply to Securities referred to in Article 23-8, paragraph (2).
(7) In cases where the Issuer, a person who engages in Secondary Distribution of Securities, an Underwriter, a Financial Instruments Business Operator, a Registered Financial Institution or a Financial Instruments Intermediary Service Provider Service Provider has another person acquire Securities for which the Public Offering or Secondary Distribution has been registered under the Shelf Registration, or sell such Securities to another person through Public Offering or Secondary Distribution, after the submission of a Shelf Registration Statement for said Securities or Shelf Registration Statement and Amended Shelf Registration Statement for the Shelf Registration Statement under Article 23-4, when a document stating the particulars that should be stated in said Shelf Registration Statement, Amended Shelf Registration Statement thereof and Shelf Registration Supplements thereof under Article 23-3, paragraphs (1) and (2), Article 23-4 and Article 23-8, paragraph (1) (excluding, among the conditions of issuance, issue price and any other matters specified by Cabinet Office Ordinance (hereinafter referred to as the "Issue Price, etc." in this paragraph)) as well as to the effect that the Issue Price, etc. will be announced and announcement method (limited to those specified by Cabinet Office Ordinance) has been delivered in advance, and said Issue Price, etc. is announced by the method stated in said document, said document is deemed to be the Prospectus under Article 13, paragraph (1) as applied mutatis mutandis pursuant to paragraph (2), and the announcement of said Issue Price, etc. is deemed to be the delivery under Article 15, paragraph (2) as applied mutatis mutandis pursuant to paragraph (3), notwithstanding the provisions of Articles 15, paragraphs (2) and (6) as applied mutatis mutandis pursuant to paragraph (3).
(Notification of Exclusive Solicitation to Qualified Institutional Investors)
Article 23-13 (1) A person that issues a solicitation with a view to issuing new securities or a solicitation with a view to delivering existing securities which falls under a case set forth in the following items (in item (ii), limited to a solicitation issued to Qualified Institutional Investors that are excluded from the large number of persons pursuant to the provisions of Article 2, paragraph (3), item (i), and in a case set forth in item (iv), limited a solicitation issued to Qualified Institutional Investors that are excluded from the large number of persons pursuant to paragraph (4), item (i) of that Article; hereinafter collectively referred to as "Exclusive Solicitation to Qualified Institutional Investors" in this Article), must notify the solicited persons that the Exclusive Solicitation to Qualified Institutional Investors falls under one of the following cases and that therefore the notification under Article 4, paragraph (1) has not been made for the Exclusive Solicitation to Qualified Institutional Investors, and of any other particular that is specified by Cabinet Office Ordinance; provided, however, that this does not apply to a Case In Which Disclosure Has Been Made with regard to the Securities that are subject to the Exclusive Solicitation to Qualified Institutional Investors nor does it apply to a case specified by Cabinet Office Ordinance that constitutes an Exclusive Solicitation to Qualified Institutional Investors with a total issue value or transfer value of less than 100 million yen:
(i) a case set forth in Article 2, paragraph (3), item (ii), sub-item (a);
(ii) a case set forth in Article 2, paragraph (3), item (ii), sub-item (c) (but only if it comes to no longer fall under the category of case set forth in item (i) of that paragraph, due to the Qualified Institutional Investors' being excluded from the large number of persons pursuant to that item);
(iii) a case set forth in Article 2, paragraph (4), item (ii), sub-item (a);
(iv) a case set forth in Article 2, paragraph (4), item (ii), sub-item (c) (but only if it comes to no longer fall under the category of case set forth in item (i) of that paragraph, due to the Qualified Institutional Investors' being excluded from the large number of persons pursuant to that item);
(v) a case set forth in Article 2-2, paragraph (4), item (ii), sub-item (a); or
(vi) a case set forth in Article 2-2, paragraph (5), item (ii), sub-item (a).
(2) If a person that issues an Exclusive Solicitation to Qualified Institutional Investors to which the main clause of the preceding paragraph is applicable causes Securities to be acquired or sells Securities through that Exclusive Solicitation to Qualified Institutional Investors, such person must deliver a document stating the particulars for which notice is required to be given pursuant to the preceding paragraph to the other party in advance of, or at the same time as, the acquisition or sale.
(3) A person performing an act set forth in one of the following items must notify the person solicited of the particulars provided for in the relevant item, pursuant to the provisions of Cabinet Office Ordinance; provided, however, that this does not apply to a Case In Which Disclosure Has Been Made for the Securities with regard to which such act was performed:
(i) the Exclusive Solicitation of Offers to Acquire Targeting Professional Investors or an exclusive Offer to Sell, etc. to Professional Investors: that a notification under Article 4, paragraph (1) has not been given for the Exclusive Solicitation of Offers to Acquire Targeting Professional Investors or exclusive Offer to Sell, etc. to Professional Investors, and any other particular specified by Cabinet Office Ordinance; and
(ii) solicitation with a view to delivering existing securities which is connected with Securities for Professional Investors and which does not fall under the category of either an exclusive Offer to Sell, etc. to Professional Investors or a General Solicitation Involving Securities Acquired by a Professional Investor (limited to those to which the main clause of Article 4, paragraph (3) is applicable): that the solicitation does not fall under a Case In Which Disclosure Has Been Made in connection with the Securities for Professional Investors, and any other particular specified by Cabinet Office Ordinance.
(4) A person that issues a solicitation with a view to issuing new securities or solicitation with a view to delivering existing securities that falls under a case set forth in one of the following items for the class of Securities set forth in the relevant item (excluding a case that falls under the category of a solicitation with a view to issuing new securities or solicitation with a view to delivering existing securities for the Securities set forth in Article 2, paragraph (1), item (ix) or those specified by Cabinet Order, and in the case set forth in item (i), sub-item (a) or (b), Exclusive Solicitation to Qualified Institutional Investors is excluded; hereinafter collectively referred to as the "Solicitation to a Small Number of Investors" in this Article) must notify the solicited persons that the solicitation with a view to issuing new securities falls under a case set forth in one of the following items (for item (i), sub-item (a) or (b), this excludes a case in which the Solicitation to a Small Number of Investors falls under the category of an Exclusive Solicitation to Qualified Institutional Investors) for the class of Securities set forth in the relevant item and therefore the notification under Article 4, paragraph (1) has not been given for the solicitation with a view to issuing new securities, and of any other particular that is specified by Cabinet Office Ordinance; provided, however, that this does not apply to a Case In Which Disclosure Has Been Made with regard to the Securities that are subject to the relevant Solicitation to a Small Number of Investors, nor does it apply in a case specified by Cabinet Office Ordinance that constitutes a Solicitation to a Small Number of Investors with a total issue value or transfer value of less than 100 million yen:
(i) The Paragraph (1) Securities: any of the following cases:
(a) one that falls under Article 2, paragraph (3), item (ii), sub-item (c);
(b) one that falls under Article 2, paragraph (4), item (ii), sub-item (c);
(c) one that falls under Article 2-2, paragraph (4), item (ii), sub-item (b);
(d) one that falls under Article 2-2, paragraph (5), item (ii), sub-item (b).
(ii) The Paragraph (2) Securities: any of the following cases:
(a) one that does not fall under the category of cases set forth in Article 2, paragraph (3), item (iii);
(b) one that does not fall under the category of cases set forth in Article 2-2, paragraph (4), item (iii).
(5) If a person that issues a Solicitation to a Small Number of Investors to which the main clause of the preceding paragraph is applicable causes Securities to be acquired or sells the same through the Solicitation to a Small Number of Investors, such person must deliver a document stating the particulars for which notice is required to be given pursuant to the preceding paragraph to the other party in advance of, or at the same time as, the acquisition or sale.
(Submission of Annual Securities Reports)
Article 24 (1) If Securities issued by a company (excluding regulated Securities; hereinafter the same applies in this Article, except in the following items) fall under one of the categories set forth in the following items, the company that is the Issuer of the Securities must submit, for each business year, a report stating the trade name of the company, the financial condition of the corporate group to which the company belongs and the company's own financial condition, other material particulars of the company's business, and other particulars specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors (hereinafter referred to as an "Annual Securities Report") to the Prime Minister, within three months after the end of that business year (or, if there is a compelling reason that the company cannot submit the document within such period, within a period approved in advance by the Prime Minister pursuant to the provisions of Cabinet Office Ordinance), for a domestic company, or within the period that is specified by Cabinet Order as necessary and appropriate in the public interest or for the protection of investors, for a foreign company, pursuant to the provisions of Cabinet Office Ordinance; provided however, that this does not apply if the Securities issued by the company fall under the category of Securities specified in item (iii) below (limited to share certificates and other Securities specified by Cabinet Order) and the numbers of holders of the Securities on the last day of that business year and on the last days of each of the business years that began within four years before the day on which the relevant business year began are smaller than the number calculated pursuant to the provisions of Cabinet Order, and the company receives the acknowledgement of the Prime Minister, pursuant to the provisions of Cabinet Office Ordinance, as a company whose non-submission of an Annual Securities Report does not damage the public interest or result in insufficient investor protection (limited to a company that has already had five years elapse since the end of the first year of report submission (meaning the business year that includes the day on which the main clause of Article 4, paragraph (1), the main clause of Article 4, paragraph (2), the main clause of Article 4, paragraph (3), or the main clause of Article 23-8, paragraph (1) or (2) became applicable to the Public Offering or Secondary Distribution of Securities, and if there are two or more First Years of Report Submission, this means the most recent one); nor does it apply if the Securities issued by the company fall under the category of Securities specified in item (iv) below, and the stated capital is less than 500 million yen (or, if the Securities are Rights in a Securities Investment Business, etc. that are deemed to be Securities pursuant to Article 2, paragraph (2), and the amount that is specified by Cabinet Order as the stated capital is less than the amount specified by Cabinet Order on the last day of that business year) or the number of holders of the Securities on the last day of that business year is smaller than the number specified by Cabinet Order; nor does it apply if the Securities issued by the company fall under the category of Securities specified in item (iii) or (iv) below, and the company receives the acknowledgement of the Prime Minister, pursuant to Cabinet Order, as a company whose non-submission of an Annual Securities Report does not damage the public interest or result in insufficient investor protection:
(i) Securities listed on a Financial Instruments Exchange (excluding Specified Listed Securities);
(ii) Securities specified by Cabinet Order as having equivalent distribution statuses to the Securities set forth in the preceding item (excluding Securities specified by Cabinet Order as having equivalent distribution statuses to Specified Listed Securities);
(iii) Securities to whose Public Offering or Secondary Distribution the main clause of Article 4, paragraph (1), the main clause of Article 4, paragraph (2), the main clause of Article 4, paragraph (3), or the main clause of Article 23-8, paragraph (1) or (2) applies (excluding those specified in the preceding two items); or
(iv) Securities (limited to share certificates, Rights in a Securities Investment Business, etc. that are deemed to be Securities pursuant to Article 2, paragraph (2), and other Securities specified by Cabinet Order) that are issued by the company, for which the number of holders on the last day of the relevant business year or on the last day of any of the business years that began within four years before the day on which the relevant business year began is at least the number specified by Cabinet Order (or, for Rights in a Securities Investment Business, etc. that are deemed to be Securities pursuant to Article 2, paragraph (2), if the number of holders on the last day of the relevant business year is at least the number specified by Cabinet Order) (excluding Securities specified in the preceding three items).
(2) In the Annual Securities Report that a company must submit pursuant to the main clause of the preceding paragraph, a company that is an Issuer of Securities that fall under the category of Securities specified in item (iii) of the preceding paragraph, which has submitted a statement provided for in Article 5, paragraph (1) stating the particulars specified in Article 5, paragraph (2) with regard to a Low-Value Public Offering, etc., and which does not fall under any of the following categories, may state the particulars set forth in the main clause of the preceding paragraph that are specified by Cabinet Office Ordinance as being relevant to that company, instead of stating the particulars set forth in the main clause of the preceding paragraph:
(i) a person that has already submitted an Annual Securities Report stating the particulars set forth in the main clause of the preceding paragraph, a Quarterly Securities Report under Article 24-4-7, paragraph (1) or (2) stating the particulars set forth in Article 24-4-7, paragraph (1), or a Semiannual Securities Report stating the particulars set forth in Article 24-5, paragraph (1); and
(ii) a person that has submitted or is required to submit a statement provided for in Article 5, paragraph (1) stating the particulars set forth in Article 5, paragraph (1), item (ii) for a Public Offering or Secondary Distribution of Securities to which the main clause of Article 4, paragraph (1), the main clause of Article 4, paragraph (2), or the main clause of Article 4, paragraph (3) applies (other than a person specified in the preceding item).
(3) If the Securities issued by a company to which the main clause of paragraph (1) does not apply, come to fall under a category of Securities specified in items (i) to (iii) inclusive of that paragraph (except in the cases specified by Cabinet Office Ordinance), the company must submit an Annual Securities Report to the Prime Minister without delay for the business year immediately prior to the business year that includes the day on which the Securities come to fall under such category, pursuant to the provisions of Cabinet Office Ordinance.
(4) Necessary particulars relevant to the calculation of the number of holders set forth in paragraph (1), item (iv) are specified by Cabinet Office Ordinance.
(5) The provisions of the preceding paragraphs apply mutatis mutandis if regulated Securities issued by a company fall under a category specified in an item of paragraph (1). In this case, in the main clause paragraph (1), the phrase "the company that is the Issuer of the Securities" is deemed to be replaced with "the company that is the Issuer of the Securities (other than a person specified by Cabinet Office Ordinance, for Securities that are specified by Cabinet Office Ordinance)", the phrase "excluding regulated Securities" is deemed to be replaced with "limited to regulated Securities", the phrase "the trade name of the company, the financial condition of the corporate group to which the company belongs and the company's own financial condition, other material particulars of the company's business" is deemed to be replaced with "the status of the company's asset accounting in connection with asset management and other similar business conducted by the company, other material particulars of the company's assets", the phrase "for each business year" is deemed to be replaced with "for each of the periods of time specified by Cabinet Office Ordinance for the regulated Securities (hereinafter referred to as a "Specified Period" in this Article)", and the phrase "that business year" is deemed to be replaced with "that Specified Period"; in the proviso to that paragraph, the phrase "this does not apply if the Securities issued by the company fall under the category of Securities specified in item (iii) below (limited to share certificates and other Securities specified by Cabinet Order) and the numbers of holders of the Securities on the last day of that business year and on the last days of each of the business years that began within four years before the day on which that business year began are smaller than the number calculated pursuant to the provisions of Cabinet Order, and the company receives the acknowledgement of the Prime Minister, pursuant to the provisions of Cabinet Office Ordinance, as a company whose non-submission of an Annual Securities Report does not damage the public interest or result in insufficient investor protection (limited to a company that has already had five years elapse since the end of the first year of report submission (meaning the business year that includes the day on which the main clause of Article 4, paragraph (1), the main clause of Article 4, paragraph (2), the main clause of Article 4, paragraph (3), or the main clause of Article 23-8, paragraph (1) or (2) became applicable to the Public Offering or Secondary Distribution of Securities, and if there are two or more First Years of Report Submission, this means the most recent one); nor does it apply if the Securities issued by the company fall under the category of Securities specified in item (iv) below" is deemed to be replaced with "this does not apply if the regulated Securities issued by the company fall under the category of Securities specified in item (iv) below" and the phrase "or the number of holders of the Securities on the last day of that business year is smaller than the number specified by Cabinet Order; nor" is deemed to be replaced with "; nor"; in item (iv) of paragraph (1), the phrase "share certificates, Rights in a Securities Investment Business, etc. that are deemed to be Securities pursuant to Article 2, paragraph (2)" is deemed to be replaced with "Rights in a Securities Investment Business, etc. that are deemed to be Securities pursuant to Article 2, paragraph (2)" and the phrase "for which the number of holders on the last day of the relevant business year or on the last day of any of the business years that began within four years before the day on which the relevant business year began is at least the number specified by Cabinet Order (or, for Rights in a Securities Investment Business, etc. that are deemed to be Securities pursuant to Article 2, paragraph (2), if the number of holders on the last day of the relevant business year is at least the number specified by Cabinet Order)" is deemed to be replaced with "for which the number of holders on the last day of the relevant Specified Period is at least the number specified by Cabinet Order"; in paragraph (2), the phrase "Securities that fall" is deemed to be replaced with "regulated Securities that fall"; in paragraph (3), the phrase "the main clause of paragraph (1)" is deemed to be replaced with "the main clause of paragraph (1) as applied mutatis mutandis pursuant to paragraph (5)", the phrase "business year" is deemed to be replaced with "Specified Period", and the phrase "the day on which the Securities came to fall under" is deemed to be replaced with "the day on which the regulated Securities came to fall under"; and any other necessary technical replacement of terms is specified by Cabinet Order.
(6) The articles of incorporation or other documents that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors must accompany an Annual Securities Report.
(7) The provisions of Article 6 apply mutatis mutandis if an Annual Securities Report and accompanying documents are submitted pursuant to paragraphs (1) to (3) inclusive (including as applied mutatis mutandis pursuant to paragraph (5)) and the preceding paragraph.
(8) In a case that is specified by Cabinet Office Ordinance as one in which this does not damage the public interest or result in insufficient investor protection, instead of an Annual Securities Report under paragraph (1) and the documents that are required to accompany it pursuant to paragraph (6) (hereinafter collectively referred to as an "Annual Securities Report, etc." in this Article), a foreign company that is required to submit an Annual Securities Report pursuant to paragraph (1) (including as applied mutatis mutandis pursuant to paragraph (5); hereinafter the same applies in this paragraph to paragraph (13) inclusive) (including a foreign company that has submitted an Annual Securities Report pursuant to Article 23-3, paragraph (4); hereinafter referred to as a "Reporting Foreign Company"), may submit a document that is similar to an Annual Securities Report, etc., but that has been prepared in English and disclosed in a foreign state (such a document is hereinafter referred to as a "Foreign Company Report" in this Chapter).
(9) A Japanese translation of the summary of the particulars stated in a Foreign Company Report that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors, as well as documents stating the particulars not stated in a Foreign Company Report that are specified by Cabinet Office Ordinance as necessary and appropriate for the public interest or for the protection of investors, and other documents specified by Cabinet Office Ordinance (such documents are hereinafter collectively referred to as "Supplementary Documents" in this Article and paragraph (4) of the following Article) must accompany a Foreign Company Report, as specified by Cabinet Office Ordinance.
(10) If a Reporting Foreign Company submits a Foreign Company Report and its Supplementary Documents instead of an Annual Securities Report, etc. pursuant to the preceding two paragraphs, in paragraph (1), the phrase "within three months after the end of that business year (or, if there is a compelling reason that the company cannot submit the document within such period, within a period approved in advance by the Prime Minister pursuant to the provisions of Cabinet Office Ordinance), for a domestic company, or within the period that is specified by Cabinet Order as necessary and appropriate in the public interest or for the protection of investors, for a foreign company" is deemed to be replaced with "within the period that is specified by Cabinet Order as necessary and appropriate in the public interest or for the protection of investors" and in paragraph (5), the phrase "in the main clause of paragraph (1), the term 'that business year' is deemed to be replaced with 'that Specified Period' " is deemed to be replaced with "the phrase 'within three months after the end of that business year (or, if there is a compelling reason that the company cannot submit the document within such period, within a period approved in advance by the Prime Minister pursuant to the provisions of Cabinet Office Ordinance), for a domestic company, or within the period that is specified by Cabinet Order as necessary and appropriate in the public interest or for the protection of investors, for a foreign company' is deemed to be replaced with 'within the period that is specified by Cabinet Order as necessary and appropriate in the public interest or for the protection of investors following the Specified Period has elapsed' ".
(11) If a Reporting Foreign Company submits a Foreign Company Report and its Supplementary Documents pursuant to paragraphs (8) and (9), the Foreign Company Report and Supplementary Documents are deemed to be an Annual Securities Report, their submission is deemed to be the submission of an Annual Securities Report, etc., and the provisions of this Act and orders based on Financial Instruments and Exchange Act and Related Regulations apply.
(12) If the Prime Minister finds that a Reporting Foreign Company that has submitted a Foreign Company Report does not satisfy the requirements referred do in the provision of paragraph (8) for being allowed to submit a Foreign Company Report, the Prime Minister must notify the Reporting Foreign Company of this. 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.
(13) Notwithstanding the provisions of paragraph (1), if a Reporting Foreign Company receives a notice under the preceding paragraph, it must submit an Annual Securities Report under the provisions of paragraph (1) within the period that is specified by Cabinet Order as necessary and in the public interest or for the protection of investors, with the day on which the notice is made as the first day for the calculation of that period.
(14) If, pursuant to the provisions of Cabinet Office Ordinance, a company that is required to submit an Annual Securities Report pursuant to paragraph (1) (but only as applied mutatis mutandis pursuant to paragraph (5); hereinafter the same applies in this Article) submits the documents stating a part of the particulars specified by Cabinet Office Ordinance that are provided for in paragraph (1) (limited to documents prepared based on laws and regulations or the rules of a Financial Instruments Exchange (including anything specified by Cabinet Office Ordinance as being similar to such rules); such documents are hereinafter referred to as "Documents Substituted for Part of an Annual Securities Report" in this paragraph and the following paragraph) together with an Annual Securities Report to the Prime Minister, with regard to the application of paragraphs (1) and (2) to cases in which a company receives the acknowledgement of the Prime Minister, pursuant to Cabinet Office Ordinance, as one whose doing so does not damage the public interest or result in insufficient investor protection, in paragraph (1), the phrase "other particulars that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors" is deemed to be replaced with "other particulars that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors (other than the particulars stated in the Documents Substituted for Part of the Annual Securities Report prescribed in paragraph (14))" and in paragraph (2), the phrase "the particulars set forth in the main clause of the preceding paragraph" is deemed to be replaced with "the particulars set forth in the main clause of the preceding paragraph (other than the particulars stated in Documents Substituted for Part of the Annual Securities Report provided for in paragraph (14))".
(15) If Documents Substituted for Part of an Annual Securities Report are submitted together with an Annual Securities Report referred to in paragraph (1) as it applies through the replacement of certain terms pursuant to the preceding paragraph, the Documents Substituted for Part of the Annual Securities Report are deemed to form a part of the Annual Securities Report, the submission of the Documents Substituted for Part of the Annual Securities Report is deemed to be the submission of the Documents Substituted for Part of the Annual Securities Report as a part of the Annual Securities Report, and the provisions of the Financial Instruments and Exchange Act and Related Regulations apply.
(Mutatis Mutandis Application of Provisions on Amended Statements)
Article 24-2 (1) The provisions of Article 7, paragraph (1),Article 9, paragraph (1), and Article 10, paragraph (1) apply mutatis mutandis to an Annual Securities Report and accompanying documents. In this case, in Article 7 ,paragraph (1),, the phrase "If, on or after the day on which a notification under Article 4, paragraphs (1) to (3) inclusive is filed and before the day on which that notification comes into effect, a material particular that is required to be stated in a statement or other document under Article 5, paragraph (1) or paragraph (13) changes" is deemed to be replaced with "If a material particular that is required to be stated in an Annual Securities Report or accompanying document changes", the phrase "the person filing the notification" is deemed to be replaced with "the person submitting the Annual Securities Report", and the term "amended statement" is deemed to be replaced with "amended report"; in Article 9, paragraph (1), the phrase "the person that submitted it" is deemed to be replaced with "the person that submitted the Annual Securities Report" and the term "amended statement" is deemed to be replaced with "amended report"; and in Article 10, paragraph (1), the phrase "the person submitting the Securities Registration Statement" is deemed to be replaced with "the person submitting the amended report" and the phrase "to submit an amended statement, and if the Prime Minister finds it to be necessary, the Prime Minister may order the suspension of the validity of a notification under Article 4, paragraphs (1) to (3) inclusive" is deemed to be replaced with "to submit an amended report".
(2) If a company that is an Issuer of Securities submits an amended report, pursuant to Article 7, paragraph (1) or Article 10, paragraph (1) as applied mutatis mutandis pursuant to the preceding paragraph, with regard to a material particular for inclusion in its Annual Securities Report, it must give public notice of this pursuant to the provisions of Cabinet Order.
(3) The provisions of Article 6 apply mutatis mutandis if an amended report is submitted in connection with an Annual Securities Report or accompanying document, pursuant to Article 7, paragraph (1), Article 9, paragraph (1) or Article 10, paragraph (1) as applied mutatis mutandis pursuant to paragraph (1).
(4) The provisions of paragraphs (8), (9) and (11) of the preceding Article apply mutatis mutandis if a Reporting Foreign Company submits an amended report in connection with the Foreign Company Report and Supplementary Documents that the company has submitted pursuant to Article 7, paragraph (1), Article 9, paragraph (1) or Article 10, paragraph (1) as applied mutatis mutandis through the replacement of certain terms pursuant to paragraph (1).
(Suspension of the Validity of Notifications Made Within One Year After the Submission of an Annual Securities Report Containing a False Statement)
Article 24-3 The provisions of Article 11 apply mutatis mutandis to any statement specified in Article 5, paragraph (1), Shelf Registration Statement, or Shelf Registration Supplements that a person that has submitted an Annual Securities Report (including any amended report in connection with it; the same applies in the following Article) that contained a false statement with regard to a material particular, submits within one year from the day on which that person submits an amended report in connection with that false statement pursuant to Article 7, paragraph (1) as applied mutatis mutandis pursuant to paragraph (1) of the preceding Article, or is ordered to submit an amended report in connection with that false statement pursuant to Article 10, paragraph (1) as applied mutatis mutandis pursuant to Article 24-2, paragraph (1).
(Compensatory Liability of the Officers, etc. of a Company Submitting an Annual Securities Report That Contains a False Statement)
Article 24-4 The provisions of Article 22 apply mutatis mutandis if an Annual Securities Report contains a false statement about a material particular, omits a statement as to a material particular that is required to be stated, or omits a statement of material fact that is necessary to prevent it from being misleading. In this case, in Article 22, paragraph (1), the phrase "has acquired Securities issued by the person submitting the Securities Registration Statement other than through a Public Offering or Secondary Distribution" is deemed to be replaced with "has acquired Securities issued by the person submitting the Securities Registration Statement".
(Submission of a Confirmation Letter for the Content of Statements in an Annual Securities Report)
Article 24-4-2 (1) A company that is required to submit an Annual Securities Report under Article 24, paragraph (1) (including a company that has submitted an Annual Securities Report under Article 23-3, paragraph (4); the same applies in the following paragraph) and which is the Issuer of Securities set forth in Article 24, paragraph (1), item (i), or any other company specified by Cabinet Order, must submit a letter to the Prime Minister in which it confirms that the content of statements in the Annual Securities Report is appropriate and in accordance with the Financial Instruments and Exchange Act and Related Regulations (hereinafter referred to as a "Confirmation Letter" in this and the following Articles), together with said Annual Securities Report (or a Foreign Company Report, if the company submits a Foreign Company Report instead of the Annual Securities Report, etc. set forth in Article 24, paragraph (8), pursuant to that paragraph), pursuant to the provisions of Cabinet Office Ordinance.
(2) A company that is required to submit an Annual Securities Report under Article 24, paragraph (1) may submit the Confirmation Letter provided for in the preceding paragraph voluntarily, even if it is not a company that is required to submit a Confirmation Letter together with an Annual Securities Report (excluding companies as specified by Cabinet Order) pursuant to the preceding paragraph.
(3) The provisions of the preceding two paragraphs apply mutatis mutandis to a company specified by Cabinet Order that is required to submit an Annual Securities Report under Article 24, paragraph (1) as applied mutatis mutandis pursuant to Article 24, paragraph (5) (including a company that has submitted an Annual Securities Report under Article 23-3, paragraph (4)).
(4) The provisions of the preceding three paragraphs apply mutatis mutandis if an amended report is submitted pursuant to Article 7,paragraph (1), Article 9, paragraph (1) and Article 10, paragraph (1) as applied mutatis mutandis through the replacement of certain terms pursuant to Article 24-2, paragraph (1). The necessary technical replacement of terms for such a case is specified by Cabinet Order.
(5) The provisions of Article 6 apply mutatis mutandis if a Confirmation Letter is submitted pursuant to paragraph (1) or (2) (including as applied mutatis mutandis pursuant to paragraph (3) (including as applied mutatis mutandis pursuant to the preceding paragraph) or the preceding paragraph; hereinafter the same applies in this Article). The necessary technical replacement of terms for such a case is specified by Cabinet Order.
(6) The provisions of Article 24, paragraphs (8), (9) and (11) to (13) inclusive apply mutatis mutandis if a Reporting Foreign Company submits a Confirmation Letter pursuant to paragraph (1) or (2) of this Article (limited to if a Reporting Foreign Company submits a Foreign Company Report). In this case, in Article 24, paragraph (8), the phrase "a foreign company that is required to submit an Annual Securities Report pursuant to paragraph (1) (including as applied mutatis mutandis pursuant to paragraph (5); hereinafter the same applies in this paragraph to paragraph (13) inclusive) (including a foreign company that has submitted an Annual Securities Report pursuant to Article 23-3, paragraph (4); hereinafter referred to as a 'Reporting Foreign Company')" is deemed to be replaced with "a foreign company that is required to submit an Annual Securities Report pursuant to paragraph (1) (including as applied mutatis mutandis pursuant to paragraph (5); hereinafter the same applies in this paragraph to paragraph (13) inclusive)", the phrase "an Annual Securities Report under paragraph (1) and the documents are required to accompany it pursuant to paragraph (6) (hereinafter collectively referred to as an 'Annual Securities Report, etc.' in this Article)" is deemed to be replaced with "a Confirmation Letter under Article 24-4-2, paragraph (1) or (2) (including as applied mutatis mutandis pursuant to Article 24-4-2, paragraph (3) (including as applied mutatis mutandis pursuant to Article 24-4-2, paragraph (4)) or Article 24-4-2, paragraph (4))", and the phrase "similar to an Annual Securities Report, etc., but that has been prepared in English and disclosed in a foreign state is deemed to be replaced with "in which it has stated the particulars that are required to be stated in a Confirmation Letter"; in Article 24, paragraph (9), the phrase "documents stating the particulars not stated in the Foreign Company Report that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors, and other" is deemed to be replaced with "other"; in Article 24, paragraph (11), the term "an Annual Securities Report, etc." is deemed to be replaced with "a Confirmation Letter under Article 24-4-2, paragraph (1) or (2) (including as applied mutatis mutandis pursuant to Article 24-4-2, paragraph (3) (including as applied mutatis mutandis pursuant to Article 24-4-2, paragraph (4)) or Article 24-4-2, paragraph (4))"; and any other necessary technical replacement of terms is specified by Cabinet Order.
(Submission of an Amended Confirmation Letter)
Article 24-4-3 (1) The provisions of Article 7, paragraph (1),Article 9, paragraph (1), and Article 10, paragraph (1) apply mutatis mutandis to a Confirmation Letter. In this case, in Article 7, paragraph (1), the phrase "If, on or after the day on which a notification under Article 4, paragraphs (1) to (3) inclusive is filed and before the day on which that notification comes into effect, a material particular that is required to be stated in a statement or other document under Article 5, paragraph (1) or paragraph (13) changes" is deemed to be replaced with "If a material particular that is required to be stated in a Confirmation Letter changes", the phrase "the person filing the notification" is deemed to be replaced with "the Person Submitting the Confirmation Letter", and the term "amended statement" is deemed to be replaced with "amended Confirmation Letter"; in Article 9, paragraph (1), the phrase "the person that submitted it" is deemed to be replaced with "the Person Submitting the Confirmation Letter" and the term "amended statement" is deemed to be replaced with "amended Confirmation Letter"; in Article 10, paragraph (1)), the phrase "the person submitting the Securities Registration Statement" is deemed to be replaced with "the Person Submitting the Confirmation Letter" and the phrase "to submit an amended statement, and if the Prime Minister finds it to be necessary, the Prime Minister may order the suspension of the validity of a notification under Article 4, paragraphs (1) to (3) inclusive" is deemed to be replaced with "to submit an amended Confirmation Letter"; and any other necessary technical replacement of terms is specified by Cabinet Order.
(2) The provisions of Article 6 apply mutatis mutandis if an amended Confirmation Letter is submitted for a Confirmation Letter pursuant to Article 7, paragraph (1), Article 9, paragraph (1), or Article 10, paragraph (1), as applied mutatis mutandis pursuant to the preceding paragraph. The necessary technical replacement of terms for such a case is specified by Cabinet Order.
(3) The provisions of Article 24, paragraphs (8), (9), and (11) apply mutatis mutandis if an amended Confirmation Letter is submitted for a Confirmation Letter that a foreign company has submitted pursuant to Article 7, paragraph (1), Article 9, paragraph (1), or Article 10, paragraph (1), as applied mutatis mutandis through the replacement of certain terms pursuant to paragraph (1). The necessary technical replacement of terms for such a case is specified by Cabinet Order.
(Evaluation of the System for Ensuring the Appropriateness of Documents and Other Information Related to Financial Accounting)
Article 24-4-4 (1) For each business year, a company required to submit an Annual Securities Report under Article 24, paragraph (1) (including one that has submitted an Annual Securities Report under Article 23-3, paragraph (4); the same applies in the following paragraph) which is the Issuer of Securities set forth in Article 24, paragraph (1), item (i) or which is any other company specified by Cabinet Order, shall submit a report to the Prime Minister in which the system specified by Cabinet Office Ordinance as necessary for ensuring the appropriateness of documents and other information related to the financial accounting of the corporate group to which the company belongs and of the company is evaluated pursuant to the provisions of Cabinet Office Ordinance (hereinafter referred to as an "Internal Control Report"), together with its Annual Securities Report (or a Foreign Company Report, if the company submits a Foreign Company Report instead of the Annual Securities Report, etc. set forth in Article 24, paragraph (8), pursuant to that paragraph), pursuant to the provisions of Cabinet Office Ordinance.
(2) A company that is required to submit an Annual Securities Report under Article 24, paragraph (1) but that is not required to submit an Internal Control Report together with an Annual Securities Report pursuant to the preceding paragraph (except a company specified by Cabinet Order), may voluntarily submit the Internal Control Report provided for in the preceding paragraph.
(3) The provisions of the preceding two paragraphs apply mutatis mutandis to a company specified by Cabinet Order that is required to submit an Annual Securities Report under Article 24, paragraph (1) as applied mutatis mutandis pursuant to paragraph (5) of that Article (including a company that has submitted an Annual Securities Report pursuant to Article 23-3, paragraph (4)). In this case, in paragraph (1), the phrase "or any other company specified by Cabinet Order" is deemed to be replaced with "or any other company specified by Cabinet Order (limited to one that is the Issuer of regulated Securities (meaning regulated Securities provided for in Article 5, paragraph (1); hereinafter the same applies in this paragraph)", the term "business year" is deemed to be replaced with "Specified Period (meaning the Specified Period provided for in Article 24, paragraph (1) as applied mutatis mutandis pursuant to Article 24, paragraph (5)) designated for the regulated Securities", the phrase "of the corporate group to which the company belongs and of the company" is deemed to be replaced with "for assets connected with the asset management and other similar business conducted by the company"; and any other necessary technical replacement of terms is specified by Cabinet Order.
(4) A document stating the particulars of the system specified by Cabinet Office Ordinance which is referred to in paragraph (1), and other documents that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors, must accompany an Internal Control Report.
(5) The provisions of Article 6 apply mutatis mutandis if an Internal Control Report and accompanying documents are submitted pursuant to paragraph (1) or (2) (including as applied mutatis mutandis pursuant to paragraph (3); hereinafter the same applies in this Article) and the preceding paragraph. The necessary technical replacement of terms for such a case is specified by Cabinet Order.
(6) The provisions of Article 24, paragraphs (8), (9), and (11) to (13) inclusive apply mutatis mutandis if a Reporting Foreign Company submits the Internal Control Report under paragraph (1) or (2) of this Article (but only if the Reporting Foreign Company submits Foreign Company Reports). In this case, in Article 24, paragraph (8), the phrase "a foreign company that is required to submit an Annual Securities Report pursuant to paragraph (1) (including as applied mutatis mutandis pursuant to paragraph (5); hereinafter the same applies in this paragraph to paragraph (13) inclusive) (including a foreign company that has submitted an Annual Securities Report pursuant to Article 23-3, paragraph (4); hereinafter referred to as a 'Reporting Foreign Company')" is deemed to be replaced with "a foreign company that is required to submit an Annual Securities Report pursuant to paragraph (1) (including as applied mutatis mutandis pursuant to paragraph (5); hereinafter the same applies in this paragraph to paragraph (13) inclusive)", the phrase "an Annual Securities Report under paragraph (1) and the documents that are required to accompany it pursuant to paragraph (6) (hereinafter collectively referred to as an "Annual Securities Report, etc." in this Article)" is deemed to be replaced with "an Internal Control Report under Article 24-4-4, paragraph (1) or (2) (including as applied mutatis mutandis pursuant to Article 24-4-4, paragraph (3)) and documents that are required to accompany it pursuant to Article 24-4-4, paragraph (4) (hereinafter collectively referred to as an 'Internal Control Report, etc.')", and the phrase "similar to an Annual Securities Report, etc., but that has been prepared in English and disclosed in a foreign state is deemed to be replaced with "in which it has stated the particulars that are required to be stated in an Internal Control Report, etc."; in Article 24, paragraph (9), the phrase "documents stating the particulars not stated in the Foreign Company Report that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors, and other" is deemed to be replaced with "other"; in Article 24, paragraph (11), the phrase "an Annual Securities Report, etc." is deemed to be replaced with "an Internal Control Report, etc."; and any other necessary technical replacement of terms is specified by Cabinet Order.
(Submission of an Amended Internal Control Report)
Article 24-4-5 (1) The provisions of Article 7, paragraph (1), Article 9, paragraph (1), and Article 10, paragraph (1) apply mutatis mutandis to an Internal Control Report and accompanying documents. In this case, in Article 7, paragraph (1), the phrase "If, on or after the day on which a notification under Article 4, paragraphs (1) to (3) inclusive is filed and before the day on which that notification comes into effect, a material particular that is required to be stated in a statement or other document under Article 5, paragraph (1) or paragraph (13) changes" is deemed to be replaced with "If a material particular that is required to be stated in an Internal Control Report or accompanying document changes", the phrase "the person filing the notification" is deemed to be replaced with "the person submitting the Internal Control Report", and the term "amended statement" is deemed to be replaced with "amended report"; in Article 9, paragraph (1), the phrase "the person that submitted it" is deemed to be replaced with "the person that submitted the Internal Control Report" and the term "amended statement" is deemed to be replaced with "amended report"; in Article 10, paragraph (1)), the phrase "the person submitting the Securities Registration Statement" is deemed to be replaced with "the person submitting the Internal Control Report" and the phrase "to submit an amended statement, and if the Prime Minister finds it to be necessary, the Prime Minister may order the suspension of the validity of a notification under Article 4, paragraphs (1) to (3) inclusive" is deemed to be replaced with "to submit an amended report"; and any other necessary technical replacement of terms is specified by Cabinet Order.
(2) The provisions of Article 6 apply mutatis mutandis if an amended report is submitted pursuant to Article 7, paragraph (1), Article 9, paragraph (1) and Article 10, paragraph (1) as applied mutatis mutandis pursuant to the preceding paragraph in connection with an Internal Control Report or accompanying document. The necessary technical replacement of terms for such a case is specified by Cabinet Order.
(3) The provisions of Article 24, paragraphs (8), (9), and (11) apply mutatis mutandis if an amended report is submitted in connection with an Internal Control Report that has been submitted by a foreign company pursuant to Article 7, paragraph (1), Article 9, paragraph (1), or Article 10, paragraph (1) as applied mutatis mutandis through the replacement of certain terms pursuant to paragraph (1). The necessary technical replacement of terms for such a case is specified by Cabinet Order.
(Mutatis Mutandis Application of Provisions on Compensatory Liability)
Article 24-4-6 The provisions of Article 22 apply mutatis mutandis if an Internal Control Report (including any accompanying document) contains a false statement about a material particular, omits a statement as to a material particular that is required to be stated, or omits a statement of material fact that is necessary to prevent it from being misleading. In this case, in Article 22, paragraph (1), the phrase "a person that, without knowing that the statement is false or has been omitted, acquires Securities issued by the person submitting the Securities Registration Statement other than through a Public Offering or Secondary Distribution" is deemed to be replaced with "a person that, without knowing that the statement is false or has been omitted, acquires Securities issued by the person submitting the Internal Control Report (including any amended report in connection with this)", and any other necessary technical replacement of terms is specified by Cabinet Order.
(Submission of Quarterly Securities Reports)
Article 24-4-7 (1) For each three-month period of the business year if the business year is longer than three months (excluding periods specified by Cabinet Order; the same applies hereinafter), a company required to submit an Annual Securities Report set forth in Article 24, paragraph (1) (including a company which submits Annual Securities Reports under Article 23-3, paragraph (4); the same applies in the following paragraph), which is the Issuer of Securities set forth in Article 24, paragraph (1), item (i) or which is any other company specified by Cabinet Order (hereinafter, such a company is referred to as a "Listed Company, etc." in this paragraph and the following paragraph) shall submit a report (hereinafter referred to as a "Quarterly Securities Report") stating the financial condition of the corporate group to which the company belongs and other particulars that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors (hereinafter referred to as the "Particulars for Inclusion in a Quarterly Securities Report" in this paragraph) to the Prime Minister within the period designated by Cabinet Order but not exceeding 45 days after the three-month period (if there is a compelling reason that the company cannot submit it within such a period, within a period approved in advance by the Prime Minister pursuant to the provisions of Cabinet Office Ordinance). In this, a Listed Company, etc. conducting business specified by Cabinet Office Ordinance shall submit a Quarterly Securities Report stating, in addition to the Particulars for Inclusion in a Quarterly Securities Report, the financial condition of the company and other particulars that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors to the Prime Minister within the period specified by Cabinet Order but not exceeding 60 days after the three-month period (if there is a compelling reason that the company cannot submit it within such a period, within a period approved in advance by the Prime Minister pursuant to the provisions of Cabinet Office Ordinance).
(2) A company (other than one specified by Cabinet Order) other than a Listed Company, etc. which is required to submit an Annual Securities Report set forth in Article 24, paragraph (1) may voluntarily submit Quarterly Securities Reports.
(3) The provisions of the preceding two paragraphs apply mutatis mutandis to a company specified by Cabinet Order which is required to submit an Annual Securities Report under Article 24, paragraph (1) as applied mutatis mutandis pursuant to paragraph (5) of that Article (including a company that has submitted an Annual Securities Report under Article 23-3, paragraph (4)). In this case, in paragraph (1), the phrase "specified by Cabinet Order ("is deemed to be replaced with "specified by Cabinet Order (limited to the Issuer of regulated Securities (meaning regulated Securities provided for in Article 5, paragraph (1); hereinafter the same applies in this paragraph);", the phrase "if the business year" is deemed to be replaced with "if the Specified Period (meaning a Specified Period provided for in Article 24, paragraph (1) as applied mutatis mutandis pursuant to Article 24, paragraph (5); hereinafter the same applies in this paragraph) designated for the Securities", the phrase "of the business years" is deemed to be replaced with "of the Specified Period", the phrase "the corporate group to which the company belongs" is deemed to be replaced with "asset management and other similar business conducted by the company", and the phrase "financial condition of the company" is deemed to be replaced with "asset accounting in connection with asset management and other similar business conducted by the company"; and any other necessary technical replacement of terms is specified by Cabinet Order.
(4) The provisions of Articles 7, paragraph (1), Article 9, paragraph (1), and Article 10, paragraph (1) apply mutatis mutandis to Quarterly Securities Reports, and Article 22 applies mutatis mutandis if a Quarterly Securities Report or the related amended report contains a false statement about a material particular, omits a statement as to a material particular that is required to be stated, or omits a statement of material fact that is necessary to prevent it from being misleading. In this case, in Article 7, paragraph (1), the phrase "If, on or after the day on which a notification under Article 4, paragraphs (1) to (3) inclusive is filed and before the day on which that notification comes into effect, a material particular that is required to be stated in a statement or other document under Article 5, paragraph (1) or paragraph (13) changes" is deemed to be replaced with "If a material particular that is required to be stated in a Quarterly Securities Report (meaning a Quarterly Securities Report set forth in Article 24-4-7, paragraph (1) or (2) (including as applied mutatis mutandis pursuant to Article 24-4-7, paragraph (3); hereinafter the same applies in this Article, Article 9, paragraph (1), Article 11, paragraph (1) and Article 22) changes", the phrase "the person filing the notification" is deemed to be replaced with "the person submitting the Quarterly Securities Report", and the term "amended statement" is deemed to be replaced with "amended report"; in Article 9, paragraph (1), the phrase "the person that submitted it" is deemed to be replaced with "the person that submitted the Quarterly Securities Report" and the term "amended statement" is deemed to be replaced with "amended report"; in Article 10, paragraph (1), the phrase "the person submitting the Securities Registration Statement" is deemed to be replaced with "the person submitting the Quarterly Securities Report" and the phrase "to submit an amended statement, and if the Prime Minister finds it to be necessary, the Prime Minister may order the suspension of the validity of a notification under Article 4, paragraphs (1) to (3) inclusive" is deemed to be replaced with "to submit an amended report"; in Article 22, paragraph (1), the phrase "a person that, without knowing that the statement is false or has been omitted, acquires Securities issued by the person submitting the Securities Registration Statement other than through a Public Offering or Secondary Distribution" is deemed to be replaced with "a person that, without knowing that the statement is false or has been omitted, acquires Securities issued by the person submitting the Quarterly Securities Report and any amended report"; in Article 22, paragraph (2), the phrase "the preceding paragraph" is deemed to be replaced with "the preceding paragraph as applied mutatis mutandis pursuant to Article 24-4-7, paragraph (4)"; and any other necessary technical replacement of terms is specified by Cabinet Order.
(5) The provisions of Article 6 apply mutatis mutandis if a Quarterly Securities Report is submitted pursuant to paragraph (1) or (2) (including as applied mutatis mutandis pursuant to paragraph (3); the same applies in the following paragraph to paragraph (11) inclusive) or if an amended report is submitted in connection with that Report pursuant to the provisions of Article 7, paragraph (1), Article 9, paragraph (1) or Article 10, paragraph (1) as applied mutatis mutandis pursuant to the preceding paragraph. The necessary technical replacement of terms for such a case is specified by Cabinet Order.
(6) In a case that is specified by Cabinet Office Ordinance as one in which this does not damage the public interest or result in insufficient investor protection, instead of the Quarterly Securities Report under paragraph (1), a Reporting Foreign Company that is required to submit a Quarterly Securities Report pursuant to paragraph (1) (including a Reporting Foreign Company and that submits a Quarterly Securities Report pursuant to paragraph (2); hereinafter the same applies in this Article) may submit a document that is similar to a Quarterly Securities Report, but that has been prepared in English and disclosed in a foreign state (such a document is hereinafter referred to as a "Foreign Company Quarterly Securities Report" in this Article).
(7) A Japanese translation of the summary of the particulars stated in a Foreign Company Quarterly Securities Report that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors, as well as the documents stating the particulars not stated in the Foreign Company Quarterly Securities Report that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors and other documents specified by Cabinet Office Ordinance (such documents are hereinafter collectively referred to as "Supplementary Documents" in this Article) must accompany the Foreign Company Quarterly Securities Report, pursuant to the provisions of Cabinet Office Ordinance.
(8) If a Reporting Foreign Company submits a Foreign Company Quarterly Securities Report and Supplementary Documents pursuant to the preceding two paragraphs, the Foreign Company Quarterly Securities Report and Supplementary Documents are deemed to be a Quarterly Securities Report, the submission of the former is deemed to be the submission of the latter, and the provisions of the Financial Instruments and Exchange Act and Related Regulations apply.
(9) If the Prime Minister finds that a Reporting Foreign Company that submitted a Foreign Company Quarterly Securities Report does not satisfy the requirements for being allowed to submit the Foreign Company Quarterly Securities Report referred to in the provision of paragraph (6), the Prime Minister must notify the Reporting Foreign Company of this. 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.
(10) Notwithstanding the provisions of paragraph (1), if a Reporting Foreign Company receives a notice under the preceding paragraph, it must submit a Quarterly Securities Report under paragraph (1) within the period that is specified by Cabinet Order as necessary and appropriate in the public interest or for the protection of investors, with the day on which the notice is made as the first day for the calculation of that period.
(11) The provisions of paragraphs (6) to (8) inclusive apply mutatis mutandis if an amended report is submitted to amend a Foreign Company Quarterly Securities Report that has been submitted by a Reporting Foreign Company pursuant to the provisions of Article 7, paragraph (1), Article 9, paragraph (1), or Article 10, paragraph (1), as applied mutatis mutandis through the replacement of certain terms pursuant to paragraph (4), or to amend its Supplementary Documents. The necessary technical replacement of terms for such a case is specified by Cabinet Order.
(12) If, pursuant to the provisions of Cabinet Office Ordinance, a company that is required to submit a Quarterly Securities Report pursuant to paragraph (1) (limited to as applied mutatis mutandis pursuant to paragraph (3); hereinafter the same applies in this Article) (including a company that submits the Quarterly Securities Report under paragraph (2) (limited to as applied mutatis mutandis pursuant to paragraph (3))) submits the documents stating a part of the particulars specified by Cabinet Office Ordinance under paragraph (1) (limited to documents prepared based on laws and regulations or the rules of a Financial Instruments Exchange (including anything specified by Cabinet Office Ordinance as being similar to such rules); such documents are hereinafter referred to as "Documents Substituted for Part of a Quarterly Securities Report" in this paragraph and the following paragraph) together with a Quarterly Securities Report to the Prime Minister, with regard to the application of paragraph (1) to a case in which a company receives the acknowledgement of the Prime Minister, pursuant to the provisions of Cabinet Office Ordinance, as one whose doing so does not damage the public interest or result in insufficient investor protection, in paragraph (1), the phrase "other particulars that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors" is deemed to be replaced with "other particulars that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors (excluding particulars stated in Documents Substituted for Part of the Quarterly Securities Report as defined in paragraph (12))".
(13) If Documents Substituted for Part of a Quarterly Securities Report are submitted together with the Quarterly Securities Report referred to in paragraph (1) as it applies through the replacement of certain terms pursuant to the preceding paragraph, the Documents Substituted for Part of the Quarterly Securities Report are deemed to form a part of the Quarterly Securities Report, the submission of the Documents Substituted for Part of the Quarterly Securities Report is deemed to be the submission of the Documents Substituted for Part of the Quarterly Securities Report as a part of the Quarterly Securities Report, and the provisions of the Financial Instruments and Exchange Act and Related Regulations apply.
(Mutatis Mutandis Application of Provisions Concerning Confirmation Letters to Quarterly Securities Reports)
Article 24-4-8 (1) The provisions of Article 24-4-2 apply mutatis mutandis if a Quarterly Securities Report is submitted pursuant to paragraph (1) or (2) of the preceding Article (including as applied mutatis mutandis pursuant to Article 24-4-7, paragraph (3)) or if an amended report is submitted pursuant to Article 7, paragraph (1), Article 9, paragraph (1), or Article 10, paragraph (1) as applied mutatis mutandis through the replacement of certain terms pursuant to Article 24-4-7, paragraph (4). In this case, in Article 24-4-2, paragraph (1), the phrase "the content of statements in the Annual Securities Report" is deemed to be replaced with "the content of statements in the Quarterly Securities Report (including any amended report in connection with this; hereinafter the same applies in this Article)", the phrase "Foreign Company Report instead of the Annual Securities Report, etc." is deemed to be replaced with "Foreign Company Quarterly Securities Report instead of the Quarterly Securities Report", and the phrase "or a Foreign Company Report" is deemed to be replaced with "or a Foreign Company Quarterly Securities Report"; in Article 24-4-2, paragraph (2), the phrase "together with an Annual Securities Report" is deemed to be replaced with "together with a Quarterly Securities Report"; in Article 24-4-2, paragraph (6) the phrase "a Confirmation Letter under Article 24-4-2, paragraph (1) or (2) (including as applied mutatis mutandis pursuant to Article 24-4-2, paragraph (3) (including as applied mutatis mutandis pursuant to Article 24-4-2, paragraph (4)) or Article 24-4-2, paragraph (4))" is deemed to be replaced with "a Confirmation Letter under Article 24-4-2, paragraph (1) or (2) (including as applied mutatis mutandis pursuant to Article 24-4-2, paragraph (3) (including as applied mutatis mutandis pursuant to Article 24-4-2, paragraph (4)) or Article 24-4-2, paragraph (4)) as applied mutatis mutandis through the replacement of certain terms pursuant to Article 24-4-8"; and any other necessary technical replacement of terms is specified by Cabinet Order.
(2) The provisions of Article 24-4-3 apply mutatis mutandis if an amended Confirmation Letter is submitted for a Confirmation Letter that has been submitted pursuant to the preceding paragraph. The necessary technical replacement of terms for such a case is specified by Cabinet Order.
(Submission of Semiannual Securities Reports and Extraordinary Reports)
Article 24-5 (1) If the business year of a company that is required to submit the Annual Securities Report set forth in Article 24, paragraph (1) (including one that has submitted an Annual Securities Report under Article 23-3, paragraph (4); the same applies in paragraph (4)) but that is not required to submit the Quarterly Securities Report under Article 24-4-7, paragraph (1) (including one that has submitted the Quarterly Securities Report under Article 24-4-7, paragraph (2); the same applies in paragraph (3)) is longer than six months, that company must submit, pursuant to the provisions of Cabinet Office Ordinance, a report for each business year stating financial condition of the corporate group to which it belongs and its own financial condition, other material particulars of the company's business, and other particulars that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors in connection with the first six months of the relevant business year (such a report is hereinafter referred to as a "Semiannual Securities Report") to the Prime Minister within three months after the end of the first six months (if there is a compelling reason that the company cannot submit it within such period, within the period approved in advance by the Prime Minister pursuant to the provisions of Cabinet Office Ordinance).
(2) Unless it falls under any of the categories of persons specified in the following items, a company submitting or seeking to submit an Annual Securities Report under Article 24, paragraph (1) that states the particulars specified in paragraph (2) of that Article, may state the particulars set forth in the preceding paragraph that are specified by Cabinet Office Ordinance as being relevant to that company, instead of stating all of the particulars set forth in the preceding paragraph, in the Semiannual Securities Report that it is required to submit pursuant to the preceding paragraph:
(i) a person that has already submitted an Annual Securities Report stating the particulars specified in the main clause of Article 24, paragraph (1) or a Semiannual Securities Report stating the particulars specified in the preceding paragraph; and
(ii) a person that has submitted or is required to submit a statement under Article 5, paragraph (1) stating the particulars set forth in Article 5, paragraph (1), item (ii) for a Public Offering or Secondary Distribution of Securities to which the main clause of Article 4, paragraph (1), the main clause of Article 4, paragraph (2), or the main clause of Article 4, paragraph (3) applies (excluding a person set forth in the preceding item).
(3) The provisions of the preceding two paragraphs apply mutatis mutandis to a company that is required to submit the Annual Securities Report under Article 24, paragraph (1) as applied mutatis mutandis pursuant to paragraph (5) of that Article (including a company that submits the Annual Securities Report under Article 23-3, paragraph (4); the same applies in the following paragraph and paragraph (20)) but that is not required to submit the Quarterly Securities Report under Article 24-4-7, paragraph (1) as applied mutatis mutandis pursuant to paragraph (3) of that Article. In this case, in paragraph (1), the phrase "of a company that is required" is deemed to be replaced with "of a company (limited to the Issuer of regulated Securities (meaning regulated Securities as defined in Article 5, paragraph (1); hereinafter the same applies in this paragraph and the following paragraph)) that is required", the term "the business year" is deemed to be replaced with "the Specified Period (meaning a Specified Period provided for in Article 24, paragraph (1) as applied mutatis mutandis pursuant to paragraph (5) of that Article; hereinafter the same applies in this paragraph) designated for the regulated Securities", the phrase "for each business year" is deemed to be replaced with "for each Specified Period", the phrase "the relevant business year" is deemed to be replaced with "the relevant Specified Period", and the phrase "financial condition of the corporate group to which it belongs and its own financial condition, other material particulars of the company's business" is deemed to be replaced with "asset accounting in connection with asset management and other similar business conducted by the company, other material particulars of the company's assets"; and in paragraph (2), the term "of Securities" is deemed to be replaced with "of regulated Securities".
(4) If a Public Offering or Secondary Distribution of Securities issued by a company that is required to submit the Annual Securities Report under Article 24, paragraph (1) (including as applied mutatis mutandis pursuant to Article 24, paragraph (5)) is conducted in a foreign state or in other cases that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors, said company, pursuant to the provisions of Cabinet Office Ordinance, must submit a report stating the details of it (hereinafter referred to as an "Extraordinary Report") to the Prime Minister without delay.
(5) The provisions of Article 7,paragraph (1), Article 9, paragraph (1), and Article 10, paragraph (1) apply mutatis mutandis to Semiannual Securities Reports and Extraordinary Reports, and the provisions of Article 22 apply mutatis mutandis if a Semiannual Securities Report, Extraordinary Report, or any amended report in connection with either of these contains a false statement about a material particular, omits a statement as to a material particular that is required to be stated, or omits a statement of material fact that is necessary to prevent it from being misleading. In this case, in Article 7,paragraph (1), the phrase "If, on or after the day on which a notification under Article 4, paragraphs (1) to (3) inclusive is filed and before the day on which that notification comes into effect, a material particular that is required to be stated in a statement or other document under Article 5, paragraph (1) or paragraph (13) changes" is deemed to be replaced with "If a material particular that is required to be stated in a Semiannual Securities Report (meaning a Semiannual Securities Report as set forth in Article 24-5, paragraph (1) (including as applied mutatis mutandis pursuant to Article 24-5, paragraph (3)); hereinafter the same applies in this Article, Article 9, paragraph (1), Article 10, paragraph (1), and Article 22) or an Extraordinary Report (meaning an Extraordinary Report as set forth in Article 24-5, paragraph (4); hereinafter the same applies in this Article, Article 9, paragraph (1), Article 10, paragraph (1), and Article 22) changes", the phrase "the person filing the notification" is deemed to be replaced with "the person submitting the Semiannual Securities Report or Extraordinary Report", and the term "amended statement" is deemed to be replaced with "amended report"; in Article 9, paragraph (1), the phrase "the person that submitted it" is deemed to be replaced with "the person that submitted the Semiannual Securities Report or Extraordinary Report" and the phrase "amended statement" is deemed to be replaced with "amended report"; in Article 10, paragraph (1), the phrase "the person submitting the Securities Registration Statement" is deemed to be replaced with "the person submitting the Semiannual Securities Report or Extraordinary Report"; in Article 10, paragraph (1), the phrase "to submit an amended statement, and if the Prime Minister finds it to be necessary, the Prime Minister may order the suspension of the validity of a notification under Article 4, paragraphs (1) to (3) inclusive" is deemed to be replaced with "to submit an amended report"; in Article 22, paragraph (1), the phrase "a person that, without knowing that the statement is false or has been omitted, acquires Securities issued by the person submitting the Securities Registration Statement other than through a Public Offering or Secondary Distribution" is deemed to be replaced with "a person that, without knowing that the statement is false or has been omitted, acquires Securities issued by the person submitting the Semiannual Securities Report or Extraordinary Report, or any amended report in connection with these"; and in Article 22, paragraph (2), the phrase "the preceding paragraph" is deemed to be replaced with "the preceding paragraph as applied mutatis mutandis pursuant to Article 24-5, paragraph (5)".
(6) The provisions of Article 6 apply mutatis mutandis if a Semiannual Securities Report or Extraordinary Report is submitted pursuant to paragraph (1) (including as applied mutatis mutandis pursuant to paragraph (3); the same applies in the following paragraph to paragraph (12) inclusive) or paragraph (4) and an amended report is submitted in connection with it pursuant to the provisions of Article 7, paragraph (1), Article 9, paragraph (1), or Article 10, paragraph (1), as applied mutatis mutandis pursuant to the preceding paragraph.
(7) In a case that is specified by Cabinet Office Ordinance as one in which this does not damage the public interest or result in insufficient investor protection, instead of a Semiannual Securities Report under paragraph (1), a Reporting Foreign Company that is required to submit a Semiannual Securities Report pursuant to said paragraph may submit a document that is similar to a Semiannual Securities Report, but that has been prepared in English and disclosed in a foreign state (such documents are hereinafter referred to as a "Foreign Company Semiannual Securities Report" in this Article).
(8) A Japanese translation of the summary of the particulars stated in a Foreign Company Semiannual Securities Report that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors, as well as documents stating the particulars not stated in a Foreign Company Semiannual Securities Report that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors, and other documents that are specified by Cabinet Office Ordinance (such documents are hereinafter collectively referred to as "Supplementary Documents" in this Article) must accompany a Foreign Company Semiannual Securities Report, pursuant to the provisions of Cabinet Office Ordinance.
(9) If a Reporting Foreign Company submits a Foreign Company Semiannual Securities Report and Supplementary Documents pursuant to the preceding two paragraphs, the Foreign Company Semiannual Securities Report and Supplementary Documents are deemed to be a Semiannual Securities Report, the submission of the former is deemed to be the submission of the latter, and the provisions of the Financial Instruments and Exchange Act and Related Regulations apply.
(10) If the Prime Minister finds that a Reporting Foreign Company that has submitted a Foreign Company Semiannual Securities Report does not satisfy the requirements for being allowed to submit a Foreign Company Semiannual Securities Report under the provision of paragraph (7), the Prime Minister must notify the Reporting Foreign Company of this. 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.
(11) Notwithstanding the provisions of paragraph (1), if a Reporting Foreign Company receives a notice under the preceding paragraph, it must submit a Semiannual Securities Report under paragraph (1) within the period that is specified by Cabinet Order as necessary and appropriate in the public interest or for the protection of investors, with the day on which the notice is made as the first day for the calculation of that period.
(12) The provisions of paragraphs (7) to (9) inclusive apply mutatis mutandis if an amended report is submitted to amend a Foreign Company Semiannual Securities Report and Supplementary Documents for it that has have submitted by a Reporting Foreign Company pursuant to Article 7,paragraph (1), Article 9, paragraph (1), or Article 10, paragraph (1), as applied mutatis mutandis through the replacement of certain terms pursuant to paragraph (5).
(13) If, pursuant to the provisions of Cabinet Office Ordinance, a company that is required to submit the Semiannual Securities Report under paragraph (1) (limited to as applied mutatis mutandis pursuant to paragraph (3); hereinafter the same applies in this paragraph and following paragraph) submits the documents stating a part of the particulars specified by Cabinet Office Ordinance under paragraph (1) (limited to documents prepared based on laws and regulations or the rules of a Financial Instruments Exchange (including anything specified by Cabinet Office Ordinance as being similar to such rules); such documents are hereinafter referred to as "Documents Substituted for Part of a Semiannual Securities Report" in this paragraph and the following paragraph) together with a Semiannual Securities Report to the Prime Minister, with regard to the application of paragraphs (1) and (2) to cases in which a company receives the acknowledgement of the Prime Minister, pursuant to the provisions of Cabinet Office Ordinance, as one whose doing so does not damage the public interest or result in insufficient investor protection, in paragraph (1), the phrase "other particulars that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors" is deemed to be replaced with "other particulars that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors (excluding particulars stated in Documents Substituted for Part of a Semiannual Securities Report as defined in paragraph (13))" and in paragraph (2), the term "the particulars set forth in the preceding paragraph" is deemed to be replaced with "the particulars set forth in the preceding paragraph (excluding particulars stated in the Documents Substituted for Part of a Semiannual Securities Report as defined in paragraph (13))".
(14) If Documents Substituted for Part of a Semiannual Securities Report are submitted together with the Semiannual Securities Report referred to in paragraph (1) as it applies through the replacement of certain terms pursuant to the preceding paragraph, the Documents Substituted for Part of the Semiannual Securities Report are deemed to form a part of the Semiannual Securities Report, the submission of the Documents Substituted for Part of the Semiannual Securities Report is deemed to be the submission of the Documents Substituted for Part of the Semiannual Securities Report as a part of the Semiannual Securities Report, and the provisions of the Financial Instruments and Exchange Act and Related Regulations apply.
(15) In cases where a Reporting Foreign Company is required to submit an Extraordinary Report under paragraph (4) and falls under cases specified by Cabinet Office Ordinance as those which would not hinder the public interest or the protection of investors, in lieu of the Extraordinary Report under the provision of said paragraph, a document stating in English the particulars to be stated under the provision of said paragraph (hereinafter referred to as "Foreign Company Extraordinary Report" in this Article) may be submitted, pursuant to Cabinet Office Ordinance provisions.
(16) The provisions of the Financial Instruments and Exchange Act and Related Regulations applies to cases where a Reporting Foreign Company submits a Foreign Company Extraordinary Report under the provision of the preceding paragraph, by deeming said Foreign Company Extraordinary Report to be the Extraordinary Report, and deeming submission of the former to be submission of the latter.
(17) The Prime Minister must, when they find that a Reporting Foreign Company which submitted a Foreign Company Extraordinary Report does not satisfy the requirements for being allowed to submit a Foreign Company Extraordinary Report under the provision of paragraph (15), notify thereof to the Reporting Foreign Company. In this case, a hearing must be held irrespective of the categories of procedures for hearing statements of opinion under Article 13, paragraph (1) of the Administrative Procedure Act.
(18) Notwithstanding the provision of paragraph (4), a Reporting Foreign Company, when receiving a notice made under the preceding paragraph, must submit an Extraordinary Report set forth in said paragraph without delay.
(19) The provisions of paragraphs (15) to (18) inclusive applies mutatis mutandis to cases where amendment reports are submitted to amend a Foreign Company Extraordinary Report submitted by a Reporting Foreign Company under Article 7, paragraph (1), Article 9, paragraph (1) or Article 10, paragraph (1) as applied mutatis mutandis by replacing certain terms pursuant to paragraph (5).
(20) If, pursuant to the provisions of Cabinet Office Ordinance, a company that is required to submit an Extraordinary Report pursuant to paragraph (4) (limited to a company that is required to submit the Annual Securities Report under Article 24, paragraph (1) as applied mutatis mutandis pursuant to Article 24, paragraph (5)) submits documents stating a part of the contents that are required to be stated in an Extraordinary Report set forth in paragraph (4) (limited to documents prepared based on laws and regulations or rules of a Financial Instruments Exchange (including anything specified by Cabinet Office Ordinance as being similar to such rules); such documents are hereinafter referred to as "Documents Substituted for Part of an Extraordinary Report" in this paragraph and the following paragraph) together with an Extraordinary Report to the Prime Minister, with regard to the application of paragraph (4) to cases in which a company receives the acknowledgement of the Prime Minister, pursuant to the provisions of Cabinet Office Ordinance, as one whose doing so does not damage the public interest or result in insufficient investor protection, in paragraph (4), the phrase "a report stating the details of it" is deemed to be replaced with "a report stating the details of it (excluding the details stated in Documents Substituted for Part of an Extraordinary Report as defined in paragraph (20)".
(21) If Documents Substituted for Part of an Extraordinary Report are submitted together with the Extraordinary Report referred to in paragraph (4) as it applies through the replacement of certain terms pursuant to the preceding paragraph, the Documents Substituted for Part of the Extraordinary Report are deemed to form a part of the Extraordinary Report, the submission of the Documents Substituted for Part of the Extraordinary Report is deemed to be the submission of the Documents Substituted for Part of the Extraordinary Report as a part of the Extraordinary Report, and the provisions of the Financial Instruments and Exchange Act and Related Regulations apply.
(Mutatis Mutandis Application of Provisions on Confirmation Letters to Semiannual Securities Reports)
Article 24-5-2 (1) The provisions of Article 24-4-2 apply mutatis mutandis if a Semiannual Securities Report is submitted pursuant to paragraph (1) of the preceding Article (including as applied mutatis mutandis pursuant to Article 24-5, paragraph (3)) or if an amended report is submitted pursuant to Article 7,paragraph (1), Article 9, paragraph (1), or Article 10, paragraph (1), as applied mutatis mutandis through the replacement of certain terms pursuant to Article 24-5, paragraph (5). In this case, in Article 24-4-2, paragraph (1), the phrase "a Foreign Company Report" is deemed to be replaced with "a Foreign Company Semiannual Securities Report", the phrase "Foreign Company Report instead of the Annual Securities Report, etc." is deemed to be replaced with "Foreign Company Semiannual Securities Report instead of the Semiannual Securities Report", and the phrase "the content of statements in the Annual Securities Report" is deemed to be replaced with "the content of statements in the Semiannual Securities Report (including any amended report in connection with this; hereinafter the same applies in this Article)"; in Article 24-4-2, paragraph (2), the phrase "together with an Annual Securities Report" is deemed to be replaced with "together with a Semiannual Securities Report"; in Article 24-4-2, paragraph (6), the phrase "a Confirmation Letter under Article 24-4-2, paragraph (1) or (2) (including as applied mutatis mutandis pursuant to Article 24-4-2, paragraph (3) (including as applied mutatis mutandis pursuant to Article 24-4-2, paragraph (4)) or Article 24-4-2, paragraph (4))" is deemed to be replaced with "a Confirmation Letter under Article 24-4-2, paragraph (1) or (2) (including as applied mutatis mutandis pursuant to Article 24-4-2, paragraph (3) (including as applied mutatis mutandis pursuant to Article 24-4-2, paragraph (4)) or Article 24-4-2, paragraph (4)) as applied mutatis mutandis through the replacement of certain terms pursuant to Article 24-5-2"; and any other necessary technical replacement of terms is specified by Cabinet Order.
(2) The provisions of Article 24-4-3 apply mutatis mutandis if an amended Confirmation Letter is submitted for a Confirmation Letter that has been submitted pursuant to the preceding paragraph. The necessary technical replacement of terms for such a case is specified by Cabinet Order.
(Submission of Reports on Repurchase)
Article 24-6 (1) An Issuer of share certificates listed in a Financial Instruments Exchange, share certificates specified by Cabinet Order as those of which the state of distribution can be regarded as being equivalent to share certificates listed in a Financial Instruments Exchange or other Securities specified by Cabinet Order (hereinafter collectively referred to as "Listed Share Certificates, etc." in this Article, Articles 27-22-2 to 27-22-4 inclusive and Article 167) shall, when a resolution of a shareholders meeting or board of directors' meeting set forth in Article 156, paragraph (1) of the Companies Act (including the cases where it is applied by replacing certain terms pursuant to Article 165, paragraph (3) of that Act) or a decision of an organization specified by Cabinet Order as being equivalent thereto is made (hereinafter referred to as the "Resolution, etc." in this paragraph), submit a report which, pursuant to the provisions of Cabinet Office Ordinance, states matters pertaining to the status of buyback of Listed Share Certificates, etc. for its own shares or equity conducted based on the Resolution, etc. of the shareholders meeting or board of directors' meeting or a meeting specified by Cabinet Order as being equivalent thereto (hereinafter referred to as the "Shareholders Meeting, etc." in this paragraph) during each month from the month which includes the day when the Shareholders Meeting, etc. in which the Resolution, etc. was made was concluded to the month which includes the day when the period set forth in Article 156, paragraph (1), item (iii) of that Act is to expire or the day specified by Cabinet Order as being equivalent thereto (each month is referred to as the "Reporting Month" in this paragraph) (including the cases where no buyback is conducted) and other matters specified by Cabinet Office Ordinance as necessary and appropriate for the public interest or protection of investors to the Prime Minister by the 15th day of the month following each Reporting Month.
(2) The provisions of Article 7,paragraph (1), Article 9, paragraph (1), and Article 10, paragraph (1) apply mutatis mutandis to a report set forth in the preceding paragraph (hereinafter referred to as a "Report on Repurchase"), and the provisions of Article 22 apply mutatis mutandis if a Report on Repurchase contains a false statement about a material particular, omits a statement as to a material particular that is required to be stated, or omits a statement of material fact that is necessary to prevent it from being misleading. In this case, in Article 7,paragraph (1), the phrase "If, on or after the day on which a notification under Article 4, paragraphs (1) to (3) inclusive is filed and before the day on which that notification comes into effect, a material particular that is required to be stated in a statement or other document under Article 5, paragraph (1) or paragraph (13) changes" is deemed to be replaced with "If a material particular that is required to be stated in a Report on Repurchase (meaning a report set forth in Article 24-6, paragraph (1); hereinafter the same applies in this Article, Article 9, paragraph (1), Article 10, paragraph (1), and Article 22) changes", the phrase "the person filing the notification" is deemed to be replaced with "the person submitting the Report on Repurchase", and the term "amended statement" is deemed to be replaced with "amended report"; in Article 9, paragraph (1) the phrase "the person that submitted it" is deemed to be replaced with "the person that submitted the Report on Repurchase" and the term "amended statement" is deemed to be replaced with "amended report"; in Article 10, paragraph (1), the phrase "the person submitting the Securities Registration Statement" is deemed to be replaced with "the person submitting the Report on Repurchase" and the phrase "to submit an amended statement, and if the Prime Minister finds it to be necessary, the Prime Minister may order the suspension of the validity of a notification under Article 4, paragraphs (1) to (3) inclusive" is deemed to be replaced with "to submit an amended report"; in Article 22, paragraph (1), the phrase "persons set forth in Article 21, paragraph (1), items (i) and (iii)" is deemed to be replaced with "person that, at the time of submission of the Report on Repurchase, is an officer of the Issuer that submitted that Report", and the phrase "a person that, without knowing that the statement is false or has been omitted, acquires Securities issued by the person submitting the Securities Registration Statement other than through a Public Offering or Secondary Distribution" is deemed to be replaced with "a person that, without knowing that the statement is false or has been omitted, acquires Securities issued by the person submitting the Report on Repurchase"; and in Article 22, paragraph (2), the phrase "Article 21, paragraph (2), items (i) and (ii)" is deemed to be replaced with "Article 21, paragraph (2), item (i)" and the phrase "the preceding paragraph" is deemed to be replaced with "the preceding paragraph as applied mutatis mutandis pursuant to Article 24-6, paragraph (2)".
(3) The provisions of Article 6 apply mutatis mutandis if a Report on Repurchase is submitted pursuant to paragraph (1) and if an amended report is submitted in connection with a Report on Repurchase, pursuant to Article 7,paragraph (1), Article 9, paragraph (1) or Article 10, paragraph (1) as applied mutatis mutandis pursuant to the preceding paragraph.
(Submission of a Parent Company, etc. Status Report)
Article 24-7 (1) A company that holds the majority of voting rights in a company that is required to submit an Annual Securities Report pursuant to Article 24, paragraph (1) (but only one that is the Issuer of Securities set forth in Article 24, paragraph (1), item (i) or (ii); such a company is referred to as a "Subsidiary Company Submitting an Annual Securities Report" in paragraph (4) of this Article, paragraph (5) of the following Article and Article 27-30-10), or which is otherwise specified by Cabinet Order as being closely related to a company that is required to submit an Annual Securities Report (excluding a company that is required to submit an Annual Securities Report pursuant to Article 24, paragraph (1) (including as applied mutatis mutandis pursuant to Article 24, paragraph (5); the same applies in the items of paragraph (4) of this Article) (including a company that has submitted an Annual Securities Report pursuant to Article 23-3, paragraph (4) or that is otherwise specified by Cabinet Office Ordinance); hereinafter, a company that holds the majority of voting rights in, or is otherwise closely related to, such a company, is referred to as a "Parent Company, etc." in this Article and paragraphs (2), (4) and (5) of the following Article) shall submit a report that, pursuant to the provisions of Cabinet Office Ordinance, states the particulars of persons that hold shares in the Parent Company, etc. and other particulars that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors, for each business year of the Parent Company, etc. (or for each period specified by Cabinet Office Ordinance, if the Parent Company, etc. is an Issuer of regulated Securities; hereinafter the same applies in this paragraph and the following paragraph) (hereinafter referred to as a "Parent Company, etc. Status Report") to the Prime Minister within three months after the end of each business year (or, if the Parent Company, etc. is a foreign company, within the period that is specified by Cabinet Order as necessary and appropriate in the public interest or for the protection of investors); provided, however, that this does not apply if a company receives the acknowledgement of the Prime Minister, pursuant to the provisions of Cabinet Order, as a company whose non-submission of a Parent Company, etc. Status Report does not damage the public interest or result in insufficient investor protection.
(2) If a company that is excluded from the application of the main clause of the preceding paragraph becomes a Parent Company, etc., the company that has become a Parent Company, etc. must submit a Parent Company, etc. Status Report to the Prime Minister without delay, pursuant to the provisions of Cabinet Office Ordinance, for the business year immediately prior to the business year that includes the day on which the company becomes a Parent Company, etc.; provided, however, that this does not apply if the company has received the acknowledgment of the Prime Minister, pursuant to the provisions of Cabinet Order, as a company whose non-submission of a Parent Company, etc. Status Report does not damage the public interest or result in insufficient investor protection.
(3) The provisions of Article 7,paragraph (1), Article 9, paragraph (1), and Article 10, paragraph (1) apply mutatis mutandis to a Parent Company, etc. Status Report. In this case, in Article 7,paragraph (1), the phrase "If, on or after the day on which a notification under Article 4, paragraphs (1) to (3) inclusive is filed and before the day on which that notification comes into effect, a material particular that is required to be stated in a statement or other document under Article 5, paragraph (1) or paragraph (13) changes" is deemed to be replaced with "If a material particular that is required to be stated in a Parent Company, etc. Status Report (meaning a Parent Company, etc. Status Report as provided for in Article 24-7, paragraph (1); the same applies hereinafter) changes", the phrase "the person filing the notification" is deemed to be replaced with "the person submitting the Parent Company, etc. Status Report", and the term "amended statement" is deemed to be replaced with "amended report"; in Article 9, paragraph (1) the phrase "the person that submitted it" is deemed to be replaced with "the person submitting the Parent Company, etc. Status Report" and the term "amended statement" is deemed to be replaced with "amended report"; in Article 10, paragraph (1)), the phrase "the person submitting the Securities Registration Statement" is deemed to be replaced with "the person submitting the Parent Company, etc. Status Report" and the phrase "to submit an amended statement, and if the Prime Minister finds it to be necessary, the Prime Minister may order the suspension of the validity of a notification under Article 4, paragraphs (1) to (3) inclusive" is deemed to be replaced with "to submit an amended report"; and any other necessary technical replacement of terms is specified by Cabinet Order.
(4) A Parent Company, etc. that has submitted a Parent Company, etc. Status Report pursuant to the main clause of paragraph (1) or the main clause of paragraph (2), or that has submitted an amended report in connection with a Parent Company, etc. Status Report pursuant to Article 7,paragraph (1), Article 9, paragraph (1), or Article 10, paragraph (1), as applied mutatis mutandis pursuant to the preceding paragraph, shall send a copy of it to the Subsidiary Company Submitting Annual Securities Reports without delay, and shall also submit a copy of it to the person specified in the relevant of following items for the category of Securities set forth in said item that were issued by the Subsidiary Company Submitting Annual Securities Reports:
(i) Securities set forth in Article 24, paragraph (1), item (i): the Financial Instruments Exchange referred to in Article 24, paragraph (1), item (i); or
(ii) Securities set forth in Article 24, paragraph (1), item (ii): the Authorized Financial Instruments Firms Association specified by Cabinet Order.
(5) The provisions of Article 24, paragraphs (8), (9), and (11) to (13) inclusive apply mutatis mutandis if a Parent Company, etc. that is a foreign company submits a Parent Company, etc. Status Report. In this case, in Article 24, paragraph (8), the phrase "a foreign company that is required to submit an Annual Securities Report pursuant to paragraph (1) (including as applied mutatis mutandis pursuant to paragraph (5); hereinafter the same applies in this paragraph to paragraph (13) inclusive) (including a foreign company that has submitted an Annual Securities Report pursuant to Article 23-3, paragraph (4); hereinafter referred to as a 'Reporting Foreign Company')" is deemed to be replaced with "a Parent Company, etc. (meaning Parent Company, etc. as defined by Article 24-7, paragraph (1); hereinafter the same applies in this Article) which is a foreign company that is required to submit an Annual Securities Report pursuant to paragraph (1) (including as applied mutatis mutandis pursuant to paragraph (5); hereinafter the same applies in this paragraph to paragraph (13) inclusive)" and the phrase "similar to an Annual Securities Report, etc., but that has been prepared in English and disclosed in a foreign state is deemed to be replaced with "in which it has stated the particulars that are required to be stated in the Parent Company, etc. Status Report"; in Article 24, paragraph (9), the phrase "documents stating the particulars not stated in the Foreign Company Report that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors, and other" is deemed to be replaced with "other"; and any other necessary technical replacement of terms is specified by Cabinet Order.
(6) The provisions of the preceding paragraphs apply mutatis mutandis if the Parent Company, etc. is a person other than a company. In this case, in paragraph (1), the phrase "A company that holds the majority of voting rights" is deemed to be replaced with "A person that is other than a company and that holds the majority of voting rights", the phrase "which is otherwise specified by Cabinet Order as being closely related to" is deemed to be replaced with "that is otherwise specified by Cabinet Order as being a person that is other than a company and that is closely related to", and the phrase "persons that hold shares in the Parent Company, etc." is deemed to be replaced with "equity investors in the Parent Company, etc. and other persons"; in paragraph (2), the term "company" is deemed to be replaced with "person that is other than a company and"; in the preceding paragraph the phrase "that is a foreign company" is deemed to be replaced with "that is a foreign person"; and any other necessary technical replacement of terms is specified by Cabinet Order.
(Public Inspection of Registration Statements, etc.)
Article 25 (1) The Prime Minister shall make the documents set forth in each of the following items (hereinafter referred to as "Public Documents" in this Article and paragraph (1) of the following Article) available for public inspection pursuant to the provisions of Cabinet Office Ordinance, for the period specified in the relevant item from the day on which the Prime Minister receives the Public Document (or for an amended statement, Amended Shelf Registration Statement, amended report, or amended Confirmation Letter set forth in one of the following items, the period specified in the relevant item from the day on which the Prime Minister receives the statement and accompanying documents under Article 5, paragraphs (1) and (13), the statement and accompanying documents to which Article 5, paragraph (4) is applicable, or the Shelf Registration Statement and accompanying documents, Annual Securities Report and accompanying documents, Confirmation Letter, Internal Control Report and accompanying documents, Quarterly Securities Report, Semiannual Securities Report, Extraordinary Report, Report on Repurchase, or Parent Company, etc. Status Report subject to that amendment; and for a Confirmation Letter set forth in item (v) or (ix) (but only if the subject of the Confirmation Letter is an amended report connected with an Annual Securities Report and accompanying documents, an amended report connected with a Quarterly Securities Report, or an amended report connected with a Semiannual Securities Report), the period specified in the relevant item from the day on which the Prime Minister receives the Annual Securities Report and accompanying documents, Quarterly Securities Report, or Semiannual Securities Report that is subject to that amendment):
(i) a statement and accompanying documents under Article 5, paragraphs (1) and (13), as well as any amended statement connected with them (excluding a statement and accompanying documents or amended statement connected with them, to which Article 5, paragraph (4) is applicable): five years;
(ii) a statement and accompanying documents, as well as any amended statement connected with them, to which Article 5, paragraph (4) is applicable: one year;
(iii) a Shelf Registration Statement and accompanying documents or Shelf Registration Supplements and accompanying documents, as well as any Amended Shelf Registration Statement connected with them: until the Shelf Registration Statement ceases to be effective;
(iv) an Annual Securities Report and accompanying documents, as well as any amended report connected with them: five years;
(v) a Confirmation Letter under Article 24-4-2 and any amended Confirmation Letter connected with it: five years;
(vi) an Internal Control Report and accompanying documents, as well as any amended report connected with them: five years;
(vii) a Quarterly Securities Report and any amended report connected with it: three years;
(viii) a Semiannual Securities Report and any amended report connected with it: three years;
(ix) a Confirmation Letter under Article 24-4-2 as applied mutatis mutandis pursuant to Article 24-4-8 or Article 24-5-2, and any amended Confirmation Letter connected with it: three years;
(x) an Extraordinary Report and any amended report connected with it: one year;
(xi) a Report on Repurchase and any amended report connected with it: one year; and
(xii) a Parent Company, etc. Status Report and any amended report connected with it: five years.
(2) An Issuer of Securities that has submitted a document set forth in one of the items (i) to (xi) inclusive of the preceding paragraph, or an Issuer of Securities whose Parent Company, etc. has submitted the document set forth in item (xii) of the preceding paragraph, shall keep a copy of such document at its head office and principal branch offices, and make the document available for public inspection for the period from the day on which the document is submitted to the Prime Minister to the day on which the period specified in the relevant item of the preceding paragraph has elapsed, pursuant to the provisions of Cabinet Office Ordinance.
(3) Pursuant to the provisions of Cabinet Office Ordinance, Financial Instruments Exchanges and the Associations of Authorized Financial Instruments Firms specified by Cabinet Order shall keep copies of the documents submitted pursuant to Article 6 (including as applied mutatis mutandis pursuant to Article 12; Article 23-12, paragraph (1); Article 24, paragraph (7); Article 24-2, paragraph (3); Article 24-4-2, paragraph (5) (including as applied mutatis mutandis pursuant to Article 24-4-8, paragraph (1) and Article 24-5-2, paragraph (1)); Article 24-4-3, paragraph (2) (including as applied mutatis mutandis pursuant to Article 24-4-8, paragraph (2) and Article 24-5-2, paragraph (2)); Article 24-4-4, paragraph (5); Article 24-4-5, paragraph (2); Article 24-4-7, paragraph (5); Article 24-5, paragraph (6); and Article 24-6, paragraph (3); the same applies in paragraph (5)) and paragraph (4) of the preceding Article at their office, and make copies of the Public Documents available for public inspection for the period from the day on which the copies of these documents are submitted to the day on which the period specified in the relevant item of paragraph (1) has elapsed.
(4) Notwithstanding the provisions of the preceding three paragraphs, if, due to a need to maintain the confidentiality of a trade secret, an Issuer of Securities that has submitted a document set forth in one of items (i) to (x) inclusive of paragraph (1), or a Parent Company, etc. that has submitted a document set forth in item (xii) of that paragraph, files a petition with the Prime Minister for a part of the documents referred to in the preceding three paragraphs not to be made available for public inspection and the Prime Minister approves it, that part of the documents is not to be made available for public inspection.
(5) When an Issuer of Securities or Parent Company, etc. that has obtained the approval referred to in the preceding paragraph sends a copy of a Public Document to a Subsidiary Company Submitting Annual Securities Reports or submits a copy of such documents to a Financial Instruments Exchange or to an Authorized Financial Instruments Firms Association specified by Cabinet Order pursuant to Article 6 or paragraph (4) of the preceding Article, before sending or submitting the copy of such documents, it may remove or delete from them the part that, pursuant to the preceding paragraph, it has been decided will not be made available for public inspection.
(6) Notwithstanding the provisions of paragraph (1), if the Prime Minister issues one of the following dispositions, the Prime Minister may decide that all or part of the Public Documents that are connected with the disposition are not to be made available for public inspection:
(i) an order to submit an amended statement under the provisions of Article 9, paragraph (1) or Article 10, paragraph (1);
(ii) an order to submit an Amended Shelf Registration Statement under Article 23-9, paragraph (1) or Article 23-10, paragraph (1), or under Article 23-10, paragraph (1) as applied mutatis mutandis pursuant to Article 23-10, paragraph (5);
(iii) an order to submit an amended report under Article 9, paragraph (1) or Article 10, paragraph (1) as applied mutatis mutandis pursuant to Article 24-2, paragraph (1); Article 24-4-5, paragraph (1); Article 24-4-7, paragraph (4); Article 24-5, paragraph (5); Article 24-6, paragraph (2); or paragraph (3) of the preceding Article (including as applied mutatis mutandis pursuant to paragraph (6) of that Article); or
(iv) an order to submit an amended Confirmation Letter under Article 9, paragraph (1) or Article 10, paragraph (1) as applied mutatis mutandis pursuant to Article 24-4-3, paragraph (1).
(7) In the case referred to in the preceding paragraph, the Prime Minister is to notify a person that makes copies of Public Documents available for public inspection pursuant to paragraph (2) (or the person submitting such Public Documents and the person that makes copies of them available for public inspection, if the Public Documents comprise a Parent Company, etc. Status Report or an amended report in connection with one; such a person is referred to as the "Submitter, etc." in the following paragraph), as well as the Financial Instruments Exchange or the Authorized Financial Instruments Firms Association specified by Cabinet Order which is referred to in paragraph (3), which makes copies of those Public Documents available for public inspection pursuant to the provisions of paragraph (3), that the Prime Minister has decided that all or part of those Public Documents will not be made available for public inspection.
(8) If the Submitter, etc. or a Financial Instruments Exchange or Authorized Financial Instruments Firms Association has been notified by the Prime Minister pursuant to the provisions of the preceding paragraph, the provisions of paragraphs (2) and (3) do not apply thereafter to the copies of the Public Documents for which the notice was made.
(Collection of Reports and Inspection of a Person Submitting a Securities Registration Statement, etc.)
Article 26 (1) Whenever 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 a person that has submitted Public Documents, a person that is found to be required to submit such documents, an Underwriter of Securities, or any other concerned party or witnesses, to submit reports or materials that should serve as a reference, and may have the relevant officials inspect that person's books and documents or any other articles.
(2) When finding it necessary with regard to the order for report or submission of materials or the inspection under the preceding paragraph, the Prime Minister may inquire with public offices or public or private organizations and request them to report necessary particulars.
(Mutatis Mutandis Application of Provisions for an Issuer That Is Not a Company)
Article 27 The provisions of Article 2-2; Articles 5 to 13 inclusive; Articles 15 to 24-5-2 inclusive; and Article 24-7 to the preceding Article inclusive apply mutatis mutandis if the Issuer is a person other than a company (with regard to the mutatis mutandis application of Article 5, paragraphs (6) to (9) inclusive, Article 7, paragraph (2), Article 9, paragraph (2), Article 10, paragraph (2), Article 24, paragraphs (8) to (13) inclusive; Article 24-2, paragraph (4); Article 24-4-2, paragraph (6) (including as applied mutatis mutandis pursuant to Article 24-4-8, paragraph (1) and Article 24-5-2, paragraph (1)); Article 24-4-3, paragraph (3); Article 24-4-4, paragraph (6); Article 24-4-5, paragraph (3); Article 24-4-7, paragraphs (6) to (11) inclusive; and Article 24-5, paragraphs (7) to (12) inclusive and paragraphs (15) to (19) inclusive, this is limited to if the Issuer is a foreign person). In this case, in Article 5, paragraph (6) and Article 24, paragraph (8), the phrase "a foreign company that is required to submit" is deemed to be replaced with "a foreign person other than a company which is required to submit"; the term "Statement-filing Foreign Company" in Article 5, paragraphs (6), (8) and (9), Article 7, paragraph (2), Article 9, paragraph (2) and Article 10, paragraph (2) shall be deemed to be "Statement-filing Foreign Person"; in Article 5, paragraphs (10) to (12) inclusive and Article 7, paragraphs (3) to (5) inclusive the term "Company Submitting a Regulated Securities Registration Statement" shall be deemed to be "Person Submitting a Regulated Securities Registration Statement"; in Article 24, paragraphs (8) and (10) to (13) inclusive; Article 24-2, paragraph (4); Article 24-4-2, paragraph (6), Article 24-4-4, paragraph (6) ;Article 24-4-7, paragraphs (6) and (8) to (11) inclusive; and Article 24-5, paragraphs (7), paragraphs (9) to (12) inclusive and paragraphs (15) to (19) inclusive, the phrase "Reporting Foreign Company" is deemed to be replaced with "Reporting Foreign Person"; and any other necessary technical replacement of terms or other necessary particulars relevant to the application of these provisions is specified by Cabinet Order.
Chapter II-2 Disclosure in a Tender Offer
Section 1 Tender Offers for Share Certificates, etc. by Persons Other than the Issuer
(Tender Offers for Share Certificates, etc. by Persons Other than the Issuer)
Article 27-2 (1) Any purchase, etc. of share certificates, corporate bond certificates with share options, or other Securities specified by Cabinet Order (hereinafter collectively referred to as "Share Certificates, etc." in this Chapter and Article 27-30-11 (excluding Article 27-30-11, paragraph (4))) (a purchase, etc. means a purchase or other acquisition for compensation of Share Certificates, etc., and includes acts specified by Cabinet Order as being similar to this; hereinafter the same applies in this Section) whose Issuer is required to submit an Annual Securities Report, or of the Share Certificates, etc. of an Issuer of Specified Listed Securities (including those specified by Cabinet Order as having equivalent distribution statuses to these, and limited to Share Certificates, etc.), which is effected by a person other than the Issuer and which falls under any of the categories set forth in the following items, must be effected by means of a Tender Offer; provided, however, that this does not apply to a Purchase, etc. Excluded from Application (meaning a purchase, etc. of Share Certificates, etc. that the holder of share options(excluding those allotted under the provision of Article 277 of the Companies Act and specified by a Cabinet Office Ordinance as those which would not hinder the protection of investors even if acquired by means other than a Tender Offer by ensuring the exercise of said share option; hereinafter the same applies in this paragraph) effects by exercising those share options, to a purchase, etc. of Share Certificates, etc. that the person effecting the purchase, etc. makes from its Specially Related Party (limited to a person set forth in paragraph (7), item (i) and specified by Cabinet Office Ordinance), or to any other purchase, etc. of Share Certificates, etc. that is specified by Cabinet Order; the same applies in item (iv)):
(i) a purchase, etc. of Share Certificates, etc. outside a Financial Instruments Exchange Market (excluding a purchase, etc. of Share Certificates, etc. effected through a transaction specified by Cabinet Order as being equivalent to the purchase and sale, etc. of Securities on a Financial Instruments Exchange Market and excluding a purchase, etc. of Share Certificates, etc. that is specified by Cabinet Order as a purchase, etc. made from an extremely small number of persons), if after that purchase, etc. the Ownership Ratio of Share Certificates, etc., in terms of the Share Certificates, etc. that the relevant person holds (including cases specified by Cabinet Order as equivalent to holding them; hereinafter the same applies in this Section) (or, if the person has any Specially Related Parties (other than Specially Related Parties specified in paragraph (7), item (i) and specified by Cabinet Office Ordinance), the Ownership Ratio of Share Certificates, etc. calculated by adding the Ownership Ratio of Share Certificates, etc. of the Specially Related Parties to that of the person; hereinafter the same applies in this paragraph), exceeds five percent;
(ii) a purchase, etc. of Share Certificates, etc. outside a Financial Instruments Exchange Market (excluding a purchase, etc. of Share Certificates, etc. effected through a transaction specified by Cabinet Order as being equivalent to the purchase and sale, etc. of Securities on a Financial Instruments Exchange Market; the same applies in item (iv)) which falls under the category of a purchase, etc. of Share Certificates, etc. that is specified by Cabinet Order as a purchase, etc. made from an extremely small number of persons, if after that purchase, etc. the Ownership Ratio of Share Certificates, etc., in terms of the Share Certificates, etc. that the relevant person holds, exceeds one third;
(iii) a purchase, etc. of Share Certificates, etc. through a purchase and sale, etc. of Securities on a Financial Instruments Exchange Market which is specified by the Prime Minister as being a purchase and sale, etc. of Securities based on a method other than an auction method (such a purchase and sale, etc. of Securities is hereinafter referred to as a "Specified Purchase and Sale, etc." in this paragraph), if after that purchase, etc. the Ownership Ratio of Share Certificates, etc., in terms of the Share Certificates, etc. that the relevant person holds, exceeds one third;
(iv) a purchase, etc. of Share Certificates, etc., if Share Certificates, etc. in excess of the proportion specified by Cabinet Order are acquired during the period of not more than six months that is specified by Cabinet Order, through that purchase, etc. of Share Certificates, etc. or through the acquisition of a new issue (meaning the acquisition of Share Certificates, etc. newly issued by their Issuer; hereinafter the same applies in this item) (if the acquisition is effected through a purchase, etc. of Share Certificates, etc., this is limited to an acquisition through a purchase, etc. of Share Certificates, etc. in excess of the proportion specified by Cabinet Order that is effected through a Specified Purchase and Sale, etc. or that is effected outside a Financial Instruments Exchange Market (excluding one effected through a Tender Offer and any Purchase, etc. Excluded from Application)), and if after the purchase, etc. or acquisition, the Ownership Ratio of Share Certificates, etc., in terms of the Share Certificates, etc. that the relevant person holds, exceeds one third (other than purchases, etc. set forth in the preceding three items);
(v) a purchase, etc. of Share Certificates, etc., if a Tender Offer is underway for those Share Certificates, etc., and a person other than the Issuer of the Share Certificates, etc. effects a purchase, etc. of them in excess of the proportion specified by Cabinet Order during the period of not more than six months that is specified by Cabinet Order (but only if the Ownership Ratio of Share Certificates, etc. in terms of the Share Certificates, etc. that the person holds, exceeds one third) (other than purchases, etc. set forth in the preceding items); and
(vi) any other purchase, etc. of Share Certificates, etc. specified by Cabinet Order as being equivalent to a purchase, etc. of Share Certificates, etc. set forth in any of the preceding items.
(2) A purchase, etc. of Share Certificates, etc. through a Tender Offer, as specified in the main clause of the preceding paragraph, must be effected after a purchase, etc. period is set that is within the scope of the period specified by Cabinet Order.
(3) If a purchase, etc. of Share Certificates, etc. is effected through a Tender Offer, as provided for in the main clause of paragraph (1), the purchase, etc. price (or, for anything other than a purchase, etc., the thing that is specified by Cabinet Order as being equivalent to the purchase, etc. price; hereinafter the same applies in this Section) must be based on a single set of conditions, pursuant to the provisions of Cabinet Order.
(4) If a purchase, etc. of Share Certificates, etc. is effected through a Tender Offer, as provided in the main clause of paragraph (1), a Financial Instruments Business Operator (limited to one engaged in Type I Financial Instruments Business as defined in Article 28, paragraph (1); the same applies in Article 27-12, paragraph (3)) or a bank, etc. (meaning a bank, Cooperative Financial Institution, or other financial institution specified by Cabinet Order; the same applies in Article 27-12, paragraph (3)) must be made to manage the Share Certificates, etc., effect payment for the purchase, etc., and conduct other affairs specified by Cabinet Order.
(5) If a purchase, etc. of Share Certificates, etc. is effected through a Tender Offer, as provided in the main clause of paragraph (1), it must be in accordance with the conditions and methods specified by Cabinet Order, in addition to what is prescribed in the preceding three paragraphs and other provisions of this Section.
(6) As used in this Article, effecting a "Tender Offer" means offering to effect purchase, etc. of Share Certificates, etc. or soliciting offers to sell, etc. them (meaning effecting a sale or other transfer for consideration; hereinafter the same applies in this Section) from many and unspecified persons through a public notice, and then effecting the purchase, etc. of Share Certificates, etc. outside of a Financial Instruments Exchange Market.
(7) The term "Specially Related Party" as used in paragraph (1) means one of the following persons:
(i) a person with a shareholding relationship, familial relationship, or other special relationship specified by Cabinet Order to the person effecting the purchase, etc. of Share Certificates, etc.; and
(ii) a person with which a person effecting a purchase, etc. of Share Certificates, etc. has agreed to jointly acquire or transfer the Share Certificates, etc. or to jointly exercise voting rights or other rights as shareholders in the Issuer of the Share Certificates, etc., or to transfer or acquire the Share Certificates, etc. to or from each other after the purchase, etc. of the Share Certificates, etc.
(8) The term "Ownership Ratio of Share Certificates, etc." as used in paragraph (1) means either of the following:
(i) in terms of the person effecting a purchase, etc. of Share Certificates, etc., the ratio arrived at, pursuant to the provisions of Cabinet Office Ordinance, when the total number of voting rights (meaning the number of voting rights represented by shares calculated pursuant to the provisions of Cabinet Office Ordinance, for share certificates, or the number of voting rights specified by Cabinet Office Ordinance, for Securities other than share certificates; hereinafter the same applies in this paragraph) with respect to the Share Certificates, etc. that the person holds (excluding those that are specified by Cabinet Office Ordinance in consideration of the manner in which they are held or other circumstances; hereinafter the same applies in this paragraph), are divided by the number arrived at when the total number of voting rights issued by the Issuer is added to the number of voting rights with respect to corporate bond certificates with share options and other Securities specified by Cabinet Order issued by the Issuer and held by that person and Specially Related Parties of that person; or
(ii) for Specially Related Parties as defined in the preceding paragraph (excluding persons that fall under the category specified in item (ii) of the preceding paragraph and that purchase, etc. any Share Certificates, etc. issued by the Issuer of the Share Certificates, etc.), the rate arrived at, pursuant to the provisions of Cabinet Office Ordinance, when the number of voting rights with respect to the Share Certificates, etc. that the party holds, is divided by the number arrived at when the total of the number of voting rights issued by the Issuer is added to the number of voting rights with respect to corporate bond certificates with share options and other Securities specified by Cabinet Order issued by the Issuer and held by that party and the person effecting a purchase, etc. of Share Certificates, etc. that is set forth in the preceding item.
(Public Notice of the Commencement of a Tender Offer and Submission of a Tender Offer Statement)
Article 27-3 (1) A person that, pursuant to the main clause of paragraph (1) of the preceding Article, is required to effect any purchase, etc. of Share Certificates, etc. through a Tender Offer as prescribed in Article 27-2, paragraph (1) (hereinafter referred to as a "Tender Offer" in this Section) shall, pursuant to the provisions of Cabinet Order, issue public notice of the purpose of the Tender Offer, the purchase, etc. price, the number of Share Certificates, etc. sought for purchase (meaning the number of shares, for share certificates, or the number of shares specified by Cabinet Office Ordinance for Securities other than share certificates; hereinafter the same applies in this Section), the purchase, etc. period, and other particulars specified by Cabinet Office Ordinance. In this, if the purchase, etc. period is shorter than the period specified by Cabinet Order, it must be clearly indicated in the public notice that the purchase, etc. period may be extended pursuant to Article 27-10, paragraph (3).
(2) A person that issues the public notice under the preceding paragraph (hereinafter referred to as a "Public Notice of the Commencement of a Tender Offer" in this Section) (such a person is hereinafter referred to as a "Tender Offeror" in this Section) must submit a document stating the following particulars and the accompanying documents specified by Cabinet Office Ordinance (hereinafter collectively referred to as the "Tender Offer Statement" in this Section and Articles 197 and 197-2) to the Prime Minister on the day on which it issues the Public Notice of the Commencement of the Tender Offer, pursuant to the provisions of Cabinet Office Ordinance; provided, however, that, if the day on which the person is required to submit the Tender Offer Statement falls on a Sunday or other day specified by Cabinet Office Ordinance, that person is to submit the Tender Offer Statement on the following day:
(i) the purchase, etc. price, the number of Share Certificates, etc. sought for purchase, the purchase, etc. period (including the detail indicated in the public notice pursuant to the second sentence of the preceding paragraph), the terms of delivery in connection with the purchase, etc., and other terms of settlement and purchase, etc. set by the Tender Offeror (hereinafter collectively referred to as the "Terms of Purchase, etc." in this Section);
(ii) the details of any contract to purchase, etc. the Share Certificates, etc. that are subject to the Tender Offer, other than through said Tender Offer, on or after the day on which the Tender Offeror issues the Public Notice of the Commencement of the Tender Offer; and
(iii) the purpose of the Tender Offer, the particulars of the Tender Offeror, and other particulars specified by Cabinet Office Ordinance.
(3) It is prohibited for a Tender Offeror, the Specially Related Party of a Tender Offeror (meaning a Specially Related Party as defined in Article 27-2, paragraph (7); hereinafter the same applies in this Section), or any other relevant party specified by Cabinet Order (hereinafter collectively referred to as the "Tender Offeror, etc." in this Section) to solicit offers to sell, etc. Share Certificates, etc. or to perform other acts specified by Cabinet Order in connection with a Tender Offer, on or after the day following the day on which the Public Notice of the Commencement of the Tender Offer is issued, unless the Tender Offeror has submitted the Tender Offer Statement to the Prime Minister.
(4) Immediately after the submission of a Tender Offer Statement, the Tender Offeror shall send a copy of the Tender Offer Statement to the Issuer of the Share Certificates, etc. involved in the Tender Offer (and to any person that has already submitted a Tender Offer Statement for the Share Certificates, etc. of that Issuer as of the day on which the Tender Offeror submits the Tender Offer Statement), and, if the Share Certificates, etc. involved in the Tender Offer fall under a category set forth in one of the following items, the Tender Offeror must also send a copy of the Tender Offer Statement to the person specified in the relevant item for the category of Share Certificates, etc. set forth in that item. The necessary particulars relevant to the sending of the copies in such a case is specified by Cabinet Office Ordinance:
(i) Share Certificates, etc. listed on a Financial Instruments Exchange: the Financial Instruments Exchange; and
(ii) Share Certificates, etc. specified by Cabinet Order as having equivalent distribution statuses to the Share Certificates, etc. referred to in the preceding item: the Authorized Financial Instruments Firms Association specified by Cabinet Order.
(Purchases, etc. in Which Securities Are Delivered as the Consideration)
Article 27-4 (1) Except in a case provided for in the following paragraph, if a Tender Offeror, etc. makes Securities the consideration for its purchases, etc. in a Tender Offer, and a Public Offering or Secondary Distribution of the relevant Securities is subject to the main clause of Article 4, paragraph (1), the main clause of Article 4, paragraph (2), or the main clause of Article 4, paragraph (3), the Tender Offeror, etc. must not solicit offers to sell, etc. or perform other acts specified by Cabinet Office Ordinance in connection with the Tender Offer unless the Issuer of the Securities provides the Prime Minister with the notification under those provisions at the same time as the submission of the Tender Offer Statement or an amended statement.
(2) In a case referred to in the preceding paragraph, if a Shelf Registration has been made for the Securities referred to in that paragraph, the Tender Offeror, etc. must not solicit offers to sell, etc. or perform other acts specified by Cabinet Order in connection with the Tender Offer unless the Shelf Registration has come into effect and the Shelf Registrant of the Securities submits Shelf Registration Supplements to the Prime Minister at the same time as the submission of the Tender Offer Statement or an amended statement.
(3) Notwithstanding the provisions of paragraph (2) of the preceding Article, in a Tender Offer that has Securities as the consideration for purchase, etc., if the notification under Article 4, paragraphs (1) to (3) inclusive has been made or the Shelf Registration Supplements have been submitted for the Securities, part of the particulars that are required to be included in a Tender Offer Statement and accompanying documents may be omitted as specified by Cabinet Office Ordinance in the Tender Offer Statement that is required to be submitted for the Tender Offer.
(Prohibition of Purchases, etc. Not through a Tender Offer)
Article 27-5 A Tender Offeror, etc. must not purchase, etc. Share Certificates, etc. that are issued by the Issuer of the Share Certificates, etc. involved in the relevant Tender Offer, other than through said Tender Offer, during the Tender Offer period (meaning the period from the day on which it issues the Public Notice of the Commencement of the Tender Offer to the last day of the purchase, etc. period, and including the extended period, if any; hereinafter the same applies in this Section); provided, however, that this does not apply in the following cases:
(i) if the contract for effecting a purchase, etc. of Share Certificates, etc. that are issued by the Issuer of the relevant Share Certificates, etc., other than through said Tender Offer, is concluded before the Public Notice of the Commencement of the Tender Offer, and the existence and details of that contract are stated in the Tender Offer Statement;
(ii) if a person set forth in Article 27-2, paragraph (7), item (i) (except one that also falls under the category of persons specified in Article 27-2, paragraph (7), item (ii)) notifies the Prime Minister, pursuant to the provisions of Cabinet Office Ordinance, that the person does not fall under the category of persons specified in Article 27-2, paragraph (7), item (ii); or
(iii) other cases specified by Cabinet Order.
(Changes to the Terms of Purchase, etc. for a Tender Offer)
Article 27-6 (1) A Tender Offeror may not make any of the following changes to the Terms of Purchase, etc.:
(i) the lowering of the purchase, etc. price (excluding what is implemented if the Public Notice of the Commencement of the Tender Offer and the Tender Offer Statement states, as one of the Terms of Purchase, etc., that the purchase, etc. price may be lowered according to the standards specified by Cabinet Office Ordinance if the Target Company (meaning a Target Company provided for in Article 27-10, paragraph (1)) conducts a share split or performs any other act specified by Cabinet Order during the Tender Offer period);
(ii) reduction of the number of Share Certificates, etc. sought for purchase;
(iii) shortening of the purchase, etc. period; or
(iv) any other changes in the Terms of Purchase, etc. specified by Cabinet Order.
(2) A Tender Offeror may make any change to the Terms of Purchase, etc. other than one that is specified in the items of the preceding paragraph. In this, a Tender Offeror seeking to make such a change must issue public notice of the details of the change to the Terms of Purchase, etc. (excluding an extension of the purchase, etc. period, if it is extended pursuant to Article 27-10, paragraph (3)) and other particulars specified by Cabinet Office Ordinance during the Tender Offer period, pursuant to the provisions of Cabinet Order.
(3) If it is difficult for a Tender Offeror to issue the public notice under the preceding paragraph by the last day of the Tender Offer period, the Tender Offeror must publicly announce the details and the particulars specified in the preceding paragraph pursuant to the provisions of Cabinet Office Ordinance, and issue a public notice based on the rules provided for in the preceding paragraph immediately after that.
(Amendment of a Public Notice of the Commencement of a Tender Offer)
Article 27-7 (1) If a Tender Offeror that has issued a Public Notice of the Commencement of a Tender Offer (including a public notice under paragraph (2) or (3) of the preceding Article and a public announcement under Article 27-6, paragraph (3); the same applies in the following paragraph) finds a formal deficiency in the content of said notice or finds that the content of the notice conflicts with the facts of the matter, the Tender Offeror must amend its content and issue a public notice or a public announcement pursuant to the provisions of Cabinet Office Ordinance.
(2) If the Prime Minister finds it to be necessary for a Public Notice of the Commencement of a Tender Offer to be amended, the Prime Minister may order the Tender Offeror that issued the Public Notice of the Commencement of the Tender Offer to issue a public notice or a public announcement of the details of the amendment pursuant to the provisions of Cabinet Office Ordinance, within the time limit designated by the Prime Minister.
(3) A disposition under the preceding paragraph may not be reached after the last day of the Tender Offer period (including the period by which it is required to be extended pursuant to paragraph (8) of the following Article).
(Submission of an Amended Statement in Connection with a Tender Offer Statement)
Article 27-8 (1) If a Tender Offeror that has submitted a Tender Offer Statement (including any amended statement in connection with it; hereinafter the same applies in this Article) finds that there is a formal deficiency in the Tender Offer Statement, that its content conflicts with the facts of the matter, that it insufficiently states or omits a statement as to a particular that is required to be stated, or that it insufficiently states or omits a statement as to a fact that is necessary to prevent it from being misleading, the Tender Offeror must submit an amended statement to the Prime Minister, pursuant to the provisions of Cabinet Office Ordinance.
(2) If, on or after the day on which a Tender Offer Statement is submitted and before the last day of the Tender Offer period, the Terms of Purchase, etc. change (other than an extension of the purchase, etc. period under Article 27-10, paragraph (3)), any other material particular that is required to be stated in a Tender Offer Statement changes, or any other circumstance specified by Cabinet Office Ordinance arises that requires the Tender Offer Statement to be amended, the Tender Offeror that submitted the Tender Offer Statement must immediately submit an amended statement to the Prime Minister pursuant to the provisions of Cabinet Office Ordinance.
(3) If Prime Minister finds it to be clear that any of the following facts have occurred, the Prime Minister may order the Tender Offeror that submitted the Tender Offer Statement to submit an amended statement within the time limit designated by the Prime Minister:
(i) the Tender Offer Statement contains a formal deficiency;
(ii) the Terms of Purchase, etc. stated in the Tender Offer Statement do not comply with the provisions of this Section; or
(iii) the change in the Terms of Purchase, etc. that is stated in the amended statement violates Article 27-6, paragraph (1).
(4) Except in a case under the provisions of the preceding paragraph, on discovering any of the following facts to have occurred, the Prime Minister may order a Tender Offeror that has submitted a Tender Offer Statement to submit an amended statement within the time limit designated by the Prime Minister. 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:
(i) the Tender Offer Statement contains a false statement about a material particular; or
(ii) the Tender Offer Statement omits a statement as to a material particular that is required to be stated or omits a statement of material fact that is necessary to prevent it from being misleading.
(5) A disposition under paragraph (3) may not be reached after the last day of the Tender Offer period (including the period by which it is required to be extended pursuant to paragraph (8); the same applies in paragraph (7)) (or, for a disposition resulting in an amended statement being submitted after the last day of the Tender Offer period, after the day on which five years have elapsed since the day following the last day of the Tender Offer period), and a disposition under the preceding paragraph may not be reached after the day on which five years have elapsed since the day following the last day of the Tender Offer period.
(6) The provisions of Article 27-3, paragraph (4) apply mutatis mutandis if an amended statement is submitted pursuant to the provisions of paragraphs (1) to (4) inclusive.
(7) If a disposition under paragraph (3) or (4) is reached during the Tender Offer period, the Tender Offeror, etc. must not solicit offers to sell, etc. or perform any other act specified by Cabinet Order for the Tender Offer until the amended statement required by the disposition is submitted.
(8) If an amended statement under paragraph (1) or (2) is submitted or an order to submit an amended statement under paragraph (3) or (4) is issued during the Tender Offer period, except in a case specified by Cabinet Office Ordinance, the Tender Offeror must extend the purchase, etc. period in that Tender Offer by a period specified by Cabinet Office Ordinance and immediately issue public notice of this or publicly announce it, pursuant to the provisions of Cabinet Office Ordinance.
(9) If the purchase, etc. period in a Tender Offer is required to be extended pursuant to the preceding paragraph, the Tender Offeror must not acquire the Share Certificates, etc. subject to the Tender Offer or conduct other settlement procedures for the Tender Offer until the last day of the required period of extension.
(10) If the purchase, etc. period in a Tender Offer is required to be extended pursuant to paragraph (8), the provisions of Article 27-5 apply mutatis mutandis until the last day of the required period of extension.
(11) If a Tender Offeror submits an amended statement pursuant to the provisions of paragraphs (1) to (4) inclusive, it shall issue public notice of the contents stated in the amended statement that pertain to the contents stated in the Tender Offer Statement, pursuant to the provisions of Cabinet Order, or publicly announce them pursuant to the provisions of Cabinet Office Ordinance; provided, however, that this does not apply if the Tender Offeror has issued the public notice under Article 27-6, paragraph (2) or issued a public notice and public announcement under Article 27-6, paragraph (3), nor does it apply if the Tender Offeror has submitted an amended statement under paragraph (1) that is specified by Cabinet Office Ordinance as one whose content is of minor importance.
(12) The preceding Article applies mutatis mutandis to a public notice or public announcement under paragraph (8) or the preceding paragraph.
(Preparation and Delivery of a Tender Offer Explanation, etc.)
Article 27-9 (1) A Tender Offeror shall prepare a document that states the particulars specified by Cabinet Office Ordinance from among the particulars that are required to be stated in a Tender Offer Statement and the particulars that are specified by Cabinet Office Ordinance as necessary and appropriate in the public interest or for the protection of investors (hereinafter referred to as a "Tender Offer Explanation" in this Section and Articles 197-2 and 200), pursuant to the provisions of Cabinet Office Ordinance.
(2) When effecting a purchase, etc. of Share Certificates, etc. through a Tender Offer, the Tender Offeror shall deliver a Tender Offer Explanation to a person seeking to sell, etc. those Share Certificates, etc., pursuant to the provisions of Cabinet Office Ordinance.
(3) If a Tender Offeror has submitted an amended statement pursuant to the provisions of paragraphs (1) to (4) inclusive of the preceding Article, it must immediately amend the Tender Offer Explanation pursuant to the provisions of Cabinet Office Ordinance and deliver the amended Tender Offer Explanation to any person to which the Tender Offer Explanation has already been delivered.
(Submission of a Target Company's Position Statement, Tender Offeror's Answer, etc.)
Article 27-10 (1) The Issuer of the Share Certificates, etc. involved in a Tender Offer (hereinafter referred to as the "Target Company" in this Section and Article 27-30-11, paragraph (3)), pursuant to the provisions of Cabinet Office Ordinance, shall submit a document that states its opinion about the Tender Offer and other particulars specified by Cabinet Office Ordinance (hereinafter referred to as the "Target Company's Position Statement") to the Prime Minister within a period specified by Cabinet Order from the date on which the Public Notice of the Commencement of the Tender Offer is issued.
(2) The Target Company may include the following particulars in the Target Company's Position Statement, in addition to its opinion about the Tender Offer:
(i) questions for the Tender Offeror; or
(ii) a request for an extension of the purchase, etc. period indicated in the Public Notice of the Commencement of the Tender Offer to the period specified by Cabinet Order (but only if the purchase, etc. period is shorter than the period specified by Cabinet Order).
(3) If the request set forth in item (ii) of the preceding paragraph has been included in the Target Company's Position Statement pursuant to the preceding paragraph and the Prime Minister makes the Target Company's Position Statement available for public inspection pursuant to Article 27-14, paragraph (1), the Tender Offeror must extend the purchase, etc. period to the period specified by Cabinet Order.
(4) If a Target Company makes the request set forth in item (ii) of paragraph (2) in the Target Company's Position Statement under paragraph (2), the Target Company, pursuant to the provisions of Cabinet Order, must issue public notice of the purchase, etc. period after the extension under the preceding paragraph, and of the other particulars specified by Cabinet Office Ordinance, by the day following the last day of the period set forth in paragraph (1).
(5) If a Target Company that issues the public notice under the preceding paragraph (hereinafter referred to as the "Public Notice of a Request for a Period Extension" in the following paragraph) finds a formal deficiency in the content of said public notice or finds that its content conflicts with the facts of the matter, the Target Company must amend this content and issue a public notice or a public announcement pursuant to the provisions of Cabinet Office Ordinance.
(6) If the Prime Minister finds it to be necessary for the Public Notice of a Request for a Period Extension to be amended, the Prime Minister, pursuant to the provisions of Cabinet Office Ordinance, may order the Target Company that issued said public notice to issue a public notice or public announcement of the details of the amended statement within the time limit designated by the Prime Minister.
(7) A disposition under the preceding paragraph may not be reached after the last day of the Tender Offer period (including the period by which it is required to be extended pursuant to Article 27-8, paragraph (8)).
(8) The provisions of Article 27-8, paragraphs (1) to (5) inclusive (excluding Article 27-8, paragraph (3), items (ii) and (iii)) apply mutatis mutandis to a Target Company's Position Statement. In this case, in Article 27-8, paragraph (1), the term "Tender Offeror" is deemed to be replaced with "Target Company as defined in Article 27-10, paragraph (1)" and the term "amended statement" is deemed to be replaced with "amended report"; in Article 27-8, paragraph (2), the phrase "the Terms of Purchase, etc. change" is deemed to be replaced with "opinion about the Tender Offer changes", the term "Tender Offeror" is deemed to be replaced with "Target Company defined in Article 27-10, paragraph (1)", and the term "amended statement" is deemed to be replaced with "amended report"; in Article 27-8, paragraphs (3) and (4), the term "Tender Offeror" is deemed to be replaced with "Target Company defined in Article 27-10, paragraph (1)" and the term "amended statement" is deemed to be replaced with "amended report"; and in Article 27-8, paragraph (5), the phrase "A disposition under paragraph (3)" is deemed to be replaced with "A disposition under paragraph (3) as applied mutatis mutandis pursuant to Article 27-10, paragraph (8)", the term "amended statement" is deemed to be replaced with "amended report", and the phrase "disposition under the preceding paragraph" is deemed to be replaced with "disposition under the preceding paragraph as applied mutatis mutandis pursuant to Article 27-10, paragraph (8)".
(9) Immediately after submitting a Target Company's Position Statement, the Target Company in a Tender Offer shall send a copy of the Target Company's Position Statement to the Tender Offeror involved in the Tender Offer (and to any person that has already submitted a Tender Offer Statement for Share Certificates, etc. of which the Target Company is the Issuer as of the day on which it submits the Target Company's Position Statement), and, if the Share Certificates, etc. involved in the Tender Offer fall under a category set forth in one of the items of Article 27-3, paragraph (4), the Target Company must also send a copy of the Target Company's Position Statement to the person specified in the relevant item for the category of Share Certificates, etc. set forth in that item.
(10) The preceding paragraph applies mutatis mutandis if an amended report is submitted pursuant to Article 27-8, paragraphs (1) to (4) inclusive as applied mutatis mutandis pursuant to paragraph (8).
(11) If a question referred to in paragraph (2), item (i) has been included in a Target Company's Position Statement, a Tender Offeror that receives a copy of the Target Company's Position Statement pursuant to paragraph (9) must submit a document, pursuant to the provisions of Cabinet Office Ordinance, stating an answer to the question (or, if it finds that it is not necessary to answer the question, the reason why it finds this to be so) and other particulars specified by Cabinet Office Ordinance (hereinafter referred to as the "Tender Offeror's Answer") to the Prime Minister within a period specified by Cabinet Order from the date on which it receives the copy of the Target Company's Position Statement.
(12) The provisions of Article 27-8, paragraphs (1) to (5) inclusive (excluding Article 27-8, paragraph (3), items (ii) and (iii)) apply mutatis mutandis to a Tender Offeror's Answer. In this case, in Article 27-8, paragraph (1), the term "amended statement" is deemed to be replaced with "amended report"; in Article 27-8, paragraph (2), the phrase "Terms of Purchase, etc. change" is deemed to be replaced with "answer changes" and the term "amended statement" is deemed to be replaced with "amended report"; in Article 27-8, paragraphs (3) and (4), the term "amended statement" is deemed to be replaced with "amended report"; and in Article 27-8, paragraph (5), the phrase "A disposition under paragraph (3)" is deemed to be replaced with "A disposition under paragraph (3) as applied mutatis mutandis pursuant to Article 27-10, paragraph (12)", the term "amended statement" is deemed to be replaced with "amended report", and the phrase "disposition under the preceding paragraph" is deemed to be replaced with "disposition under the preceding paragraph as applied mutatis mutandis pursuant to Article 27-10, paragraph (12)".
(13) Immediately after submitting a Tender Offeror's Answer, the Tender Offeror shall send a copy of the Tender Offeror's Answer to the Target Company (and to any person that has already submitted a Tender Offer Statement for Share Certificates, etc. of which the Target Company is the Issuer as of the day on which it submits the Tender Offeror's Answer), and, if the Share Certificates, etc. involved in the Tender Offer fall under a category set forth in one of the items of Article 27-3, paragraph (4), the Tender Offeror must also send a copy of the Tender Offeror's Answer to the person specified in the relevant item for the category of Share Certificates, etc. set forth in that item.
(14) The provisions of the preceding paragraph apply mutatis mutandis if an amended report is submitted pursuant to Article 27-8, paragraphs (1) to (4) inclusive as applied mutatis mutandis pursuant to paragraph (12).
(Tender Offer Withdrawal, etc. and Cancellation of Contracts by the Tender Offeror)
Article 27-11 (1) A Tender Offeror may not withdraw offers or cancel contracts in connection with a Tender Offer (hereinafter collectively referred to as "Tender Offer Withdrawal, etc." in this Section) after having issued Public Notice of the Commencement of the Tender Offer; provided, however, that this does not apply if the Tender Offeror states as one of the Terms of Purchase, etc. in the Public Notice of the Commencement of the Tender Offer and in the Tender Offer Statement that the Tender Offer may be withdrawn if a material change occurs in the business or property of the Issuer of the Share Certificates, etc. that are involved in the Tender Offer or in its Subsidiary (meaning a Subsidiary as defined in Article 2, item (iii) of the Companies Act) or any other circumstance occurs that would significantly compromise its ability to achieve the purpose of the Tender Offer (limited to circumstances specified by Cabinet Order), or if an order to commence bankruptcy proceedings is issued against the Tender Offeror or any other material change in circumstances specified by Cabinet Order occurs.
(2) If the Tender Offeror seeks to effect a Tender Offer Withdrawal, etc. under the proviso to the preceding paragraph, the Tender Offeror must issue a public notice indicating that it will effect a Tender Offer Withdrawal, etc., the reason for this, and other particulars specified by Cabinet Office Ordinance by the last day of the Tender Offer period, pursuant to the provisions of Cabinet Order; provided, however, that if it is difficult for the Tender Offeror to issue such a public notice by the last day of the Tender Offer period, the Tender Offeror is to issue a public announcement of the details that are required to be stated in the public notice, pursuant to the provisions of Cabinet Office Ordinance, and issue the public notice immediately following.
(3) A person issuing a public notice or public announcement under the preceding paragraph shall submit a document to the Prime Minister, pursuant to the provisions of Cabinet Office Ordinance, in which it states the details that are required to be stated in the public notice provided for in the preceding paragraph and other particulars specified by Cabinet Office Ordinance (hereinafter referred to as a "Written Tender Offer Withdrawal Notice" in this Section and Articles 197 and 197-2) on the day on which said person issues the public notice or public announcement.
(4) The provisions of Article 27-3, paragraph (4) apply mutatis mutandis to a Written Tender Offer Withdrawal Notice. In this case, in Article 27-3, paragraph (4), the phrase "the Issuer of the Share Certificates, etc. involved in the Tender Offer is made (and to any person that has already submitted a Tender Offer Statement for the Share Certificates, etc. of that Issuer as of the day on which the Tender Offeror submits the Tender Offer Statement)" is deemed to be replaced with "the Issuer of the Share Certificates, etc. involved in the Tender Offer".
(5) A Tender Offer Withdrawal, etc. comes into effect only if public notice is given pursuant to paragraph (2). In this, the Tender Offer Withdrawal, etc. comes into effect at the time at which the public notice is given (or at the time when the public announcement is made, if the public announcement and the public notice are given pursuant to the proviso to paragraph (2)).
(Cancellation of a Contract by a Tendering Shareholder, etc.)
Article 27-12 (1) A tendering shareholder, etc. (meaning a person that accepts an offer to purchase, etc. the Share Certificates, etc. involved in a Tender Offer or that offers to sell, etc. them; hereinafter the same applies in this Section) may cancel a contract involving a Tender Offer at any time during the Tender Offer period (including the period by which it is required to be extended pursuant to Article 27-8, paragraph (8); the same applies in paragraphs (1) and (4) of the following Article, Article 27-14, paragraph (1) and Article 27-21, paragraphs (1) and (2)).
(2) If a Public Notice of the Commencement of a Tender Offer and a Tender Offer Statement includes the condition that any cancellation of a contract connected with the Tender Offer be done by a method specified by Cabinet Order, a tendering shareholder, etc. that cancels a contract pursuant to the preceding paragraph must do so by that method. In this, the cancellation of the contract comes into effect at the time specified by Cabinet Order.
(3) If a tendering shareholder, etc. cancels a contract pursuant to paragraph (1), the Tender Offeror may not request the tendering shareholder, etc. to pay damages or penalties, and if the Tender Offeror is having a Financial Instruments Business Operator or a bank, etc. manage the tendered Share Certificates, etc. (meaning Share Certificates, etc. that the tendering shareholders, etc. sell, etc. in response to the Tender Offer; hereinafter the same applies in this Section), the Tender Offeror bears the cost required to return them.
(Public Notice of the Number of Tendered Share Certificates, etc. in a Tender Offer and Submission of a Tender Offer Report, etc.)
Article 27-13 (1) A Tender Offeror, pursuant to the provisions of Cabinet Order, shall issue a public notice or public announcement of the number of tendered Share Certificates, etc. and other particulars specified by Cabinet Office Ordinance on the day following the last day of the Tender Offer period; provided, however, that this does not apply if a public notice has been issued pursuant to Article 27-11, paragraph (2).
(2) A Tender Offeror issuing a public notice or public announcement under the main clause of the preceding paragraph shall submit a document to the Prime Minister, pursuant to the provisions of Cabinet Office Ordinance, in which it states the details of that public notice or public announcement and other particulars specified by Cabinet Office Ordinance (hereinafter referred to as a "Tender Offer Report" in this Section and Articles 197 and 197-2) on the day on which it issues the public notice or public announcement.
(3) The provisions of Article 27-3, paragraph (4) and Article 27-8, paragraphs (1) to (6) inclusive apply mutatis mutandis to a Tender Offer Report. In this case, in Article 27-3, paragraph (4), the phrase "the Tender Offeror shall send a copy of the Tender Offer Statement to the Issuer of the Share Certificates, etc. involved in the Tender Offer (and to any person that has already submitted a Tender Offer Statement for the Share Certificates, etc. of that Issuer as of the day on which the Tender Offeror submits the Tender Offer Statement)" is deemed to be replaced with "the Issuer of the Share Certificates, etc. involved in the Tender Offer"; in Article 27-8, paragraph (1), the term "amended statement" is deemed to be replaced with "amended report"; in Article 27-8, paragraph (2), the phrase "submitted and before the last day of the Tender Offer period, the Terms of Purchase, etc. change (other than an extension of the purchase, etc. period under Article 27-10, paragraph (3)), any other material particular that is required to be stated in a Tender Offer Statement changes, or any other circumstance specified by Cabinet Office Ordinance arises that requires the Tender Offer Statement to be amended" is deemed to be replaced with "submitted, the number of Share Certificates, etc. for which a purchase, etc. will be effected is fixed by the Pro Rata Method set forth in Article 27-13, paragraph (5)" and the term "amended statement" is deemed to be replaced with "amended report"; in Article 27-8, paragraph (3), the term "amended statement" is deemed to be replaced with "amended report", the term "Terms of Purchase, etc." is deemed to be replaced with "delivery and other settlement methods", the phrase "the provisions of this Section" is deemed to be replaced with "Article 27-13, paragraphs (4) and (5)", the phrase "the change in the Terms of Purchase, etc. that is stated in the amended statement violates Article 27-6, paragraph (1)" is deemed to be replaced with "the result of calculations for deciding the number of Share Certificates, etc. being purchased, etc. contravenes the Pro Rata Method specified by Cabinet Office Ordinance that is stipulated in Article 27-13, paragraph (5)"; in Article 27-8, paragraph (4), the term "amended statement" is deemed to be replaced with "amended report"; in Article 27-8, paragraph (5), the phrase "disposition under paragraph (3)" is deemed to be replaced with "disposition under paragraph (3) and the preceding paragraph as applied mutatis mutandis pursuant to Article 27-13, paragraph (3)" and the phrase "the last day of the Tender Offer period (including the period by which it is required to be extended pursuant to paragraph (8); the same applies in paragraph (7)) (or, for a disposition resulting in an amended statement being submitted after the last day of the Tender Offer period, after the day on which five years have elapsed since the day following the last day of the Tender Offer period), and the disposition under the preceding paragraph may not be reached after the day on which five years have elapsed since the day following the last day of the Tender Offer period" is deemed to be replaced with "the day on which five years have elapsed since the day following the last day of the Tender Offer period"; and in Article 27-8, paragraph (6), the term "amended statement" is deemed to be replaced with "amended report" and the phrase "paragraphs (1) to (4) inclusive" is deemed to be replaced with "paragraphs (1) to (4) inclusive as applied mutatis mutandis pursuant to Article 27-13, paragraph (3)".
(4) Unless a Tender Offeror, during the Tender Offer period, effects a Tender Offer Withdrawal, etc. pursuant to the proviso to Article 27-11, paragraph (1) for all of the tendered Share Certificates, etc., or unless the Tender Offeror has included one of the following conditions in the Public Notice of the Commencement of the Tender Offer and in the Tender Offer Statement (if the Tender Offeror has included the condition referred to in item (ii), this is only if the Ownership Ratio of Share Certificates, etc. (meaning Ownership Ratio of Share Certificates, etc. as defined in Article 27-2, paragraph (8)), in terms of the Share Certificates, etc. that the Tender Offeror will hold after the Tender Offer (if the Tender Offeror has a Specially Related Party as specified in Article 27-2, paragraph (1), item (i), the Ownership Ratio of Share Certificates, etc. as defined in Article 27-2, paragraph (8), in terms of the Share Certificates, etc. that Specially Related Party holds, is added to calculate this) will be below the proportion specified by Cabinet Order), the Tender Offeror must acquire or otherwise effect settlement procedures for its purchase, etc. based on the Terms of Purchase, etc. it has stated in the Public Notice of the Commencement of the Tender Offer and in the Tender Offer Statement (or, if it has changed the Terms of Purchase, etc. in accordance with a public notice under Article 27-6, paragraph (2) or a public announcement and public notice under Article 27-6, paragraph (3), based on the Terms of Purchase, etc. after the change) for all tendered Share Certificates, etc.:
(i) that if the total number of tendered Share Certificates, etc. does not reach the number of Share Certificates, etc. designated in advance in the Public Notice of the Commencement of the Tender Offer and in the Tender Offer Statement as the whole number of Share Certificates, etc. sought for purchase or a portion of them, the Tender Offeror will not purchase, etc. any of the tendered Share Certificates, etc.; or
(ii) that if the total number of tendered Share Certificates, etc. exceeds the number of Share Certificates, etc. sought for purchase, the Tender Offeror will not purchase, etc. tendered Share Certificates, etc. in excess of the number of Share Certificates, etc. sought for purchase.
(5) If the condition specified in item (ii) of the preceding paragraph has been given, and the total number of tendered Share Certificates, etc. exceeds the number of Share Certificates, etc. sought for purchase, the Tender Offeror must acquire Share Certificates, etc. and effect other settlement procedures for their purchase, etc. using the pro rata method specified by Cabinet Office Ordinance (hereinafter referred to as the "Pro Rata Method" in this Section).
(Public Inspection of a Tender Offer Statement, etc.)
Article 27-14 (1) The Prime Minister must make a Tender Offer Statement (including any amended statement in connection with it; the same applies in paragraph (1) of the following Article), Written Tender Offer Withdrawal Notice, Tender Offer Report, Target Company's Position Statement, and Tender Offeror's Answer (including any amended report in connection with them; the same applies in paragraph (1) of the following Article) available for public inspection, pursuant to the provisions of Cabinet Office Ordinance, during the period from the day that the Prime Minister accepts them to the day on which five years have elapsed since the day following the last day of the Tender Offer period in the relevant Tender Offer.
(2) Pursuant to the provisions of Cabinet Office Ordinance, a person that has submitted a document prescribed in the preceding paragraph (hereinafter referred to as a "Public Document" in this Article) (such a person is hereinafter referred to as the "Submitter" in this Article) must keep a copy of that Public Document at its head office or principal office and make it available for public inspection during the period that the Prime Minister makes that Public Document available for public inspection pursuant to the preceding paragraph.
(3) Pursuant to the provisions of Cabinet Office Ordinance, Financial Instruments Exchanges and the Associations of Authorized Financial Instruments Firms specified by Cabinet Order must keep copies of the Public Documents they have been sent pursuant to Article 27-3, paragraph (4) (including as applied mutatis mutandis pursuant to Article 27-8, paragraph (6), Article 27-11, paragraph (4) and paragraph (3) of the preceding Article), Article 27-10, paragraph (9) (including as applied mutatis mutandis pursuant to Article 27-10, paragraph (10)), and Article 27-10, paragraph (13) (including as applied mutatis mutandis pursuant to Article 27-10, paragraph (14)) at their offices and make them available for public inspection during the period that the Prime Minister makes those Public Documents available for public inspection pursuant to the provisions of paragraph (1).
(4) Beyond what is provided for in the preceding three paragraphs, the necessary matters relevant to the public inspection referred to in paragraph (1) are specified by Cabinet Office Ordinance.
(5) Notwithstanding the provisions of paragraph (1), if the Prime Minister issues one of the following dispositions, the Prime Minister may decide not to make all or part of the Public Documents that are connected with the disposition available for public inspection:
(i) an order to submit an amended statement under the provisions of Article 27-8, paragraph (3) or (4);
(ii) an order to submit an amended report under Article 27-8, paragraph (3) or (4) as applied mutatis mutandis pursuant to Article 27-10, paragraph (8) or (12), or paragraph (3) of the preceding Article.
(6) In a case referred to in the preceding paragraph, the Prime Minister is to notify the Submitter that makes the copies of the Public Documents available for public inspection pursuant to paragraph (2), as well as the Financial Instruments Exchanges or the Associations of Authorized Financial Instruments Firms specified by Cabinet Order which are referred to in paragraph (3), which make copies of the Public Documents available for public inspection pursuant to the provisions of paragraph (3), that the Prime Minister has decided that all or part of the Public Documents will not be made available for public inspection.
(7) If a Submitter or a Financial Instruments Exchange or Authorized Financial Instruments Firms Association has been notified by the Prime Minister pursuant to the provisions of the preceding paragraph, the provisions of paragraphs (2) and (3) do not apply after that time to the copies of the Public Documents to which the notice pertains.
(Prohibition on Presuming the Veracity of a Tender Offer Statement, etc.)
Article 27-15 (1) No person may deem, due to a Tender Offer Statement, Written Tender Offer Withdrawal Notice, Tender Offer Report, Target Company's Position Statement, or Tender Offeror's Answer having been accepted, that the Prime Minister certifies a statement contained in these documents to be true and accurate, or that the Prime Minister certifies these documents not to omit a statement as to a material particular.
(2) It is not permitted for the Tender Offeror, etc. or the Target Company to make a representation that is in violation of the preceding paragraph.
(Compensatory Liability for Violations Connected with a Tender Offer)
Article 27-16 The provisions of Article 16 apply mutatis mutandis to a person that violates the provisions of Article 27-3, paragraph (3) or Article 27-8, paragraph (7) in performing an act specified by Cabinet Office Ordinance, or that violates the provisions of Article 27-9, paragraph (2) or (3) in effecting a purchase, etc. of Share Certificates, etc. In this case, in Article 16, the phrase "the person that acquires the Securities" is deemed to be replaced with "the person that sells, etc. its Share Certificates, etc. in response to the Tender Offer".
Article 27-17 (1) A Tender Offeror, etc. that violates the provisions of Article 27-5 (including as applied mutatis mutandis pursuant to Article 27-8, paragraph (10); hereinafter the same applies in this paragraph) in effecting a purchase, etc. of Share Certificates, etc. is liable to compensate for damage sustained by a person that sells, etc. its Share Certificates, etc. in response to the Tender Offer (excluding persons that sell, etc. Share Certificates, etc. to which Article 27-5 is applicable and the part of the persons that are prescribed in paragraph (2), item (i) of the following Article).
(2) The amount of compensation for which the Tender Offeror, etc. is liable pursuant to the preceding paragraph is the price that the Tender Offeror, etc. pays at the time it effects a purchase, etc. referred to in the preceding paragraph (this includes providing a benefit equivalent to such a price, and if prices are not the same for all purchases, etc., the most favorable of them is used) less the Tender Offer price (meaning the purchase, etc. price stated in the Public Notice of the Commencement of the Tender Offer and Tender Offer Statement, or, if the Tender Offeror, etc. changes the purchase, etc. price pursuant to a public notice or public announcement under Article 27-6, paragraph (2) or (3), this means the purchase, etc. price after the change; hereinafter the same applies in this Section), multiplied by the number of tendered Share Certificates, etc. of a claimant under the preceding paragraph (excluding tendered Share Certificates, etc. that could not have been sold, etc. through the Pro Rata Method; the same applies in paragraph (2) of the following Article and Article 27-20, paragraph (2)).
Article 27-18 (1) A person that, in acquiring Share Certificates, etc. or effecting other settlement procedures for a purchase, etc. of Share Certificates, etc. through a Tender Offer (hereinafter referred to as a "Tender Offer Purchaser" in this Article) violates the provisions of Article 27-13, paragraph (4), is liable to compensate for damage sustained by a person that sells, etc. its Share Certificates, etc. in response to the Tender Offer (in a case set forth in item (i) of the following paragraph, this excludes a person that sells, etc. its Share Certificates, etc. at a price that is more favorable than the Tender Offer price (this includes being provided with a benefit equivalent to such a price; hereinafter the same applies in this Article); and in a case set forth in item (ii) of the following paragraph, it includes a person that could not sell, etc. its Share Certificates, etc. due to the Tender Offer Purchaser's use of the different method referred to in item (ii)).
(2) In the following cases, the amount of compensation for which a Tender Offer Purchaser is liable pursuant to the preceding paragraph is the amount specified in the relevant of the following items for the category set forth in that item:
(i) if the Tender Offer Purchaser only purchases, etc. Share Certificates, etc. at a price that is more favorable than the Tender Offer price from a part of the persons that sell, etc. their Share Certificates, etc. in response to the Tender Offer: the favorable price (if two or more favorable prices are used for the purchases, etc., the most favorable price) less the Tender Offer price, multiplied by the number of tendered Share Certificates, etc. of a claimant under the preceding paragraph; and
(ii) if the Tender Offer Purchaser purchases, etc. Share Certificates, etc. through a method that is different from the Pro Rata Method stated in the Tender Offer Statement: the number of Share Certificates, etc. that should have been purchased, etc. from a claimant under the preceding paragraph, as calculated using that Pro Rata Method, less the number of Share Certificates, etc. that the Tender Offer Purchaser actually purchased, etc. from the claimant (or, if the Tender Offer Purchaser did not purchase, etc. any Share Certificates, etc. from the claimant, the number of the Share Certificates, etc. that should have been purchased, etc. from the claimant, as calculated using that Pro Rata Method), multiplied by the difference between the Tender Offer price (or the price paid by the Tender Offeror as specified in Article 27-17, paragraph (2), in a case to which paragraph (1) of the preceding Article is also applicable; the favorable price referred to in the preceding item, in a case to which the preceding item is also applicable; or the more favorable of these prices, in a case to which both Article 27-17, paragraph (1) and the preceding item are also applicable) and the market price of the Share Certificates, etc. at the time the claimant claims damages under the preceding paragraph (this is the estimated disposal price, if there is no market price for the Share Certificates, etc., or the disposal price, if the Share Certificates, etc. are disposed of prior to the claim being filed).
(Compensatory Liability of a Person Using a Tender Offer Explanation That Contains a False Statement, etc.)
Article 27-19 The provisions of Article 17 apply mutatis mutandis to a person that has caused a person to sell, etc. Share Certificates, etc. through the use of a Tender Offer Explanation or other representation that contains a false statement about a material particular, omits a representation as to a material particular that is required to be represented, or omits a representation of material fact that is necessary to prevent it from being misleading. In this case, in Article 17, the phrase "a person that acquires the Securities" is deemed to be replaced with "a person that sells, etc. its Share Certificates, etc. in response to the Tender Offer".
(Compensatory Liability of a Person Issuing a Public Notice of the Commencement of a Tender Offer Which Contains a False Statement, etc.)
Article 27-20 (1) The provisions of Article 18, paragraph (1) apply mutatis mutandis to the following persons. In this case, in Article 18, paragraph (1), both the phrase "person that acquires the Securities through the Public Offering or Secondary Distribution" and the phrase "person that acquires the Securities" are deemed to be replaced with "person that sells, etc. its Share Certificates, etc. in response to the Tender Offer", and the phrase "at the time the person offers to acquire the Securities" is deemed to be replaced with "at the time the person sells, etc. its Share Certificates, etc.":
(i) a person that issues a Public Notice of the Commencement of the Tender Offer or a public notice or public announcement under Article 27-6, paragraph (2) or (3), Article 27-7, paragraph (1) or (2) (including as applied mutatis mutandis pursuant to Article 27-8, paragraph (12)) or Article 27-8, paragraph (8) or (11) (hereinafter collectively referred to as "Public Notice of the Commencement of a Tender Offer, etc." in this and the following Article) that contains a false representation about a material particular, omits a representation as to a material particular that is required to be represented, or omits a representation of material fact that is necessary to prevent it from being misleading;
(ii) a person that submits a Tender Offer Statement (including any amended statement in connection with it; hereinafter the same applies in this and the following Articles) that contains a false statement about a material particular, omits a statement as to a material particular that is required to be stated, or omits a statement of material fact that is necessary to prevent it from being misleading;
(iii) a person that prepares a Tender Offer Explanation (including a Tender Offer Explanation amended pursuant to Article 27-9, paragraph (3); hereinafter the same applies in this and the following Articles) that contains a false statement about a material particular, omits a statement as to a material particular that is required to be stated, or omits a statement of material fact that is necessary to prevent it from being misleading; and
(iv) a person that submits a Tender Offeror's Answer (including any amended report in connection with this; hereinafter the same applies in this and the following Articles) that contains a false statement about a material particular, omits a statement as to a material particular that is required to be stated, or omits a statement of material fact that is necessary to prevent it from being misleading.
(2) If the provisions of the preceding paragraph (excluding items (i) and (iv)) are applicable and, in spite of having concluded a contract to purchase, etc., after the last day of the Tender Offer period, Share Certificates, etc. that are subject to the Tender Offer other than through that Tender Offer, the Tender Offeror does not state this in the Tender Offer Statement or Tender Offer Explanation but then effects the purchase, etc. under the contract after the last day of the Tender Offer period, the amount of compensation that the Tender Offer is liable for to a person that sells, etc. its Share Certificates, etc. in response to the Tender Offer (excluding a person that sells, etc. Share Certificates, etc. pursuant to such a contract, a person that sells, etc. Share Certificates, etc. to which Article 27-5 is applicable, and the part of the persons referred to in Article 27-18, paragraph (2), item (i)) is the price at which the Tender Offeror, etc. purchases, etc. them (this includes providing a benefit equivalent to such a price, and if prices are not the same for all purchases, etc., the most favorable of them is used) less the Tender Offer price, multiplied by the number of tendered Share Certificates, etc. of the claimant under Article 18, paragraph (1) as applied mutatis mutandis pursuant to the preceding paragraph.
(3) Except for cases to which the preceding paragraph is applicable, the persons specified in the following items are jointly and severally liable for compensation under paragraph (1) with the persons set forth in the items of paragraph (1); provided, however, that this does not apply if the person specified in the following items proves that it did not know, and in the exercise of reasonable care could not have known, that the statement was false or had been omitted:
(i) the Specially Related Party (limited to a person specified in Article 27-2, paragraph (7), item (ii)) of a person set forth in one of the items of paragraph (1); and
(ii) if a person set forth in one of the items of paragraph (1) is a corporation or other organization, its director, accounting advisor, company auditor, executive officer, board member, auditor, or person equivalent thereto, at the time it submitted the Public Notice of the Commencement of the Tender Offer, etc., the Tender Offer Statement, or the Tender Offeror's Answer, or at the time it prepared the Tender Offeror Explanation.
(Prescription of the Right to Claim Compensation Due to a Violation of Provisions Relevant to a Tender Offer)
Article 27-21 (1) A claim under Article 27-17, paragraph (1) or a claim under Article 27-18, paragraph (1) in a case to which Article 27-18, paragraph (2) is applicable extinguishes by prescription if it is not exercised within one year from when the claimant comes to know, or in exercise of reasonable care could have come to know, of the violation. The same applies if the claim is not exercised within five years from the day following the last day of the Tender Offer period in the relevant Tender Offer.
(2) A claim under Article 27-20, paragraph (1) in a case to which paragraph (2) of the preceding Article is applicable extinguishes by prescription if it is not exercised within one year from when the claimant comes to know, or in exercise of reasonable care could have come to know, that the Public Notice of the Commencement of the Tender Offer, etc., Tender Offer Statement, Tender Offer Explanation, or Tender Offeror's Answer contains a false statement or false representation about a material particular, omits a statement as to a material particular that is required to be stated or represented, or omits a statement of material fact that is necessary to prevent it from being misleading. The same applies if the claim is not exercised within five years from the day following the last day of the Tender Offer period in the relevant Tender Offer.
(Collection of Reports and Inspection of a Tender Offeror)
Article 27-22 (1) Whenever 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 a Tender Offeror, a person that that is found to be required to purchase, etc. Share Certificates, etc. through a Tender Offer pursuant to the main clause of Article 27-2, paragraph (1), a Specially Related Party of either of these persons, or any other concerned party or witness, to submit reports or materials that should serve as a reference, and may have the relevant officials inspect these persons' books and documents or any other articles.
(2) Whenever 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 a person that has submitted a Target Company's Position Statement, a person that is found to be required to submit the same, or any other concerned party or witness, to submit reports or materials that should serve as a reference, and may have the relevant officials inspect these persons' books and documents or any other articles.
(3) When the Prime Minister finds it necessary with regard to the order for report or submission of materials or the inspection under the preceding two paragraphs, he/she may inquire to public offices or public or private organizations and request them to report necessary matters.
Section 2 Tender Offers for Listed Share Certificates, etc. by the Issuer
(Tender Offers for Listed Share Certificates, etc. by the Issuer)
Article 27-22-2 (1) A purchase, etc. (meaning a purchase or other acquisition for compensation; hereinafter the same applies in this and the following Articles) of Listed Share Certificates, etc. outside a Financial Instruments Exchange Market by the Issuer of those Listed Share Certificates, etc. must be effected by means of a Tender Offer, if it falls under one of the following categories; provided, however, that this does not apply to a purchase, etc. through a transaction specified by Cabinet Order as being equivalent to a purchase and sale, etc. of Securities on a Financial Instruments Exchange Market:
(i) a purchase, etc. under Article 156, paragraph (1) of the Companies Act (including as it applies through the replacement of certain terms pursuant to Article 165, paragraph (3) of that Act; hereinafter the same applies in this item) or under the provisions of other laws and regulations specified by Cabinet Order as being equivalent to Article 156, paragraph (1) of said Act (unless the Issuer gives the notice under Article 158, paragraph (1) of that Act as provided in Article 160, paragraph (1) of that Act); or
(ii) a purchase, etc. effected by an Issuer of Listed Share Certificates, etc. that is a foreign company, which is specified by Cabinet Order as a purchase, etc. effected by a method that makes the particulars of that purchase, etc. available to a large number of persons.
(2) The provisions of Article 27-2, paragraphs (2) to (6) inclusive; Article 27-3 (excluding the second sentence of paragraph (1) and item (ii) of paragraph (2)); Article 27-4; Article 27-5 (limited to the non-itemized part thereof; the same applies in paragraph (5) and Article 27-22-3, paragraph (5)); Articles 27-6 to 27-9 inclusive (excluding Article 27-8, paragraphs (6), (10), and (12)); Article 27-11 to 27-15 inclusive (excluding Article 27-11, paragraph (4) and Article 27-13, paragraph (3) and paragraph (4), item (i)); Article 27-17; Article 27-18; Article 27-21, paragraph (1); and the preceding Article(excluding paragraph (2)) apply mutatis mutandis if a purchase, etc. is effected through a Tender Offer pursuant to the preceding paragraph. In this case, in these provisions (excluding Article 27-3, paragraph (4) and the proviso to Article 27-11, paragraph (1)), the term "Share Certificates, etc." is deemed to be replaced with "Listed Share Certificates, etc."; in Article 27-2, paragraph (6), the phrase "sell, etc. them (meaning effecting a sale or other transfer for consideration; hereinafter the same applies in this Section)" is deemed to be replaced with "sell, etc. them"; in Article 27-3, paragraph (2), the phrase "the following particulars" is deemed to be replaced with "the particulars set forth in items (i) and (iii) below"; in Article 27-3, paragraph (2), item (i), the phrase "purchase, etc. period (including the detail indicated in the public notice pursuant to the second sentence of the preceding paragraph)" is deemed to be replaced with "purchase, etc. period"; in Article 27-3, paragraph (3), the phrase "a Tender Offeror, the Specially Related Party of a Tender Offeror (meaning a Specially Related Party as defined in Article 27-2, paragraph (7); hereinafter the same applies in this Section), or any other relevant party specified by Cabinet Order" is deemed to be replaced with "a Tender Offeror or any other relevant party specified by Cabinet Order"; in the first sentence of Article 27-3, paragraph (4), the phrase "the Tender Offeror shall send a copy of the Tender Offer Statement to the Issuer of the Share Certificates, etc. involved in the Tender Offer (and to any person that has already submitted a Tender Offer Statement for the Share Certificates, etc. of that Issuer as of the day on which the Tender Offeror submits the Tender Offer Statement), and, if the Share Certificates, etc. involved in the Tender Offer fall under a category set forth in one of the following items, the Tender Offeror must also send a copy of the Tender Offer Statement to the person specified in the relevant item for the category of Share Certificates, etc. set forth in that item" is deemed to be replaced with "the Tender Offeror, for the categories of Listed Share Certificates, etc. set forth in the following items, shall send the person set forth in the relevant item a copy of the Tender Offer Statement, and shall also send a copy of the Tender Offer Statement to any person that has already submitted a Tender Offer Statement for Share Certificates, etc. of which the Tender Offeror is the Issuer, as of the day on which it submits the Tender Offer Statement"; in the items of Article 27-3, paragraph (4), the term "Share Certificates, etc." is deemed to be replaced with "Listed Share Certificates, etc."; in the proviso to Article 27-5, the phrase "the following cases" is deemed to be replaced with "the cases specified by Cabinet Order"; in Article 27-6, paragraph (1), item (i), the phrase "the lowering of the purchase, etc. price (excluding what is implemented if the Public Notice of the Commencement of the Tender Offer and the Tender Offer Statement states, as one of the Terms of Purchase, etc., that the purchase, etc. price may be lowered according to the standards specified by Cabinet Office Ordinance if the Target Company (meaning a Target Company provided for in Article 27-10, paragraph (1)) conducts a share split or performs any other act specified by Cabinet Order during the Tender Offer period)" is deemed to be replaced with "the lowering of the purchase, etc. price"; in Article 27-6, paragraph (2), the phrase "the details of the change to the Terms of Purchase, etc. (excluding the extension of the purchase, etc. period, if it is extended pursuant to Article 27-10, paragraph (3))" is deemed to be replaced with "the details of the change to the Terms of Purchase, etc."; in Article 27-8, paragraph (2), the phrase "the Terms of Purchase, etc. change (other than an extension of the purchase, etc. period under Article 27-10, paragraph (3))" is deemed to be replaced with "the Terms of Purchase, etc. change"; in the proviso to Article 27-11, paragraph (1), the phrase "the Tender Offeror states as one of the Terms of Purchase, etc. in the Public Notice of the Commencement of the Tender Offer and in the Tender Offer Statement that the Tender Offer may be withdrawn if a material change occurs in the business or property of the Issuer of the Share Certificates, etc. that are involved in the Tender Offer or in its Subsidiary (meaning a Subsidiary as defined in Article 2, item (iii) of the Companies Act) or any other circumstance occurs that would significantly compromise its ability to achieve the purpose of the Tender Offer (limited to circumstances specified by Cabinet Order), or if an order to commence bankruptcy proceedings is issued against the Tender Offeror or any other material change in circumstances specified by Cabinet Order occurs" is deemed to be replaced with "effecting a purchase, etc. of Listed Share Certificates, etc. through the Tender Offer would violate any other law or regulation, or if any circumstance occurs that is specified by Cabinet Order as involving a risk of violation of any other law or regulation"; in Article 27-13, paragraph (4), the phrase "has included one of the following conditions in the Public Notice of the Commencement of the Tender Offer and in the Tender Offer Statement (if the Tender Offeror has included the condition referred to in item (ii), this is only if the Ownership Ratio of Share Certificates, etc. (meaning Ownership Ratio of Share Certificates, etc. as defined in Article 27-2, paragraph (8)), in terms of the Share Certificates, etc. that the Tender Offeror will hold after the Tender Offer (if the Tender Offeror has a Specially Related Party as specified in Article 27-2, paragraph (1), item (i), the Ownership Ratio of Share Certificates, etc. as defined in Article 27-2, paragraph (8) in terms of the Share Certificates, etc. that Specially Related Party holds is added to calculate this) will be below the proportion specified by Cabinet Order)" is deemed to be replaced with "has included the condition specified in item (ii) below in the Public Notice of the Commencement of the Tender Offer and in the Tender Offer Statement"; in Article 27-14, paragraph (1), the phrase "Tender Offer Report, the Target Company's Position Statement, and the Tender Offeror's Answer (including any amended report in connection with them" is deemed to be replaced with "and a Tender Offer Report (including any amended report in connection with it"; in Article 27-14, paragraph (3), the phrase ", Article 27-10, paragraph (9) (including as applied mutatis mutandis pursuant to Article 27-10, paragraph (10)) and Article 27-10, paragraph (13) (including as applied mutatis mutandis pursuant to Article 27-10, paragraph (14)) at" is deemed to be replaced with "at"; in Article 27-14, paragraph (5), item (i), the phrase "Article 27-8, paragraph (3)" is deemed to be replaced with "Article 27-8, paragraph (3) as applied mutatis mutandis pursuant to Article 27-22-2, paragraph (2)"; in Article 27-14, paragraph (5), item (ii), the phrase "Article 27-10, paragraph (8) or (12), or paragraph (3) of the preceding Article" is deemed to be replaced with "Article 27-22-2, paragraph (7)"; in Article 27-15, paragraph (1), the phrase ", Tender Offer Report, Target Company's Position Statement, or Tender Offeror's Answer" is deemed to be replaced with "or Tender Offer Report"; in Article 27-15, paragraph (2), the phrase "Tender Offeror, etc. and the Target Company" is deemed to be replaced with "Tender Offeror, etc."; and in paragraph (1) of the preceding Article, the phrase "a person that that is found to be required to purchase, etc. Share Certificates, etc. through a Tender Offer pursuant to the main clause of Article 27-2, paragraph (1), a Specially Related Party of either of these persons" is deemed to be replaced with "a person that is found to be required to purchase, etc. Listed Share Certificates, etc. through a Tender Offer pursuant to the main clause of Article 27-22-2, paragraph (1)" ; and the term "the preceding two paragraphs" in paragraph (3) of that Article shall be deemed to be replaced with "paragraph (1) as applied mutatis mutandis pursuant to Article 27-22-2, paragraph (2).".
(3) The provisions of Article 27-3, paragraph (4) apply mutatis mutandis if an amended statement is submitted pursuant to Article 27-8, paragraphs (1) to (4) inclusive as applied mutatis mutandis pursuant to the preceding paragraph. In this case, in the first sentence of Article 27-3, paragraph (4), the phrase "the Tender Offeror shall send a copy of the Tender Offer Statement to the Issuer of the Share Certificates, etc. involved in the Tender Offer (and to any person that has already submitted a Tender Offer Statement for the Share Certificates, etc. of that Issuer as of the day on which the Tender Offeror submits the Tender Offer Statement), and, if the Share Certificates, etc. involved in the Tender Offer fall under a category set forth in one of the following items, the Tender Offeror must also send a copy of the Tender Offer Statement to the person specified in the relevant item for the category of Share Certificates, etc. set forth in that item" is deemed to be replaced with "the Tender Offeror, for the categories of Listed Share Certificates, etc. set forth in the following items, shall send the person set forth in the relevant item a copy of the Tender Offer Statement, and shall also send a copy of the Tender Offer Statement to any person that has already submitted a Tender Offer Statement for Share Certificates, etc. of which the Tender Offeror is the Issuer, as of the day on which it submits the amended statement"; and in the items of Article 27-3, paragraph (4), the term "Share Certificates, etc." is deemed to be replaced with "Listed Share Certificates, etc."
(4) A Tender Offeror (meaning Tender Offeror as defined in Article 27-3, paragraph (2) as applied mutatis mutandis pursuant to paragraph (2); hereinafter the same applies in this Section), immediately after submitting a Written Tender Offer Withdrawal Notice (meaning a Written Tender Offer Withdrawal Notice as defined in Article 27-11, paragraph (3) as applied mutatis mutandis pursuant to paragraph (2); hereinafter the same applies in this Section) or Tender Offer Report (meaning a Tender Offer Report as defined in Article 27-13, paragraph (2) as applied mutatis mutandis pursuant to paragraph (2); hereinafter the same applies in this Section), shall send a copy of the Written Tender Offer Withdrawal Notice or Tender Offer Report to the person specified in the relevant item of Article 27-3, paragraph (4) for the category of Listed Share Certificates, etc. set forth in that item. The necessary particulars relevant to the sending of those copies in such a case are specified by Cabinet Office Ordinance.
(5) If the purchase, etc. period in a Tender Offer is required to be extended pursuant to Article 27-8, paragraph (8) as applied mutatis mutandis pursuant to paragraph (2), the provisions of Article 27-5 apply mutatis mutandis until the last day of the required period of extension. In this case, in Article 27-5, the term "Share Certificates, etc." is deemed to be replaced with "Listed Share Certificates, etc." and the phrase "the following cases" is deemed to be replaced with "the cases specified by Cabinet Order".
(6) The provisions of Article 27-7 apply mutatis mutandis to a public notice or public announcement under Article 27-8, paragraphs (8) and (11) as applied mutatis mutandis pursuant to paragraph (2).
(7) The provisions of Article 27-8, paragraphs (1) to (5) inclusive apply mutatis mutandis to a Tender Offer Report. In this case, in Article 27-8, paragraph (1), the term "amended statement" is deemed to be replaced with "amended report"; in Article 27-8, paragraph (2), the phrase "submitted and before the last day of the Tender Offer period, the Terms of Purchase, etc. change (other than an extension of the purchase, etc. period under Article 27-10, paragraph (3)), any other material particular that is required to be stated in a Tender Offer Statement changes, or any other circumstance specified by Cabinet Office Ordinance arises that requires the Tender Offer Statement to be amended" is deemed to be replaced with "submitted, the number of Listed Share Certificates, etc. for which a purchase, etc. will be effected is fixed by the Pro Rata Method set forth in Article 27-13, paragraph (5) as applied mutatis mutandis pursuant to Article 27-22-2, paragraph (2) on or after the day on which the Tender Offer Statement is submitted" and the term "amended statement" is deemed to be replaced with "amended report"; in Article 27-8, paragraph (3), the term "amended statement" is deemed to be replaced with "amended report", the phrase "the Terms of Purchase, etc. stated in the Tender Offer Statement do not comply with the provisions of this Section" is deemed to be replaced with "the delivery and other settlement methods for the purchase, etc. stated in the Tender Offer Statement do not comply with Article 27-13, paragraph (4) (excluding 27-13, paragraph (4), item (i)) and Article 27-13, paragraph (5) as applied mutatis mutandis pursuant to Article 27-22-2, paragraph (2)", and the phrase "the change in the Terms of Purchase, etc. that is stated in the amended statement violates Article 27-6, paragraph (1)" is deemed to be replaced with "the result of calculation stated in the amended statement for deciding the number of Listed Share Certificates, etc. to purchase, etc., contravenes the pro rata method specified by the Cabinet Office Ordinance set forth in Article 27-13, paragraph (5) as applied mutatis mutandis pursuant to Article 27-22-2, paragraph (2)"; in Article 27-8, paragraph (4), the term "amended statement" is deemed to be replaced with "amended report"; in Article 27-8, paragraph (5), the phrase "disposition under paragraph (3)" is deemed to be replaced with "disposition under paragraph (3) or the preceding paragraph as applied mutatis mutandis pursuant to Article 27-22, paragraph (7)", and the phrase "the last day of the Tender Offer period (including the period by which it is required to be extended under paragraph (8); the same applies in paragraph (7)) (or, for a disposition resulting in an amended statement being submitted after the last day of the Tender Offer period, after the day on which five years have elapsed since the day following the last day of the Tender Offer period), and the disposition under the preceding paragraph may not be reached after the day on which five years have elapsed since the day following the last day of the Tender Offer period" is deemed to be replaced with "the day on which five years have elapsed since the day following the last day of the Tender Offer period".
(8) The provisions of paragraph (4) apply mutatis mutandis to an amended report provided for in Article 27-8, paragraphs (1) to (4) inclusive as applied mutatis mutandis pursuant to the preceding paragraph. In this case, in Article 27-8, paragraph (4), the phrase "Written Tender Offer Withdrawal Notice (meaning a Written Tender Offer Withdrawal Notice as defined in Article 27-11, paragraph (3) as applied mutatis mutandis pursuant to paragraph (2); hereinafter the same applies in this Section) or Tender Offer Report (meaning a Tender Offer Report as defined in Article 27-13, paragraph (2) as applied mutatis mutandis pursuant to paragraph (2); hereinafter the same applies in this Section)" is deemed to be replaced with "amended report (meaning an amended report provided for in Article 27-8, paragraphs (1) to (4) inclusive as applied mutatis mutandis pursuant to paragraph (7)" and the phrase "the Written Tender Offer Withdrawal Notice or Tender Offer Report" is deemed to be replaced with "the amended report".
(9) The provisions of Article 16 apply mutatis mutandis to a person that violates the provisions of Article 27-3, paragraph (3) or Article 27-8, paragraph (7) as applied mutatis mutandis pursuant to paragraph (2) in performing the act specified by Cabinet Office Ordinance or that violates the provisions of Article 27-9, paragraph (2) or (3) as applied mutatis mutandis pursuant to paragraph (2) in effecting a purchase, etc. of Listed Share Certificates, etc. In this case, in Article 16, the term "the person that acquires the Securities" is deemed to be replaced with "the person that sells, etc. its Listed Share Certificates, etc. in response to the Tender Offer".
(10) The provisions of Article 17 apply mutatis mutandis to a person that has caused a person to sell, etc. its Listed Share Certificates, etc. through the use of a Tender Offer Explanation (meaning Tender Offer Explanation as defined in Article 27-9, paragraph (1) as applied mutatis mutandis pursuant to paragraph (2); hereinafter the same applies in this Section) or other representation that contains a false statement about a material particular, omits a representation as to a material particular that is required to be represented, or omits a representation of material fact that is necessary to prevent it from being misleading. In this case, in Article 17, the phrase "the person that acquires the Securities" is deemed to be replaced with "the person that sells, etc. its Listed Share Certificates, etc. in response to the Tender Offer".
(11) The provisions of Article 18, paragraph (1) apply mutatis mutandis to the following persons. In this case, in Article 18, paragraph (1), both of the phrases "person that acquires the Securities through the Public Offering or Secondary Distribution" and "person that acquires the Securities" are deemed to be replaced with "person that sells, etc. its Listed Share Certificates, etc. in response to the Tender Offer", and the term "at the time the person offers to acquire the Securities" is deemed to be replaced with "at the time the person sells, etc. its Listed Share Certificates":
(i) a person that issues a Public Notice of the Commencement of a Tender Offer as defined in Article 27-3, paragraph (2) as applied mutatis mutandis pursuant to paragraph (2), or a public notice or public announcement under Article 27-6, paragraph (2) or (3); Article 27-7, paragraph (1) or (2); or Article 27-8, paragraph (8) or (11) as applied mutatis mutandis pursuant to paragraph (2); or Article 27-7, paragraph (1) or (2) as applied mutatis mutandis pursuant to paragraph (6) (collectively referred to as a "Public Notice of the Commencement of the Tender Offer, etc." in the following paragraph) that contains a false representation about a material particular, omits a representation as to a material particular that is required to be represented, or omits a representation of material fact that is necessary to prevent it from being misleading;
(ii) a person that submits a Tender Offer Statement as defined in Article 27-3, paragraph (2) as applied mutatis mutandis pursuant to paragraph (2) (including any amended statement in connection with it; the same applies in the following paragraph) that contains a false statement about a material particular, omits a statement as to a material particular that is required to be stated, or omits a statement of material fact that is necessary to prevent it from being misleading; or
(iii) a person that prepares a Tender Offer Explanation (including a Tender Offer Explanation amended pursuant to Article 27-9, paragraph (3) as applied mutatis mutandis pursuant to paragraph (2); the same applies in the following paragraph) that contains a false statement about a material particular, omits a statement as to a material particular that is required to be stated, or omits a statement of material fact that is necessary to prevent it from being misleading.
(12) In a case to which Article 18, paragraph (1) is applicable as applied mutatis mutandis pursuant to the preceding paragraph, an officer of the Issuer at the time of its submission of a Public Notice of the Commencement of the Tender Offer, etc. or Tender Offer Statement, or at the time of the preparation of the Tender Offer Explanation is jointly and severally liable with the Issuer for compensation under the preceding paragraph; provided, however, that this does not apply if the officer proves that that officer did not know, and in the exercise of reasonable care could not have known, that the statement was false or had been omitted.
(13) In a case referred to in paragraph (2), (3), or (5) to (11) inclusive, beyond what is provided for in those provisions, any other necessary technical replacement of terms is specified by Cabinet Order.
(Disclosure of a Material Fact About Business)
Article 27-22-3 (1) If a material fact has occurred with regard to an Issuer who seeks to purchase, etc. Listed Share Certificates, etc. through a Tender Offer provided for in paragraph (1) of the preceding Article (meaning a material fact about its business which is provided for in Article 166, paragraph (1) (excluding those specified by Cabinet Office Ordinance); hereinafter the same applies in this and the following Articles), and this has not been disclosed as provided for in Article 166, paragraph (1), the Issuer must disclose that material fact pursuant to the provisions of Cabinet Office Ordinance before the day on which it submits the Tender Offer Statement (meaning a Tender Offer Statement as defined in Article 27-3, paragraph (2) as applied mutatis mutandis pursuant to paragraph (2) of the preceding Article; hereinafter the same applies in this and the following Articles).
(2) If a purchase, etc. of Listed Share Certificates, etc. is effected through a Tender Offer as provided for in paragraph (1) of the preceding Article, and any new material fact occurs at the Issuer that is the Tender Offeror (including if it becomes clear that a material fact had occurred before the day on which the Tender Offeror submitted the Tender Offer Statement, but that this has not been disclosed as provided for in Article 166, paragraph (1)) between the day on which it submits the Tender Offer Statement and the last day of the Tender Offer period (including the period by which it is required to be extended pursuant to Article 27-8, paragraph (8) as applied mutatis mutandis pursuant to paragraph (4) of this Article; the same applies in the following Article) as defined in Article 27-5 as applied mutatis mutandis pursuant to paragraph (2) of the preceding Article, the Issuer must immediately disclose the material fact and notify persons that have accepted the offer to purchase, etc. Listed Share Certificates, etc. through the Tender Offer, persons that have offered to sell, etc. their Listed Share Certificates, etc. in connection with the Tender Offer, and persons seeking to sell, etc. such Listed Share Certificates, etc., of the content of what it has disclosed, pursuant to the provisions of Cabinet Office Ordinance.
(3) Once the period specified by Cabinet Order has elapsed after the disclosure under the preceding two paragraphs is made, the disclosure prescribed in Article 166, paragraph (1) is deemed to have been made.
(4) The provisions of Article 27-8, paragraphs (8) and (9) apply mutatis mutandis to the disclosure under paragraph (2). In this case, in Article 27-8, paragraph (8), the phrase "If an amended statement under paragraph (1) or (2) is submitted or an order to submit an amended statement under paragraph (3) or (4) is issued during the Tender Offer period, except in a case specified by Cabinet Office Ordinance" is deemed to be replaced with "If a material fact is required to be disclosed pursuant to Article 27-22-3, paragraph (2)"; and in Article 27-8, paragraph (9), the phrase "the preceding paragraph" is deemed to be replaced with "the preceding paragraph as applied mutatis mutandis pursuant to Article 27-22-3, paragraph (4)" and the term "Share Certificates, etc." is deemed to be replaced with "Listed Share Certificates, etc.".
(5) If the purchase, etc. period in a Tender Offer is required to be extended pursuant to Article 27-8, paragraph (8) as applied mutatis mutandis pursuant to the preceding paragraph, the provisions of Article 27-5 apply mutatis mutandis until the last day of the required period of extension. In this case, in Article 27-5, the term "Share Certificates, etc." is deemed to be replaced with "Listed Share Certificates, etc." and the phrase "the following cases" is deemed to be replaced with "the cases specified by Cabinet Order".
(6) The provisions of Article 18, paragraph (1) apply mutatis mutandis to an Issuer that issues a public notice or public announcement under Article 27-8, paragraph (8) as applied mutatis mutandis pursuant to paragraph (4), which contains a false representation with regard to a material particular, omits a representation as to a material particular that is required to be represented, or omits a representation of material fact that is necessary to prevent it from being misleading. In this case, in Article 18, paragraph (1), both the phrase "person that acquires the Securities through the Public Offering or Secondary Distribution" and the phrase "person that acquires the Securities" are deemed to be replaced with "person that sells, etc. the Listed Share Certificates, etc. in response to the Tender Offer", and the phrase "at the time the person offers to acquire the Securities" is deemed to be replaced with "at the time the person sells, etc. the Listed Share Certificates".
(7) In a case to which Article 18, paragraph (1) is applicable as applied mutatis mutandis pursuant to the preceding paragraph, an officer of an Issuer at the time the Issuer issues a public notice or public announcement provided for in the preceding paragraph is jointly and severally liable with the Issuer for compensation under the preceding paragraph; provided, however, that this does not apply if the officer proves that the officer did not know, and in the exercise of reasonable care could not have known, that the statement was false or had been omitted.
(8) The provisions of Article 27-17 apply mutatis mutandis if a person violates the provisions of Article 27-5 as applied mutatis mutandis pursuant to paragraph (5) in purchasing, etc. Listed Share Certificates, etc. In this case, in Article 27-17, the term "Share Certificates, etc." is deemed to be replaced with "Listed Share Certificates, etc.", and any other necessary technical replacement of terms is specified by Cabinet Order.
(Compensatory Liability for Damage Due to Failure to Disclose or False Disclosure)
Article 27-22-4 (1) An Issuer that fails to make a disclosure or issue a notice under paragraph (1) or (2) of the preceding Article (hereinafter collectively referred to as "Disclosure" in this Article) with regard to a material fact requiring Disclosure, or an Issuer that makes a false Disclosure with regard to such a fact, is liable to compensate a person that sells, etc. its Listed Share Certificates, etc. in response to the Tender Offer, for damage arising from the company's failure to make Disclosure or from its false Disclosure; provided, however, that this does not apply in the following cases:
(i) the person that sells, etc. the Listed Share Certificates, etc. in response to the Tender Offer knows that the material fact has occurred at the Issuer or knows that the content of the Disclosure is false; or
(ii) the Issuer proves that it did not know that the material fact had occurred at said Issuer or that the content of the Disclosure was false, and that in the exercise of reasonable care it could not have known this at the time of the Tender Offer (meaning when the Public Notice of the Commencement of the Tender Offer is submitted, in terms of disclosure under paragraph (1) of the preceding Article, or the period between when the Public Notice of the Commencement of the Tender Offer is submitted and the last day of the Tender Offer period, in terms of the disclosure or notice under Article 27-22-3, paragraph (2); the same applies in the following paragraph).
(2) In a case to which the main clause of the preceding paragraph is applicable, an officer of an Issuer at the time of a Tender Offer is jointly and severally liable with the Issuer for compensation under the preceding paragraph; provided, however, that this does not apply if the officer proves that the officer did not know that the material fact had occurred at the Issuer or that the content of the Disclosure was false, and in the exercise of reasonable care could not have known this at the time of the Tender Offer.
Chapter II-3 Disclosure of the Status of Large-Volume Holdings in Share Certificates, etc.
(Submission of Statements of Large-Volume Holdings)
Article 27-23 (1) A holder of Subject Securities (including what is specified by Cabinet Order as indicating a right connected to Securities set forth in Article 2, paragraph (1), item (xix) and other Securities specified by Cabinet Order that indicate an Option on Subject Securities (limited to an Option that causes the person that exercises it to acquire the position of the buyer in a purchase and sale of the Subject Securities linked to the Option (hereinafter collectively referred to as "Share Certificates, etc." in this Chapter and Article 27-30-11, paragraph (4))) issued by a corporation (or, with regard to the Securities specified by Cabinet Office Ordinance, a person specified by Cabinet Office Ordinance; hereinafter the same applies in this Chapter and Article 27-30-11, paragraph (4), except for Article 27-30, paragraph (2)) that is the Issuer of share certificates, corporate bond certificates with share options, and other Securities specified by Cabinet Order (hereinafter referred to as the "Share-related Securities" in this paragraph) that are listed on a Financial Instruments Exchange (including the Share-related Securities specified by Cabinet Order as having equivalent distribution statuses to said Securities), and whose Ownership Ratio of Share Certificates, etc. with respect to the relevant Share Certificates, etc. exceeds five percent (such a holder is hereinafter referred to as a "Large-Volume Holder" in this Chapter) must submit a statement in which it states the particulars of its Ownership Ratio of Share Certificates, etc., the particulars of the funds for the acquisition, the purpose of the holdings, and any other particulars specified by Cabinet Office Ordinance (such a statement is hereinafter referred to as a "Statement of Large-Volume Holdings") to the Prime Minister, pursuant to the provisions of Cabinet Office Ordinance, within five days from the date on which it becomes a Large-Volume Holder (Sundays and other holidays specified by Cabinet Order are not included for the purpose of counting days; the same applies in Article 27-25, paragraph (1) and Article 27-26); provided, however, that this does not apply if the total number of Share Certificates, etc. held which are provided for in paragraph (4) does not increase, nor does it apply in any other case specified by Cabinet Office Ordinance.
(2) The term "Subject Securities" as used in the preceding paragraph means the share certificates, corporate bond certificates with share options, and other Securities specified by Cabinet Order.
(3) The holder referred to in paragraph (1) includes the following persons, in addition to persons that own Share Certificates, etc. in their own names or in the name of another person (or under a fictitious name) (including a person that holds the right to request the delivery of Share Certificates, etc. under a purchase and sale contract or any other contract, or any other person specified by Cabinet Order as being equivalent); provided, however, that the person set forth in item (i) is deemed to become a holder on the day on which that person comes to know that the person has the authority prescribed in that item, only within the scope of the Share Certificates, etc. (including the Securities set forth in Article 2, paragraph (1), item (xx) indicating the rights to Share Certificates, etc., and other Securities specified by Cabinet Office Ordinance; hereinafter the same applies in this paragraph and the following Article) regarding which the person comes to know that said that person has that authority:
(i) a person that has the authority to exercise voting rights or any other rights as a shareholder in the Issuer of the Share Certificates, etc., or to give instructions as to the exercise of said voting rights or any other rights, based on a money trust contract or any other contract or the provisions of the law (except for a person that falls under the following item), and that has the aim of controlling the business activities of said Issuer; or
(ii) a person that has the necessary authority to invest in Share Certificates, etc., based on a Discretionary Investment Contract or any other contract or the provisions of the law.
(4) The term " Ownership Ratio of Share Certificates, etc." as used in paragraph (1) means the ratio arrived at when the number of Share Certificates, etc. issued by the Issuer of the relevant Share Certificates, etc., which the holder (meaning a holder as set forth in paragraph (1); hereinafter the same applies in this Chapter) is obligated to transfer (excluding those that the holder is obligated to transfer to a Joint Holder) due to having acquired them through a margin transaction provided for in Article 161-2, paragraph (1) or any other transaction method specified by Cabinet Office Ordinance, is deducted from the total number of Share Certificates, etc. (excluding Treasury Shares (meaning Treasury Shares as defined in Article 113, paragraph (4) of the Companies Act) and the Share Certificates, etc. that are specified by Cabinet Office Ordinance in consideration of the manner in which they are held or any other circumstance; hereinafter the same applies in this paragraph) held by the holder of the relevant Share Certificates, etc. (meaning the number of represented shares, if they are share certificates, or the number specified by Cabinet Office Ordinance, if they are other Securities; hereinafter the same applies in this Chapter) (this includes if the holder has the authority set forth in the items of the preceding paragraph with regard to those Share Certificates, etc.; hereinafter the same applies in this Chapter) (the number of Share Certificates, etc. after this deduction is hereinafter referred to as the "Number of Share Certificates, etc. Held" in this Chapter); the Number of Share Certificates, etc. Held by Joint Holders of the Share Certificates, etc. issued by that Issuer (excluding those for which a right to request delivery or any other right specified by Cabinet Order exists between the holder and a Joint Holder) is added (the number of Share Certificates, etc. after this addition is hereinafter referred to as the "Total Number of Share Certificates, etc. Held" in this Chapter); and this is divided by the sum of either the total number of the Issuer's issued shares or the number specified by Cabinet Office Ordinance as being equivalent to this, and the number of Share Certificates, etc. that are held by the holder and the Joint Holders (excluding share certificates and other Securities that are specified by Cabinet Office Ordinance).
(5) The term "Joint Holder" as used in the preceding paragraph means the other holder of the relevant Share Certificates, etc., in a case in which the holder of Share Certificates, etc. has agreed to jointly acquire or transfer said Share Certificates, etc., or to jointly exercise voting rights and other rights as the Issuer's shareholder, together with another holder of Share Certificates, etc. issued by the Issuer of the relevant Share Certificates, etc.
(6) If a first holder of Share Certificates, etc. and another holder of Share Certificates, etc. that are issued by the Issuer of the relevant Share Certificates, etc. are related to each other through a shareholding relationship, familial relationship, or other special relationship specified by Cabinet Order, the other holder is deemed to be a Joint Holder referred to in paragraph (4) in relation to that holder; provided, however, that this does not apply if the Number of Share Certificates, etc. Held by either the first holder or the other holder is the number specified by Cabinet Office Ordinance or less.
(Preparation and Delivery of a Written Notice of Shareholding Status)
Article 27-24 A person set forth in paragraph (3), item (ii) of the preceding Article, pursuant to the provisions of Cabinet Office Ordinance, shall prepare a written notice that accounts for the status of holdings in the relevant Share Certificates, etc. and deliver it to customers that have the authority to exercise their voting rights or any other rights as shareholders in the Issuer of those Share Certificates, etc. or to give instructions as to the exercise of their voting rights or any other rights, at least once a month.
(Submission of a Statement of Changes to a Statement of Large-Volume Holdings)
Article 27-25 (1) If, after the day on which a person that is required to submit a Statement of Large-Volume Holdings has become a Large-Volume Holder, the Ownership Ratio of Share Certificates, etc. (meaning the Ownership Ratio of Share Certificates, etc. set forth in Article 27-23, paragraph (4); hereinafter the same applies in this Chapter) has increased or decreased by one percent or more (unless this is not linked to an increase or decrease in the Total Number of Share Certificates, etc. Held by said person; hereinafter the same applies in this Chapter), or if there has been any other change that is specified by Cabinet Order as a change in a material particular that is required to be stated in the Statement of Large-Volume Holdings, such person must submit a report on the particulars of the change (hereinafter referred to as a "Statement of Changes") to the Prime Minister, within five days after the day of the change, pursuant to the provisions of Cabinet Office Ordinance; provided, however, that this does not apply that this shall not apply to cases where a Change Report reporting that the Holding Ratio of Share Certificates, etc. are five percent or less has already been submitted or to other cases specified by Cabinet Office Ordinance..
(2) In a case that falls under the criteria specified by Cabinet Order as a case in which a large number of Share Certificates, etc. have been transferred within a short period, a person that submits a Statement of Changes due to a decrease in the Ownership Ratio of Share Certificates, etc. must also state in said Statement of Changes the particulars of the party to which the Share Certificates, etc. have been transferred and the consideration received (with regard to a person specified by Cabinet Order as a person to whom an insignificant number of Share Certificates, etc. have been transferred, limited to the particulars of the consideration received), pursuant to the provisions of Cabinet Office Ordinance.
(3) If a person that has submitted a Statement of Large-Volume Holdings or a Statement of Changes finds that its content conflicts with the facts of the matter, that such a document insufficiently states or omits a statement as to a material particular that is required to be stated, or that such a document insufficiently states or omits a statement as to a material fact that is necessary to prevent it from being misleading, said person shall submit an amended report to the Prime Minister.
(Special Provisions for Statements by Large-Volume Holders of Share Certificates, etc. Subject to Special Provisions)
Article 27-26 (1) Notwithstanding the provisions of the main clause of Article 27-23, paragraph (1), a Statement of Large-Volume Holdings in Share Certificates, etc. that a Financial Instruments Business Operator (limited to one that engages in Type I Financial Instruments Business provided for in Article 28, paragraph (1), or that engages in Investment Management Business provided for in paragraph (4) of that Article; hereinafter the same applies in this Article), a bank, or any other person specified by Cabinet Office Ordinance (limited to one that has notified the Prime Minister of the reference date provided for in paragraph (3)) holds, but which it does not hold for the purpose of performing an act specified by Cabinet Order as something that materially changes or materially influences the business activities of the Issuer of said Share Certificates, etc. (such an act is referred to as a "Material Proposal" in paragraphs (4) and (5)) (unless the Ownership Ratio of Share Certificates, etc. exceeds the ratio specified by Cabinet Office Ordinance and excluding any other cases that are specified by Cabinet Office Ordinance in consideration of the manner in which the Share Certificates, etc. are held and other circumstances), or which are held by the State, local government, or any other person specified by Cabinet Office Ordinance (limited to those that have notified the Prime Minister of the reference date provided for in paragraph (3)) (such Share Certificates, etc. are hereinafter collectively referred to as "Share Certificates, etc. Subject to Special Provisions" in this Article) must be submitted to the Prime Minister with a statement of the particulars specified by Cabinet Office Ordinance with regard to the status of Share Certificate, etc. holdings as of the reference date on which the Ownership Ratio of Share Certificates, etc. comes to exceed five percent for the first time, within five days from said reference date, pursuant to the provisions of Cabinet Office Ordinance.
(2) Notwithstanding the provisions of the main clause of paragraph (1) of the preceding Article, a Statement of Changes for Share Certificates, etc. Subject to Special Provisions (excluding a Statement of Changes for a change that occurs if the relevant Share Certificates, etc. come to fall under a category other than Share Certificates, etc. Subject to Special Provisions) must be submitted to the Prime Minister by the date that is specified in the relevant of the following items for the category of cases set forth in that item, pursuant to the provisions of Cabinet Office Ordinance:
(i) if the Ownership Ratio of Share Certificates, etc. as of the reference date that comes after the reference date of the Statement of Large-Volume Holdings set forth in the preceding paragraph increases or decreases by one percent or more from the Ownership Ratio of Share Certificates, etc. that is stated in said Statement of Large-Volume Holdings, or if there has been any other change that is specified by Cabinet Order as a change in a material particular that is required to be stated in said Statement of Large-Volume Holdings: within five days from the later reference date;
(ii) if the Ownership Ratio of Share Certificates, etc. as of the reference date that comes after the reference date of the Statement of Changes increases or decreases by one percent or more from the Ownership Ratio of Share Certificates, etc. that was stated in said Statement of Changes, or if there has been any other change that is specified by Cabinet Order as a change in a material particular that is required to be stated in the Statement of Large-Volume Holdings: within five days from the later reference date;
(iii) if the Ownership Ratio of Share Certificates, etc. falls below the ratio specified by Cabinet Office Ordinance, and the relevant Share Certificates, etc. have become Share Certificates, etc. Subject to Special Provisions: within five days from the date on which the Share Certificates, etc. become Share Certificates, etc. Subject to Special Provisions; and
(iv) a case specified by Cabinet Office Ordinance as being equivalent to any of the preceding three items: the date specified by Cabinet Office Ordinance.
(3) The reference date referred to in the preceding two paragraphs means the date on which a Holder of Share Certificates, etc. Subject to Special Provisions notifies the Prime Minister pursuant to the provisions of Cabinet Office Ordinance, from among the combinations of two or more days in each month designated pursuant to the provisions of Cabinet Order.
(4) Notwithstanding the provisions of paragraph (1), if the Financial Instruments Business Operator, bank, or other person specified by Cabinet Office Ordinance provided for in that paragraph makes a Material Proposal within a period specified by Cabinet Order from the date on which the Ownership Ratio of Share Certificates, etc. comes to exceed five percent, it must submit the Statement of Large-Volume Holdings referred to in that paragraph to the Prime Minister by five days prior to the date on which it makes the Material Proposal, pursuant to the provisions of Cabinet Office Ordinance.
(5) Notwithstanding the provisions of paragraph (2), if the Ownership Ratio of Share Certificates, etc. of the Financial Instruments Business Operator, bank, or other person specified by Cabinet Office Ordinance provided for in paragraph (1) increases by one percent or more after the submission of the Statement of Large-Volume Holdings referred to in that paragraph or the Statement of Changes referred to in paragraph (2), and if it makes a Material Proposal within the period specified by Cabinet Order from the date of the increase, it must submit the Statement of Changes referred to in that paragraph to the Prime Minister by five days prior to the date on which it makes the Material Proposal, pursuant to the provisions of Cabinet Office Ordinance.
(6) The provisions of paragraph (3) of the preceding Article apply mutatis mutandis to the Statement of Large-Volume Holdings referred to in paragraph (1) or (4), or the Statement of Changes referred to in paragraph (2) or the preceding paragraph.
(Submission of a Copy of a Statement of Large-Volume Holdings, etc. to a Financial Instruments Exchange, etc.)
Article 27-27 If a Holder of Share Certificates, etc. has submitted a Statement of Large-Volume Holdings, Statement of Changes, or amended reports in connection with them, said holder must send the copies of these documents without delay to the Issuer of the relevant Share Certificates, etc., and to the person specified in the relevant of the following items for the category of Share Certificates, etc. set forth in that item:
(i) Share Certificates, etc. issued by an Issuer of Share Certificates, etc. listed on a Financial Instruments Exchange: said Financial Instruments Exchange; and
(ii) Share Certificates, etc. issued by an Issuer of Share Certificates, etc., which are specified by Cabinet Order as having equivalent distribution statuses to the Share Certificates, etc. set forth in the preceding item: the Authorized Financial Instruments Firms Association specified by Cabinet Order.
(Public Inspection of Statements of Large-Volume Holdings)
Article 27-28 (1) The Prime Minister, pursuant to the provisions of Cabinet Office Ordinance, must make Statements of Large-Volume Holdings and Statements of Changes, as well as amended reports in connection with them, available for public inspection for five years from the day on which the Prime Minister receives these documents (or for an amended report, the day on which the Prime Minister receives the Statement of Large-Volume Holdings or Statement of Change that is subject to that amendment).
(2) Pursuant to the provisions of Cabinet Office Ordinance, Financial Instruments Exchanges and the Associations of Authorized Financial Instruments Firms specified by Cabinet Order must keep at their offices the copies of the documents prescribed in the preceding paragraph that have been sent to them pursuant to the provisions of the preceding Article (hereinafter referred to as "Public Documents" in this Article), and must make copies of them available for public inspection for five years from the day on which they receive those copies of the Public Documents.
(3) Notwithstanding the provisions of paragraph (1), with regard to the particulars of funds for acquisition as stated in a Public Document, if said funds have been borrowed from a bank, Cooperative Financial Institution, or any other financial institution specified by Cabinet Order (hereinafter collectively referred to as a "Bank, etc." in this paragraph) (excluding the cases specified by Cabinet Office Ordinance), the Prime Minister is not to make the name of the Bank, etc. available for public inspection, and the person that has submitted the Public Documents is to delete the name of the Bank, etc. before sending the copy of the Public Document.
(4) Notwithstanding the provisions of paragraph (1), if the Prime Minister issues a submission order for an amended report under Article 9, paragraph (1) or Article 10, paragraph (1) as applied mutatis mutandis pursuant to paragraph (1) of the following Article, the Prime Minister may decide not to make all or part of the Public Document that is connected with the order available for public inspection.
(5) In a case referred to in the preceding paragraph, the Prime Minister is to notify a Large-Volume Holder, and the Financial Instruments Exchange or the Authorized Financial Instruments Firms Association specified by Cabinet Order that is referred to in paragraph (2), that makes copies of Public Documents available for public inspection pursuant to the provisions of paragraph (2), that the Prime Minister has decided that all or part of the Public Document will not be made available for public inspection.
(6) If a Financial Instruments Exchange or an Authorized Financial Instruments Firms Association receives a notice from the Prime Minister pursuant to the provisions of the preceding paragraph, the provisions of paragraph (2) do not apply after that time to the Public Document to which the notice pertains.
(Order to Submit an Amended Report in Connection with a Statement of Large-Volume Holdings, etc.)
Article 27-29 (1) The provisions of Article 9, paragraph (1) and Article 10, paragraph (1) apply mutatis mutandis to Statements of Large-Volume Holdings and Statements of Changes. In this case, in Article 10, paragraph (1), the phrase "to submit an amended statement, and if the Prime Minister finds it to be necessary, the Prime Minister may order the suspension of the validity of a notification under Article 4, paragraphs (1) to (3) inclusive" is deemed to be replaced with "to submit an amended statement".
(2) The provisions of the preceding two Articles apply mutatis mutandis if an amended report in connection with a Statement of Large-Volume Holdings or a Statement of Changes has been submitted pursuant to the provisions of Article 9, paragraph (1) or Article 10, paragraph (1), as applied mutatis mutandis pursuant to the preceding paragraph.
(Collection of Reports and Inspection of a Person Submitting a Statement of Large-Volume Holdings, etc.)
Article 27-30 (1) Whenever 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 a person that has submitted a Statement of Large-Volume Holdings, a person that is found to be required to submit the same, a Joint Holder (meaning a Joint Holder as prescribed in Article 27-23, paragraph (5)) of either of such persons, or any other concerned party or witness to submit reports or materials that should serve as a reference, and may have the relevant officials inspect that person's books and documents or any other articles.
(2) Whenever 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 the Issuer of Share Certificates, etc. to which a Statement of Large-Volume Holdings pertains or a witness, to submit reports or materials that should serve as a reference.
(3) When the Prime Minister finds it necessary with regard to the order for submission of reports or materials or the inspection under paragraph (1) or the order for submission of reports or materials under the preceding paragraph, he/she may inquire to public offices or public or private organizations and request them to report necessary matters.
Chapter II-4 Special Provisions, etc. on Carrying Out Procedures Via an Electronic Data Processing System for Disclosure
(Definition of Electronic Data Processing Systems for Disclosure)
Article 27-30-2 The term "Electronic Data Processing System for Disclosure" as used in this Chapter means an electronic data processing system through which a computer used by the Cabinet Office (including its input and output devices; hereinafter the same applies in this Chapter), and the input and output devices used by a person that carries out the procedures under the provisions of Article 5, paragraph (1) (including as applied mutatis mutandis pursuant to paragraph (5) of that Article (including the cases where it is applied mutatis mutandis pursuant to Article 27) and Article 27); Article 7,paragraph (1), (including as applied mutatis mutandis pursuant to Article 24-2, paragraph (1); Article 24-4-3, paragraph (1) (including as applied mutatis mutandis pursuant to Article 24-4-8, paragraph (2) and Article 24-5-2, paragraph (2)); Article 24-4-5, paragraph (1); Article 24-4-7, paragraph (4); Article 24-5, paragraph (5) and Article 24-7, paragraph (3) (including as applied mutatis mutandis pursuant to Article 27); Article 24-6, paragraph (2); and Article 27)); Article 9, paragraph (1) (excluding the second sentence of that paragraph, and including as applied mutatis mutandis pursuant to Article 24-2, paragraph (1); Article 24-4-3, paragraph (1) (including as applied mutatis mutandis pursuant to Article 24-4-8, paragraph (2) and Article 24-5-2, paragraph (2)); Article 24-4-5, paragraph (1); Article 24-4-7, paragraph (4); Article 24-5, paragraph (5) and Article 24-7, paragraph (3) (including as applied mutatis mutandis pursuant to Article 27); Article 24-6, paragraph (2); and Article 27); Article 10, paragraph (1) (excluding the second sentence of that paragraph, and including as applied mutatis mutandis pursuant to Article 24-2, paragraph (1); Article 24-4-3, paragraph (1) (including as applied mutatis mutandis pursuant to Article 24-4-8, paragraph (2) and Article 24-5-2, paragraph (2)); Article 24-4-5, paragraph (1); Article 24-4-7, paragraph (4); Article 24-5, paragraph (5) and Article 24-7, paragraph (3) (including as applied mutatis mutandis pursuant to Article 27); Article 24-6, paragraph (2); and Article 27); Article 23-3, paragraph (1) and (4) (including as applied mutatis mutandis pursuant to Article 27); Article 23-4 (including as applied mutatis mutandis pursuant to Article 27); Article 23-7, paragraph (1) (including as applied mutatis mutandis pursuant to Article 27); Article 23-8, paragraph (1) (including as applied mutatis mutandis pursuant to Article 27); Article 23-9, paragraph (1) (excluding the second sentence of that paragraph, and including as applied mutatis mutandis pursuant to Article 27); Article 23-10, paragraph (1) (excluding the second sentence of that paragraph, and including as applied mutatis mutandis pursuant to Article 23-10, paragraph (5) (including as applied mutatis mutandis pursuant to Article 27); and Article 27), Article 24, paragraph (1) and (3) (including as applied mutatis mutandis pursuant to Article 24, paragraph (5) (including as applied mutatis mutandis pursuant to Article 27) and Article 27); Article 24-4-2, paragraph (1) and (2) (including as applied mutatis mutandis pursuant to Article 24-2, paragraph (3) (including as applied mutatis mutandis pursuant to Article 24-2, paragraph (4)) and Article 24-2, paragraph (4) (including as applied mutatis mutandis pursuant to Article 24-4-8, paragraph (1) and Article 24-5-2, paragraph (1), and including as applied mutatis mutandis pursuant to Article 27) and Article 27); Article 24-4-4, paragraph (1) and (2) (including as applied mutatis mutandis pursuant to Article 24-4-4, paragraph (3) (including as applied mutatis mutandis pursuant to Article 27) and Article 27); Article 24-4-7, paragraph (1) and (2) (including as applied mutatis mutandis pursuant to Article 24-4-7, paragraph (3) (including as applied mutatis mutandis pursuant to Article 27) and Article 27); Article 24-5, paragraph (1) (including as applied mutatis mutandis pursuant to Article 24-5, paragraph (3) (including as applied mutatis mutandis pursuant to Article 27); Article 24-5, paragraph (4) (including as applied mutatis mutandis pursuant to Article 27); Article 24-6, paragraph (1); Article 24-7, paragraph (1) and (2) (including as applied mutatis mutandis pursuant to Article 24-7, paragraph (6) (including as applied mutatis mutandis pursuant to Article 27); and Article 27); Article 25, paragraph (4) (including as applied mutatis mutandis pursuant to Article 27); Article 27-3, paragraph (2) (including as applied mutatis mutandis pursuant to Article 27-22-2, paragraph (2)); Article 27-8, paragraphs (1) to (4) inclusive (excluding the second sentence of paragraph (4), and including as applied mutatis mutandis pursuant to Article 27-10, paragraphs (8) and (12); Article 27-13, paragraph (3); and Article 27-22-2, paragraphs (2) and (7)); Article 27-10, paragraph (1) and (11); Article 27-11, paragraph (3) (including as applied mutatis mutandis pursuant to Article 27-22-2, paragraph (2)); Article 27-13, paragraph (2) (including as applied mutatis mutandis pursuant to Article 27-22-2, paragraph (2)); Article 27-23, paragraph (1); Article 27-25, paragraph (1) or (3); the paragraphs of Article 27-26; or the provisions of Article 9, paragraph (1) (excluding the second sentence of that paragraph) and Article 10, paragraph (1) (excluding the second sentence of that paragraph) as applied mutatis mutandis pursuant to Article 27-29, paragraph (1) (including the submission of anything that must accompany documents if they are submitted via these procedures; hereinafter referred to as "Electronic Disclosure" in this Chapter); or the procedures under Article 4, paragraph (6) (including as applied mutatis mutandis pursuant to Article 23-8, paragraph (4) (including as applied mutatis mutandis pursuant to Article 27)), the procedures prescribed in Article 27-5, item (ii), and other procedures specified by Cabinet Order (including the submission of anything that must accompany documents if they are submitted through these procedures; hereinafter referred to as "Voluntary Electronic Disclosure" in this Chapter) are connected over a telecommunications line, or an electronic data processing system through which a computer used by the Cabinet Office and the input and output devices used by a Financial Instruments Exchange or by an Authorized Financial Instruments Firms Association designated by Cabinet Order are connected over a telecommunications line.
(Use of an Electronic Data Processing System for Disclosure for Electronic Disclosure)
Article 27-30-3 (1) A person that carries out Electronic Disclosure must use an Electronic Data Processing System for Disclosure to do so, pursuant to the provisions of Cabinet Order.
(2) A person that carries out Voluntary Electronic Disclosure may use an Electronic Data Processing System for Disclosure to do so, pursuant to the provisions of Cabinet Order.
(3) Electronic Disclosure or Voluntary Electronic Disclosure that is carried out pursuant to the provisions of the preceding two paragraphs is deemed to reach the Cabinet Office when it is recorded in a file stored on the computer referred to in the preceding Article (hereinafter simply referred to as the "File" in this Chapter).
(4) Electronic Disclosure or Voluntary Electronic Disclosure that is carried out pursuant to the provisions of paragraph (1) or (2) is deemed to have been carried out using the paper documents specified in the provisions of the Financial Instruments and Exchange Act and Related Regulations which stipulate that these procedures are to be carried out using paper documents, and the Financial Instruments and Exchange Act and Related Regulations apply.
(5) The provisions of Article 3 of the Act on the Utilization of Information and Communications Technology in Administrative Procedures (Act No. 151 of 2002) do not apply to Electronic Disclosure and Voluntary Electronic Disclosure.
(Special Provisions for Times When an Electronic Data Processing System for Disclosure Is Unusable)
Article 27-30-4 (1) Notwithstanding the provisions of paragraph (1) of the preceding Article, if a person that carries out Electronic Disclosure is unable to carry out Electronic Disclosure through the use of an Electronic Data Processing System for Disclosure due to a failure in telecommunication lines or any other cause, the person may carry out Electronic Disclosure by submitting a magnetic disk (including anything on which it is possible to reliably record specific particulars through use of a similar means; hereinafter the same applies in this Chapter), instead of using an Electronic Data Processing System for Disclosure, with the approval of the Prime Minister and pursuant to the provisions of Cabinet Order.
(2) If a person that carries out Voluntary Electronic Disclosure by use of an Electronic Data Processing System for Disclosure is unable to carry out Voluntary Electronic Disclosure using an Electronic Data Processing System for Disclosure due to a failure in telecommunication lines or any other cause, said person may carry out Voluntary Electronic Disclosure by submitting a magnetic disk, instead of using an Electronic Data Processing System for Disclosure, with an approval of the Prime Minister and pursuant to the provisions of Cabinet Order.
(3) If Electronic Disclosure or Voluntary Electronic Disclosure is carried out through the submission of a magnetic disk pursuant to the provisions of the preceding two paragraphs, the Prime Minister must immediately record the particulars recorded on that magnetic disk into the File, pursuant to the provisions of Cabinet Office Ordinance. In this, the particulars recorded on the magnetic disk are deemed to reach the Cabinet Office when those particulars are recorded into the File.
(4) The provisions of paragraph (4) of the preceding Article apply mutatis mutandis to Electronic Disclosure or Voluntary Electronic Disclosure carried out pursuant to the provisions of the preceding three paragraphs.
(Special Provisions for Times When an Electronic Data Processing System for Disclosure Malfunctions, etc.)
Article 27-30-5 (1) The provisions of Article 27-30-3, paragraph (1) do not apply to a case that falls under one of the following items, if the Prime Minister gives approval:
(i) it is found that there has been a malfunction in the computer referred to in Article 27-30-2 or there are otherwise found to be grounds specified by Cabinet Order; or
(ii) it is found to be extremely difficult for the relevant person to carry out Electronic Disclosure using an Electronic Data Processing System for Disclosure.
(2) The procedures for the approval referred to in the preceding paragraph are specified by Cabinet Office Ordinance.
(Notice etc. in Lieu of the Submission, etc. of Copies of Documents to a Financial Instruments Exchange, etc.)
Article 27-30-6 (1) Notwithstanding the provisions of Article 6 (including as applied mutatis mutandis pursuant to Article 12; Article 23-12, paragraph (1); Article 24, paragraph (7); Article 24-2, paragraph (3); Article 24-4-2, paragraph (5) (including as applied mutatis mutandis pursuant to Article 24-4-8, paragraph (1) and Article 24-5-2, paragraph (1)); Article 24-4-3, paragraph (2) (including as applied mutatis mutandis pursuant to Article 24-4-8, paragraph (2) and Article 24-5-2, paragraph (2)); Article 24-4-4, paragraph (5); Article 24-4-5, paragraph (2); Article 24-4-7, paragraph (5) and Article 24-5, paragraph (6) (including as applied mutatis mutandis pursuant to Article 27); Article 24-6, paragraph (3); and Article 27)); Article 24-7, paragraph (4) (including as applied mutatis mutandis pursuant to Article 24-7, paragraph (6) (including as applied mutatis mutandis pursuant to Article 27) and Article 27); Article 27-3, paragraph (4) (including as applied mutatis mutandis pursuant to Article 27-8, paragraph (6) (including as applied mutatis mutandis pursuant to Article 27-13, paragraph (3)); Article 27-11, paragraph (4); Article 27-13, paragraph (3); and Article 27-22-2, paragraphs (2) and (3)); Article 27-10, paragraph (9) (including as applied mutatis mutandis pursuant to Article 27-10, paragraph (10)); and Article 27-10, paragraph (13) (including as applied mutatis mutandis pursuant to Article 27-10, paragraph (14)); Article 27-22-2, paragraph (4) (including as applied mutatis mutandis pursuant to Article 27-22-2, paragraph (8)); and Article 27-27 (including as applied mutatis mutandis pursuant to Article 27-29, paragraph (2)); if a person that carries out Electronic Disclosure or Voluntary Electronic Disclosure has carried out such procedures using an Electronic Data Processing System for Disclosure (including if the person has carried out those procedures by submitting a magnetic disk), in lieu of copies of the documents that are required to be submitted or sent to a Financial Instruments Exchange or to an Authorized Financial Instruments Firms Association specified by Cabinet Order pursuant to the provisions referred to above, that person is to notify these persons of the particulars, as per the copies of those documents (excluding the parts that are not to be made available for public inspection pursuant to the provisions of Article 27-28, paragraph (3) (including as applied mutatis mutandis pursuant to Article 27-29, paragraph (2)), that are required to be stated in the documents set forth in the items of Article 25, paragraph (1) (including as applied mutatis mutandis pursuant to Article 27) or the documents prescribed in Article 27-14, paragraph (1) (including as applied mutatis mutandis pursuant to Article 27-22-2, paragraph (2)) or Article 27-27 (including as applied mutatis mutandis pursuant to Article 27-29, paragraph (2)); provided, however, that the person may elect not to notify these persons of a part that is not to be made available for public inspection pursuant to the provisions of Article 25, paragraph (4) (including as applied mutatis mutandis pursuant to Article 27).
(2) The notice under the provisions of the preceding paragraph is deemed to have been sent by a person that has carried out the Electronic Disclosure or Voluntary Electronic Disclosure referred to in that paragraph at the time it is recorded in the File, and is presumed to have reached the addressee of the notice at the time that the period normally required to output it has elapsed after its recording.
(3) If a Holder of Share Certificates, etc. as prescribed in Article 27-27 (including as applied mutatis mutandis pursuant to Article 27-29, paragraph (2); hereinafter the same applies in this paragraph) has followed the procedure for submitting any of the documents prescribed in Article 27-27 (hereinafter referred to as the "Statement of Large-Volume Holdings, etc." in this paragraph) by using an Electronic Data Processing System for Disclosure (including the case of having followed said procedure by submitting a magnetic disk), the Holder of Share Certificates, etc. is not required to send a copy of said Statement of Large-Volume Holdings, etc. to the Issuer as required under that Article.
(Public Inspection When Procedures Are Carried Out by Use of an Electronic Data Processing System for Disclosure)
Article 27-30-7 (1) If Electronic Disclosure or Voluntary Electronic Disclosure has been carried out by use of an Electronic Data Processing System for Disclosure (including if such procedures have been carried out through the submission of a magnetic disk), the Prime Minister is to make the particulars (excluding the parts that are not to be made available for public inspection pursuant to the provisions of Article 25, paragraph (4) (including as applied mutatis mutandis pursuant to Article 27) or Article 27-28, paragraph (3) (including as applied mutatis mutandis pursuant to Article 27-29, paragraph (2)) and also excluding the Specified Portion) that have been recorded into the File in connection with the documents prescribed in Article 25, paragraph (1) (including as applied mutatis mutandis pursuant to Article 27); Article 27-14, paragraph (1) (including as applied mutatis mutandis pursuant to Article 27-22-2, paragraph (2)); or Article 27-28, paragraph (1) (including as applied mutatis mutandis pursuant to Article 27-29, paragraph (2)), or documents stating those particulars, available for public inspection, pursuant to the provisions of Cabinet Order,.
(2) The term "Specified Portion" as used in the preceding paragraph means the portion of a document that is not to be made available for public inspection pursuant to the provisions of Article 25, paragraph (6) (including as applied mutatis mutandis pursuant to Article 27), Article 27-14, paragraph (5) (including as applied mutatis mutandis through the replacement of certain terms pursuant to Article 27-22-2, paragraph (2)), or Article 27-28, paragraph (4).
(3) The provisions of Article 5 of the Act on the Utilization of Information and Communications Technology in Administrative Procedures do not apply to the public inspection of documents under the provisions of paragraph (1).
(4) If the particulars that have been recorded into the File set forth in paragraph (1) or documents stating those particulars are made available for public inspection pursuant to the provisions of paragraph (1), the documents prescribed in Article 25, paragraph (1) (including as applied mutatis mutandis pursuant to Article 27); Article 27-14, paragraph (1) (including as applied mutatis mutandis pursuant to Article 27-22-2, paragraph (2)); and Article 27-28, paragraph (1) (including as applied mutatis mutandis pursuant to Article 27-29, paragraph (2)) are deemed to have been made available for public inspection pursuant to those provisions, and the provisions of the Financial Instruments and Exchange Act and Related Regulations apply.
(5) In a case referred to in paragraph (1), if the Prime Minister finds it to be necessary and appropriate in the public interest or for the protection of investors, the Prime Minister may make an indication of having rendered a disposition set forth in one of the items of Article 25, paragraph (6) (including as applied mutatis mutandis pursuant to Article 27) or in one of the items of Article 27-14, paragraph (5) (including as applied mutatis mutandis through the replacement of certain terms pursuant to Article 27-22-2, paragraph (2)), an indication of having issued a submission order under Article 27-28, paragraph (4), or any other information with a bearing on the particulars set forth in paragraph (1), which has a material influence on investors' investment decisions (hereinafter referred to as "Material Reference Information" in the following paragraph) available for public inspection, together with the relevant particulars.
(6) In a case referred to in the preceding paragraph, the Prime Minister is to notify the Financial Instruments Exchange or the Authorized Financial Instruments Firms Association specified by Cabinet Order referred to in paragraph (1) of the following Article, that makes the particulars set forth in that paragraph that involve Material Reference Information available for public inspection pursuant to the provisions of that paragraph, and the person that makes the particulars set forth in the relevant Article that involve Material Reference Information available for public inspection pursuant to the provisions of Article 25, paragraph (2) (including as applied mutatis mutandis pursuant to Article 27) and Article 27-14, paragraph (2) (including as applied mutatis mutandis pursuant to Article 27-22-2, paragraph (2)) or Article 27-30-10, that the Material Reference Information has been made available for public inspection pursuant to the provisions of the preceding paragraph.
(Public Inspection by a Financial Instruments Exchange, etc.)
Article 27-30-8 (1) A Financial Instruments Exchange or an Authorized Financial Instruments Firms Association specified by Cabinet Order which has been notified pursuant to the provisions of Article 27-30-6 is to make the particulars (excluding the parts that are not to be made available for public inspection pursuant to the provisions of Article 25, paragraph (4) (including as applied mutatis mutandis pursuant to Article 27) and also excluding the Specified Portion (meaning the Specified Portion prescribed in paragraph (2) of the preceding Article; the same applies in Article 27-30-10) of which it has been notified pursuant to the provisions of Article 27-30-6 in connection with the copies of documents prescribed in Article 25, paragraph (3) (including as applied mutatis mutandis pursuant to Article 27); Article 27-14, paragraph (3) (including as applied mutatis mutandis pursuant to Article 27-22-2, paragraph (2)); or Article 27-28, paragraph (2) (including as applied mutatis mutandis pursuant to Article 27-29, paragraph (2)), or the documents stating those particulars, available for public inspection, pursuant to the provisions of Cabinet Order.
(2) If particulars under a notification that is set forth in the preceding paragraph or a document stating those particulars is made available for public inspection pursuant to the provisions of that paragraph, the documents prescribed in Article 25, paragraph (3) (including as applied mutatis mutandis pursuant to Article 27); Article 27-14, paragraph (3) (including as applied mutatis mutandis pursuant to Article 27-22-2, paragraph (2)); and Article 27-28, paragraph (2) (including as applied mutatis mutandis pursuant to Article 27-29, paragraph (2)) are deemed to have been made available for public inspection pursuant to those provisions, and the provisions of the Financial Instruments and Exchange Act and Related Regulations apply.
(Providing, etc. Persons with the Particulars Stated in a Prospectus by Means of an Electronic Data Processing System or by Other Means)
Article 27-30-9 (1) In the cases specified by Cabinet Office Ordinance, in lieu of delivering a Prospectus, a person that is required to deliver a Prospectus pursuant to the provisions of Article 15, paragraphs (2) to (4) inclusive (including as applied mutatis mutandis pursuant to Article 15, paragraph (6) (including as applied mutatis mutandis pursuant to Article 23-12, paragraph (3) (including as applied mutatis mutandis pursuant to Article 27) and Article 27); Article 23-12, paragraph (3) (including as applied mutatis mutandis pursuant to Article 27); and Article 27) may provide the relevant persons with the particulars that have been stated in the Prospectus by means of an electronic data processing system or by any other means specified by Cabinet Office Ordinance. In such a case, the person that provides the other person with those particulars is deemed to have delivered the Prospectus.
(2) The provisions of the preceding paragraph apply mutatis mutandis to documents that are required to be delivered pursuant to the provisions of Article 23-14, paragraph (2); to a Tender Offer Explanation (meaning a Tender Offer Explanation provided for in Article 27-9, paragraph (1) (including as applied mutatis mutandis pursuant to Article 27-22-2, paragraph (2)), and also including an amended Tender Offer Explanation) that is required to be delivered pursuant to the provisions of Article 27-9, paragraph (2) or (3) (including as applied mutatis mutandis pursuant to Article 27-22-2, paragraph (2)); and to a written notice that is required to be delivered pursuant to the provisions of Article 27-24.
(Public Inspection by the Issuer, etc.)
Article 27-30-10 In a case specified by Cabinet Office Ordinance, in lieu of making the copies of the documents that are required to be made available for public inspection pursuant to the provisions of Article 25, paragraph (2) (including as applied mutatis mutandis pursuant to Article 27) or Article 27-14, paragraph (2) (including as applied mutatis mutandis pursuant to Article 27-22-2, paragraph (2)) available for public inspection, the Subsidiary Company Submitting Annual Securities Reports of a person that has carried out Electronic Disclosure for the documents set forth in Article 25, paragraph (1), items (i) to (xi) inclusive (including as applied mutatis mutandis pursuant to Article 27); the Subsidiary Company Submitting Annual Securities Reports of a person that has carried out Electronic Disclosure for the documents set forth in Article 25, paragraph (1), item (xii) (including as applied mutatis mutandis pursuant to Article 27); or a person that has carried out Electronic Disclosure for the document prescribed in Article 27-14, paragraph (1) (including as applied mutatis mutandis pursuant to Article 27-22-2, paragraph (2)) may make the particulars, as per the copies of those documents (excluding the parts that are not to be made available for public inspection pursuant to the provisions of Article 25, paragraph (4) (including as applied mutatis mutandis pursuant to Article 27) and also excluding the Specified Portion), that are required to be stated in the documents set forth in each item of Article 25, paragraph (1) (including as applied mutatis mutandis pursuant to Article 27) or the documents prescribed in Article 27-14, paragraph (1) (including as applied mutatis mutandis pursuant to Article 27-22-2, paragraph (2)) available for public inspection by displaying those particulars on the screen of an output device or by any other means specified by Cabinet Office Ordinance. In such a case, the person that makes those particulars available for public inspection is deemed to have made the copies of those documents available for public inspection.
(Providing, etc. Persons with the Particulars Stated in a Tender Offer Statement by Means of an Electronic Data Processing System or by Other Means)
Article 27-30-11 (1) In the cases specified by Cabinet Office Ordinance, in lieu of sending the copies of the documents that a Tender Offeror (meaning a Tender Offeror as prescribed in Article 27-3, paragraph (2); hereinafter the same applies in this paragraph and paragraph (3)) is required to send to the Issuer (and to any person that has already submitted a Tender Offer Statement for the Share Certificates, etc. of that Issuer as of the day on which the Tender Offeror submits the Tender Offer Statement in connection with the relevant Tender Offer (meaning a Tender Offer Statement as prescribed in Article 27-3, paragraph (2) and including any amended statement in connection with it; hereinafter the same applies in this paragraph and paragraph (3))) of the Share Certificates, etc. that are subject to the Tender Offer (meaning a Tender Offer as prescribed in Article 27-3, paragraph (1); hereinafter the same applies in this paragraph and paragraph (3)), pursuant to the provisions of Article 27-3, paragraph (4) (including as applied mutatis mutandis pursuant to Article 27-8, paragraph (6) (including as applied mutatis mutandis pursuant to Article 27-13, paragraph (3)); Article 27-11, paragraph (4); and Article 27-13, paragraph (3)) or Article 27-10, paragraph (13) (including as applied mutatis mutandis pursuant to Article 27-10, paragraph (14)), the Tender Offeror may provide the Issuer with the particulars, as per the copies of those documents, that are required to be stated in the Tender Offer Notification, Written Tender Offer Withdrawal Notice (meaning a Written Tender Offer Withdrawal Notice as prescribed in Article 27-11, paragraph (3)), Tender Offer Report (meaning a Tender Offer Report as prescribed in Article 27-13, paragraph (2) and including any amended report in connection with it), and Tender Offeror's Answer, by means of an electronic data processing system or by any other means specified by Cabinet Office Ordinance. In such a case, the Tender Offeror is deemed to have sent the copies of those documents.
(2) In the cases specified by Cabinet Office Ordinance, in lieu of sending the copies of the documents that a Tender Offeror (meaning a Tender Offeror as prescribed in Article 27-3, paragraph (2) as applied mutatis mutandis pursuant to Article 27-22-2, paragraph (2); hereinafter the same applies in this paragraph) is required to send pursuant to the provisions of Article 27-3, paragraph (4) as applied mutatis mutandis pursuant to Article 27-22-2, paragraph (2) or (3) if a person has already submitted a Tender Offer Statement (meaning a Tender Offer Statement as prescribed in Article 27-3, paragraph (2)) for Share Certificates, etc. issued by the Issuerthat is the Tender Offeror, as of the date on which the Tender Offeror submits the Tender Offer Statement (meaning a Tender Offer Statement as prescribed in Article 27-3, paragraph (2) as applied mutatis mutandis pursuant to Article 27-22-2, paragraph (2), and including any amended statement in connection with it) in the relevant Tender Offer (meaning a Tender Offer as prescribed in Article 27-3, paragraph (1) as applied mutatis mutandis pursuant to Article 27-22-2, paragraph (2); hereinafter the same applies in this paragraph), the Tender Offeror may provide the relevant person with the particulars for that Tender Offer that are required to be stated in the Tender Offer Statement (meaning the Tender Offer Statement prescribed in Article 27-3, paragraph (2) as applied mutatis mutandis to Article 27-22-2, paragraph (2), and including any amended statement in connection with it) by means of an electronic data processing system or by any other means specified by Cabinet Office Ordinance. In such a case, the Tender Offeror is deemed to have sent the copies of those documents.
(3) In the cases specified by Cabinet Office Ordinance, in lieu of sending the copies of the documents that the Target Company of a Tender Offer is required to send to the Tender Offeror that is involved in the relevant Tender Offer pursuant to the provisions of Article 27-10, paragraph (9) (including as applied mutatis mutandis pursuant to Article 27-10, paragraph (10)) (and to any person other than the Tender Offeror that has already submitted a Tender Offer Statement for the Share Certificates, etc. of the Issuer that are subject to said Tender Offer as of the day on which the Target Company submits the Target Company's Position Statement in connection with the relevant Tender Offer (including any amended reports in connection with it; hereinafter the same applies in this paragraph)),the Target Company may provide the Tender Offeror with the particulars that are required to be stated in the Target Company's Position Statement by means of an electronic data processing system or by any other means specified by Cabinet Office Ordinance. In such a case, the Target Company of the Tender Offer is deemed to have sent the copies of those documents.
(4) In the cases specified by Cabinet Office Ordinance, in lieu of sending the copies of the documents that the holder of Share Certificates, etc. is required to send to the Issuer of those Share Certificates, etc. pursuant to the provisions of Article 27-27 (including as applied mutatis mutandis pursuant to Article 27-29, paragraph (2)), the holder of the Share Certificates, etc. may provide the company with the particulars, as per the copies of those documents, that are required to be stated in the documents prescribed in Article 27-27 (including as applied mutatis mutandis pursuant to Article 27-29, paragraph (2)) (excluding parts that are not to be made available for public inspection pursuant to the provisions of Article 27-28, paragraph (3) (including as applied mutatis mutandis pursuant to Article 27-29, paragraph (2))) by means of an electronic data processing system or by any other means specified by Cabinet Office Ordinance. In such a case, the holder of Share Certificates, etc. is deemed to have delivered the copies of those documents.
Chapter II-5 Provision or Disclosure of Specified Information on Securities, etc.
(Provision or Disclosure of Specified Information on Securities)
Article 27-31 (1) An Issuer may not issue an Exclusive Solicitation of Offers to Acquire Targeting Professional Investors or any other category of solicitation with a view to issuing new securities specified by Cabinet Order which is not subject to the application of the main clause of Article 4, paragraph (1) (hereinafter referred to as "Exclusive Solicitation of Offers to Acquire" in this Article and Chapter VI-2) or an exclusive Offer to Sell, etc. to Professional Investors (unless the Securities subject to the relevant exclusive Offer to Sell, etc. to Professional Investors fall under the category of Securities for Professional Investors, and the exclusive Offer to Sell, etc. to Professional Investors falls under the category of a case specified by Cabinet Order as one in which a small number of persons are the other parties) or any other category of solicitation with a view to delivering existing securities specified by Cabinet Order that is not subject to the application of the main clause of Article 4, paragraph (1), the main clause of Article 4, paragraph (2), or the main clause of Article 4, paragraph (3) (hereinafter referred to as a "Specified Offer to Sell, etc." in this Article and Chapter VI-2) unless the Issuer of the Securities that are subject to the Exclusive Solicitation of Offers to Acquire or the Specified Offer to Sell, etc. (hereinafter collectively referred to as "Specified Solicitation, etc.") has provided to the solicited person, or has disclosed, information specified by Cabinet Office Ordinance as the basic information about the Securities and the Issuer that must be disclosed to investors (hereinafter referred to as "Specified Information on Securities"), prior to the Specified Solicitation, etc. and pursuant to the provisions of the following paragraph.
(2) An Issuer seeking to provide or disclose Specified Information on Securities must provide the Specified Information on Securities itself or entrust another party to do so, or must disclose such information using the Internet or through other means, pursuant to the provisions of Cabinet Office Ordinance.
(3) When an Issuer that has been disclosing Information on the Issuer (meaning Information on the Issuer as prescribed in paragraph (1) of the following Article; hereinafter the same applies in this paragraph) continuously for the period specified by Cabinet Office Ordinance pursuant to the provisions of paragraph (1) of the following Article seeks to provide or disclose Specified Information on Securities pursuant to the provisions of the preceding paragraph, and the Issuer has indicated in said Specified Information on Securities, pursuant to the provisions of Cabinet Office Ordinance, that reference should be made to the latest Information on the Issuer and to the Amended Information on the Issuer set forth in paragraph (3) of that Article with respect that that Issuer (hereinafter referred to as "Reference Information"), the Issuer is deemed to have provided or disclosed the information specified by Cabinet Office Ordinance as information about the Issuer that is part of the Specified Information on Securities.
(4) If, between the day on which an Issuer that provides or discloses Specified Information on Securities pursuant to the provisions of paragraph (2), provides or discloses that information and the day on which one year has elapsed since that day (or, in the cases specified by Cabinet Office Ordinance as those in which it is found not to damage the public interest or result in insufficient investor protection, within the period specified by Cabinet Office Ordinance), there is a particular requiring amendment in the Specified Information on Securities, the Issuer must provide or disclose information indicating that it is amending that particular (hereinafter referred to as "Amended Specified Information on Securities"), pursuant to the provisions of Cabinet Office Ordinance.
(5) An Issuer that has disclosed Specified Information on Securities pursuant to the provisions of paragraph (2) must continue to disclose such Specified Information on Securities (if any Amended Specified Information on Securities has been disclosed, such Amended Specified Information on Securities is included), until one year has elapsed since the date that it disclosed the Specified Information on Securities (or, in the cases specified by Cabinet Office Ordinance as those in which it is found not to damage the public interest or result in insufficient investor protection, for the period specified by Cabinet Office Ordinance).
(Provision or Disclosure of Information on the Issuer)
Article 27-32 (1) The Issuer set forth in each of the following items, pursuant to the provisions of Cabinet Office Ordinance, must provide the holders of the Securities set forth in the relevant item with the information about that Issuer that is specified by Cabinet Office Ordinance (hereinafter referred to as "Information on the Issuer") or disclose the same, at least once each business year (if the Issuer is not a company or in any other cases specified by Cabinet Office Ordinance, the period specified by Cabinet Office Ordinance; the same applies in paragraph (4), Article 172-11, paragraph (1) and Article 185-7, paragraph (31), item (v)); provided, however, that this does not apply in the cases that are specified by Cabinet Office Ordinance as those in which, in consideration of liquidity and other circumstances, not doing so is found not to damage the public interest or result in insufficient investor protection:
(i) an Issuer of Securities for Professional Investors: Securities for Professional Investors issued by the Issuer; or
(ii) an Issuer that has provided or disclosed Specified Information on Securities pursuant to the provisions of paragraph (2) of the preceding Article (excluding the Issuer specified in the preceding item): the Securities to which the provided or disclosed Specified Information on Securities pertains.
(2) If Securities that did not fall under the category of Securities for Professional Investors have come to fall under this category (except in a case specified by Cabinet Office Ordinance), the Issuer of such Securities must provide the holder of such Securities with the Information on the Issuer or disclose the same, without delay, pursuant to the provisions of Cabinet Office Ordinance.
(3) If there is a particular that is required to be amended in the Information on the Issuer, an Issuer set forth in one of the items of paragraph (1) must provide or disclose information indicating that it is amending that particular (hereinafter referred to as the "Amended Information on the Issuer"), pursuant to the provisions of Cabinet Office Ordinance.
(4) An Issuer that has disclosed the Information on the Issuer pursuant to the provisions of paragraph (1) or (2) must continue to disclose such Information on the Issuer (if any Amended Information on the Issuer has been disclosed, such Amended Information on the Issuer is included), from the date on which it discloses that Information on the Issuer until the date on which it provides or discloses the Information on the Issuer for the business year following that in which it discloses the relevant Information on the Issuer (if Securities for Professional Investors to which the Information on the Issuer pertains come to no longer fall under the category of Securities for Professional Investors or in any other case specified by Cabinet Office Ordinance, for the period specified by Cabinet Office Ordinance).
(Provision or Disclosure of Foreign Securities Information)
Article 27-32-2 (1) If a Financial Instruments Business Operator, etc. sells Securities through a Secondary Distribution of Securities falling under Article 4, paragraph (1), item (iv) (hereinafter referred to as a "Secondary Distribution of Foreign Securities"), the Financial Instruments Business Operator, etc., in advance of selling of, or at the same time as it sells such Securities, must provide the other party with the information specified by Cabinet Office Ordinance as information about the Securities and about the Issuer of the Securities (hereinafter collectively referred to as the "Foreign Securities Information"), or must disclose such information; provided, however, that this does not apply if the Issuer of the Securities has already disclosed Specified Information on Securities, etc. for the relevant Securities, nor does it apply in any other case specified by Cabinet Office Ordinance.
(2) If a Financial Instruments Business Operator, etc. making a Secondary Distribution of Foreign Securities is so requested by a person that acquires the Securities through the Secondary Distribution of Foreign Securities and entrusts those Securities to the custody of the Financial Instruments Business Operator, etc.; if it is so requested by a person specified by Cabinet Office Ordinance as being equivalent thereto; or in a case specified by Cabinet Office Ordinance as one in which a fact has occurred that may have a material influence on the investors' investment decisions, the Financial Instruments Business Operator, etc. must provide the Foreign Securities Information to that person or must disclose such information; provided, however that this does not apply in the cases that are specified by Cabinet Office Ordinance as those in which, in light of the availability of information on the relevant Securities, the status of holding of the Securities, and other considerations, not doing so is found not to damage the public interest or result in insufficient investor protection.
(3) A Financial Instruments Business Operator, etc. seeking to provide or disclose Foreign Securities Information pursuant to the preceding two paragraphs must provide the Foreign Securities Information personally or entrust another party to do so, or must disclose the same using the Internet or through any other means, pursuant to the provisions of Cabinet Office Ordinance.
(Compensatory Liability in Connection with False Specified Information on Securities, etc.)
Article 27-33 The provisions of Article 18, paragraph (1); Article 19; Article 20; and Article 21 (excluding item (iii) of paragraph (1); items (ii) and (iii) of paragraph (2); and also excluding paragraph (3)) apply mutatis mutandis to the Specified Information on Securities, etc. (meaning the Specified Information on Securities, the Reference Information in connection with Specified Information on Securities to which Article 27-31, paragraph (3) is applicable, or the Amended Specified Information on Securities (including Reference Information in connection with the Amended Specified Information on Securities; the same applies hereinafter)). In this case, in Article 18, paragraph (1), the term "a Securities Registration Statement" is deemed to be replaced with "any Specified Information on Securities, etc. (meaning the Specified Information on Securities, etc. prescribed in Article 27-33; the same applies hereinafter)", the phrase "false statement" is deemed to be replaced with "false information", the phrase "that is required to be stated" is deemed to be replaced with "that is required to be provided or disclosed", the phrase "omits a statement of material fact" is deemed to be replaced with "omits to give information concerning a material fact", the phrase "the person that submitted the Securities Registration Statement" is deemed to be replaced with "the Issuer that provided or disclosed the Specified Information on Securities, etc.", the phrase "person that acquires the Securities through the Public Offering or Secondary Distribution" is deemed to be replaced with "person that acquires the Securities through a Specified Solicitation, etc. (meaning a Specified Solicitation, etc. prescribed in Article 27-31, paragraph (1); the same applies hereinafter) to which the Specified Information on Securities, etc. pertains (if the Specified Information on Securities, etc. has not been disclosed, this is limited to a person that has been provided with the Specified Information on Securities, etc.; hereinafter the same applies in this paragraph and Article 21 as applied mutatis mutandis through the replacement of certain terms pursuant to Article 27-33), and the phrase "statement was false" is deemed to be replaced with the "information was false"; in Article 19, paragraph (2), the phrase "the Securities Registration Statement or the Prospectus" is deemed to be replaced with the "Specified Information on Securities, etc.", the phrase "false statement" is deemed to be replaced with "false information", the phrase "that is required to be stated" is deemed to be replaced with "that is required to be provided or disclosed", and the phrase "omits a statement of material fact" is deemed to be replaced with "omits to give information concerning a material fact"; in Article 20, the phrase "Article 18" is deemed to be replaced with "Article 18 as applied mutatis mutandis through the replacement of certain terms pursuant to Article 27-33", the phrase "the Securities Registration Statement or the Prospectus" is deemed to be replaced with "the Specified Information on Securities, etc.", the phrase "false statement" is deemed to be replaced with "false information", the phrase "that is required to be stated" is deemed to be replaced with "that is required to be provided or disclosed", the phrase "omits a statement of material fact" is deemed to be replaced with "omits to give information concerning a material fact", and the phrase "within seven years (excluding, if an order for suspension under Article 10, paragraph (1) or Article 11, paragraph (1) has been issued, the period from the day on which the order for suspension is issued to the day on which the order is canceled) of the time that the notification under Article 4, paragraphs (1) to (3) inclusive for the relevant Public Offering or Secondary Distribution of the Securities comes into effect or the Prospectus is delivered" is deemed to be replaced with "within seven years of the time that the Specified Information on Securities, etc. is provided or disclosed"; in the non-itemized part of Article 21, paragraph (1), the term " Securities Registration Statement" is deemed to be replaced with "Specified Information on Securities, etc.", the phrase "false statement" is deemed to be replaced with "false information", the phrase "that is required to be stated" is deemed to be replaced with "that is required to be provided or disclosed", the phrase "omits a statement of material fact" is deemed to be replaced with "omits to give information concerning a material fact", the phrase "Public Offering or Secondary Distribution" is deemed to be replaced with "Specified Solicitation, etc.", and the phrase "statement was false" is deemed to be replaced with "information was false"; in Article 21, paragraph (1), item (i), the phrase "company that submitted the Securities Registration Statement" is deemed to be replaced with "Issuer that has provided or disclosed the Specified Information on Securities, etc.", the phrase "at the time of submission of the Securities Registration Statement" is deemed to be replaced with "at the time that the Specified Information on Securities, etc. was provided or disclosed", the phrase "incorporator of the company" is deemed to be replaced with "incorporator of the Issuer or any other person that can be regarded as equivalent thereto", and the phrase "the Securities Registration Statement was submitted before the incorporation of the company" is deemed to be replaced with "the Specified Information on Securities, etc. was provided or disclosed before the establishment or inauguration of the Issuer"; in Article 21, paragraph (1), item (ii), the phrase "for which the Secondary Distribution was made" is deemed to be replaced with "for which the Specified Solicitation, etc. (limited to Specified Solicitation, etc. falling under the category of a Specified Offer to Sell, etc. (meaning a Specified Offer to Sell, etc. as prescribed in Article 27-31, paragraph (1); hereinafter the same applies in this item) was made" and the phrase "through a Secondary Distribution" is deemed to be replaced with "through a Specified Offer to Sell, etc."; in Article 21, paragraph (1), item (iv), the phrase "the Public Offering" is deemed to be replaced with "the Specified Solicitation, etc. (limited to Specified Solicitation, etc. falling under the category of an Exclusive Solicitation of Offers to Acquire (meaning an Exclusive Solicitation of Offers to Acquire as prescribed in Article 27-31, paragraph (1)); in Article 21, paragraph (2), item (i), the phrase "or (ii)" is deemed to be replaced with ", (ii), or (iv)"; in Article 21, paragraph (2), item (i), the phrase "statement was false" is deemed to be replaced with "information was false"; in Article 21, paragraph (4), the phrase "Public Offering or Secondary Distribution of Securities" is deemed to be replaced with "Specified Solicitation, etc."; in item (i) of that paragraph, the term "Securities" is deemed to be replaced with "Securities for which the Specified Solicitation, etc. was made"; in Article 21, paragraph (4), item (ii), the term "Securities" is deemed to be replaced with "Securities for which the Specified Solicitation, etc. was made"; the term "Securities" in Article 21, paragraph (4), item (iii) shall be deemed to be replaced with "Securities for which the Specified Solicitation, etc. was made"; and any other necessary technical replacement of terms is specified by Cabinet Order.
(Compensatory Liability in Connection with False Specified Information)
Article 27-34 The provisions of Articles 21-2 to 22 inclusive apply mutatis mutandis to Specified Information (meaning Specified Information on Securities, etc. or Information on the Issuer, etc. (meaning Information on the Issuer or Amended Information on the Issuer; the same applies hereinafter); the same applies in Article 27-35, paragraph (1)). In this case, in Article 21-2, paragraph (1), the phrase "a document set forth in one of the items of Article 25, paragraph (1) (excluding items (v) and (ix)) (hereinafter referred to as a 'Document' in this Article)" is deemed to be replaced with "the Specified Information (meaning the Specified Information prescribed in Article 27-34; the same applies hereinafter) disclosed pursuant to the provisions of Article 27-31, paragraph (2), (4), or (5) or Article 27-32 (hereinafter referred to as 'Disclosed Information')", the phrase "false statement" is deemed to be replaced with "false information", the phrase "that is required to be stated" is deemed to be replaced with "that is required to be provided or disclosed", the phrase "omits a statement of material fact" is deemed to be replaced with "omits to give information concerning a material fact", the phrase "the person submitting the Document" is deemed to be replaced with "the Issuer disclosing the Disclosed Information", the phrase "a person that, during the period that the Document is being made available for public inspection as required by Article 25, paragraph (1), acquires Securities issued by the person submitting that Document (excluding a document set forth in Article 25, paragraph (1), item (xii)) or by a person whose Parent Company, etc. (meaning a Parent Company, etc. as defined by Article 24-7, paragraph (1)) is the person submitting the document (limited to a document set forth in Article 25, paragraph (1), item (xii))" is deemed to be replaced with "a person that, during the period that the Document is being disclosed pursuant to any of these provisions, acquires Securities issued by said Issuer", the phrase "or Secondary Distribution" is deemed to be replaced with ", Secondary Distribution, or Specified Solicitation, etc. (meaning the Specified Solicitation, etc. prescribed in Article 27-31, paragraph (1); the same applies hereinafter)", the phrase "statement being false" is deemed to be replaced with "information being false", and the phrase "False Statement, etc." is deemed to be replaced with "False Information, etc."; in Article 21-2, paragraph (2), the phrase "False Statement, etc. in the relevant Document" is deemed to be replaced with "False Information, etc. that pertains to the relevant Disclosed Information"; in Article 21-2, paragraph (3), the phrase "False Statement, etc. in the relevant Document" is deemed to be replaced with "False Information, etc. that pertains to the relevant Disclosed Information" and the phrase "the day of the Disclosure of the False Statement, etc." is deemed to be replaced with "the day of the Disclosure of the False Information, etc."; in Article 21-2, paragraph (4), the phrase "Disclosure of a False Statement, etc." is deemed to be replaced with "Disclosure of False Information, etc.", the phrase "means that the person submitting the document" is deemed to be replaced with "means that the Issuer disclosing the Disclosed Information", the phrase "over the person submitting the Document" is deemed to be replaced with "over the Issuer", the phrase "that the Document's False Statement, etc. concerns" is deemed to be replaced with "that the False Statement, etc. in the Disclosed Information concerns", the phrase "that is required to be stated" is deemed to be replaced with "that is required to be provided or disclosed", and the phrase "through public inspection provided for in Article 25, paragraph (1) or through other means" is deemed to be replaced with "pursuant to the provisions of Cabinet Office Ordinance"; in Article 21-2, paragraphs (5) and (6), the phrase "the Document's False Statement, etc." is deemed to be replaced with "the False Information, etc. in the Disclosed Information"; in Article 21-3, the phrase "Article 21-2" is deemed to be replaced with "Article 21-2 as applied mutatis mutandis through the replacement of certain terms pursuant to Article 27-34", the phrase "a document set forth in one of the items of Article 25, paragraph (1) (excluding Article 25, paragraph (1), items (v) and (ix))" is deemed to be replaced with "the Disclosed Information (meaning the Disclosed Information prescribed in Article 21-2, paragraph (1) as applied mutatis mutandis through the replacement of certain terms pursuant to Article 27-34; the same applies hereinafter))", the phrase "the phrase 'three years' is deemed to be replaced with 'two years' " is deemed to be replaced with "the phrase 'false statement' is deemed to be replaced with 'false information', the phrase 'that is required to be stated' is deemed to be replaced with 'that is required to be provided or disclosed', the phrase 'omits a statement as to a material particular' is deemed to be replaced with 'omits to give information concerning a material fact', the phrase 'three years' is deemed to be replaced with 'two years' ", and the phrase "within five years of the time that the document is submitted" is deemed to be replaced with "within five years of the day on which the Disclosed Information is disclosed"; in Article 22, paragraph (1), the phrase "If a Securities Registration Statement contains" is deemed to be replaced with "If Specified Information contains", the phrase "a false statement" is deemed to be replaced with "false information", the phrase "that is required to be stated" is deemed to be replaced with "that is required to be provided or disclosed", the phrase "omits a statement as to a material particular" is deemed to be replaced with "omits to give information concerning a material fact", the phrase "persons set forth in Article 21, paragraph (1), items (i) and (iii)" is deemed to be replaced with "a person that, at the time of the provision or disclosure of the Specified Information, is an officer (meaning an officer as prescribed in Article 21, paragraph (1), item (i)) of the Issuer that provided or disclosed said Specified Information, or an incorporator or founder of the Issuer or any other person equivalent thereto (but only if the Specified Information, etc. is provided or disclosed before the incorporation or inauguration of the Issuer)", the phrase "statement is false" is deemed to be replaced with the "information is false" and the phrase "acquires or disposes of Securities issued by the person submitting the Securities Registration Statement other than through a Public Offering or Secondary Distribution" is deemed to be replaced with "acquires (if the Specified Information has not been disclosed, this is limited to a person that has been provided with the Specified Information; and, if the Specified Information falls under the category of Specified Information on Securities, etc. (meaning the Specified Information on Securities, etc. prescribed in Article 27-33), this is limited to a person that has acquired such Securities other than through a Public Offering, Secondary Distribution, or Specified Solicitation, etc.) or disposes (if the Specific Information has not been disclosed, this is limited to a person that has been provided with the Specified Information) of Securities of the Issuer that provided or disclosed the Specified Information"; in Article 22, paragraph (2), the phrase "Article 21, paragraph (2), items (i) and (ii)" is deemed to be replaced with "Article 21, paragraph (2), item (i)"; and any other necessary technical replacement of terms is specified by Cabinet Order.
(Compensatory Liability of a Violator in Connection with Foreign Securities Information)
Article 27-34-2 (1) A Financial Instruments Business Operator, etc. that violates the provisions of Article 27-32-2, paragraph (1) in selling Securities is liable to compensate a person that purchases those Securities, for damage arising from the violation.
(2) A Financial Instruments Business Operator, etc. that sells Securities through a Secondary Distribution of Foreign Securities, using Foreign Securities Information that contains false information about a material particular, omits information about a material particular that is required to be provided or disclosed, or omits to give information concerning a material fact that is necessary to prevent it from being misleading, is liable to compensate for damage sustained by a person that purchases said Securities without knowing that the information is false or has been omitted; provided, however, that this does not apply if the Financial Instruments Business Operator, etc. that would be liable for such compensation proves that it did not know, and in the exercise of reasonable care could not have known, that the information was false or had been omitted.
(3) If Foreign Securities Information that is disclosed pursuant to the provisions of Article 27-32-2, paragraph (3) (hereinafter referred to as "Disclosed Information" in this paragraph) contains false information about a material particular, omits information about a material particular that is required to be provided or disclosed, or omits to give information concerning a material fact that is necessary to prevent it from being misleading, the Financial Instruments Business Operator, etc. that discloses the Disclosed Information is liable to compensate a person that, without knowing that the information is false or has been omitted, acquires or disposes of Securities to which the Disclosed Information pertains from the Financial Instruments Business Operator other than through a Public Offering or Secondary Distribution or Exclusive Solicitation of Offers to Acquire, etc., during the period in which the Disclosed Information is being disclosed pursuant to paragraph (3) of that Article, for damage arising from the information being false or having been omitted; provided, however, that this does not apply if the Financial Instruments Business Operator, etc. that would be liable for such damages proves that it did not know, and in the exercise of reasonable care could not have known, that the information was false or had been omitted.
(Collection of Reports and Inspection of a Provider of Specified Information)
Article 27-35 (1) Whenever 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 Issuer that has provided or disclosed Specified Information, an Issuer that is found to be required to provide or disclose Specified Information, the Underwriter of Securities to which Specified Information pertains, or any other concerned party or witness to submit reports or materials that should serve as a reference, and may have the relevant officials inspect that person's books and documents or any other articles of theirs.
(2) When finding it necessary with regard to the order for to report or the submission of materials or the inspection under the preceding paragraph, the Prime Minister may inquire to public offices or public or private organizations and request them to report necessary particulars.
Chapter III Financial Instruments Business Operators, etc.
Section 1 General Provisions
Subsection 1 General Rules
Article 28 (1) The term "Type I Financial Instruments Business" as used in this Chapter means the performance of one of the following acts on a regular basis, within the Financial Instruments Business:
(i) an act set forth in Article 2, paragraph (8), items (i) to (iii) inclusive, item (v), item (viii), or item (ix) with regard to Securities (excluding rights set forth in the items of Article 2, paragraph (2) that are deemed to be Securities pursuant to the provisions of that paragraph);
(i)-2 acts listed in Article 2, paragraph (8), item (ii), (iii) or (v) with regard to Commodity-Related Market Transactions of Derivatives;
(ii) an act set forth in Article 2, paragraph (8), item (iv), or an act set forth in item (v) of that paragraph in relation to Over-the-Counter Transactions of Derivatives;
(iii) an act falling under one of the following sub-items (a) to (c) inclusive:
(a) the Wholesale Underwriting of Securities that is specified by Cabinet Order as involving a high necessity to manage the risk of loss;
(b) the Wholesale Underwriting of Securities other than that which is set forth in sub-item (a); or
(c) an act set forth in Article 2, paragraph (8), item (vi) other than the Wholesale Underwriting of Securities.
(iv) an act set forth in Article 2, paragraph (8), item (x); or
(v) an act set forth in Article 2, paragraph (8), item (xvi) or (xvii).
(2) The term "Type II Financial Instruments Business" as used in this Chapter means the performance of one of the following acts on a regular basis, within the Financial Instruments Business:
(i) an act set forth in Article 2, paragraph (8), item (vii);
(ii) an act set forth in Article 2, paragraph (8), items (i) to (iii) inclusive, item (v), item (viii), or item (ix) with regard to rights set forth in the items of Article 2, paragraph (2) that are deemed to be Securities pursuant to the provisions of that paragraph;
(iii) an act set forth in Article 2, paragraph (8), items (i) to (iii) inclusive or item (v) (other than one that is set forth in item (i) , (i)-2 or (ii) of the preceding paragraph or the preceding item); or
(iv) an act set forth in Article 2, paragraph (8), item (xviii).
(3) The term "Investment Advisory and Agency Business" as used in this Chapter means the performance of one of the following acts on a regular basis, within the Financial Instruments Business:
(i) an act set forth in Article 2, paragraph (8), item (xi); or
(ii) an act set forth in Article 2, paragraph (8), item (xiii).
(4) The term "Investment Management Business" as used in this Chapter means the performance of one of the following acts on a regular basis, within the Financial Instruments Business, and includes the performance of such an act by a bank, by a Cooperative Financial Institution, or by any other financial institution specified by Cabinet Order, on a regular basis:
(i) an act set forth in Article 2, paragraph (8), item (xii);
(ii) an act set forth in Article 2, paragraph (8), item (xiv); or
(iii) an act set forth in Article 2, paragraph (8), item (xv).
(5) The term "Securities, etc. Management" as used in this Chapter means services within the Type I Financial Instruments Business which are connected with the act set forth in paragraph (1), item (v).
(6) The term "Investment Advisory Business" as used in this Chapter means services within Investment Advisory and Agency Business which are connected with the act set forth in paragraph (3), item (i).
(7) The term "Wholesale Underwriting of Securities" as used in this Chapter means the underwriting of Securities prescribed in Article 2, paragraph (8), item (vi) which falls under a category set forth in one of the following items:
(i) the acquisition of all or part of the relevant Securities from the Issuer or holder (excluding Financial Instruments Business Operators and registered financial institutions; the same applies in the following item and item (iii)) with the aim of having other persons acquire said Securities;
(ii) the conclusion of a contract stipulating that if no other person acquires all or part of the relevant Securities, the Underwriter will acquire those that remain from the Issuer or holder.
(iii) in cases where the Securities are share option certificates (including the Securities specified by Cabinet Office Ordinance as being equivalent thereto; hereinafter the same applies in this item), the person who acquired said share option certificates concludes a contract to acquire, when he/she does not exercise share options (including the rights specified by Cabinet Office Ordinance as being equivalent thereto; hereinafter the same applies in this item) for all or part of said share option certificates, the share option certificates pertaining to said unexercised share options from the issuer or holder thereof in order for said person or a third party to exercise said share options.
(8) The term "Securities Services" as used in this Chapter means the performance of one of the following acts on a regular basis:
(i) the purchase and sale of Securities, or intermediation, brokerage (excluding Brokerage for Clearing of Securities, etc.), or agency for the same;
(ii) intermediation, brokerage, or agency for entrustment of the purchase and sale of Securities on a Financial Instruments Exchange Market or foreign Financial Instruments Market;
(iii) the following transactions, among Market Transactions of Derivatives:
(a) a transaction comprising a purchase and sale in which the parties to the purchase and sale promise to deliver and take delivery of a Security (including a standardized instrument as set forth in Article 2, paragraph (24), item (v) which is connected with a Security, other than one that is specified by Cabinet Order; hereinafter the same applies in this item) and its value at a fixed time in the future, and which the parties may settle by delivering and taking delivery of the difference in values if they sell or buy back the underlying Security;
(b) a transaction comprising the parties' promises to pay and receive an amount of money calculated based on the difference between the numerical value of a Securities indicator upon which the parties agree in advance (hereinafter referred to as the "Agreed Figure for the Securities" in this Chapter) and the actual numerical value of the Securities indicator at a fixed time in the future (hereinafter referred to as the "Actual Figure for the Securities" in this Chapter);
(c) a transaction comprising the first party's promise to grant the second party the option of effecting one of the following transactions between them by a unilateral manifestation of the second party's intention alone, and the second party's promise to pay the value of that option:
1. a purchase and sale of Securities; and
2. a transaction set forth in one of sub-items (a), (b), (d), or (e) (including a transaction equivalent to the transaction set forth in sub-item (b) that is prescribed by the Financial Instruments Exchange).
(d) a transaction comprising the parties' mutual promise that, for the amount of money they have set as the principal, the first party will pay money to the second based on the interest rate, etc. of agreed-upon Securities or based on the rate of change in an agreed-upon Securities indicator (excluding the interest rate, etc. of Securities and numerical values calculated based on them; the same applies in this sub-item (d) and sub-item (e) of the following item) during the period they have agreed to, and the second party will pay money to the first based on an agreed-upon money rate or the interest rate, etc. of agreed-upon Securities, or based on the value of an agreed-upon currency or the rate of change in an agreed-upon Securities indicator during the period they have agreed to (including transactions in which the parties promise that, in addition to paying such amounts, they will also deliver and take delivery of money or Securities equivalent to the amount they have set as the principal); and
(e) a transaction specified by Cabinet Order which is similar to one of the transactions set forth in sub-items (a) to (d) inclusive.
(iv) the following transactions, among Over-the-Counter Transactions of Derivatives:
(a) a transaction comprising a purchase and sale in which the parties to the purchase and sale promise to deliver and take delivery of a Security (other than one specified by Cabinet Order; hereinafter the same applies in this item) and its value at a fixed time in the future, and which the parties may settle by delivering and taking delivery of the difference in values if they sell back or buy back the underlying Security or if they take some other action that is specified by Cabinet Order;
(b) a transaction comprising the parties' promises to pay and receive an amount of money calculated based on the difference between the Agreed Figure for the Securities and the Actual Figure for the Securities, or a transaction similar thereto;
(c) a transaction comprising the first party's promise to grant the second party the option of effecting one of the following transactions between them by a unilateral manifestation of the second party's intention alone, and the other party's promise to pay the value of that option, or any transaction similar thereto:
1. a purchase and sale of Securities; and
2. a transaction set forth in sub-items (a), (b), (e), and (f).
(d) a transaction comprising, on one side, the first party's promise to grant the second party the option of effecting a transaction by a unilateral manifestation of the second party's intention alone, in which the parties pay and receive the amount of money calculated based on the difference between the numerical value that they have agreed in advance to use as the Agreed Figure for the relevant Securities indicator if the second party manifests the intention to effect the transaction, and the Actual Figure of the Securities indicator at the time the second party manifests that intention, and, on the other side, the second party's promise to pay the value of that option, or any transaction similar thereto;
(e) a transaction comprising the parties' mutual promise that, for the amount of money they have set as the principal, the first party will pay money to the second based on the interest rate, etc. of agreed-upon Securities or based on the rate of change in an agreed-upon Securities indicator during the period they have agreed to, and the second party will pay money to the first based on an agreed-upon money rate or the interest rate, etc. of agreed-upon Securities, or based on the value of agreed-upon currencies or the rate of change in an agreed-upon Securities indicator during the period they have agreed to (including transactions comprising the parties' promise that, in addition to paying such amounts, they will also deliver and take delivery of money or Securities equivalent to the amount they have set as the principal), or any transaction similar thereto; and
(f) a transaction, other than what is set forth in sub-items (a) to (e) inclusive, that has an economic nature similar to these, and that is specified by Cabinet Order as a transaction regarding which it is found to be necessary to ensure the public interest or the protection of investors.
(v) a transaction conducted on a foreign Financial Instruments Market that is similar to a transaction set forth in item (iii);
(vi) intermediation, brokerage (excluding Brokerage for Clearing of Securities, etc.), or agency for a transaction set forth in one of the preceding three items (hereinafter referred to as a "Transaction of Securities-Related Derivatives") or intermediation, brokerage, or agency for the entrustment of a transaction set forth in item (iii) or the preceding item;
(vii) an act set forth in Article 2, paragraph (8), item (v) that is connected with the purchase and sale of a Security, a Transaction of Securities-Related Derivatives, or any other transaction specified by Cabinet Order; or
(viii) an act set forth in Article 2, paragraph (8), item (vi), (viii), or (ix).
Subsection 2 Financial Instruments Business Operators
(Registration)
Article 29 A person may not engage in Financial Instruments Business if that person has not been registered by the Prime Minister.
(Application for Registration)
Article 29-2 (1) A person seeking the registration referred to in the preceding Article must submit a written application for registration to the Prime Minister, in which it states the following particulars:
(i) the person's trade name or name;
(ii) the amount of stated capital or the total amount of contributions, if it is a corporation (or if it is a foreign corporation seeking to engage in Type I Financial Instruments Business, the amount of stated capital or the total amount of contributions and the amount of brought-in capital (meaning assets corresponding to the stated capital that are brought into Japan; the same applies hereinafter));
(iii) the names of its officers, if it is a corporation (including the domestic representative, if it is a foreign corporation; hereinafter the same applies in this Chapter (excluding Article 29-4, paragraph (1), item (v), sub-item (e)3.) and Section 5) to Chapter III-3 inclusive);
(iv) if the person has an employee as specified by Cabinet Order, the name of that employee;
(v) the business category (meaning which of the acts set forth in Article 28, paragraph (1), item (i), item (i)-2, item (ii), item (iii), sub-items (a) to (c) inclusive, or item (iv), or which, among Securities, etc. Management, Type II Financial Instruments Business, Investment Advisory and Agency Business, or Investment Management Business, is the business category for which the person seeks registration);
(vi) if the person provides an Electronic Public Offering Service (meaning performing the act set forth in Article 2, paragraph (8), item (ix) on a regular basis by means of an electronic data processing system or by any other means of information and communications technology specified by Cabinet Office Ordinance; hereinafter the same applies in this Chapter) with regard to Securities set forth in the items of Article 3 or Securities not listed on a Financial Instruments Exchange (excluding those specified by Cabinet Order), an indication of this;
(vii) the name and location of the head office and other business offices or offices (or if it is a foreign corporation, the head office, and the principal business office or office in Japan, or other business offices or offices in Japan);
(viii) if the person engages in other business, the business type; and
(ix) other particulars specified by Cabinet Office Ordinance.
(2) The following documents must accompany the written application for registration referred to in the preceding paragraph:
(i) a document pledging that the applicant does not fall under any of the items of Article 29-4, paragraph (1) (other than item (i), sub-items (d) to (f) inclusive or item (v), sub-item (c));
(ii) a document stating the things specified by Cabinet Office Ordinance as constituting the business outline and business methods, and any other documents specified by Cabinet Office Ordinance; and
(iii) in addition to what is set forth in the preceding two items, if the person is a corporation, its articles of incorporation, its certificate of registered information, and any other document specified by Cabinet Office Ordinance.
(3) As concerns the documents set forth in item (iii) of the preceding paragraph accompanying a written application for registration, if the articles of incorporation have been prepared as electronic or magnetic records, such electronic or magnetic records (limited to those specified by Cabinet Office Ordinance) may accompany the written application in lieu of paper documents.
(4) Calculation of brought-in capital is specified by Cabinet Order.
(Registration in the Register)
Article 29-3 (1) Whenever an application is filed for the registration referred to in Article 29, unless the Prime Minister refuses the registration pursuant to the provisions of paragraph (1) of the following Article, the Prime Minister shall register the following particulars in the Financial Instruments Business Operators' register:
(i) the particulars set forth in the items of paragraph (1) of the preceding Article; and
(ii) the date of registration and the registration number.
(2) The Prime Minister must make the Financial Instruments Business Operators register available for public inspection.
(Refusal of Registration)
Article 29-4 (1) The Prime Minister must refuse to effect a registration if the applicant for registration falls under one of the following items, or if the written application for registration or a document or electronic or magnetic record that is required to accompany it contains a false statement or record or omits a statement or record of a material fact:
(i) a person falling under one of the following:
(a) a person that has had the registration referred to in Article 29 rescinded pursuant to the provisions of Article 52, paragraph (1); Article 53, paragraph (3); or Article 57-6, paragraph (3); had the permission referred to in Article 60, paragraph (1) rescinded pursuant to the provisions of Article 60-8, paragraph (1) had the permission under Article 60-14, paragraph (1) rescinded under the provisions of Article 60-8, paragraph (1) as applied mutatis mutandis pursuant to Article 60-14, paragraph (2),; had the registration referred to in Article 66 rescinded pursuant to the provisions of Article 66-20, paragraph (1); or had the registration referred to in Article 66-27 rescinded pursuant to the provisions of Article 66-42, paragraph (1); if five years have not yet passed since the date of the rescission; or a person that had obtained a registration or license of the same kind in a foreign state pursuant to the provisions of a foreign law or regulation that is equivalent to this Act (including authorization or any other administrative disposition similar to such a license or registration), but that has had that registration or license rescinded, if five years have not yet passed since the date of the rescission;
(b) a person falling under one of the following:
1. a person that has made a notification under Article 50-2, paragraph (1) to the effect that the person falls under item (ii), (vi) or (vii) of that paragraph, within the period from the day on which a notice was made under Article 15 of the Administrative Procedure Act with regard to rescission of the registration set forth in Article 29 under Article 52, paragraph (1), Article 53, paragraph (3) or Article 57-6, paragraph (3) to the day on which said disposition is made or the day on which the disposition is decided not to be made (excluding a person that had made, before the day on which said notice was made, a decision (if the person is a corporation, a decision by the organ that is responsible for making decisions about the execution of its operations) about discontinuing its Financial Instruments Business, having the whole of its business linked with Financial Instruments Business succeeded to through a split, or transferring the whole of its business linked with Financial Instruments Business), if five years have not yet passed since the date of the notification;
2. in the case where, within the period from the day on which a notice was made under Article 15 of the Administrative Procedure Act with regard to rescission of the permission set forth in Article 60, paragraph (1) under Article 60-8, paragraph (1) to the day on which said disposition is made or the day on which the disposition is decided not to be made, a notification has been made under Article 60-7 to the effect that a person falls under the case prescribed in said Article as a result of discontinuing its On-Exchange Transaction Services (meaning the On-Exchange Transaction Services prescribed in Article 60, paragraph (1); hereinafter the same applies in this item and sub-item (f)2. of the following item), the Authorized Operator for On-Exchange Transactions (meaning the Authorized Operator for On-Exchange Transactions prescribed in Article 60-4, paragraph (1); hereinafter the same applies in this item and the following item) pertaining to said notification (excluding a person that has made, before the day on which said notice was made, a decision (meaning a decision by the organ that is responsible for making decisions about the execution of operations of said Authorized Operator for On-Exchange Transactions) about discontinuing its On-Exchange Transaction Services), if five years have not yet passed since the date of the notification;
3. a person that has made a notification under Article 66-19, paragraph (1) to the effect that the person falls under item (i) of that paragraph, within the period from the day on which a notice was made under Article 15 of the Administrative Procedure Act with regard to rescission of the registration set forth in Article 66 under Article 66-20, paragraph (1) to the day on which said disposition is made or the day on which the disposition is decided not to be made (excluding a person that had made, before the day on which said notice was made, a decision (if the person is a corporation, a decision by the organ that is responsible for making decisions about the execution of its operations) about discontinuing its Financial Instruments Intermediary Service, having the whole of its business linked with Financial Instruments Intermediary Service succeeded to through a split, or transferring the whole of its business linked with Financial Instruments Intermediary Service), if five years have not yet passed since the date of the notification; or
4. a person that has made a notification under Article 66-40, paragraph (1) to the effect that the person falls under item (i) of that paragraph, within the period from the day on which a notice was made under Article 15 of the Administrative Procedure Act with regard to rescission of the registration set forth in Article 66-27 under Article 66-42, paragraph (1) to the day on which said disposition is made or the day on which the disposition is decided not to be made (excluding a person that had made, before the day on which said notice was made, a decision (meaning a decision by the organ that is responsible for making decisions about the execution of operations of said person) about discontinuing its Credit Rating Services, having the whole of its business linked with Credit Rating Services succeeded to through a split, or transferring the whole of its business linked with Credit Rating Services), if five years have not yet passed since the date of the notification;
(c) a person that has been sentenced to a fine (including an equivalent sentence under foreign laws and regulations) for violating the provisions of this Act; the Secured Bonds Trust Act (Act No. 52 of 1905); the Act on Engagement in Trust Business by a Financial Institution (Act No. 43 of 1943); the Commodity Futures Act; the Act on Investment Trusts and Investment Corporations; the Real Estate Brokerage Act (Act No. 176 of 1952); the Act Regulating the Receipt of Contributions, the Receipt of Deposits, and Interest Rates (Act No. 195 of 1954); the Installment Sales Act (Act No. 159 of 1961); the Money Lending Business Act (Act No. 32 of 1983); the Act on the Deposit, etc. Transaction Agreements of Specified Commodities, etc. (Act No. 62 of 1986); the Act Regulating Business Involving Commodity Investment (Act No. 66 of 1991); the Specified Joint Real Estate Ventures Act; the Act on the Securitization of Assets; the Act on Corporate Bond Issuance for Financial Corporations' Loan Business (Act No. 32 of 1999); the Trust Business Act (Act No. 154 of 2004); or any other Act specified by Cabinet Order, or for violating the provisions of a foreign law or regulation that is equivalent to one of these Acts, if five years have not yet passed since the day on which the person finished serving the sentence or ceased to be subject to its enforcement;
(d) a person that does other business which is found to be contrary to the public interest;
(e) a person that does not have a sufficient personnel structure to perform Financial Instruments Business in an appropriate manner; or
(f) a person that is found not to have in place the necessary system for performing Financial Instruments Business in an appropriate manner.
(ii) a corporation that has a person falling under one of the following as its officer (including an advisor, consultant, or any other person, irrespective of title, that is found to have at least the same amount of authority over the corporation as a director, executive officer, or any equivalent person; hereinafter the same applies in this item, Article 52, paragraph (2); Article 52-2, paragraph (2); and Article 57-20, paragraph (1), item (i) and paragraph (3)) or among those of its employees as are specified by Cabinet Order:
(a) an adult ward, a person under curatorship, or a person that is treated in the same manner under foreign laws and regulations;
(b) a person that has become subject to an order to commence bankruptcy proceedings and has not obtained a restoration of rights, or a person that is treated in the same manner under foreign laws and regulations;
(c) a person that has been sentenced to imprisonment or a heavier punishment (including an equivalent sentence under foreign laws and regulations), if five years have not yet passed since the day on which that person finished serving the sentence or ceased to be subject to its enforcement;
(d) a person that, during the 30 days prior to the date of rescission, was the officer of a corporation, in a case in which the corporation was a Financial Instruments Business Operator but has had the registration referred to in Article 29 rescinded pursuant to the provisions of Article 52, paragraph (1), Article 53, paragraph (3), or Article 57-6, paragraph (3); in a case in which the corporation was an Authorized Operator for On-Exchange Transactions but has had the permission referred to in Article 60, paragraph (1) rescinded pursuant to the provisions of Article 60-8, paragraph (1); in a case in which juridical person that was an Authorized Electronic Over-the-Counter Transactions of Derivatives, etc. Business Operator prescribed in Article 60-14, paragraph (2) has had its permission under Article 60-14, paragraph (1) rescinded under the provisions of Article 60-8, paragraph (1) as applied mutatis mutandis pursuant to Article 60-14, paragraph (1) ; in a case in which the corporation was a Financial Instruments Intermediary Service Provider but has had the registration referred to in Article 66 rescinded pursuant to the provisions of Article 66-20, paragraph (1); in a case in which the corporation was a Credit Rating Agency but has had the registration referred to in Article 66-27 rescinded pursuant to the provisions of Article 66-42, paragraph (1); or in a case in which the corporation had obtained a registration or permission of the same kind in a foreign state pursuant to the provisions of a foreign law or regulation that is equivalent to this Act (including authorization or any other administrative disposition similar to such a registration or permission), but has had that registration or permission rescinded; if five years have not yet passed since the date of the rescission;
(e) an individual that was a Financial Instruments Business Operator but that has had the registration referred to in Article 29 rescinded pursuant to the provisions of Article 52, paragraph (1); an individual that was a Financial Instruments Intermediary Service Provider but that has had the registration referred to in Article 66 rescinded pursuant to the provisions of Article 66-20, paragraph (1); or an individual that had obtained a registration of the same kind in a foreign state pursuant to the provisions of a foreign law or regulation that is equivalent to this Act (including permission or any other administrative disposition similar to such a registration) or that had obtained permission of the same kind as the permission referred to in Article 60, paragraph (1) or Article 60-14, paragraph (1)in a foreign state pursuant to the provisions of a foreign law or regulation that is equivalent to this Act (including permission or any other administrative disposition that is similar to such permission), but that has had that registration or permission rescinded; if five years have not yet passed since the date of the rescission;
(f) a person falling under one of the following:
1. in the case where a person that has made a notification under Article 50-2, paragraph (1) to the effect that the person falls under any of items (ii) to (vii) inclusive of that paragraph, within the period from the day on which a notice was made under Article 15 of the Administrative Procedure Act with regard to rescission of the registration set forth in Article 29 under Article 52, paragraph (1), Article 53, paragraph (3) or Article 57-6, paragraph (3) to the day on which said disposition is made or the day on which the disposition is decided not to be made (in the case of having made a notification under Article 50-2, paragraph (1) to the effect that the person falls under any of items (iii) to (v) inclusive of that paragraph, such person is a corporation that was the Financial Instruments Business Operator pertaining to said notification, and such person excludes a person that had made, before the day on which said notice was made, a decision (meaning a decision by the organ that is responsible for making decisions about the execution of operations of said person) about discontinuing its Financial Instruments Business, effecting a merger (limited to a merger in the case where the Financial Instruments Business Operator disappears as a result of the merger), dissolving, having the whole of its business linked with Financial Instruments Business succeeded to through a split, or transferring the whole of its business linked with Financial Instruments Business) was a corporation, a person that was an officer of said corporation, if five years have not yet passed since the date of the notification;
2. in the case where, within the period from the day on which a notice was made under Article 15 of the Administrative Procedure Act with regard to rescission of the permission set forth in Article 60, paragraph (1) under Article 60-8, paragraph (1) to the day on which said disposition is made or the day on which the disposition is decided not to be made, a notification has been made under Article 60-7 to the effect that a person falls under the case prescribed in said Article, a person that was an officer of the Authorized Operator for On-Exchange Transactions pertaining to said notification (excluding a person that has made, before the day on which said notice was made, a decision (meaning a decision by the organ that is responsible for making decisions about the execution of operations of said Authorized Operator for On-Exchange Transactions) about dissolving or discontinuing its On-Exchange Transaction Services), if five years have not yet passed since the date of the notification;
3. in the case where a person that has made a notification under Article 66-19, paragraph (1) to the effect that the person falls under any of item (i) or items (iii) to (v) inclusive of that paragraph, within the period from the day on which a notice was made under Article 15 of the Administrative Procedure Act with regard to rescission of the registration set forth in Article 66 under Article 66-20, paragraph (1) to the day on which said disposition is made or the day on which the disposition is decided not to be made (in the case of having made a notification under Article 66-19, paragraph (1) to the effect that the person falls under any of items (iii) to (v) inclusive of that paragraph, such person is a corporation that was the Financial Instruments Intermediary Service Provider pertaining to said notification, and such person excludes a person that had made, before the day on which said notice was made, a decision (meaning a decision by the organ that is responsible for making decisions about the execution of operations of said person) about discontinuing its Financial Instruments Intermediary Service, having the whole of its business linked with Financial Instruments Intermediary Service succeeded to through a split, transferring the whole of its business linked with Financial Instruments Intermediary Service, effecting a merger (limited to a merger in the case where the Financial Instruments Intermediary Service Provider disappears as a result of the merger) or dissolving) was a corporation, a person that was an officer of said corporation, if five years have not yet passed since the date of the notification; or
4. a person that was an officer of a person that has made a notification under Article 66-40, paragraph (1) to the effect that the person falls under any of the items of that paragraph, within the period from the day on which a notice was made under Article 15 of the Administrative Procedure Act with regard to rescission of the registration set forth in Article 66-27 under Article 66-42, paragraph (1) to the day on which said disposition is made or the day on which the disposition is decided not to be made (in the case of having made a notification under Article 66-40, paragraph (1) to the effect that the person falls under any of items (ii) to (iv) inclusive of that paragraph, such person is a corporation that was the Credit Rating Agency pertaining to said notification, and such person excludes a person that had made, before the day on which said notice was made, a decision (meaning a decision by the organ that is responsible for making decisions about the execution of operations of said person) about discontinuing its Credit Rating Services, having the whole of its business linked with Credit Rating Services succeeded to through a split, transferring the whole of its business linked with Credit Rating Services, effecting a merger (limited to a merger in the case where the Credit Rating Agency disappears as a result of the merger) or dissolving), if five years have not yet passed since the date of the notification.
(g) an individual that falls under sub-item (b) of the preceding item;
(h) a person falling under the category of an officer whose dismissal or removal has been ordered pursuant to the provisions of Article 52, paragraph (2), Article 60-8, paragraph (2) (including the cases where it is applied mutatis mutandis pursuant to Article 60-14, paragraph (2)); Article 66-20, paragraph (2); or Article 66-42, paragraph (2); or an officer whose dismissal or removal has been ordered in a foreign state pursuant to the provisions of a foreign law or regulation that is equivalent to this Act, if five years have not yet passed since the day of the disposition; or
(i) a person that has been sentenced to a fine (including an equivalent sentence under foreign laws and regulations) for violating the provisions of one of the Acts prescribed in sub-item (c) of the preceding item or the Act to Prevent Illegal Activities by Members of Organized Crime Groups (Act No. 77 of 1991) (excluding the provisions of Article 32-2, paragraph (7) of that Act), or for violating the provisions of a foreign law or regulation that is equivalent to one of these Acts, or committing a crime specified by the Penal Code (Act No. 45 of 1907) or the Act on Punishment of Violent Acts (Act No. 60, 1926), if five years have not yet passed since the day on which the person finished serving the sentence or ceased to be subject to its enforcement.
(iii) an individual that falls under any of sub-items (a) to (h) inclusive or (i) (excluding the part that involves the provisions of Acts prescribed in item (i), sub-item (c)) of the preceding item, or an individual that has an employee specified by Cabinet Order that falls under any of sub-items (a) to (i) inclusive of the preceding item;
(iv) a person (other than an individual) falling under one of the following and seeking to engage in Type I Financial Instruments Business, Type II Financial Instruments Business, or Investment Management Business:
(a) a person whose stated capital or contributes in total are less than the amount of money that is specified by Cabinet Order as necessary and appropriate in the public interest or for the protection of investors;
(b) a person that does not have a business office or office in Japan;
(c) a foreign corporation that has not designated a domestic representative (limited to one responsible for business at all business offices or offices that the foreign corporation operates in Japan so as to engage in Type I Financial Instruments Business, Type II Financial Instruments Business or Investment Management Business); or
(d) a person that has not joined an Association (meaning an Authorized Financial Instruments Firms Association or Certified Financial Instruments Business Association prescribed in Article 78, paragraph (2) and limited to one whose main association members or members are persons that conduct the business which the applicant for registration intends to conduct; hereinafter the same applies in this item and Article 33-5, paragraph (1), item (iv)) and that has not prepared internal rules (meaning rules with which said person or its officers or employees should comply) that have contents equivalent to the articles of incorporation or other rules (limited to those for ensuring fair and smooth purchase and sales and other transactions of Securities or ensuring fair and smooth Derivatives Transactions, etc. as prescribed in Article 33, paragraph (3) or for protecting investors) of the Association or that has not established a system for complying with said internal rules.
(v) a person falling under one of the following and seeking to engage in Type I Financial Instruments Business or Investment Management Business:
(a) a person other than a stock company (limited to one that has a board of directors, company auditors, supervisory committee, or Nominating Committee, etc. (meaning the Nominating Committee, etc. prescribed in Article 2, item (xii) of the Companies Act; the same applies hereinafter)) and a corporation of the same kind as a company with a board of directors incorporated in compliance with foreign laws and regulations (if a person seeks to engage in Type I Financial Instruments Business, limited to a person that engages in the same kind of business as Type I Financial Instruments Business in a foreign state in compliance with foreign laws and regulations (including a person specified by Cabinet Order as equivalent to such a person));
(b) a person whose net assets (meaning the figure arrived at when the total amount of liabilities is deducted from the total amount of assets pursuant to the provisions of Cabinet Office Ordinance) are less than the amount of money that is specified by Cabinet Order as necessary and appropriate in the public interest or for the protection of investors;
(c) a person engaged in other business that does not fall under one of the categories of business prescribed in Article 35, paragraph (1) or business set forth in the items of Article 35, paragraph (2), and that is found to compromise investor protection due to difficulties in managing the risk of loss in connection with said business;
(d) a corporation (excluding a foreign corporation) that has a person falling under one of the following as an individual Major Shareholder (if the applicant is a Subsidiary Company of a Holding Company (meaning a holding company as prescribed in Article 9, paragraph (4), item (i) of the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade (Act No. 54 of 1947); hereinafter the same applies in this item and Article 32-4), this includes a Major Shareholder of said Holding Company; the same applies in sub-items (e) and (f)):
1. an adult ward or a person under curatorship, or a person that is treated in the same manner under foreign laws and regulations, whose statutory representative falls under one of sub-items (a) to (i) inclusive of item (ii); or
2. a person falling under one of sub-items (b) to (i) inclusive of item (ii).
(e) a corporation (excluding a foreign corporation) that has a person falling under one of the following as a corporate Major Shareholder; or
1. a corporation falling under item (i), sub-item (a) or (b);
2. a corporation that has been sentenced to a fine (including an equivalent sentence under foreign laws and regulations) for violating the provisions of one of the Acts prescribed in item (i), sub-item (c) or for violating the provisions of a foreign law or regulation that is equivalent to one of such Acts, if five years have not yet passed since the day on which the person finished serving the sentence or ceased to be subject to its enforcement; or
3. a corporation that has a person falling under one of sub-items (a) to (g) inclusive of item (ii) among the officers that represent it.
(f) a foreign corporation for which the foreign regulatory authority (meaning the Foreign Regulatory Authority for Financial Instruments defined in Article 189, paragraph (1) or any other regulatory authority specified by Cabinet Order that enforces foreign laws and regulations) has not confirmed that a person equivalent to a Major Shareholder is unlikely to compromise the sound and appropriate operation of Financial Instruments Business.
(vi) a person falling under one of the following and seeking to engage in Type I Financial Instruments Business:
(a) a person whose ratio as calculated based on the provisions of Article 46-6, paragraph (1) is less than 120 percent; or
(b) a person seeking to use a trade name that another Financial Instruments Business Operator (limited to those engaged in Type I Financial Instruments Business; the same applies in this sub-item (b)) is already using or a trade name that could give rise to the misconception that it is another Financial Instruments Business Operator.
(2) The term "Major Shareholder" as used in sub-items (d) to (f) inclusive of item (v) of the preceding paragraph means a person that holds voting rights (excluding the voting rights that are specified by Cabinet Office Ordinance in consideration of the manner in which they are held and other circumstances; hereinafter referred to as "Subject Voting Rights" in paragraph (4), Article 32, paragraphs (1) and (4)) constituting 20 percent or more (or 15 percent or more, if a fact has occurred that is specified by Cabinet Office Ordinance as something that is presumed to have a material influence on decisions about the company's financial and operational policies) of all shareholders', etc. voting rights (meaning the voting rights of all shareholders, all members, all partners, and all equity investors, and for a stock company, excluding voting rights in respect of shares that do not allow voting rights to be exercised with regard to all matters that can be resolved at a shareholders meeting, and including voting rights in respect of shares that are deemed to have voting rights pursuant to the provisions of Article 879, paragraph (3) of the Companies Act; the same applies hereinafter).
(3) The term "Subsidiary Company" as used in paragraph (1), item (v), sub-item (d) means a second company in which a first company holds the majority of all shareholders', etc. voting rights. In such a case, a second company in which a first company and one or more of its Subsidiary Companies hold the majority of all shareholders', etc. voting rights, or in which one or more of a first company's Subsidiary Companies hold the majority of all shareholders', etc. voting rights, is deemed to be the Subsidiary Company of said first company.
(4) With regard to the application of the provisions of paragraph (2) in a case set forth in one of the following items, the person set forth in the relevant item is deemed to hold the Subject Voting Rights prescribed in that item:
(i) if a person has the authority to exercise the company's Subject Voting Rights or the authority to give instructions on the exercise of said voting rights based on a money trust contract or other contract or based on the provisions of the law: said Subject Voting Rights; and
(ii) if a person that is related to the relevant person through a shareholding relationship, familial relationship, or other special relationship specified by Cabinet Order, holds Subject Voting Rights in a corporation: the Subject Voting Rights held by the person with the special relationship to the relevant person.
(5) The necessary particulars relevant to the application of the provisions of paragraph (2) and the preceding paragraph are specified by Cabinet Order.
(Special Provisions on Registration, etc. of Type I Small Amount Electronic Public Offering Service Provider)
Article 29-4-2 (1) With regard to the application of the provisions of Article 29-2, paragraph (1), item (vi) and paragraph (2), item (i) to Type I Small Amount Electronic Public Offering Service in cases where a person who intends to obtain the registration set forth in Article 29 intends to only engage in Type I Small Amount Electronic Public Offering Service from among Type I Financial Instruments Businesses, the term "a statement to that effect" in Article 29-2, paragraph (1), item (vi) is deemed to be replaced with "a statement to that effect (in the case of only engaging in the Type I Small Amount Electronic Public Offering Service prescribed in Article 29-4-2, paragraph (10) from among Type I Financial Instruments Businesses, including a statement to that effect)" and the term "and item (v), sub-item (c)" in paragraph (2), item (i) of that Article is deemed to be replaced with ", item (v), sub-item (c) and item (vi), sub-item (a)."
(2) The provisions of paragraph (1), item (v), sub-item (c) and item (vi), sub-item (a) of the preceding Article (including the cases where these provisions are applied mutatis mutandis pursuant to Article 31, paragraph (5)) do not apply to Type I Small Amount Electronic Public Offering Service in the case referred to in the preceding paragraph or in the case where a person who intends to obtain the registration of change set forth in Article 31, paragraph (4) intends to only engage in Type I Small Amount Electronic Public Offering Service from among Type I Financial Instruments Businesses.
(3) A Type I Small Amount Electronic Public Offering Service Provider (excluding a person who engages in Investment Management Business; hereinafter the same applies in the following paragraph) is not required to notify the Prime Minister to the effect that it will start to engage in any of the businesses listed in the items of Article 35, paragraph (2), notwithstanding the provision of Article 35, paragraph (3).
(4) When a Type I Small Amount Electronic Public Offering Service Provider conducts a business other than Financial Instruments Business and the businesses prescribed in Article 35, paragraphs (1) and (2), the service provider is not required to obtain approval from the Prime Minister, notwithstanding the provision of paragraph (4) of that Article.
(5) The provisions of Article 36-2, paragraph (1) do not apply to the case where a Type I Small Amount Electronic Public Offering Service Provider engages in Type I Small Amount Electronic Public Offering Service.
(6) The provisions of Articles 46-5 and 46-6 do not apply to a Type I Small Amount Electronic Public Offering Service Provider.
(7) With regard to the application of the provisions of Article 2, paragraph (11), Article 27-2, paragraph (4) (including the cases where applied mutatis mutandis pursuant to Article 27-22-2, paragraph (2)), Article 27-26, paragraph (1) and Article 66-2, paragraph (1), item (iv) in cases where a Type I Small Amount Electronic Public Offering Service Provider engages in Type I Small Amount Electronic Public Offering Service, the term "Type I Financial Instruments Business" in these provisions is deemed to be replaced with "Type I Financial Instruments Business (excluding the Type I Small Amount Electronic Public Offering Service prescribed in Article 29-4-2, paragraph (10))" and the term "paragraph (4) of that Article" in Article 2, paragraph (11) and Article 27-26, paragraph (1) is deemed to be replaced with "Article 28, paragraph (4)."
(8) A Type I Small Amount Electronic Public Offering Service Provider must publicize its trade name, registration number and other matters specified by Cabinet Office Ordinance by means of an electronic data processing system or by any other means of information and communications technology specified by Cabinet Office Ordinance, pursuant to the provisions of Cabinet Office Ordinance.
(9) The term "Type I Small Amount Electronic Public Offering Service Provider" as used in paragraph (3) to the preceding paragraph inclusive means a person who has obtained the registration set forth in Article 29 or the registration of change set forth in Article 31, paragraph (4) by stating in the written application for registration to the effect that the person will only engage in Type I Small Amount Electronic Public Offering Service from among Type I Financial Instruments Businesses.
(10) The term "Type I Small Amount Electronic Public Offering Service" as used in paragraphs (1), (2), (5) and (7) and the preceding paragraph means Electronic Public Offering Service (limited to handling of Public Offering or handling of Private Placement of the Securities set forth in Article 2, paragraph (1), item (ix) (limited to Securities not listed on a Financial Instruments Exchange and excluding those specified by Cabinet Order; hereinafter the same applies in this paragraph) which satisfies the requirements specified by Cabinet Order as being such handling where the total issue value of the Securities and the amount to be paid by the person who acquires the Securities are small; hereinafter the same applies in this paragraph) or receiving of a deposit of money from customers in relation to Electronic Public Offering Service.
(Special Provisions on Registration, etc. of Type II Small Amount Electronic Public Offering Service Provider)
Article 29-4-3 (1) With regard to the application of the provisions of Article 29-2, paragraph (1), item (vi) to Type II Small Amount Electronic Public Offering Service in cases where a person who intends to obtain the registration set forth in Article 29 intends to only engage in Type II Small Amount Electronic Public Offering Service from among Type II Financial Instruments Businesses, the term "a statement to that effect" in Article 29-2, paragraph (1), item (vi) is deemed to be replaced with "a statement to that effect (in the case of only engaging in the Type II Small Amount Electronic Public Offering Service prescribed in Article 29-4-3, paragraph (4) from among Type II Financial Instruments Businesses, including a statement to that effect)."
(2) The provisions of Article 36-2, paragraph (1) do not apply to the case where a Type II Small Amount Electronic Public Offering Service Provider (meaning a person who has obtained the registration set forth in Article 29 or the registration of change set forth in Article 31, paragraph (4) by stating in the written application for registration to the effect that the person will only engage in Type II Small Amount Electronic Public Offering Service from among Type II Financial Instruments Businesses; the same applies in the following paragraph) engages in Type II Small Amount Electronic Public Offering Service.
(3) A Type II Small Amount Electronic Public Offering Service Provider must publicize its trade name or name, registration number and other matters specified by Cabinet Office Ordinance by means of an electronic data processing system or by any other means of information and communications technology specified by Cabinet Office Ordinance, pursuant to the provisions of Cabinet Office Ordinance.
(4) The term "Type II Small Amount Electronic Public Offering Service" as used in paragraphs (1) and (2) means, among Electronic Public Offering Service, handling of Public Offering or handling of Private Placement of Securities (limited to rights set forth in item Article 2, paragraph (2), item (v) or (vi) which are deemed to be Securities pursuant to that paragraph and which are set forth in Article 3, item (iii) or which are not listed on a Financial Instruments Exchange, and excluding those specified by Cabinet Order; hereinafter the same applies in this paragraph) which satisfies the requirements specified by Cabinet Order as being such handling where the total issue value of the Securities and the amount to be paid by the person who acquires the Securities are small.
(Special Provisions for Registration, etc. of Business concerning Qualified Investors)
Article 29-5 (1) With regard to the application of the provisions of Article 29-2, paragraph (1), item (v) and Article 29-4, paragraph 1, item (v), sub-item (a) (including as applied mutatis mutandis pursuant to Article 31, paragraph (5); hereinafter the same applies in this paragraph) to an Investment Management Business that satisfies all of the following requirements (hereinafter referred to as "Investment Management Business for Qualified Investors" in this Article) in cases where a person who intends to obtain registration under Article 29 or registration of change under Article 31, paragraph (4) intends to engage in an Investment Management Business for Qualified Investors, the term "what category of businesses the person intends to conduct" in Article 29-2, paragraph (1), item (v) shall be deemed to be replaced with "what category of businesses the person intends to conduct (in the case of an Investment Management Business for Qualified Investors prescribed in Article 29-5, paragraph (1), including a statement to that effect)"; and the terms "a board of directors, company auditors," and "a company with a board of directors" in Article 29-4, paragraph (1), item (v), sub-item (a) shall be deemed to be replaced with "company auditors," and "a company with company auditors, a company with supervisory committee, or a company with nominating committee, etc.," respectively.
(i) Rights Holders (meaning Rights Holders prescribed in Article 42, paragraph (1), including Investors (meaning Investors prescribed in Article 2, paragraph (16) of the Act on Investment Trust and Investment Corporations) of Registered Investment Corporations (meaning Registered Investment Corporations prescribed in Article 2, paragraph (13) of said Act) who are counterparties to the contracts referred to in Article 2, paragraph (8), item (xii), sub-item (a), or any other person specified by Cabinet Order as being equivalent to them) for all Investment Properties (meaning Investment Properties prescribed in Article 35, paragraph (1), item (xv); the same applies in the following item) consist exclusively of Qualified Investors; and
(ii) The total amount of all Investment Properties does not exceed the amount specified by Cabinet Order in consideration of the actual state of the Investment Management Business, the impact exerted on Japan's capital market and other circumstances.
(2) With regard to the application of the provisions of this Act and other laws and regulations to cases where a Financial Instruments Business Operator who obtained registration under Article 29 or registration of change under Article 31, paragraph (4) for engaging in an Investment Management Business for Qualified Investors has been entrusted with full authority to invest money or other property invested or contributed from a person who holds rights indicated on the following Securities under a contract referred to in Article 2, paragraph (8), item (xii), sub-item (b), business involving dealings in Private Placement of said Securities made with Qualified Investors by said Financial Instruments Business Operator (limited to those specified by Cabinet Order as being not likely to involve the transfer of said Securities from the Qualified Institutional Investor who acquired them to persons other than Qualified Investors, etc.) shall be deemed to be Type II Financial Instruments Business:
(i) Securities set forth in Article 2, paragraph (1), item (x);
(ii) Securities set forth in Article 2, paragraph (1), item (xi);
(iii) Securities set forth in Article 2, paragraph (1), item (xiv) or Securities set forth in item (xvii) of that paragraph (limited to those having the nature of the Securities set forth in item (xiv) of that paragraph);
(iv) Securities set forth in Article 2, paragraph (1), item (xxi) that indicate the rights specified by Cabinet Order as prescribed to in Article 2, paragraph (8), item (xiv) or (xv); or
(v) Rights to be indicated on Securities set forth in the preceding items that are deemed to be Securities under the provision of Article 2, paragraph (2).
(3) "Qualified Investor" referred to in paragraph (1), item (i) and the preceding paragraph shall mean Professional Investor, or any other person specified by Cabinet Office Ordinance as those equivalent to Professional Investor in light of his/her knowledge, experience and state of property or person specified by Cabinet Order as having a close relationship with a Financial Instruments Business Operator (including those who intend to obtain registration under Article 29).
(4) With regard to the application of the provisions of paragraphs (1) and (2), the following persons shall be deemed not to be Qualified Investors prescribed in the preceding paragraph:
(i) a Special Purpose Company (meaning the Special Purpose Company provided in Article 2, paragraph (3) of the Act on Securitization of Assets), if Asset Backed Securities (meaning the Asset Backed Securities provided in Article 2, paragraph (11) of that Act) issued by it are held by persons other than Qualified Investors (meaning Qualified Investors prescribed in the preceding paragraph; the same applies in the following item);
(ii) a person who engages, or intends to engage in a Securities investment business based on a contract or any other juristic acts (limited to rights based on said contract or other juristic acts that fall under the rights referred to in Article 2, paragraph (2), item (v) or (vi)) pertaining to the Securities investment business to which the counterparty is a person other than a Qualified Investor by appropriating money or other property invested or contributed from said counterparty (excluding cases in which the investment of property pertaining to said investment business is conducted by a Financial Instruments Business Operator, etc. prescribed in Article 34 (limited to those who engage in Investment Management Business) or any other person specified by Cabinet Order); or
(iii) a person who is specified by Cabinet Office Ordinance as a person equivalent to the persons listed in the preceding two sub-items.
(5) With regard to the application of the provisions of Article 2, paragraph (11) and Article 66-2, paragraph (1), item (iv) to cases where a Financial Instruments Business Operator who obtained the registration under Article 29 or registration of change under Article 31, paragraph (4) for engaging in an Investment Management Business for Qualified Investors engages in an Investment Management Business for Qualified Investors, the term "Investment Management Business defined in Article 28, paragraph (4)" in Article 2, paragraph (11) shall be deemed to be replaced with "Investment Management Business defined in Article 28, paragraph (4) (excluding the Investment Management Business for Qualified Investors defined in Article 29-5, paragraph (1))"; and the phrase "Investment Management as prescribed in Article 28, paragraph (4)" in in Article 66-2, paragraph (1), item (iv) shall be deemed to be replaced with "Investment Management Business as prescribed in Article 28, paragraph (4) (excluding the Investment Management Business for Qualified Investors defined in Article 29-5, paragraph (1))."
(Authorization)
Article 30 (1) A Financial Instruments Business Operator must obtain the authorization of the Prime Minister if it seeks to perform the acts set forth in Article 2, paragraph (8), item (x) on a regular basis.
(2) Upon granting the authorization referred to in the preceding paragraph to a Financial Instruments Business Operator, the Prime Minister shall note this in said Financial Instruments Business Operator's registration.
(Conditions on Authorization)
Article 30-2 (1) The Prime Minister may attach conditions to the authorization referred to in paragraph (1) of the preceding Article.
(2) The conditions referred to in the preceding paragraph must constitute the minimum level of conditions that are necessary in the public interest and for the protection of investors.
(Application for Authorization)
Article 30-3 (1) A Financial Instruments Business Operator seeking the authorization referred to in Article 30, paragraph (1) must submit a written application for authorization to the Prime Minister, in which it states the following particulars:
(i) its trade name; and
(ii) the date of registration and its registration number.
(2) A document stating how the person manages the risk of loss, how duties are divided, and the other things specified by Cabinet Office Ordinance as constituting the business outline and business methods, and other documents specified by Cabinet Office Ordinance must accompany the written application for authorization referred to in the preceding paragraph.
(Criteria for Authorization)
Article 30-4 Before seeking to grant the authorization referred to in Article 30, paragraph (1), the Prime Minister shall examine whether there is compliance with the following criteria:
(i) an appropriate system and regulations are in place for managing the risk of loss;
(ii) the amount of stated capital exceeds the amount of money that is specified by Cabinet Order as necessary and appropriate in the public interest or for the protection of investors;
(iii) the amount of net assets exceeds the amount of money prescribed in the preceding item;
(iv) the provisions of Article 46-6, paragraph (2) are not being violated; and
(v) the applicant's price formation method, its methods of transfer and other settlement, and its Cabinet-Office-Ordinance-specified business outline and business methods are necessary and appropriate in the public interest or for the protection of investors.
(Registration of a Change)
Article 31 (1) If a particular set forth in the items of Article 29-2, paragraph (1) (excluding items (v) and (vi)) changes, the Financial Instruments Business Operator must notify the Prime Minister of this within two weeks from the day of the change.
(2) Upon accepting a notification under the preceding paragraph, the Prime Minister shall register the particulars given in the notification in the Financial Instruments Business Operator register.
(3) If the business outline or business methods that a Financial Instruments Business Operator has stated in the documents set forth in Article 29-2, paragraph (2), item (ii) change, the Financial Instruments Business Operator must notify the Prime Minister of this without delay pursuant to the provisions of Cabinet Office Ordinance.
(4) If a Financial Instruments Business Operator seeks to change the particular set forth in Article 29-2, paragraph (1), item (v) or (vi), it must have that change registered by the Prime Minister pursuant to the provisions of Cabinet Office Ordinance.
(5) The provisions of Article 29-3 and Article 29-4 apply mutatis mutandis to the registration of a change referred to in the preceding paragraph. In this case, in Article 29-3, paragraph (1), the phrase "the following particulars" is deemed to be replaced with "the particulars subject to the change"; in Article 29-4, paragraph (1), the phrase "the following items" is deemed to be replaced with "the following items (excluding item (i), sub-items (a) to (d) inclusive, item (ii), and item (iii))"; and any other necessary technical replacement of terms is specified by Cabinet Order.
(6) Notwithstanding the provisions of paragraph (3), if a Financial Instruments Business Operator that has obtained the authorization referred to in Article 30, paragraph (1) seeks to change the way it manages the risk of loss, its price formation method, its methods of transfer and other settlement, or the Cabinet-Office-Ordinance-specified business outline and business methods for which it has obtained that authorization, it must obtain the authorization of the Prime Minister.
(Security Deposits for Operations)
Article 31-2 (1) A Financial Instruments Business Operator (limited to individuals seeking to engage in Type II Financial Instruments Business and persons seeking to engage in Investment Advisory and Agency Business only; hereinafter the same applies in this Article) must deposit a business security deposit with the deposit office nearest to its principal business office or office.
(2) The amount of the business security deposit referred to in the preceding paragraph is specified by Cabinet Order in consideration of the actual condition of a Financial Instruments Business Operator's business and the need to protect investors.
(3) If a Financial Instruments Business Operator concludes a contract stating that the required business security deposit of the Financial Instruments Business Operator will be deposited if ordered by the Prime Minister, and has notified the Prime Minister of this, pursuant to the provisions of Cabinet Order, so long as that contract remains valid, the Financial Instruments Business Operator may refrain from depositing all or part of the business security deposit referred to in paragraph (1), in line with the amount of money that will be deposited pursuant to the contract (hereinafter referred to as the "Contract Amount" in this Article).
(4) If the Prime Minister finds it to be necessary for the protection of investors, the Prime Minister may order a person that has concluded a contract as referred to in the preceding paragraph with a Financial Instruments Business Operator, or may order the relevant Financial Instruments Business Operator, to deposit all or part of the amount equivalent to the Contract Amount.
(5) A Financial Instruments Business Operator must not begin Financial Instruments Business until it deposits the business security deposit referred to in paragraph (1) (or until it concludes a contract set forth in paragraph (3)) and notifies the Prime Minister of this.
(6) A person that concludes an Investment Advisory Contract with a Financial Instruments Business Operator, a person that concludes an Investment Advisory Contract or Discretionary Investment Contract based on a Financial Instruments Business Operator's agency or intermediation for that Investment Advisory Contract or an Discretionary Investment Contract, or a person that concludes a purchase and sale contract for Securities based on a Financial Instruments Business Operator's purchase and sale of Securities or its intermediation, brokerage, or agency for such a purchase and sale, has the right to receive payment of a claim arising from such a contract out of the business security deposit furnished by the Financial Instruments Business Operator, in preference over other creditors.
(7) The necessary particulars relevant to the exercise of the right referred to in the preceding paragraph are specified by Cabinet Order.
(8) If the amount of a business security deposit (including the Contract Amount; the same applies in paragraph (10)) comes to fall short of the amount specified by Cabinet Order as prescribed in paragraph (2) due to the exercise of the right referred to in paragraph (6) or for any other reason, the Financial Instruments Business Operator shall deposit the shortfall (or conclude a contract set forth in paragraph (3)) within three weeks from the day specified by Cabinet Office Ordinance and notify the Prime Minister of this without delay.
(9) National government bonds, municipal bonds, and other Securities specified by Cabinet Office Ordinance may serve as a business security deposit that is deposited pursuant to the provisions of paragraph (1) or the preceding paragraph.
(10) If the registration referred to in Article 29 is rescinded pursuant to the provisions of Article 52, paragraph (1) or (4) or Article 54, if the registration referred to in Article 29 loses its effect pursuant to the provisions of Article 50-2, paragraph (2), if a person has had a change registered as referred to in paragraph (4) of the preceding Article in connection with its engagement in the Financial Instruments Business other than in Type II Financial Instruments Business (but only if an individual engages in such business) or Investment Advisory and Agency Business, or if the amount of a business security deposit exceeds the amount specified by Cabinet Order as prescribed in paragraph (2), all or part of the business security deposit that is deposited pursuant to the provisions of paragraph (1), (4), or (8) may be refunded pursuant to the provisions of Cabinet Order.
(11) Beyond what is prescribed in the preceding paragraphs, the necessary particulars relevant to a business security deposit are specified by Cabinet Office Ordinance and by Ordinance of the Ministry of Justice.
(Restriction on the Use of Trade Names)
Article 31-3 A person that is not a Financial Instruments Business Operator must not use a trade name or name that refers to it as a Financial Instruments Business Operator, and must not use any trade name or name that is confusingly similar to this.
(Prohibition of Indication, etc. of Engagement in Financial Instruments Business)
Article 31-3-2 Anyone other than a Financial Instruments Business Operator, etc. (meaning a Financial Instruments Business Operator, etc. prescribed in Article 34), Financial Instruments Intermediary Service Provider, or any other person who is allowed to engage in Financial Instruments Business (including the Registered Financial Institution Business prescribed in Article 33-5, paragraph (1), item (iii); hereinafter the same applies in this Article) under the provisions of laws and regulations shall not conduct any of the following acts:
(i) Posting of a sign prescribed in Article 36-2, paragraph (1) or any sign similar thereto, or any other indication that a Financial Instruments Business is being conducted; or
(ii) Soliciting for conclusion of a Contract for Financial Instruments Transaction (meaning Contract for Financial Instruments Transaction prescribed in Article 34) for the purpose of engaging in Financial Instruments Business (excluding those that fall under the acts listed in the items of Article 2, paragraph (8)).
(Notification on Assumption of the Position of Director)
Article 31-4 (1) If the director or executive officer of a Financial Instruments Business Operator (limited to a person engaged in Type I Financial Instruments Business or Investment Management Business; hereinafter the same applies in this paragraph) assumes the position of director, accounting advisor (or, if the accounting advisor is a corporation, the position of a staff member that performs those duties; hereinafter the same applies in this and the following paragraphs), company auditor, or executive officer of another company (including if a director, accounting advisor, company auditor, or executive officer of another company is to concurrently hold the position of director or executive officer of the Financial Instruments Business Operator), or if that person resigns from the position of director, accounting advisor, company auditor, or executive officer of another company, that person must notify the Prime Minister of this without delay, pursuant to the provisions of Cabinet Office Ordinance.
(2) If the director or executive officer of a Financial Instruments Business Operator (limited to a person engaged in Securities Services other than Type I Financial Instruments Business) assumes the position of director, accounting advisor, company auditor, or executive officer of the Parent Bank, etc. or Subsidiary Bank, etc. of said Financial Instruments Business Operator (including if a director, accounting advisor, company auditor or executive officer of the Parent Bank, etc. or Subsidiary Bank, etc. comes to concurrently hold the position of director or executive officer of the Financial Instruments Business Operator), or if that person resigns from the position of director, accounting advisor, company auditor, or executive officer of the Parent Bank, etc. or Subsidiary Bank, etc., that person must notify the Prime Minister of this without delay, pursuant to the provisions of Cabinet Office Ordinance.
(3) The term "Parent Bank, etc." as used in the preceding paragraph means a bank or Cooperative Financial Institution, or a person that falls under any other category of financial institution specified by Cabinet Order, which Cabinet Order specifies as satisfying the requirement of being a corporation or other organization that holds the majority of all shareholders', etc. voting rights in a Financial Instruments Business Operator, or of being a corporation or other organization which is otherwise closely related to such a Financial Instruments Business Operator (such a corporation or other organization is referred to as a "Parent Corporation, etc." in Article 33-3, paragraph (2), item (iii) and Article 44-3).
(4) The term "Subsidiary Bank, etc." as used in paragraph (2) means a bank or Cooperative Financial Institution, or a person that falls under any other category of financial institution specified by Cabinet Order, which Cabinet Order specifies as satisfying the requirement of being a corporation or other organization in which a Financial Instruments Business Operator holds the majority of all shareholders', etc. voting rights, or of being a corporation or other organization which is otherwise closely related to such a Financial Instruments Business Operator (such a corporation or other organization is referred to as a "Subsidiary Corporation, etc." in Article 33-3, paragraph (2), item (iii) and Article 44-3).
(5) The necessary particulars relevant to a determination of whether the majority of all shareholders', etc. voting rights are held as prescribed in paragraph (3) are specified by Cabinet Office Ordinance in consideration of the manner in which they are held and other circumstances.
(Eligibility as a Director)
Article 31-5 The provisions of the proviso to Article 331, paragraph (2) (including as applied mutatis mutandis pursuant to Article 335, paragraph (1) of the Companies Act); Article 332, paragraph (2) (including as applied mutatis mutandis pursuant to Article 334, paragraph (1) of that Act); Article 336, paragraph (2); and the proviso to Article 402, paragraph (5) of that Act do not apply to Financial Instruments Business Operators (limited to those engaged in Type I Financial Instruments Business or Investment Management Business).
Subsection 3 Major Shareholders
(Submission of a Statement of Holdings in Subject Voting Rights)
Article 32 (1) A person that has become the Major Shareholder (meaning a Major Shareholder as prescribed in Article 29-4, paragraph (2); hereinafter the same applies in this Section) of a Financial Instruments Business Operator (limited to one engaged in Type I Financial Instruments Business or Investment Management Business and excluding foreign corporations; hereinafter the same applies in this Subsection) must submit a statement of holdings in Subject Voting Rights which states the Subject Voting Right holding rate (meaning the rate arrived at when the number of Subject Voting Rights held by the holder of said Subject Voting Rights is divided by the number of all shareholders', etc. voting rights in said Financial Instruments Business Operator), the purpose for which they are held, and other particulars specified by Cabinet Office Ordinance to the Prime Minister, without delay, pursuant to the provisions of Cabinet Office Ordinance.
(2) A document pledging that the relevant person does not fall under the purview of Article 29-4, paragraph (1), item (v), sub-item (d)1. or 2., or sub-item (e)1. to 3. inclusive, and other documents specified by Cabinet Office Ordinance must accompany the statement of holdings in Subject Voting Rights referred to in the preceding paragraph.
(3) If a Major Shareholder other than the Specified Major Shareholder of a Financial Instruments Business Operator becomes the Specified Major Shareholder of said Financial Instruments Business Operator, it must notify the Prime Minister of this without delay, pursuant to the provisions of Cabinet Office Ordinance.
(4) The term "Specified Major Shareholder" as used in the preceding paragraph means a person that holds Subject Voting Rights exceeding 50 percent of all shareholders', etc. voting rights in a company.
(5) The provisions of Article 29-4, paragraph (4) apply mutatis mutandis if the provisions of the preceding paragraph are applicable.
(Order for Measures to Be Taken by a Major Shareholder)
Article 32-2 (1) If the Major Shareholder of a Financial Instruments Business Operator falls under one of the categories in Article 29-4, paragraph (1), item (v), sub-item (d)1. or 2. or sub-item (e)1. to 3. inclusive, the Prime Minister may order said Major Shareholder to take measures so that it will cease to be the Major Shareholder of said Financial Instruments Business Operator or to take any other necessary measures within a fixed period of no longer than three months.
(2) If the Prime Minister finds it to be particularly necessary in the public interest or for the protection of investors in light of state of the business or assets of the Specified Major Shareholder (meaning a Specified Major Shareholder as provided for in paragraph (4) of the preceding Article; the same applies hereinafter) of a Financial Instruments Business Operator (if such a Specified Major Shareholder is a corporation, this includes the state of the assets of a Subsidiary Corporation, etc. of such Specified Major Shareholder (meaning a person falling under the category of a corporation or other organization in which the Specified Major Shareholder holds the majority of all shareholders', etc. voting rights, or that otherwise satisfies the requirements specified by Cabinet Order as a corporation or other organization that is closely related to the Specified Major Shareholder)), the Prime Minister, within the scope of this necessity, may order said Specified Major Shareholder to take measures that are necessary for improving the Financial Instruments Business Operator's business operations or the state of its assets.
(3) If the Specified Major Shareholder of a Financial Instruments Business Operator violates an order under the preceding paragraph, the Prime Minister may order the Specified Major Shareholder to take measures so that it will cease to be the Major Shareholder of said Financial Instruments Business Operator or to take other necessary measures within a fixed period of no longer than three months.
(Notification of Having Ceased to Be a Major Shareholder)
Article 32-3 (1) If the Major Shareholder of a Financial Instruments Business Operator ceases to be the Major Shareholder of said Financial Instruments Business Operator, it must notify the Prime Minister of this without delay.
(2) If the Specified Major Shareholder of a Financial Instruments Business Operator becomes a Major Shareholder other than the Specified Major Shareholder of said Financial Instruments Business Operator, it shall notify the Prime Minister of this without delay, pursuant to the provisions of Cabinet Office Ordinance.
(Mutatis Mutandis Application of Provisions on Major Shareholders)
Article 32-4 The provisions of Article 32, paragraphs (1) and (2), Article 32-2, paragraph (1) and paragraph (1) of the preceding Article apply mutatis mutandis to the shareholders or equity investors of a Holding Company that has a Financial Instruments Business Operator as its Subsidiary Company (meaning a Subsidiary Company as prescribed in Article 29-4, paragraph (3)).
Subsection 4 Registered Financial Institutions
(Prohibition on Engagement in Securities Services by Financial Institutions)
Article 33 (1) It is prohibited for a bank or Cooperative Financial Institution, or for any other financial institution specified by Cabinet Order (hereinafter collectively referred to as a "Financial Institution" in this Article, the following Article and Article 201) to engage in Securities Services or Investment Management Business; provided, however, that with regard to Securities Services, this does not apply if the Financial Institution conducts the sale and purchase of Securities or Transactions of Securities-Related Derivatives for the purpose of investment pursuant to the provisions of other Acts or on the account of a person that entrusts it to do so based on a trust contract.
(2) The provisions of the main clause of the preceding paragraph do not apply if a Financial Institution conducts brokerage with written orders (meaning conducting a purchase and sale of Securities or a Transaction of Securities-Related Derivatives on a customer's account upon receiving written orders from the customer, and excluding transactions conducted based on its solicitation of a customer for such an order and transactions conducted upon the receipt of an order from the customer in connection with the Financial Institution's Investment Advisory Business; the same applies in item (i) of the following Article) or performs the act set forth in the relevant of the following items in connection with the Securities or transactions set forth in that item:
(i) Securities set forth in Article 2, paragraph (1), items (i) and (ii); Securities set forth in Article 2, paragraph (1), item (iii) (limited to those for which the government guarantees the redemption of the principal or the payment of interest, short-term bonds prescribed in Article 54-4, paragraph (1) of the Credit Union Act (Act No. 238 of 1951), and short-term agriculture and forestry bonds prescribed in Article 62-2, paragraph (1) of the Agriculture and Forestry Credit Union Act (Act No. 93 of 2001)); Securities set forth in Article 2, paragraph (1), item (iv); Securities set forth in Article 2, paragraph (1), item (v) (limited to those for which the government guarantees the redemption of the principal or the payment of interest, and short-term corporate bonds prescribed in Article 66, paragraph (1) of the Act on the Transfer of Corporate Bonds, etc. or those specified by Cabinet Order as similar to these); Securities set forth in Article 2, paragraph (1), item (viii); Securities set forth in Article 2, paragraph (1), item (xi) (limited to short-term investment corporation bonds prescribed in Article 139-12, paragraph (1) of the Act on Investment Trusts and Investment Corporations and those specified by Cabinet Order as similar to these; referred to as "Short-Term Investment Corporation Bonds, etc." in the following item); Securities set forth in Article 2, paragraph (1), items (xii) to (xiv) inclusive; Securities set forth in Article 2, paragraph (1), item (xv) (limited to those with a term between the day of issuance and the day of redemption of less than one year); Securities set forth in Article 2, paragraph (1), item (xvi); Securities specified by Cabinet Order among those set forth in Article 2, paragraph (1), item (xvii); Securities set forth in Article 2, paragraph (1), item (xviii); Securities specified by Cabinet Order among those set forth in Article 2, paragraph (1), item (xxi); and rights set forth in the items of Article 2, paragraph (2) that are deemed to be Securities pursuant to the provisions of that paragraph (excluding rights specified by Cabinet Order set forth in item (iv)): acts set forth in Article 2, paragraph (8), items (i) to (iii) inclusive, (vi), (viii), and (ix);
(ii) Securities set forth in Article 2, paragraph (1), items (x) and (xi) (excluding Short-Term Investment Corporation Bonds, etc.): acts set forth in Article 2, paragraph (8), items (i) to (iii) inclusive, and acts set forth in Article 2, paragraph (8), item (ix) (excluding dealings in a Secondary Distribution of Securities and in an exclusive Offer to Sell, etc. to Professional Investors);
(iii) Securities set forth in Article 2, paragraph (1), item (xvii) that have the nature set forth in Article 2, paragraph (1), item (i): the following acts:
(a) Market Transactions of Derivatives, Foreign Market Derivatives Transaction, and acts set forth in Article 2, paragraph (8), item (ii) or (iii) in connection with these transactions;
(b) dealings in a Private Placement; and
(c) acts set forth in Article 2, paragraph (11), items (i) to (iii) inclusive (excluding those set forth in sub-items (a) and (b)) that the Financial Institution is entrusted with by a Financial Instruments Business Operator (limited to those engaged in Type I Financial Instruments Business) and performs for said Financial Instruments Business Operator.
(iv) Securities other than those set forth in the preceding three items, and rights set forth in Article 2, paragraph (2), items (iii) and (iv) that are deemed to be Securities pursuant to the provisions of Article 2, paragraph (2) and that are specified by Cabinet Order: the following acts:
(a) dealings in a Private Placement (excluding those involving Securities specified by Cabinet Order); and
(b) acts set forth in Article 2, paragraph (11), items (i) to (iii) inclusive (excluding those set forth in sub-item (a)) that the Financial Institution is entrusted with by a Financial Instruments Business Operator (limited to those engaged in Type I Financial Instruments Business) and performs for said Financial Instruments Business Operator.
(v) the following transactions: acts set forth in Article 2, paragraph (8), item (iv) (with regard to transactions set forth in sub-item (b), excluding those that fall under the category of cases specified by Cabinet Order as those in which the transaction is conducted with a large number of persons as the other parties thereto):
(a) Over-the-Counter Transactions of Derivatives of Securities set forth in item (i) (including indices calculated by the method agreed upon between the parties based on the prices of two or more Securities connected with the relevant Securities); and
(b) Over-the-Counter Transactions of Derivatives that are connected with the Securities set forth in the preceding three items (including indices calculated by the method agreed between the parties based on prices of two or more Securities pertaining to said Securities), and that can only be settled through the delivery and receipt of the difference in prices.
(vi) the purchase and sale of Securities, Transactions of Securities-Related Derivatives, and other transactions specified by Cabinet Order: Brokerage for Clearing of Securities, etc.
(3) The provisions of Article 29 do not apply if a Financial Institution performs acts other than those set forth in Article 28, paragraph (8), items (iii) to (vi) inclusive (hereinafter referred to as "Transactions of Securities-Related Derivatives, etc.") among the following acts (hereinafter referred to as "Derivatives Transactions, etc.") on a regular basis, performs acts other than those set forth in Article 28, paragraph (8), item (vii) among those specified in Article 2, paragraph (8), item (v) on a regular basis, performs acts set forth in Article 2, paragraph (8), item (vii) on a regular basis, or provides Investment Advisory and Agency Business or Securities, etc. Management:
(i) Market Transactions of Derivatives, etc. (meaning Market Transactions of Derivatives and acts set forth in Article 2, paragraph (8), item (ii) or (iii) in connection with the same);
(ii) Over-the-Counter Transactions of Derivatives, etc.; and
(iii) Foreign Market Derivatives Transaction, etc. (meaning Foreign Market Derivatives Transaction and acts set forth in Article 2, paragraph (8), item (ii) or (iii) in connection with the same).
(Registration of Financial Institutions)
Article 33-2 A Financial Institution must be registered by the Prime Minister if it seeks to perform any of the following acts on a regular basis, or if it seeks to provide Investment Advisory and Agency Business or engage in Securities, etc. Management:
(i) brokerage with written orders;
(ii) an act specified in one of the items of paragraph (2) of the preceding Article in connection with the Securities or transactions set forth in the relevant item (excluding those falling under the proviso to paragraph (1) of that Article);
(iii) Derivatives Transactions, etc. other than Transactions of Securities-Related Derivatives, etc. (excluding those conducted for the purpose of investment pursuant to the provisions of other Acts or on the account of a person that entrusts the Financial Institution to do so based on a trust contract and Commodity-Related Market Transactions of Derivatives)), or acts other than those set forth in Article 28, paragraph (8), item (vii) among those specified in Article 2, paragraph (8), item (v); or
(iv) acts set forth in Article 2, paragraph (8), item (vii).
(Application for the Registration of a Financial Institution)
Article 33-3 (1) A person seeking the registration referred to in the preceding Article must submit a written application for registration to the Prime Minister, in which it states the following particulars:
(i) its trade name or name;
(ii) the amount of stated capital, the total amount of funds, or the total amount of contributions;
(iii) the names of its officers;
(iv) the names of its accounting advisors, if it is a company with accounting advisors;
(v) if the person provides an Electronic Public Offering Service with regard to Securities set forth in the items of Article 3 or Securities not listed on a Financial Instruments Exchange (excluding those specified by Cabinet Order as prescribed in Article 29-2, paragraph (1), item (vi)), an indication of this;
(vi) the names and locations of its head office and other business offices or offices;
(vii) if the person engages in other business, the business type; and
(viii) other particulars specified by Cabinet Office Ordinance.
(2) The following documents must accompany the written application for registration referred to in the preceding paragraph:
(i) a document pledging that the applicant does not fall under Article 33-5, paragraph (1), items (i) and (ii);
(ii) a document stating the person's way of managing the risk of loss, the way that duties are divided, and the other things specified by Cabinet Office Ordinance as constituting the business outline and business methods;
(iii) a document stating the things specified by Cabinet Office Ordinance as constituting the person's status as a Parent Corporation, etc., Subsidiary Corporation, etc., or other affiliated company; and
(iv) its articles of incorporation, certificate of registered information, balance sheet, profit and loss statement, and other documents specified by Cabinet Office Ordinance, other than those that are set forth in the preceding three items.
(3) As concerns the documents set forth in item (iv) of the preceding paragraph accompanying a written application for registration, if the articles of incorporation or balance sheet have been prepared as electronic or magnetic records or if electronic or magnetic records have been prepared for a profit and loss statement in lieu of a written document, such electronic or magnetic records (limited to those specified by Cabinet Office Ordinance) may accompany the written application for registration in lieu of the written documents.
(Registration in a Financial Institutions Register)
Article 33-4 (1) Whenever an application is filed for the registration referred to in Article 33-2, unless the Prime Minister refuses the registration pursuant to the provisions of paragraph (1) of the following Article, the Prime Minister shall register the following particulars in a financial institutions register:
(i) the particulars set forth in the items of paragraph (1) of the preceding Article; and
(ii) the date of registration and the registration number.
(2) The Prime Minister must make the financial institutions register available for public inspection.
(Refusal etc. to Register a Financial Institution)
Article 33-5 (1) The Prime Minister must refuse to effect a registration if the applicant for registration falls under one of the following items (with regard to item (iii), this excludes if the applicant seeks to conduct only Investment Advisory and Agency Business), or if the written application for registration or a document or electronic or magnetic record that is required to accompany it contains a false statement or record or omits a statement or record of a material fact:
(i) a person that has had the registration referred to in Article 33-2 rescinded pursuant to the provisions of Article 52-2, paragraph (1); that has had the registration referred to in Article 66 rescinded pursuant to the provisions of Article 66-20, paragraph (1); or that has had the registration referred to in Article 66-27 rescinded pursuant to Article 66-42, paragraph (1); if five years have not yet passed since the date of that rescission; or a person that had obtained a registration of the same kind in a foreign state pursuant to the provisions of a foreign law or regulation that is equivalent to this Act (including permission or any other administrative disposition similar to such a registration), but that has had that registration rescinded, if five years have not yet passed since the date of the rescission;
(ii) a person that has been sentenced to a fine (including an equivalent sentence under foreign laws and regulations) for violating the provisions of this Act; the Secured Bonds Trust Act; the Act on Engagement in Trust Business by a Financial Institution; the Commodity Futures Act; the Act on Investment Trusts and Investment Corporations; the Real Estate Brokerage Act; the Act Regulating the Receipt of Contributions, the Receipt of Deposits, and Interest Rates; the Installment Sales Act; the Money Lending Business Act; the Act on the Deposit, etc. Transaction Agreements of Specified Commodities, etc.; the Act Regulating Business Involving Commodity Investment; the Specified Joint Real Estate Ventures Act; the Act on the Securitization of Assets; the Act on Corporate Bond Issuance for Financial Corporations' Loan Business; the Trust Business Act; or any other Act specified by Cabinet Order, or for violating the provisions of a foreign law or regulation that is equivalent to one of these Acts, if five years have not yet passed since the day on which the person finished serving the sentence or ceased to be subject to its enforcement;
(iii) a person that does not have a sufficient personnel structure to perform the services of a registered financial institution (meaning business in connection with the registration set forth in Article 33-2; the same applies hereinafter) in an appropriate manner;
(iv) a person that has not joined an Association and that has not prepared internal rules (meaning rules with which said person or its officers or employees should comply) that have contents equivalent to the articles of incorporation or other rules (limited to those for ensuring fair and smooth purchase and sales and other transactions of Securities or ensuring fair and smooth Derivatives Transactions, etc. or for protecting investors) of the Association or that has not established a system for complying with said internal rules;
(v) a person that is found not to have in place the necessary system for performing Services of a Registered Financial Institution in an appropriate manner.
(2) If the Prime Minister registers that a bank or Cooperative Financial Institution, or any other financial institution specified by Cabinet Order, performs the act specified in Article 33, paragraph (2), item (v) in connection with transactions set forth in that item on a regular basis, the Prime Minister must add the conditions specified by Cabinet Office Ordinance within the necessary scope for ensuring fair transactions in connection with share certificates.
(Notification of a Change)
Article 33-6 (1) If the particulars set forth in one of the items of Article 33-3, paragraph (1) changes, the registered financial institution must notify the Prime Minister of this within two weeks from the day of the change.
(2) Upon accepting a notification under the preceding paragraph, the Prime Minister shall register the particulars given in the notification in a financial institutions register.
(3) If the business outline or business methods that a registered financial institution has stated in the documents set forth in Article 33-3, paragraph (2), item (ii) change, the registered financial institution must notify the Prime Minister of this without delay pursuant to the provisions of Cabinet Office Ordinance.
(Provisions on Interpretation)
Article 33-7 The provisions of Article 33 do not preclude the Prime Minister from granting the registration referred to in Article 29 or the authorization referred to in Article 30, paragraph (1) to a person in which a bank or Cooperative Financial Institution, or any other financial institution specified by Cabinet Order, holds the majority of all shareholders', etc. voting rights
(Special Provisions, etc. for When Trust Business Is Engaged In)
Article 33-8 (1) With regard to the application of the provisions of Article 33, paragraphs (1) and (2); Article 33-2; and Article 52-2, paragraph (1), item (iv) if a bank or Cooperative Financial Institution, or any other financial institution specified by Cabinet Order, is a financial institution that has obtained the authorization referred to in Article 1, paragraph (1) of the Act on Engagement in Trust Business by a Financial Institution, in Article 33, paragraph (1), the phrase "Securities Services or Investment Management Business" is deemed to be replaced with "Securities Services"; in Article 33, paragraph (2), the term "excluding transactions conducted based on its solicitation of a customer for such an order and transactions conducted upon the receipt of an order from the customer in connection with the Financial Institution's Investment Advisory Business" is deemed to be replaced with "excluding transactions conducted based on its solicitation of a customer for such an order"; in Article 33-2, the term "Investment Advisory and Agency Business or Securities, etc. Management" is deemed to be replaced with "Investment Advisory and Agency Business, Investment Management Business (excluding the business of performing the acts set forth in Article 2, paragraph (8), item (xiv) or (xv) (limited to acts performed with the money under these provisions or other properties held as trust property); hereinafter the same applies in this Chapter), or Securities, etc. Management"; and in Article 52-2, paragraph (1), item (iv), the term "Investment Advisory and Agency Business" is deemed to be replaced with "Investment Advisory and Agency Business or Investment Management Business".
(2) The provisions of Article 29 do not apply if a person set forth in one of the following items acts as the agent for a registered financial institution in providing the services prescribed in the relevant item (hereinafter referred to as "Specified Financial Instruments Business" in this Article) pursuant to the provisions of Cabinet Order. In this case, the person that provides Specified Financial Instruments Business is deemed to be an employee of the registered financial institution that the person acts as the agent for, and the provisions of this Act apply:
(i) a person that acts as the agent for a registered financial institution and that is specified by Cabinet Order: the business of performing acts specified in Article 33, paragraph (2), item (ii) with regard to Securities set forth in that item;
(ii) a person that acts as agent for a registered financial institution and that is set forth in the following: among transactions set forth in Article 2, paragraph (22), item (ii) that are connected with the Financial Indicators set forth in Article 2, paragraph (25), item (ii), the business of performing acts in which the registered financial institution promises to receive money from the other party to a transaction and to pay the other party the amount of money calculated based on the difference between the Agreed Figure and the Actual Figure (but only if said other party has no risk of incurring a loss exceeding the amount of money the other party has paid in advance due to the fluctuation of a Financial Indicator set forth in Article 2, paragraph (25), item (ii));
(a) a Non-life Insurance Agent (meaning a Non-life Insurance Agent as prescribed in Article 2, paragraph (21) of the Insurance Business Act; hereinafter the same applies in this item) that is an individual;
(b) the employee of an individual Non-life Insurance Agent, for which the notification under the provisions of Article 302 of the Insurance Business Act has been made;
(c) the officer or employee of a corporate Non-life Insurance Agent, for which a notification under the provisions of Article 302 of the Insurance Business Act has been made; and
(d) an officer that holds the authority of representation for a corporate Non-life Insurance Agent.
(3) A registered financial institution for which a person that provides Specified Financial Instruments Business acts as an agent is liable for the damages that the person causes to a customer in connection with Specified Financial Instruments Transaction Services; provided, however, that this does not apply if the registered financial institution exercises due care in appointing the person, and endeavors to prevent the damage that the person causes to a customer in connection with the Specified Financial Instruments Business that the person performs.
Subsection 5 Professional Investors
(Obligation to Notify Professional Investors)
Article 34 If a Financial Instruments Business Operator, etc. (meaning a Financial Instruments Business Operator or registered financial institution; the same applies hereinafter) receives an offer from a Professional Investor (limited to one set forth in Article 2, paragraph (31), item (iv)) for a contract for the Financial Instruments Business Operator, etc. to perform an act that constitutes a Financial Instruments transaction (meaning an act as set forth in the items of Article 2, paragraph (8); the same applies hereinafter) with the customer as the other party or on behalf of the customer (hereinafter such contract is referred to as a "Financial Instruments Transaction Contract"), and has never in the past concluded a Financial Instruments Transaction Contract with that Professional Investor of a type specified by Cabinet Office Ordinance as constituting the same contract type as the Financial Instruments Transaction Contract to which the offer pertains (hereinafter referred to as a "Contract Type" in this Subsection), the Financial Instruments Business Operator, etc., before concluding the Financial Instruments Transaction Contract to which the offer pertains, must notify that Professional Investor that the Professional Investor may make a request under the provisions of paragraph (1) of the following Article.
(Cases in Which a Professional Investor Is Deemed to Be a Customer Other Than a Professional Investor)
Article 34-2 (1) For each Contract Type, a Professional Investor (limited to one as set forth in Article 2, paragraph (31), item (iv)) may request a Financial Instruments Business Operator, etc. to treat the Professional Investor as a customer other than a Professional Investor with regard to Financial Instruments Transaction Contracts that are of the same Contract Type.
(2) Upon receiving a request under the provisions of the preceding paragraph, a Financial Instruments Business Operator, etc. must approve that request by the time it solicits the conclusion of the first Financial Instruments Transaction Contract thereafter that is of the same Contract Type as that to which the request pertains (hereinafter referred to as a "Subject Contract" in this Article) or by the time it concludes such a contract.
(3) Before a Financial Instruments Business Operator, etc. approves a request pursuant to the provisions of the preceding paragraph, it shall deliver a document stating the following particulars to the Professional Investor that submitted the request under paragraph (1) (hereinafter referred to as a "Applicant" in this Article):
(i) the day on which the request is approved pursuant to the provisions of the preceding paragraph (hereinafter referred to as the "Approval Date" in this Article);
(ii) the Contract Type to which the Subject Contract belongs;
(iii) an indication that it will treat the Applicant as a customer other than a Professional Investor if it solicits the Applicant to conclude a Subject Contract or concludes a Subject Contract with the Applicant on or after the Approval Date; and
(iv) other particulars specified by Cabinet Office Ordinance.
(4) With the consent of the Applicant and pursuant to the provisions of Cabinet Order, in lieu of delivering the document under the provisions of the preceding paragraph, a Financial Instruments Business Operator, etc. may provide the Applicant with the particulars that are required to be stated in that document by means of an electronic data processing system or by any other means of information and communications technology specified by Cabinet Office Ordinance. In doing this, the Financial Instruments Business Operator, etc. is deemed to have delivered the document.
(5) With regard to the application of the provisions of this Act (excluding Article 29-5, paragraph (3) and this Subsection) if a Financial Instruments Business Operator, etc. gives the approval under the provisions of paragraph (2) or delivers the document under the provisions of paragraph (3), and the Applicant is a person set forth in one of the following items, the Applicant is deemed to be a customer other than a Professional Investor:
(i) the other party to the Financial Instruments Business Operator's, etc. solicitation to conclude a Subject Contract on or after the Approval Date; or
(ii) the other party with which the Financial Instruments Business Operator, etc. concludes a Subject Contract on or after the Approval Date.
(6) If the preceding paragraph applies to an Applicant with regard to the conclusion of a Subject Contract (limited to one that entails the Financial Instruments Business Operator, etc. acting as an agent as provided in Article 2, paragraph (8), items (ii) to (iv) inclusive, (x) and (xiii); hereinafter referred to as a "Specified Subject Contract" in this paragraph and paragraph (8)), before the Financial Instruments Business Operator, etc. concludes a Financial Instruments Transaction Contract on behalf of the Applicant based on the Specified Subject Contract, the Financial Instruments Business Operator, etc. must notify the other Financial Instruments Business Operator, etc. with which the Financial Instruments Transaction Contract is to be concluded (hereinafter referred to as the "Counterparty Financial Instruments Business Operator, etc." in the following paragraph and paragraph (8)) that the Applicant is deemed to be a customer other than a Professional Investor in connection with the Financial Instruments Transaction Contract.
(7) If a Financial Instruments Business Operator, etc. gives a notification under the preceding paragraph, the provisions of the preceding Article do not apply to the Counterparty Financial Instruments Business Operator, etc.
(8) If a Financial Instruments Business Operator, etc. that has concluded a Specified Subject Contract gives a notification under the provisions of paragraph (6), the Applicant is deemed to be a customer other than a Professional Investor with regard to any Financial Instruments Transaction Contract that the Financial Instruments Business Operator, etc. concludes with the Counterparty Financial Instruments Business Operator, etc. on behalf of the Applicant based on the Specified Subject Contract, and the provisions of this Act (excluding Article 29-5, paragraph (3) and this Subsection) apply.
(9) If an Applicant newly becomes a Qualified Institutional Investor on or after the Approval Date, the provisions of paragraphs (5) to (9) inclusive do not apply to the Applicant on or after the day on which the Applicant becomes a Qualified Institutional Investor.
(10) An Applicant may request a Financial Instruments Business Operator, etc. to treat the Applicantas a Professional Investor again with regard to Subject Contracts, at any time on or after the Approval Date;
(11) Before approving a request under the preceding paragraph, a Financial Instruments Business Operator, etc. must obtain the written consent of the person making that request (such person is referred to as the "Person Requesting Reinstatement" in the following paragraph), on a document that states the day on which the request has the approval under this paragraph and any other particulars specified by Cabinet Office Ordinance.
(12) With the agreement of the Person Requesting Reinstatement and pursuant to the provisions of Cabinet Order, in lieu of obtaining the written consent under the preceding paragraph, a Financial Instruments Business Operator, etc. may obtain written consent by means of an electronic data processing system or any other means of information and communications technology that is specified by Cabinet Office Ordinance. In doing this, the Financial Instruments Business Operator, etc. is deemed to have obtained written consent.
(13) If a Financial Instruments Business Operator, etc. gives the approval under paragraph (11), the provisions of paragraphs (5), (6), and (8) do not apply during the period from the day on which it gives the approval under paragraph (11) until the day immediately preceding the day on which it gives the new approval pursuant to paragraph (2).
(When a Customer Other than a Professional Investor Is a Corporation and That Corporation Is Deemed to Be a Professional Investor)
Article 34-3 (1) For each Contract Type, a corporation (excluding a Professional Investor) may request a Financial Instruments Business Operator, etc. to treat it as a Professional Investor with regard to Financial Instruments Transaction Contracts that are of the same Contract Type.
(2) Before approving a request under the preceding paragraph, a Financial Instruments Business Operator, etc. must obtain the written consent of the corporation making the request (hereinafter referred to as the "Applicant" in this Article), on a document that states the following particulars. In this, it shall make the End Date provided for in item (ii) the day on which one year elapses counting from the Approval Date provided for in item (i) (or, in a case specified by Cabinet Office Ordinance, a day before that one year elapses, which is specified by Cabinet Office Ordinance):
(i) the day on which it gives the approval under this paragraph (hereinafter referred to as the "Approval Date" in this Article);
(ii) the last day of the period during which it will treat the Applicant as a Professional Investor in soliciting the Applicant to conclude a Financial Instruments Transaction Contract that is of the same Contract Type as the one to which the request pertains (hereinafter such a contract is referred to as a "Subject Contract" in this Article; hereinafter such day is referred to as the "End Date" in this Article) or in concluding a Subject Contract with said Applicant before the End Date;
(iii) the Contract Type to which the Subject Contract belongs;
(iv) an indication that the Applicant understands the following particulars:
(a) particulars specified by Cabinet Office Ordinance as special provisions for the application of this Act if a Professional Investor is solicited to conclude a Subject Contract by a Financial Instruments Business Operator, etc., if a Professional Investor offers a Subject Contract to the Financial Instruments Business Operator, etc., or concludes a Subject Contract with the Financial Instruments Business Operator, etc.; and
(b) an indication of the risk of insufficient protection involved, if a person that it is inappropriate to treat as a Professional Investor in connection with the Subject Contracts, in light of its knowledge, experience, and the state of its assets, will be treated as a Professional Investor.
(v) an indication that it will treat the Applicant as a Professional Investor in soliciting the Applicant to conclude a Subject Contract before the End Date or in concluding a Subject Contract with the Applicant before the End Date;
(vi) an indication that it will treat the Applicant as a customer other than a Professional Investor in soliciting the Applicant to conclude a Subject Contract after the End Date or in concluding a Subject Contract with the Applicant after the End Date; and
(vii) other particulars specified by Cabinet Office Ordinance.
(3) The provisions of paragraph (12) of the preceding Article apply mutatis mutandis to the written consent under the preceding paragraph.
(4) With regard to the application of the provisions of this Act (excluding Article 29-5, paragraph (3) and this Subsection) if a Financial Instruments Business Operator, etc. gives the approval under paragraph (2), the Applicant gives the written consent under that paragraph, and the Applicant is a person set forth in one of the following items, the Applicant is deemed to be a Professional Investor:
(i) a person that the Financial Instruments Business Operator, etc. solicits to conclude a Subject Contract during the period from the Approval Date to the End Date; or
(ii) a person with which the Financial Instruments Business Operator, etc. concludes a Subject Contract during the period from the Approval Date to the End Date.
(5) If the preceding paragraph applies to an Applicant in connection with the conclusion of a Subject Contract (limited to one that entails the Financial Instruments Business Operator, etc. acting as an agent as provided in Article 2, paragraph (8), items (ii) to (iv) inclusive, (x) and (xiii); hereinafter referred to as a "Specified Subject Contract" in this and the following paragraphs), and the Financial Instruments Business Operator, etc., acting as the Applicant's agent based on that Specified Subject Contract, concludes a Financial Instruments Transaction Contract before the Approval Date, it must notify the Counterparty Financial Instruments Business Operator, etc. with which the Financial Instruments Transaction Contract is to be concluded (referred to as the "Counterparty Financial Instruments Business Operator, etc." in the following paragraph) in advance, that the Applicant is deemed to be a Professional Investor with regard to the Financial Instruments Transaction Contract.
(6) If a Financial Instruments Business Operator, etc. that has concluded a Specified Subject Contract gives a notification under the preceding paragraph, the Applicant is deemed to be a Professional Investor with regard to a Financial Instruments Transaction Contract that the Financial Instruments Business Operator, etc. concludes with the Counterparty Financial Instruments Business Operator, etc. while acting as the agent of the Applicant pursuant to the Specified Subject Contract (limited to a Financial Instruments Transaction Contract concluded before the End Date), and the provisions of this Act (excluding Article 29-5, paragraph (3) and this Subsection) apply.
(7) If the Applicant makes a request under paragraph (1) before the End Date for the same Contract Type as the Subject Contracts (such a request is referred to as the "Request for Renewal" in the following paragraph), the Applicant must do so on or after the day on which the period specified by Cabinet Office Ordinance elapses counting from the Approval Date.
(8) With regard to the application of the provisions of paragraph (2) and the preceding paragraph if an Applicant makes a Request for Renewal, in paragraph (2), the phrase "Approval Date prescribed in item (i)" is deemed to be replaced with "day following the previous End Date" and in the preceding paragraph, the term "Approval Date" is deemed to be replaced with "day following the previous End Date".
(9) An Applicant may request a Financial Instruments Business Operator, etc. to treat it as a customer other than a Professional Investor again with regard to Subject Contracts, at any time on or after the Approval Date.
(10) After receiving a request under the provisions of the preceding paragraph, a Financial Instruments Business Operator, etc. must approve said request by the time it solicits the conclusion of the first Subject Contract thereafter or by the time it first concludes such a contract thereafter.
(11) Before approving a request pursuant to the provisions of the preceding paragraph, a Financial Instruments Business Operator, etc. must deliver a document stating the day on which it gives the approval under the preceding paragraph and any other particulars specified by Cabinet Office Ordinance to the corporation that submitted the request under paragraph (9).
(12) The provisions of paragraph (4) of the preceding Article apply mutatis mutandis to the delivery of documents under the preceding paragraph.
(13) If a Financial Instruments Business Operator, etc. gives the approval under paragraph (10), the provisions of paragraphs (4) to (9) inclusive do not apply for the period from the day of approval under paragraph (10) to the day immediately preceding the day on which it newly gives approval under paragraph (2).
(When a Customer Other Than a Professional Investor Is an Individual and That Individual Is Deemed to Be a Professional Investor)
Article 34-4 (1) For each Contract Type, an individual set forth in the following (excluding Qualified Institutional Investors) may request a Financial Instruments Business Operator, etc. to treat that individual as a Professional Investor with regard to Financial Instruments Transaction Contracts that are of the same Contract Type:
(i) an individual that is the proprietor of a business and that has concluded an silent partnership agreement as prescribed in Article 535 of the Commercial Code (excluding those specified by Cabinet Office Ordinance), or any other individual specified by Cabinet Office Ordinance as being similar thereto; and
(ii) an individual other than one set forth in the preceding item, which satisfies the requirements specified by Cabinet Office Ordinance as a person equivalent to a Professional Investor, in light of such individual's knowledge and experience and the state of that individual's assets.
(2) If a Financial Instruments Business Operator, etc. receives a request under the preceding paragraph, it must deliver a document stating the particulars set forth in paragraph (2), item (iv), sub-items (a) and (b) of the preceding Article to the individual that submitted the request (hereinafter referred to as a "Applicant" in this Article), and must confirm that the Applicant falls under one of the categories of persons set forth in the items of the preceding paragraph.
(3) The provisions of Article 34-2, paragraph (4) apply mutatis mutandis to the delivery of a document under the preceding paragraph.
(4) An Applicant may request a Financial Instruments Business Operator, etc. to treat it as a customer other than a Professional Investor again with regard to Financial Instruments Transaction Contracts that are of the same Contract Type as the one to which the request under paragraph (1) pertains, at any time on or after the day on which the Financial Instruments Business Operator, etc. gives the approval under paragraph (2) of the preceding Article as applied mutatis mutandis pursuant to paragraph (6).
(5) After receiving a request under the provisions of the preceding paragraph, a Financial Instruments Business Operator, etc. must approve said request by the time it solicits the conclusion of the first Financial Instruments Transaction Contract thereafter that is of the Contract Type to which the request pertains, or by the time it concludes the first such contract thereafter.
(6) The provisions of paragraphs (2) to (8) inclusive of the preceding Article apply mutatis mutandis if a Financial Instruments Business Operator, etc. approves a request under paragraph (1), and the provisions of paragraphs (11) to (13) inclusive of that Article apply mutatis mutandis if a Financial Instruments Business Operator, etc. approves a request under paragraph (4). In this case, in Article 34-3, paragraph (2), the phrase "the corporation making the request" is deemed to be replaced with "the Applicant under paragraph (2) of the following Article"; in Article 34-3, paragraph (4), the phrase "the approval under paragraph (2)" is deemed to be replaced with "the delivery of a document and the confirmation under paragraph (2) of the following Article and the approval under paragraph (2)"; in Article 34-3, paragraph (7), the term "paragraph (1)" is deemed to be replaced with "paragraph (1) of the following Article"; in Article 34-3, paragraph (11), the phrase "the preceding paragraph" is deemed to be replaced with "paragraph (5) of the following Article" and the phrase "the corporation that submitted the request under paragraph (9)" is deemed to be replaced with "the individual that submitted the request under paragraph (4) of that Article"; in Article 34-3, paragraph (13), the term "paragraph (10)" is deemed to be replaced with "paragraph (5) of the following Article", the phrase "gives approval under paragraph (2)" is deemed to be replaced with "delivers the documents and makes the confirmation under the provisions of paragraph (2) of that Article, as well as giving approval under paragraph (2)", and the term "(9) inclusive" is deemed to be replaced with "(8) inclusive and paragraph (4) of the following Article"; and any other necessary technical replacement of terms is specified by Cabinet Order.
(Delegation to Cabinet Order)
Article 34-5 Beyond what is provided for in this Subsection, procedures for if a Professional Investor is deemed to be a customer other than a Professional Investor or if a customer other than a Professional Investor is deemed to be a Professional Investor and necessary particulars otherwise relevant to the application of the provisions of this Subsection are specified by Cabinet Order.
Section 2 Services
Subsection 1 General Rules
(Scope of Services for Persons Engaged in Type I Financial Instruments Business or Investment Management Business)
Article 35 (1) A Financial Instruments Business Operator (limited to one engaged in Type I Financial Instruments Business or Investment Management Business; hereinafter the same applies in this Article), in addition to the Financial Instruments Business, may perform the following acts on a regular basis and provide any other services incidental to the Financial Instruments Business:
(i) the lending and borrowing of Securities, or intermediation or agency for the same;
(ii) money lending incidental to margin transactions prescribed in Article 156-24, paragraph (1);
(iii) money lending secured by Securities that are deposited for safe custody by customers (limited to those specified by Cabinet Office Ordinance);
(iv) the provision of agency for customers in connection with Securities;
(v) the provision of agency for services by the settlor company of an investment trust defined in Article 2, paragraph (11) of the Act on Investment Trusts and Investment Corporations, which involve the payment of earnings, redemption moneys, or cancellation moneys in connection with Securities set forth in Article 2, paragraph (1), item (x), or for services by such a settler company which involve the delivery of Securities or any other assets that are among trust property in connection with the relevant Securities;
(vi) the provision of agency for services by an investment corporation as defined in Article 2, paragraph (12) of the Act on Investment Trusts and Investment Corporations, which involve the distribution of money, the distribution of refunds or residual assets, or the payment of interest or redemption moneys in connection with Securities set forth in Article 2, paragraph (1), item (xi) conducted;
(vii) the conclusion of a contract for cumulative investment (meaning a contract in which a Financial Instruments Business Operator (limited to one that engages in Securities, etc. Management) receives money deposited by a customer and sells Securities to that customer continuously on dates designated in advance while receiving consideration from that money) (limited to contracts specified by Cabinet Office Ordinance);
(viii) the provision of information or advice in relation to Securities (excluding acts falling under Article 2, paragraph (8), item (xi));
(ix) the provision of agency for services by a Counterparty Financial Instruments Business Operator, etc. (limited to agency involving the Financial Instruments Business (including services of a registered financial institution conducted by a registered financial institution) and any other services incidental to the Financial Instruments Business (excluding services prescribed in this item), which the relevant Financial Instruments Business Operator, etc. may conduct, and excluding those specified in item (v) above);
(x) the retention of the assets of a registered investment corporation as defined in Article 2, paragraph (13) of the Act on Investment Trusts and Investment Corporations;
(xi) the provision of consultation to any other person or firm in business with regard to a business transfer, merger, company split, share exchange, or share transfer, or intermediation in connection with the same;
(xii) the provision of consultation to any other person or firm in business with regard to management;
(xiii) the purchase and sale of currencies and other assets specified by Cabinet Order as being related to Derivatives Transactions (excluding Transactions of Securities-Related Derivatives) or intermediation, brokerage, or agency for the same;
(xiv) the purchase and sale of negotiable deposits and other monetary claims (excluding those that fall under the category of Securities), or intermediation, brokerage, or agency for the same; and
(xv) investment of invested assets (meaning money and other property invested by a Financial Instruments Business Operator, etc. that engages in Investment Management Business on behalf of a rights holder as provided for in Article 42, paragraph (1), as investments in the following assets; the same applies hereinafter):
(a) specified assets defined in Article 2, paragraph (1) of the Act on Investment Trusts and Investment Corporations (excluding real estate and other assets specified by Cabinet Order); and
(b) assets specified by Cabinet Order other than those set forth in sub-item (a).
(2) A Financial Instruments Business Operator, in addition to the Financial Instruments Business and other services provided pursuant to the provisions of the preceding paragraph, may provide the following services:
(i) services connected with transactions on a commodity market, etc. defined in Article 2, paragraph (21) of the Commodity Futures Act;
(ii) services connected with transactions conducted by using fluctuations in Commodity prices and other indicators, market gaps, etc. as specified by Cabinet Office Ordinance (other than services already specified in the preceding item);
(iii) services connected with the money lending business as defined in Article 2, paragraph (1) of the Money Lending Business Act or other money loans, or intermediation for the lending and borrowing of money;
(iv) services connected with real estate brokerage as defined in Article 2, item (ii) of the Real Estate Brokerage Act or with the lease of real estate prescribed in item (i) of that Article;
(v) specified joint real estate ventures as defined in Article 2, paragraph (4) of the Specified Joint Real Estate Ventures Act;
(v)-2 services for investing money or other assets on behalf of another person, by means of commodity investment defined by Article 2, paragraph (1) of the Act Regulating Business Involving Commodity Investment, or through the acquisition (including production), transfer, or use of goods with substantial price volatility or goods specified by Cabinet Order as goods that make it difficult to estimate the profit generated from their use (excluding the designated items prescribed in item (iii) of that paragraph) or by means of having such goods used (excluding services that fall under the category of service set forth in items (i) and (ii));
(vi) services for investing invested assets (excluding services that fall under the category of services that entails performing the acts specified in item (xv) of the preceding paragraph, and also excluding services that fall under the category of services specified in items (i), (ii), and the preceding item) as an investment in assets other than Securities or rights arising from Derivatives Transactions; and
(vii) other services specified by Cabinet Office Ordinance.
(3) If a Financial Instruments Business Operator comes to engage in any of the services set forth in the items of the preceding paragraph, it must notify the Prime Minister of this without delay pursuant to the provisions of Cabinet Office Ordinance.
(4) A Financial Instruments Business Operator, in addition to the Financial Instruments Business and the services provided pursuant to paragraph (1) and paragraph (2), may perform services for which it has obtained the approval of the Prime Minister.
(5) When an application is filed for the approval referred to in the preceding paragraph, the Prime Minister may only choose not to grant approval if it is found that the provision of the services under the application would be contrary to the public interest or if it is found that they would compromise the protection of investors due to the difficulty in managing the risk of loss in connection with the services.
(6) If a Financial Instruments Business Operator discontinues services of which it has given notice pursuant to paragraph (3) or services for which it has obtained approval pursuant to paragraph (4), it must notify the Prime Minister of this without delay.
(7) If a Financial Instruments Business Operator engages in services set forth in the items of paragraph (1) or items of paragraph (2) or engages in services for which it has received the approval referred to in paragraph (4), the provisions of paragraph (1), paragraph (2), and paragraph (4) must not be construed to preclude the application of Acts concerning these services.
(Scope of Concurrent Business by Persons Who Only Engage in Type II Financial Instruments Business or Investment Advisory and Agency Business)
Article 35-2 (1) A Financial Instruments Business Operator (limited to one that only engages in Type II Financial Instruments Business or Investment Advisory and Agency Business; the same applies in the following paragraph), in addition to doing Financial Instruments Business (limited to Type II Financial Instruments Business or Investment Advisory and Agency Business), may also do other business, concurrently.
(2) If a Financial Instruments Business Operator does any other business concurrently as prescribed in the preceding paragraph, the provisions of that paragraph must not be construed to preclude the application of Acts concerning that business.
(Establishment of an Operational Control System)
Article 35-3 A Financial Instruments Business Operator, etc. must establish an operational control system for the fair and appropriate performance of its Financial Instruments Business or Services of a Registered Financial Institution, pursuant to the provisions of Cabinet Office Ordinance.
(Duty of Sincerity to Customers)
Article 36 (1) A Financial Instruments Business Operator, etc. as well as its officers and employees must be sincere and fair to customers in the performance of its services.
(2) A Specified Financial Instruments Business Operator, etc., pursuant to the provisions of Cabinet Office Ordinance, must appropriately manage information connected with Financial Instruments services (meaning services entailing acts that constitute Financial Instruments transactions and any other services specified by Cabinet Office Ordinance), and must establish a system for properly supervising the implementation status of Financial Instruments services and take any other measures as are necessary, in line with the transactions that the Specified Financial Instruments Business Operator, etc. or its Parent Financial Institution, etc. or Subsidiary Financial Institution, etc. conducts, so that the interests of the customers of the Financial Instruments services that the Specified Financial Instruments Business Operator, etc. or its Subsidiary Financial Institution, etc. provides are not unjustly prejudiced.
(3) The term "Specified Financial Instruments Business Operator, etc." as used in this Article means a Financial Instruments Business Operator, etc. that conducts Securities Services (limited to a person registered as referred to in Article 29 to engage in Type I Financial Instruments Business), or that is specified by Cabinet Order.
(4) The term "Parent Financial Institution, etc." as used in paragraph (2) means a Financial Instruments Business Operator, a bank, a Cooperative Financial Institution, or any other person engaged in finance that is specified by Cabinet Order, which Cabinet Order specifies as being a person that holds the majority of all shareholders', etc. voting rights in a Specified Financial Instruments Business Operator, etc. or as being otherwise closely related to the relevant Specified Financial Instruments Business Operator.
(5) The term "Subsidiary Financial Institution, etc." as used in paragraph (2) means a Financial Instruments Business Operator, a bank, a Cooperative Financial Institution, or any other person engaged in finance that is specified by Cabinet Order, which Cabinet Order specifies as being a person in which a Specified Financial Instruments Business Operator, etc. holds the majority of all shareholders', etc. voting rights or as being otherwise closely related to the relevant Specified Financial Instruments Business Operator, etc.
(Posting of Signs)
Article 36-2 (1) A Financial Instruments Business Operator, etc. must post a sign in the format specified by Cabinet Office Ordinance in a place that is accessible to the public at each of its business offices or other offices.
(2) A person other than a Financial Instruments Business Operator, etc. (limited to Financial Instruments Intermediary Service Provider, or any other person who is allowed to engage in Financial Instruments Business under the provisions of laws and regulations) must not post the sign referred to in the preceding paragraph or a sign similar thereto.
(Prohibition on Name Lending)
Article 36-3 A Financial Instruments Business Operator, etc. must not allow another person to engage in Financial Instruments Business (or, if it is a registered financial institution, to engage in the services of a registered financial institution; hereinafter the same applies in this Subsection) using the name of said Financial Instruments Business Operator, etc.
(Prohibition on Corporate Bond Management)
Article 36-4 (1) A Financial Instruments Business Operator (limited to one that engages in Securities Services; the same applies in the following paragraph) may not become a bond manager as provided for in Article 7,paragraph (1),02 of the Companies Act, nor may it become the trustee company under a trust contract provided for in Article 2, paragraph (1) of the Secured Bonds Trust Act.
(2) Notwithstanding the provisions of other Acts, a Financial Instruments Business Operator may become an Underwriter.
(Regulation of Advertising)
Article 37 (1) When advertising the contents of its Financial Instruments Business or performing any similar act specified by Cabinet Office Ordinance, a Financial Instruments Business Operator, etc. must give the following particulars, pursuant to the provisions of Cabinet Office Ordinance:
(i) the trade name or name of the Financial Instruments Business Operator, etc.;
(ii) an indication that it is a Financial Instruments Business Operator, etc., and its registration number; and
(iii) the particulars of the contents of the Financial Instruments Business that the Financial Instruments Business Operator, etc. engages in, which is specified by Cabinet Order as material particulars that may have an impact on customers' judgment.
(2) When advertising the contents of its Financial Instruments Business or engaging in any similar act specified by Cabinet Office Ordinance, a Financial Instruments Business Operator, etc. must not make a representation that significantly conflicts with the fact of the matter or that could cause a person to have a serious misconception about the prospect of profiting from the performance of an act that constitutes a Financial Instruments transaction, or about any other matter that is specified by Cabinet Office Ordinance.
(Obligation to Clarify the Conditions of Transactions in Advance)
Article 37-2 When a Financial Instruments Business Operator, etc. has had an order from a customer for the purchase or sale of Securities or for an Over-the-Counter Transaction of Derivatives, it must give the customer clear notice, in advance, regarding whether said Financial Instruments Business Operator, etc. will conclude the purchase and sale or the transaction with the customer personally, as the other party, or whether it will conduct intermediation, brokerage, or agency for the purchase and sale or the transaction.
(Delivery of Documents Prior to the Conclusion of a Contract)
Article 37-3 (1) If a Financial Instruments Business Operator, etc. seeks to conclude a Financial Instruments Transaction Contract, it must deliver a document stating the following particulars to the customer in advance, pursuant to the provisions of Cabinet Office Ordinance; provided, however, that this does not apply in cases specified by Cabinet Office Ordinance as those in which its not doing so does not compromise the protection of investors:
(i) the trade name or name and address of the Financial Instruments Business Operator, etc.;
(ii) an indication that it is a Financial Instruments Business Operator, etc., and its registration number;
(iii) an outline of the relevant Financial Instruments Transaction Contract;
(iv) the particulars specified by Cabinet Office Ordinance with regard to any fees, remuneration, or other consideration payable by the customer in connection with the Financial Instruments Transaction Contract;
(v) an indication of any risk that a loss will be incurred due to fluctuations in the money rate, the value of currencies, quotations on the Financial Instruments Market, and other indicators, in connection with an act that constitutes a Financial Instruments transaction carried out by the customer;
(vi) an indication of any risk that the amount of the loss set forth in the preceding item will exceed the amount of customer margin or any other security deposit specified by Cabinet Office Ordinance that is payable by the customer; and
(vii) the particulars of the contents of the relevant Financial Instruments Business other than what is set forth in the preceding items, which are specified by Cabinet Office Ordinance as material particulars that may have an impact on customers' judgment.
(2) The provisions of Article 34-2, paragraph (4) apply mutatis mutandis to the delivery of a document under the preceding paragraph.
(3) Before soliciting (limited to a Public Offering or Secondary Distribution, or dealings in a Public Offering or Secondary Distribution specified by Cabinet Order) the conclusion of a Financial Instruments Transaction Contract for any of the rights set forth in the items of Article 2, paragraph (2) that are deemed to be Securities under that paragraph, a Financial Instruments Business Operator, etc. must notify the Prime Minister of the contents of the document set forth in paragraph (1) regarding said Financial Instruments Transaction Contract; provided, however, that this does not apply in cases specified by Cabinet Office Ordinance as those in which its not doing so does not compromise the protection of investors.
(Delivery of Documents upon the Conclusion of a Contract)
Article 37-4 (1) When a Financial Instruments Business Operator, etc. effects a Financial Instruments Transaction Contract or when otherwise specified by Cabinet Office Ordinance, the Financial Instruments Business Operator, etc. shall prepare a document and deliver it to the customer, without delay and pursuant to the provisions of Cabinet Office Ordinance; provided, however, that this does not apply in the cases that are specified by Cabinet Office Ordinance as those in which, in consideration of the contents of the Financial Instruments Transaction Contract and other circumstances, it is found that even if the document is not delivered to the customer, this does not compromise the public interest or the protection of investors.
(2) The provisions of Article 34-2, paragraph (4) apply mutatis mutandis to the delivery of a document under the preceding paragraph.
(Delivery of Documents in Connection with the Receipt of a Security Deposit)
Article 37-5 (1) Whenever a Financial Instruments Business Operator, etc. receives a security deposit that is payable by the customer (limited to those specified by Cabinet Office Ordinance) in connection the Financial Instruments Business that it conducts, it must immediately deliver a document stating this to the customer, pursuant to the provisions of Cabinet Office Ordinance.
(2) The provisions of Article 34-2, paragraph (4) apply mutatis mutandis to the delivery of a document under the preceding paragraph.
(Written Cancellation)
Article 37-6 (1) Except as otherwise specified by Cabinet Office Ordinance, a customer that has concluded a Financial Instruments Transaction Contract (limited to one that is specified by Cabinet Order in consideration of the contents of such a Financial Instruments Transaction Contract and other circumstances) with a Financial Instruments Business Operator, etc. may cancel said Financial Instruments Transaction Contract in writing, until the number of days specified by Cabinet Order has elapsed since the day on which the customer received the document set forth in Article 37-4, paragraph (1).
(2) The cancellation of a Financial Instruments Transaction Contract under the preceding paragraph takes effect when a document indicating that the Financial Instruments Transaction Contract is cancelled is issued.
(3) If a Financial Instruments Transaction Contract becomes subject to a cancelation under paragraph (1), the Financial Instruments Business Operator, etc. may not request the customer to pay damages or a penalty for the cancellation of that Financial Instruments Transaction Contract beyond the amount specified by Cabinet Office Ordinance as the amount of fees, remuneration, or other consideration payable by the customer with regard to that Financial Instruments Transaction Contract (referred to as a "Consideration" in the following paragraph) for the period until the cancellation of that Financial Instruments Transaction Contract.
(4) If a Financial Instruments Transaction Contract becomes subject to a cancellation under paragraph (1), the Financial Instruments Business Operator, etc. shall refund any Consideration paid in advance for the relevant Financial Instruments Transaction Contract to the customer that paid it; provided, however, that this does not apply to the amount specified by Cabinet Office Ordinance as prescribed in the preceding paragraph.
(5) Any special provision that is contrary to the provisions of the preceding paragraphs and disadvantageous to a customer is void.
(Obligation to Conclude a Contract with a Designated Dispute Resolution Organization)
Article 37-7 (1) A Financial Instruments Business Operator, etc. must take the measures specified in the relevant of the following items for the category of cases set forth in said item:
(i) if the Financial Instruments Business Operator, etc. (excluding a registered financial institution; the same applies in the following item to item (iv) inclusive) engages in Type I Financial Instruments Business: the measures specified in the relevant of the following sub-items (a) and (b) for the category of cases set forth in each sub-item:
(a) if there is a Designated Type I Dispute Resolution Organization (meaning a Designated Dispute Resolution Organization (meaning a Designated Dispute Resolution Organization as defined in Article 156-38, paragraph (1); hereinafter the same applies in this Chapter and Chapter V-4) for which the Category of Dispute Resolution Services (meaning the Category of Dispute Resolution Services as defined in paragraph (12) of that Article; hereinafter the same applies in this Chapter and Chapter V-4) is Specified Type I Financial Instruments Business (meaning Specified Type I Financial Instruments Business as defined in paragraph (2) of that Article; hereinafter the same applies in this item); hereinafter the same applies in this item and paragraph (3), item (ii)): measures to conclude a Basic Contract for the Implementation of Dispute Resolution Procedures (meaning a Basic Contract for the Implementation of Dispute Resolution Procedures as defined in paragraph (13) of that Article; hereinafter the same applies in this Chapter and Chapter V-4) in connection with Specified Type I Financial Instruments Business with a single Designated Type I Dispute Resolution Organization);
(b) if there is no Designated Type I Dispute Resolution Organization: complaint processing measures (meaning measures to have the person set forth in Article 156-50, paragraph (3), item (iii) provide advice or guidance to the employee or any other workers engaged in the business of processing complaints from customers (including the rights holders provided for in Article 42, paragraph (1) that are other than customers; the same applies in this sub-item (b)) or any other measures specified by Cabinet Office Ordinance as being equivalent thereto; hereinafter the same applies in this Chapter and Chapter V-4)) and dispute resolution measures (meaning measures to resolve disputes with customers through Certified Dispute Resolution Procedures (meaning Certified Dispute Resolution Procedures as defined in Article 2, item (iii) of the Act on Promotion of Use of Alternative Dispute Resolution (Act No. 151 of 2004)) or any other measures specified by Cabinet Office Ordinance as being equivalent thereto) in connection with Specified Type I Financial Instruments Business.
(ii) if the Financial Instruments Business Operator, etc. engages in Type II Financial Instruments Business: the measures specified in the relevant of the following sub-items (a) and (b) for the category of cases set forth in each sub-item:
(a) if there is a Designated Type II Dispute Resolution Organization (meaning a Designated Dispute Resolution Organization for which the Category of Dispute Resolution Services is Specified Type II Financial Instruments Business (meaning Specified Type II Financial Instruments Business defined in Article 156-38, paragraph (3); hereinafter the same applies in this item); hereinafter the same applies in this item and paragraph (3), item (ii)): measures to conclude a Basic Contract for the Implementation of Dispute Resolution Procedures in connection with Specified Type II Financial Instruments Business with a single Designated Type II Dispute Resolution Organization;
(b) if there is no Designated Type II Dispute Resolution Organization: complaint processing measures and dispute resolution measures in connection with Specified Type II Financial Instruments Business;
(iii) if the Financial Instruments Business Operator, etc. engages in Investment Advisory and Agency Business: the measures specified in the relevant of the following sub-items (a) and (b) for the category of cases set forth in each sub-item:
(a) if there is a Designated Investment Advisory and Agency Business Dispute Resolution Organization (meaning a Designated Dispute Resolution Organization for which the Category of Dispute Resolution Services is Specified Investment Advisory and Agency Business (meaning Specified Investment Advisory and Agency Business as defined in Article 156-38, paragraph (4); hereinafter the same applies in this item); hereinafter the same applies in this item and paragraph (3), item (ii)): measures to conclude a Basic Contract for the Implementation of Dispute Resolution Procedures in connection with Specified Investment Advisory and Agency Business with a single Designated Investment Advisory and Agency Business Dispute Resolution Organization:
(b) if there is no Designated Investment Advisory and Agency Business Dispute Resolution Organization: complaint processing measures and dispute resolution measures in connection with Specified Investment Advisory and Agency Business;
(iv) if the Financial Instruments Business Operator, etc. engages in Investment Management Business: the measures specified in the relevant of the following sub-items (a) and (b) for the category of cases set forth in each sub-item:
(a) if there is a Designated Investment Management Dispute Resolution Organization (meaning a Designated Dispute Resolution Organization for which the Category of Dispute Resolution Services is Specified Investment Management Business (meaning Specified Investment Management Business as defined in Article 156-38, paragraph (5); hereinafter the same applies in this item); hereinafter the same applies in this item and paragraph (3), item (ii)): measures to conclude a Basic Contract for the Implementation of Dispute Resolution Procedures in connection with Specified Investment Management Business with a single Designated Investment Management Dispute Resolution Organization;
(b) if there is no Designated Investment Management Dispute Resolution Organization: complaint processing measures and dispute resolution measures in connection with Specified Investment Management Business;
(v) if the Financial Instruments Business Operator, etc. is a registered financial institution: the measures specified in the relevant of the following sub-items (a) and (b) for the category of cases set forth in said sub-item:
(a) if there is a Designated Dispute Resolution Organization for registered financial institutions (meaning a Designated Dispute Resolution Organization for which the Category of Dispute Resolution Services is the Specified Services of a Registered Financial Institution (meaning Specified Services of a Registered Financial Institution as defined in Article 156-38, paragraph (6); hereinafter the same applies in this item); hereinafter the same applies in this item and paragraph (3), item (ii)): measures to conclude a Basic Contract for the Implementation of Dispute Resolution Procedures in connection with the Specified Services of a Registered Financial Institution with a single Designated Dispute Resolution Organization for registered financial institutions;
(b) if there is no Designated Registered Financial Institutions Dispute Resolution Organization: complaint processing measures and dispute resolution measures in connection with the Specified Services of a Registered Financial Institution.
(2) Once a Financial Instruments Business Operator has taken measures to conclude a Basic Contract for the Implementation of Dispute Resolution Procedures pursuant to the provisions of the preceding paragraph, it must disclose the trade name or name of the Designated Dispute Resolution Organization that is the counterparty to the Basic Contract for the Implementation of Dispute Resolution Procedures.
(3) The provisions of paragraph (1) do not apply during the period specified in the relevant of the following items for the category of cases set forth in each item:
(i) if a case that fell under a category of cases set forth in paragraph (1), item (i), sub-item (a); item (ii), sub-item (a); item (iii), sub-item (a); item (iv), sub-item (a); or item (v), sub-item (a); has come to fall under a category of cases set forth in item (i), sub-item (b); item (ii), sub-item (b); item (iii), sub-item (b); item (iv), sub-item (b); or item (v), sub-item (b) of that paragraph: the period specified by the Prime Minister as the period needed for taking the measures specified in paragraph (1), item (i), sub-item (b); item (ii), sub-item (b); item (iii), sub-item (b); item (iv), sub-item (b); or item (v), sub-item (b); at the time of granting authorization for the discontinuation of Dispute Resolution Services under Article 156-60, paragraph (1) or at the time of rescinding the designation under Article 156-61, paragraph (1);
(ii) if a case formerly fell under a category of cases set forth in paragraph (1), item (i), sub-item (a); item (ii), sub-item (a); item (iii), sub-item (a); item (iv), sub-item (a); or item (v), sub-item (a); but the discontinuation of the Dispute Resolution Services of a single Designated Type I Dispute Resolution Organization under item (i), sub-item (a) of that paragraph; a single Designated Type II Dispute Resolution Organization under item (ii), sub-item (a) of that paragraph; a single Designated Investment Advisory and Agency Business Dispute Resolution Organization under item (iii), sub-item (a) of that paragraph; a single Designated Investment Management Dispute Resolution Organization under item (iv), sub-item (a) of that paragraph; or a single Designated Dispute Resolution Organization for registered financial institutions (hereinafter collectively referred to as the "Designated Dispute Resolution Organization for Each Category of Business" in this item) has been authorized under Article 156-60, paragraph (1) or the designation under Article 156-39, paragraph (1) has been rescinded for the Designated Dispute Resolution Organization for Each Category of Business pursuant to Article 156-61, paragraph (1) (excluding in a case set forth in the preceding item): the period specified by the Prime Minister as the period needed for taking the measures specified in paragraph (1), item (i), sub-item (a); item (ii), sub-item (a); item (iii), sub-item (a); item (iv), sub-item (a); or item (v), sub-item (a); at the time of granting such authorization or at the time of rescinding the designation; and
(iii) if a case formerly fell under a category of cases set forth in paragraph (1), item (i), sub-item (b); item (ii), sub-item (b); item (iii), sub-item (b); item (iv), sub-item (b); or item (v), sub-item (b); but come to fall under the cases set forth in item (i), sub-item (a); item (ii), sub-item (a); item (iii), sub-item (a); item (iv), sub-item (a); or item (v), sub-item (a) of that paragraph: the period specified by the Prime Minister as the period needed for taking the measures specified in paragraph (1), item (i), sub-item (a); item (ii), sub-item (a); item (iii), sub-item (a); item (iv), sub-item (a); or item (v), sub-item (a) at the time of the designation under Article 156-39, paragraph (1).
(Prohibited Acts)
Article 38 It is prohibited for a Financial Instruments Business Operator, etc. or the officer or employee thereof to engage in any of the following acts; provided, however, that this excludes acts set forth in items (iv) to (vi) inclusive that are specified by Cabinet Office Ordinance as being unlikely to result in insufficient investor protection, harm the fairness of transactions, or cause a loss of confidence in the Financial Instruments Business:
(i) providing a customer with false information in connection with the conclusion of a Financial Instruments Transaction Contract or in connection with the solicitation thereof;
(ii) providing a customer with a conclusive assessment of a matter that is uncertain or with information that could mislead the customer into believing that a matter that is uncertain is actually certain, thereby soliciting the customer to conclude a Financial Instruments Transaction Contract;
(iii) supplying a customer with a Credit Rating that has been determined by a person engaged in Credit Rating Services other than a Credit Rating Agency (excluding a Credit Rating specified by Cabinet Office Ordinance as one that is found to have little likelihood of resulting in insufficient investor protection), without informing the customer that the person giving the Credit Rating is not registered as referred to in Article 66-27 and without informing the customer of the matters specified by Cabinet Office Ordinance, including the significance of such a registration and any other matters, thereby soliciting the customer to conclude a Financial Instruments Transaction Contract;
(iv) visiting or telephoning a customer that is not asking to be solicited for the conclusion of a Financial Instruments Transaction Contract (limited to one that is specified by Cabinet Order in consideration of the content of the Financial Instruments Transaction Contract and other circumstances, as a contract in connection with which it is particularly necessary to ensure the protection of investors), and soliciting such a customer to conclude a Financial Instruments Transaction Contract;
(v) soliciting a customer to conclude a Financial Instruments Transaction Contract (limited to one that is specified by Cabinet Order in consideration of the contents of the Financial Instruments Transaction Contract and other circumstances, as a contract in connection with which it is necessary to ensure the protection of investors) without obtaining confirmation from the customer, prior to solicitation, regarding whether or not the customer is willing to be solicited;
(vi) continuing to solicit a customer to conclude a Financial Instruments Transaction Contract (limited one that is specified by Cabinet Order in consideration of the content of the Financial Instruments Transaction Contract and other circumstances, as a contract in connection with which it is necessary to ensure the protection of investors) despite the customer having manifested an intention that indicates an unwillingness to conclude such a Financial Instruments Transaction Contract (including the an intention that indicates a wish not to continue to be solicited) after being solicited;
(vii) providing a Specified Financial Indicator Calculation Agent (meaning the Specified Financial Indicator Calculation Agent prescribed in Article 156-85, paragraph (1); hereinafter the same applies in this item) with Calculation Basis Data (meaning the price, indicator, figure, or any other information provided to the Specified Financial Indicator Calculation Agent as the basis for calculation of Specified Financial Indicators) to benefit itself or a third party;
(viii) acts other than what is set forth in the preceding items, which are specified by Cabinet Office Ordinance as acts that result in insufficient investor protection, harm the fairness of transactions, or cause a loss of confidence in the Financial Instruments Business.
Article 38-2 A Financial Instruments Business Operator, etc. must not engage in any of the following acts in connection with the Investment Advisory and Agency Business or Investment Management Business it conducts:
(i) using fraudulent means, committing assault, or using intimidation in connection with the conclusion or cancellation of an Investment Advisory Contract, Discretionary Investment Contract, or contract specified in Article 2, paragraph (8), item (xii), sub-item (b); and
(ii) promising a customer, at the time of solicitation, that any loss that may arise will be compensated in whole or in part.
(Prohibition on Compensation of Loss)
Article 39 (1) A Financial Instruments Business Operator, etc. must not engage in any of the following acts:
(i) making an offer or promise, or having a third party make an offer or promise, in connection with a purchase and sale or other transaction of Securities (excluding a purchase and sale with a repurchase requirement and a predetermined repurchase price, and other transactions specified by Cabinet Order) or a Derivatives Transaction (hereinafter collectively referred to as a "Purchase and Sale or Other Transaction of Securities, etc." in this Article), to a customer or to a person designated by the customer, that in the event that the customer (if a Trust Company, etc. (meaning a trust company or a financial institution that has obtained the authorization referred to in Article 1, paragraph (1) of the Act on Engagement in Trust Business by a Financial Institution; the same applies hereinafter) conducts the purchase and sale of Securities or a Derivatives Transaction on the account of a person that establishes a trust based a trust contract, this includes the person that establishes the trust; hereinafter the same applies in this Article) incurs a loss from the Securities or Derivatives Transaction (hereinafter collectively referred to as "Securities, etc." in this Article), or in the event that a predetermined amount of profit does not accrue from those Securities, etc., the Financial Instruments Business Operator, etc. or a third party will cover the whole or part of the loss or provide the customer or a third party with an economic benefit to supplement its profits;
(ii) making an offer or promise, or having a third party make an offer or promise, in connection with a Purchase and Sale or Other Transaction of Securities, etc., to a customer or to a person designated by the customer, that the Financial Instruments Business Operator, etc. or a third party will cover the whole or part of a loss that the customer has incurred in connection with the relevant Securities, etc., or will add to the profits that the customer has accrued in connection with those Securities, etc.; and
(iii) providing an economic benefit to a customer or third party, or having a third party provide an economic benefit to a customer or third party, in connection with a Purchase and Sale or Other Transaction of Securities, etc., in order to cover the whole or part of a loss that the customer has incurred in connection with the relevant Securities, etc., or in order to add to the profit that the customer has accrued in connection with those Securities, etc.
(2) The customer of a Financial Instruments Business Operator, etc. must not engage in any of the following acts:
(i) being party to, or having a third party be party to, the promise referred to in item (i) of the preceding paragraph (but only if that promise is based on a request that the customer makes personally or has a third party make), with the Financial Instruments Business Operator, etc. or a third party, in connection with a Purchase and Sale or Other Transaction of Securities, etc.;
(ii) being party to, or having a third party be party to, the promise referred to in item (ii) of the preceding paragraph (but only if that promise is based on a request that the customer makes personally or has a third party make), with the Financial Instruments Business Operator, etc. or a third party in connection with a Purchase and Sale or Other Transaction of Securities, etc.; and
(iii) receiving an economic benefit that is provided as referred to in item (iii) of the preceding paragraph or having a third party receive such an economic benefit (but only if this is based on a promise referred to in one of the preceding two items, if that promise is based on a request that the customer makes personally or has a third party make, and if the economic benefit is provided based on a request that the customer makes personally or has a third party make) from a Financial Instruments Business Operator, etc. or a third party, in connection with a Purchase and Sale or Other Transaction of Securities, etc.
(3) The provisions of paragraph (1) do not apply if the offer, promise, or provision of an economic benefit as referred to in the items of that paragraph is done in order to cover the whole or a part of a loss incurred due to problematic conduct (meaning illegal or wrongful conduct by a Financial Instruments Business Operator, etc. or its officer or employee, which is specified by Cabinet Office Ordinance as a potential cause of a dispute between a Financial Instruments Business Operator, etc. and its customer; hereinafter the same applies in this and the following Sections); provided, however, that with regard to the offer or promise referred to in item (ii) of that paragraph or the provision of an economic benefit as referred to in item (iii) of that paragraph, this only applies if the Financial Instruments Business Operator, etc. receives confirmation from the Prime Minister in advance that the loss to be covered was incurred due to problematic conduct, or in a case that is otherwise specified by Cabinet Office Ordinance.
(4) The provisions of paragraph (2) do not apply if the promise referred to in item (i) or (ii) of that paragraph is a promise to cover the whole or part of a loss incurred due to problematic conduct, or if the economic benefit referred to in item (iii) of that paragraph is provided in order to cover the whole or part of a loss incurred due to problematic conduct.
(5) A person seeking to receive the confirmation referred to in the proviso to paragraph (3) must submit a written application stating the fact regarding which confirmation is sought and other particulars specified by Cabinet Office Ordinance to the Prime Minister pursuant to the provisions of Cabinet Office Ordinance, accompanied by a document specified by Cabinet Office Ordinance as being necessary for proving the relevant fact.
(The Principle of Suitability)
Article 40 A Financial Instruments Business Operator, etc. shall conduct its business in such a manner that the state of its business operations does not fall under one of the following items:
(i) its issuance of a solicitation in connection with an act that constitutes a Financial Instruments transaction which is found to be inappropriate in light of customer knowledge, customer experience, the state of customer assets, or the purpose for which a Financial Instruments Transaction Contract is concluded, results in or is likely to result in insufficient investor protection; and
(ii) beyond what is set forth in the preceding item, the state of business operations is such that the Financial Instruments Business Operator, etc. is found not to have taken measures to ensure the appropriate handling of customer information it has obtained in the course of the business, or business operations are otherwise in a state specified by Cabinet Office Ordinance as one that is contrary to the public interest or that is likely to compromise the protection of investors.
(Best Execution Policy)
Article 40-2 (1) A Financial Instruments Business Operator, etc., pursuant to the provisions of Cabinet Order, must establish a policy and method for executing orders from customers for the purchase and sale of Securities and Derivatives Transactions (excluding those specified by Cabinet Order; hereinafter referred to as "Transactions of Securities, etc." in this Article) under the best terms and conditions (hereinafter referred to as the "Best Execution Policy, etc." in this Article).
(2) A Financial Instruments Business Operator, etc. must disclose its Best Execution Policy, etc. pursuant to the provisions of Cabinet Office Ordinance.
(3) A Financial Instruments Business Operator, etc. must execute orders for Transactions of Securities, etc. in accordance with its Best Execution Policy, etc.
(4) Before accepting an order from a customer for a purchase and sale of Securities listed on a Financial Instruments Exchange, purchase and sale of Over-the-Counter Traded Securities, or other transaction specified by Cabinet Order, a Financial Instruments Business Operator, etc., pursuant to the provisions of Cabinet Office Ordinance, must deliver a document to the customer stating its Best Execution Policy, etc. for the relevant transaction; provided, however, that this does not apply if it has already delivered such a document (or a document stating the revised policy, if its Best Execution Policy, etc. has been revised).
(5) If a Financial Instruments Business Operator, etc. is so requested by a customer within a period specified by Cabinet Office Ordinance after executing the customer's order for a Transaction of Securities, etc., it must deliver a document to the customer, pursuant to the provisions of Cabinet Office Ordinance, which explains, pursuant to the provisions of Cabinet Office Ordinance, that the order has been executed in accordance with its Best Execution Policy, etc.
(6) The provisions of Article 34-2, paragraph (4) apply mutatis mutandis to the delivery of a document under the preceding two paragraphs.
(Prohibition of Purchase and Sale, etc. If Separate Management Is Not Ensured)
Article 40-3 With regard to the rights set forth in Article 2, paragraph (2), item (v) or (vi) or the Securities set forth in Article 2, paragraph (1), item (xxi) (limited to those specified by Cabinet Order) or the rights set forth in Article 2, paragraph (2), item (vii) (limited to those specified by Cabinet Order), a Financial Instruments Business Operator, etc. must not perform any of the acts set forth in Article 2, paragraph (8), item (i), (ii), or (vii) to (ix) inclusive unless the relevant right or Securities are specified by Cabinet Office Ordinance as those for which a contract or other juridical act involving the right or Securities ensures that the money invested or contributed for the right or Securities (including anything specified by Cabinet Order as being similar to money; hereinafter the same applies in this Article) is managed separately from the assets that belong to the person conducting the relevant business conducts by allocating such money, and is managed separately from any other assets connected with other business conducted by that person.
(Prohibition of Public Offering, etc. Where Money Has Been Diverted)
Article 40-3-2 A Financial Instruments Business Operator, etc. must not conduct one of the acts specified in Article 2, paragraph (8), items (vii) to (ix) inclusive with regard to the rights set forth in Article 2, paragraph (2), item (v) or (vi) or the rights set forth in item (vii) of that paragraph (limited to rights specified by Cabinet Order as having an economic nature similar to the rights set forth in item (v) or (vi) of that paragraph), knowing that the money invested or contributed for such rights (including anything specified by Cabinet Order as being similar thereto; hereinafter the same applies in this Article) is not allocated to the business that is to be conducted by allocating said money.
(Restrictions on the Sale and Purchase, etc. of Securities for Professional Investors)
Article 40-4 A Financial Instruments Business Operator, etc. must not perform any of the acts set forth in Article 2, paragraph (8), items (i) to (iv) inclusive and (x) in connection with the Securities for Professional Investors with a general investor (meaning a person other than a Professional Investor, etc. or Issuer of Securities for Professional Investors, or any other person specified by Cabinet Office Ordinance; hereinafter the same applies in this Article); provided, however, that this does not apply in a Case In Which Disclosure Has Been Made (meaning a Case In Which Disclosure Has Been Made as prescribed in Article 4, paragraph (7); the same applies in Article 40-5, paragraph (1) and Article 66-14-2) with regard to the relevant Securities for Professional Investors, nor does it apply in a case in which the Financial Instruments Business Operator, etc. intermediates a sale for the general investor without having solicited the general investors, nor does it in any case specified by Cabinet Office Ordinance as one in which there is little likelihood of this resulting in insufficient investor protection.
(Obligation to Notify in Connection with Securities for Professional Investors)
Article 40-5 (1) If a Financial Instruments Business Operator, etc. sells Securities for Professional Investors in a case not falling under the category of a Case In Which Disclosure Has Been Made, or performs any other act specified by Cabinet Order in connection with such Securities, without issuing a Solicitation of Offers to Acquire or an Offer to Sell, etc., it must notify the other party to the sale or other act, pursuant to the provisions of Cabinet Office Ordinance and with regard to the Securities for Professional Investors, that the case does not fall under the category of a Case In Which Disclosure Has Been Made, as well as notifying the other party of any other matters that are specified by Cabinet Office Ordinance.
(2) The first time that a Financial Instruments Business Operator, etc. receives an offer from a Professional Investor, etc. (excluding a person set forth in Article 2, paragraph (31), items (i) to (iii) inclusive) for a contract for transactions in Securities for Professional Investors (meaning a contract for performing an act set forth in Article 2, paragraph (8), item (i) to (iv) inclusive, or item (x) in connection with Securities for Professional Investors (excluding a contract for effecting a sale and purchase of Securities for Professional Investors through an act set forth in item (x) of that paragraph (this is limited to a sale and purchase effected through the intermediation, brokerage, or agency of the Financial Instruments Business Operator that effects the relevant act) or any other contract that is specified by Cabinet Office Ordinance in consideration of the contents of the contract and the characteristics of the counterparty); hereinafter the same applies in this paragraph), it must notify the Professional Investor, etc. of the following matters and deliver a document to the Professional Investor, etc. that states those matters, before it concludes the contract for transactions in Securities for Professional Investors to which the offer pertains:
(i) the contents of the information provided in connection with the Securities for Professional Investors, the nature of the transaction, and any other matters specified by Cabinet Office Ordinance as material matters of which an investor must be made aware in connection with Securities for Professional Investors; and
(ii) an indication of the risk of insufficient protection involved, if a transaction of Securities for Professional Investors will be conducted by a person whose knowledge or experience, or the state of whose assets, makes it inappropriate for the person to do so;
(3) The provisions of Article 34-2, paragraph (4) apply mutatis mutandis to the delivery of the documents set forth in the preceding paragraph.
(Prohibition of Trading Against)
Article 40-6 When a Financial Instruments Business Operator, etc. accepts consignment of a Commodity-Related Market Transaction of Derivatives, etc. (meaning a Commodity-Related Transaction of Derivatives, or intermediary, brokerage, or agency service for the entrustment thereof; hereinafter the same applies in this Article), it shall not close a transaction by becoming the counterparty itself instead of carrying out such Commodity-Related Transaction of Derivatives, etc. pertaining to such consignment.
(Obligation to Use Electronic Data Processing System Concerning Over-the-Counter Transactions of Derivatives, etc.)
Article 40-7 (1) When a Financial Instruments Business Operator, etc. (limited to a Financial Instruments Business Operator, etc. who conducts Over-the-Counter Transactions of Derivatives on a regular basis) conducts specified Over-the-Counter Transactions of Derivatives (meaning Over-the-Counter Transactions of Derivatives specified by Cabinet Office Ordinance as transactions that require expeditious disclosure of information concerning the outline of said transactions for securing fairness in said transactions, in light of the transaction volume and other transaction status; the same applies in the following paragraph, Article 58-2 and Article 60-14, paragraph (1)), it shall use the Electronic Data Processing System used by said Financial Instruments Business Operator, etc. for its business of Over-the-Counter Transactions of Derivatives or the Electronic Data Processing System used by another Financial Instruments Business Operator, etc. (limited to a Financial Instruments Business Operator, etc. who conducts Over-the-Counter Transactions of Derivatives, etc. on a regular basis) or an Authorized Electronic Over-the-Counter Transactions of Derivatives, etc. Business Operator prescribed in Article 60-14, paragraph (2) for its business of Over-the-Counter Transactions of Derivatives, etc.
(2) A person who used the Electronic Data Processing System pursuant to the provisions of the preceding paragraph shall, with regard to the specified Over-the-counter Transactions of Derivatives conducted using said Electronic Data Processing System, publicly announce the price, quantity and other outline of the transaction pursuant to the provisions of Cabinet Office Ordinance.
Subsection 2 Special Provisions on Investment Advisory Business
(Duty to Customers)
Article 41 (1) A Financial Instruments Business Operator, etc. must work faithfully on behalf of its customers in providing its Investment Advisory Business.
(2) A Financial Instruments Business Operator, etc. must provide its Investment Advisory Business with the due care of a prudent manager toward its customers.
(Prohibited Acts)
Article 41-2 A Financial Instruments Business Operator, etc. must not perform any of the following acts in connection with the Investment Advisory Business it conducts:
(i) advising customers to conduct a transaction between or among themselves that would be detrimental to a particular customer's interests in the interest of another customer;
(ii) giving advice regarding a particular Financial Instrument, Financial Indicator, or Option for which there is no justifiable basis, with the aim of using fluctuations in the price, indicator, figure, or amount receivable based on a customer's transaction, to benefit itself or a third party other than that customer;
(iii) advising a customer to conduct a transaction under terms and conditions that are different from the ordinary terms and conditions and detrimental to the customer's interests (other than as is specified in item (i) above);
(iv) making a purchase and sale or other transaction of Securities, or a Derivatives Transaction (hereinafter referred to as "Purchase and Sale or Other Transaction of Securities, etc."), on its own account, using information from a transaction conducted by a customer that has received its advice;
(v) providing an economic benefit to a customer or a third party or having a third party provide an economic benefit to a customer, in order to cover the whole or part of a loss incurred by the customer due to a transaction about which the customer has received its advice, or in order to add to the profit that a customer has accrued in connection with a transaction about which the customer has received its advice (unless this is to cover the whole or part of a loss incurred due to problematic conduct); and
(vi) beyond what is set forth in the preceding items, any act specified by Cabinet Office Ordinance as resulting in insufficient investor protection, harming the fairness of transactions, or causing a loss of confidence in the Financial Instruments Business.
(Prohibition on the Purchase and Sale of Securities, etc.)
Article 41-3 A Financial Instruments Business Operator, etc. must not perform any of the acts set forth in Article 2, paragraph (8), items (i) to (iv) inclusive, in connection with the Investment Advisory Business it conducts, with a customer as the counterparty or on behalf of a customer; provided, however, that this does not apply if it does so as Type I Financial Instruments Business, or if it does so in a case that is specified by Cabinet Order.
(Prohibition on Receiving Deposits of Money or Securities)
Article 41-4 A Financial Instruments Business Operator, etc. must not, for any reason, receive a deposit of money or Securities from a customer, or have a person specified by Cabinet Order as being closely related to the Financial Instruments Business Operator, etc. deposit a customer's money or Securities, in connection with the Investment Advisory Business it conducts, unless it does so as Securities, etc. Management, or unless it does so in a case that is specified by Cabinet Order.
(Prohibition on the Lending, etc. of Money or Securities)
Article 41-5 A Financial Instruments Business Operator, etc. must not lend money or Securities to a customer or perform intermediation, brokerage, or agency for a third party's lending of money or Securities to a customer in connection with the Investment Advisory Business it conducts; provided, however, that this does not apply if a Financial Instruments Business Operator lends money or Securities to a customer in the course of a margin transaction prescribed in Article 156-24, paragraph (1), or if it performs one of such acts in a case that is specified by Cabinet Order.
Subsection 3 Special Provisions on Investment Management Business
(Duty to Rights Holders)
Article 42 (1) A Financial Instruments Business Operator, etc. must work faithfully on behalf of rights holders (meaning persons prescribed in the relevant of the following items for the category of business set forth in each item; hereinafter the same applies in this Subsection) in providing Investment Management Business:
(i) the business of performing the act specified in Article 2, paragraph (8), item (xii): the other party to the contract set forth in sub-item (a) or (b) of that item;
(ii) the business of performing the act specified in Article 2, paragraph (8), item (xiv): the person that holds the rights indicated on the Securities provided for in that item or other rights specified by Cabinet Order; and
(iii) the business of performing the act specified in Article 2, paragraph (8), item (xv): the person that holds rights set forth in sub-items (a) to (c) inclusive of that item or other rights specified by Cabinet Order as prescribed in that item.
(2) A Financial Instruments Business Operator, etc. must provide Investment Management Business with the due care of a prudent manager toward rights holders.
(Prohibited Acts)
Article 42-2 A Financial Instruments Business Operator, etc. must not perform any of the following acts in connection with the Investment Management Business it conducts; provided, however, that this excludes acts set forth in items (i) and (ii) below that are specified by Cabinet Office Ordinance as being unlikely to result in insufficient investor protection, harm the fairness of transactions, or cause a loss of confidence in the Financial Instruments Business:
(i) making an investment that involves a transaction being conducted with the Financial Instruments Business Operator, etc. or a director or executive officer thereof;
(ii) making an investment that involves a transaction being conducted between or among invested assets;
(iii) making an investment in a particular Financial Instrument, Financial Indicator, or Option, which involves a transaction being conducted for which there is no justifiable basis, with the aim of using fluctuations in the price, indicator, figure, or amount receivable based on the transaction, to benefit itself or a third party other than the rights holder;
(iv) making an investment that involves a transaction being conducted under terms and conditions that are different from the ordinary terms and conditions, and that are detrimental to the rights holder's interests;
(v) making a Purchase and Sale or Other Transaction of Securities, etc. on its own account using information about a transaction that it has conducted as an investment;
(vi) providing an economic benefit to a rights holder or a third party or having a third party provide an economic benefit to a rights holder or third party, in order to cover the whole or part of a loss that a rights holder has incurred due to a transaction conducted as an investment of invested assets, or in order to add to the profit that a rights holder has accrued from a transaction conducted as an investment of invested assets (unless this is done to cover the whole or part of a loss incurred due to problematic conduct or a loss caused to the principal of an Investment Trust (meaning the investment trust defined in Article 2, paragraph (3) of the Act on Investment Trusts and Investment Corporations) specified by Cabinet Office Ordinance as those of which beneficial interest is acquired or held for the purpose of providing it for paying or receiving money in the sales and purchase of Securities or any other transactions between the Right Holder and the Financial Instruments Business Operator, etc.); and
(vii) beyond what is set forth in the preceding items, any act specified by Cabinet Office Ordinance as resulting in insufficient investor protection, harming the fairness of transactions, or causing a loss of confidence in the Financial Instruments Business.
(Entrustment of Authority to Invest)
Article 42-3 (1) A Financial Instruments Business Operator, etc. may entrust the whole or part of the authority to make investments on behalf of a rights holder to another Financial Instruments Business Operator, etc. (limited to one does Investment Management Business) or other person specified by Cabinet Order, but only if the matters specified by Cabinet Office Ordinance are stipulated in a contract or other juridical act set forth in one of the following items:
(i) the contract set forth in Article 2, paragraph (8), item (xii), sub-item (a) or (b);
(ii) a contract concerning the rights indicated on Securities or other rights specified by Cabinet Order as prescribed in Article 2, paragraph (8), item (xiv); and
(iii) a contract or other juridical act concerning the rights set forth in Article 2, paragraph (8), item (xv), sub-items (a) to (c) inclusive or other rights specified by Cabinet Order as prescribed in that item.
(2) Notwithstanding the provisions of the preceding paragraph, a Financial Instruments Business Operator, etc. must not entrust the whole of the authority to invest all invested assets to the person specified by Cabinet Order that is referred to in that paragraph.
(3) With regard to the application of the provisions of Article 42, paragraph (1) if a Financial Instruments Business Operator, etc. effected an entrustment pursuant to paragraph (1), in Article 42, paragraph (1), the phrase "Financial Instruments Business Operator, etc." is deemed to be replaced with "Financial Instruments Business Operator, etc. (including a person specified by Cabinet Order that is referred to in Article 42-3, paragraph (1) and that has been entrusted by the relevant Financial Instruments Business Operator, etc. pursuant to that paragraph; the same applies in the following paragraph and the following Article)".
(Separate Management)
Article 42-4 A Financial Instruments Business Operator, etc. must manage invested assets separately from its own assets and other invested assets, pursuant to the provisions of Cabinet Office Ordinance, in connection with the Investment Management Business (limited to the business of performing the act specified in Article 2, paragraph (8), item (xv)) it conducts.
(Prohibition on Receiving Deposits of Money or Securities)
Article 42-5 A Financial Instruments Business Operator, etc. must not, for any reason, receive a deposit of money or Securities from a customer, or have a person specified by Cabinet Order as being closely related to the Financial Instruments Business Operator, etc. deposit a customer's money or Securities, in connection with the Investment Management Business it conducts (limited to the business of performing the acts specified in Article 2, paragraph (8), item (xii); hereinafter the same applies in this and the following Articles), unless it does so as Securities, etc. Management, or unless it does so in a case that is specified by Cabinet Order; provided, however, that this does not apply if the Financial Instruments Business Operator, etc. performs one of the acts set forth in Article 2, paragraph (8), items (i) to (iv) inclusive or Commodity-Related Market Transactions of Derivatives in connection with its Investment Management Business on behalf of a customer, and such a deposit is necessary for the settlement of the transaction conducted through such an act.
(Prohibition on the Lending of Money or Securities)
Article 42-6 A Financial Instruments Business Operator, etc. must not lend money or Securities to a customer or perform intermediation, brokerage, or agency for a third party's lending of money or Securities to a customer in connection with the Investment Management Business it conducts; provided, however, that this does not apply if a Financial Instruments Business Operator lends money or Securities to a customer in the course of a margin transaction prescribed in Article 156-24, paragraph (1), or if it performs one of these acts in a case that is specified by Cabinet Order.
(Delivery of an Investment Report)
Article 42-7 (1) A Financial Instruments Business Operator, etc., pursuant to the provisions of Cabinet Office Ordinance, must periodically prepare an investment report for invested assets and deliver it to any known rights holders affiliated with those invested assets; provided, however, that this does not apply in the cases specified by Cabinet Office Ordinance as those in which, even if no investment report is delivered to such rights holders, this will not compromise the protection of the rights holders.
(2) The provisions of Article 34-2, paragraph (4) apply mutatis mutandis to the delivery of an investment report under the preceding paragraph.
(3) When a Financial Instruments Business Operator, etc. has prepared an investment report set forth in paragraph (1) in connection with the Investment Management Business it conducts (limited to the business of performing the act specified in Article 2, paragraph (8), item (xv)), it shall notify the Prime Minister of this without delay; provided, however, that this does not apply if the number of rights holders to a set of invested assets is below the number specified by Cabinet Order, nor does it apply in the cases specified by Cabinet Office Ordinance as those in which its not doing so does not compromise the protection of investors.
(Exclusion from Application of the Trust Business Act)
Article 42-8 The provisions of Chapter IV of the Trust Business Act do not apply if a Financial Instruments Business Operator, etc. engages in Investment Management Business.
Subsection 4 Special Provisions on Securities, etc. Management
(Duty of Due Care of a Prudent Manager)
Article 43 A Financial Instruments Business Operator, etc. must engage in Securities, etc. Management with the due care of a prudent manager toward its customers.
(Separate Management)
Article 43-2 (1) A Financial Instruments Business Operator, etc. must manage the following Securities (excluding the Securities to be managed under the following paragraph) in the way specified by Cabinet Office Ordinance as a reliable and orderly way of managing property, and must do so separately from its own property:
(i) the Securities that a customer deposits with the Financial Instruments Business Operator, etc. pursuant Article 119 (limited to those deposited in connection with Transactions of Securities-Related Derivatives) or Securities that a customer deposits with the Financial Instruments Business Operator, etc. pursuant to Article 161-2; and
(ii) the Securities in the possession of the Financial Instruments Business Operator, etc. on the account of a customer or Securities that a customer has deposited with the Financial Instruments Business Operator, etc. (excluding Securities set forth in the preceding item, Securities that a Financial Instruments Business Operator, etc. may use pursuant to a contract, and Securities specified by Cabinet Order), in connection with transactions involved in Securities Services or other services specified by Cabinet Office Ordinance as being incidental to Securities Services (excluding Over-the-Counter Transactions of Derivatives (limited to transactions to be made with a Financial Instruments Business Operator that is engaged in Securities Services and is registered as referred to in Article 29 to engage in Type I Financial Instruments Business as the counterparty, and other transactions that are specified by Cabinet Office Ordinance in consideration of the characteristics of the counterparty to the transaction) and other transactions specified by Cabinet Order; hereinafter referred to as "Transactions Related to Subject Securities" in item (ii) of the following paragraph, Article 79-20 and Article 79-49).
(2) As regards the money or Securities set forth in the following items, a Financial Instruments Business Operator, etc. must manage the amount of money calculated pursuant to the provisions of Cabinet Office Ordinance as the amount to be refunded to the customer in the event that said Financial Instruments Business Operator, etc. discontinues its Financial Instruments Business (including Services of a Registered Financial Institution; hereinafter the same applies in this paragraph) or otherwise ceases to operate in the Financial Instruments Business, separately from its own assets, and must establish a trust with a Trust Company, etc. in Japan, pursuant to the provisions of Cabinet Office Ordinance, for the purpose of managing the amount of money to be refunded to the customer in the event that said Financial Instruments Business Operator, etc. discontinues its Financial Instruments Business or otherwise ceases to operate in the Financial Instruments Business:
(i) money that a customer deposits with the Financial Instruments Business Operator, etc. (limited to money deposited in connection with Transactions of Securities-Related Derivatives) pursuant to Article 119, or money that a customer deposits with the Financial Instruments Business Operator, etc. pursuant to Article 161-2;
(ii) money on the account of a customer or money that a customer deposits with the Financial Instruments Business Operator, etc. (excluding the money set forth in the preceding item) in connection with a Transaction Related to Subject Securities; and
(iii) Securities set forth in the items of the preceding paragraph that have been furnished as security pursuant to Article 43-4, paragraph (1).
(3) A Financial Instruments Business Operator, etc. must periodically undergo an audit by a certified public accountant (this includes a foreign certified public accountant as prescribed in Article 16-2, paragraph (5) of the Certified Public Accountants Act (Act No. 103 of 1948); the same applies in Article 193-2 and Article 193-3) or audit by an auditing firm, pursuant to the provisions of Cabinet Office Ordinance, as regards the management conditions under the preceding two paragraphs.
Article 43-2-2 A Financial Instruments Business Operator, etc. shall, with regard to his/her transactions pertaining to the acts listed in Article 2, paragraph (8), item (ii) or item (iii) for Commodity-Related Market Transactions of Derivatives (hereinafter referred to as "Commodity-Related Market Transactions of Derivatives Brokerage, etc." in this Article, the following Article and Article 79-20) or his/her transactions pertaining to the business prescribed in Article 35, paragraph (1) specified by Cabinet Office Ordinance as a business incidental to a business pertaining to Commodity-Related Market Transactions of Derivatives Brokerage, etc. (hereinafter collectively referred to as "Subject Commodity Derivatives Transaction-Related Transactions" in Article 79-20 and Article 79-49), manage the money or Securities deposited from a customer under the provisions of Article 119 or other property deposited from a customer, or money or other property belonging to the account of a customer, separately from his/her own property pursuant to the provisions of Cabinet Office Ordinance.
Article 43-3 (1) A Financial Instruments Business Operator, etc. must manage the money or Securities that a customer deposits pursuant to Article 119 and other security deposits and Securities in connection with the Derivatives Transactions, etc. it conducts (excluding those that fall under the category of Transactions of Securities-Related Derivatives, etc. , Commodity-Related Market Transactions of Derivatives or Commodity-Related Market Transactions of Derivatives Brokerage, etc.; the same applies in the following paragraph), separately from its own property, pursuant to the provisions of Cabinet Office Ordinance.
(2) A Financial Instruments Business Operator, etc. must manage the money and other assets that are equivalent to the amount of Financial Instruments that are part of the customer's account in connection with the Derivatives Transactions, etc. it conducts, pursuant to the provisions of Cabinet Office Ordinance.
(Restriction on the Act of Furnishing a Customer's Securities, etc. as Collateral)
Article 43-4 (1) If a Financial Instruments Business Operator, etc. furnishes the Securities in its possession on a customer's account or Securities deposited with it by a customer as collateral, or lends such Securities to another person, it must obtain written consent from said customer pursuant to the provisions of Cabinet Office Ordinance.
(2) A Financial Instruments Business Operator, etc. shall, when furnishing as security the Commodity possessed by him/her based on a customer's account (including securities or certificates issued in relation to deposited Commodity; hereinafter the same applies in this paragraph) or a Commodity deposited to him/her from a customer or loaning such Commodities to another person, with regard to the business pertaining to the acts listed in Article 2, paragraph (8), item (ii), (iii) or (v) for Commodity-Related Market Transactions of Derivatives, obtain written consent from the customer pursuant to the provisions of Cabinet Office Ordinance.
(3) The provisions of Article 34-2, paragraph (12) apply mutatis mutandis to the written consent prescribed in the preceding two paragraphs.
Subsection 5 Special Provisions on Electronic Public Offering Services
Article 43-5 When a Financial Instruments Business Operator, etc. provides an Electronic Public Offering Service with regard to Securities set forth in the items of Article 3 or Securities not listed on a Financial Instruments Exchange (excluding those specified by Cabinet Order as prescribed in Article 29-2, paragraph (1), item (vi)), it must, pursuant to the provisions of Cabinet Office Ordinance, make the particulars to be stated in the document to be delivered pursuant to Article 37-3, paragraph (1) which are specified by Cabinet Office Ordinance as having a material influence on decisions by the other party to the Electronic Public Offering Service available for inspection by said other party, by means of an electronic data processing system or by any other means of information and communications technology specified by Cabinet Office Ordinance, throughout the period in which it provides an Electronic Public Offering Service with regard to such Securities.
Subsection 6 Preventive Measures against Adverse Effects
(Prohibited Acts When Doing Business in Two or More Business Categories)
Article 44 If a Financial Instruments Business Operator, etc. or its officer or employee does business in two or more business categories (meaning business categories provided for in Article 29-2, paragraph (1), item (v)), the operator, etc., officer, or employee must not perform any of the following acts:
(i) soliciting a customer to entrust, etc. it (meaning to request it to provide intermediation, brokerage, or agency; the same applies hereinafter) with a Purchase and Sale or Other Transaction of Securities, etc., using information about a Purchase and Sale or Other Transaction of Securities, etc. conducted by a customer that has received advice in connection with Investment Advisory Business or using information about a Purchase and Sale or Other Transaction of Securities, etc. conducted by such a customer as an investment in connection with Investment Management Business;
(ii) giving advice in connection with the Investment Advisory Business it conducts, that would involve a transaction being conducted that is unnecessary in light of the transaction policy, the amount of the transaction, or the market conditions, or making an investment in connection with the Investment Management Business it conducts, that involves a transaction being conducted that is unnecessary in light of the investment policy, the amount of invested assets, or the market conditions, with the aim of benefitting from business other than Investment Advisory Business and Investment Management Business; and
(iii) any act other than what is set forth in the preceding two items, which is specified by Cabinet Office Ordinance as resulting in insufficient investor protection, harming the fairness of transactions, or causing a loss of confidence in the Financial Instruments Business.
(Prohibited Acts Involving Other Business)
Article 44-2 (1) If a Financial Instruments Business Operator, etc. or the officer or employee thereof does business other than in the Financial Instruments Business and services incidental thereto (hereinafter referred to as "Business Activities Other Than Those of a Financial Instruments Business Operator" in item (ii) and item (iii) below), the operator, etc., officer, or employee must not perform any of the following acts:
(i) making its becoming entrusted, etc. with a purchase and sale of Securities (meaning causing a person to entrust, etc. it with such purchase and sale; hereinafter the same applies) conditional upon it lending money or otherwise granting credit to a person through a means other than a margin transaction prescribed in Article 156-24, paragraph (1) (excluding acts specified by Cabinet Office Ordinance as acts that are found to have little likelihood of resulting in insufficient investor protection);
(ii) giving advice in connection with the Investment Advisory Business it conducts, that would involve a transaction being conducted that is unnecessary in light of the transaction policy, the amount of the transaction, or the market conditions, or making an investment in connection with the Investment Management Business it conducts, that involves a transaction being conducted that is unnecessary in light of the investment policy, the amount of invested assets, or the market conditions, with the aim of benefitting from Business Activities Other Than Those of a Financial Instruments Business Operator; and
(iii) any act other than what is set forth in the preceding two items, which is set forth in the items of Article 2, paragraph (8), which is performed in connection with Business Activities Other Than Those of a Financial Instruments Business Operator, and which is specified by Cabinet Office Ordinance as resulting in insufficient investor protection, harming the fairness of transactions, or causing a loss of confidence in the Financial Instruments Business.
(2) If a registered financial institution or its officer or employee does business other than engaging in the services of a registered financial institution (referred to as "Business Activities Other Than Those of a Registered Financial Institution" in item (ii) and item (iii) below), the institution, officer, or employee must not perform any of the following acts:
(i) making its becoming entrusted, etc. with a purchase and sale of Securities, conditional on it lending money or otherwise granting credit to a person (excluding acts specified by Cabinet Office Ordinance as acts that are found to have little likelihood of resulting in insufficient investor protection);
(ii) giving advice in connection with the Investment Advisory Business it conducts, that would involve a transaction being conducted that is unnecessary in light of the transaction policy, the amount of the transaction, or the market conditions, or making an investment in connection with the Investment Management Business it conducts, that involves a transaction being conducted that is unnecessary in light of the investment policy, the amount of invested assets, or the market conditions, with the aim of benefitting from Business Activities Other Than Those of a Registered Financial Institution; and
(iii) any act other than what is set forth in the preceding two items, which is performed in connection with Business Activities Other Than Those of a Registered Financial Institution and which is specified by Cabinet Office Ordinance as resulting in insufficient investor protection, harming the fairness of transactions, or causing a loss of confidence in the Financial Instruments Business.
(Restriction on Acts Involving Parent Corporations, etc. or Subsidiary Corporations, etc.)
Article 44-3 (1) It is prohibited for a Financial Instruments Business Operator, etc. or its officer or employee to perform any of the following acts; provided, however, that this does not apply if the approval of the Prime Minister is obtained for the relevant act as one that is found not to compromise the public interest or the protection of investors:
(i) conducting a purchase and sale or other transaction of Securities or an Over-the-Counter Transaction of Derivatives with the Parent Corporation, etc. or Subsidiary Corporation, etc. of the Financial Instruments Business Operator, etc., under terms and conditions that are different from ordinary terms and conditions and that are likely to be detrimental to the fairness of transactions;
(ii) concluding a contract with a customer for any of the acts set forth in the items of Article 2, paragraph (8), knowing that the Parent Corporation, etc. or Subsidiary Corporation, etc. of the Financial Instruments Business Operator, etc. has granted credit to the customer on the condition that said contract be concluded with the Financial Instruments Business Operator, etc.;
(iii) giving advice in connection with the Investment Advisory Business it conducts, that would involve a transaction being conducted that is unnecessary in light of the transaction policy, the amount of the transaction, or the market conditions, or making an investment in connection with the Investment Management Business it conducts, that involves a transaction being conducted that is unnecessary in light of the investment policy, the amount of invested assets, or the market conditions, with the aim of benefitting the Parent Corporation, etc. or Subsidiary Corporation, etc. of the Financial Instruments Business Operator, etc.; and
(iv) any act other than what is set forth in the preceding three items, which involves the Parent Corporation, etc. or Subsidiary Corporation, etc. of the Financial Instruments Business Operator, etc. and which is specified by Cabinet Office Ordinance as being likely to compromise the protection of investors, harm the fairness of transactions, or cause a loss of confidence in the Financial Instruments Business.
(2) It is prohibited for a registered financial institution or its officer or employee to perform any of the following acts; provided, however, that this does not apply if the approval of the Prime Minster is obtained for the relevant act as one that is found not to compromise the public interest or the protection of investors:
(i) conducting a purchase and sale or other transaction of Securities or an Over-the-Counter Transaction of Derivatives with the Parent Corporation, etc. or Subsidiary Corporation, etc. of the registered financial institution, under terms and conditions that are different from ordinary terms and conditions and that are likely to be detrimental to the fairness of transactions;
(ii) performing the act specified in Article 33, paragraph (2), item (iv), sub-item (b) with a customer, while granting credit to the customer on the condition that a contract for any of the acts set forth in the items of Article 2, paragraph (8) be concluded with the Parent Corporation, etc. or Subsidiary Corporation, etc. of the registered financial institution;
(iii) giving advice in connection with the Investment Advisory Business it conducts, that would involve a transaction being conducted that is unnecessary in light of the transaction policy, the amount of the transaction, or the market conditions, or making an investment in connection with the Investment Management Business it conducts, that involves a transaction being conducted that is unnecessary in light of the investment policy, the amount of invested assets, or the market conditions, with the aim of benefitting the Parent Corporation, etc. or Subsidiary Corporation, etc. of the registered financial institution; and
(iv) any act other than what is set forth in the preceding three items, which involves the Parent Corporation, etc. or Subsidiary Corporation, etc. of the registered financial institution and which is specified by Cabinet Office Ordinance as being likely to compromise the protection of investors, harm the fairness of transactions, or cause a loss of confidence in the business of the registered financial institution.
(Restriction on Credit Granting by the Underwriter)
Article 44-4 If a Financial Instruments Business Operator that has become an Underwriter of Securities sells said Securities(in the case of a Financial Instruments Business Operator who conducts the act specified in Article 2, paragraph (6), item (iii), the Securities acquired by exercising share options prescribed in said item), it must not lend money or otherwise grant credit for the purchase price to the purchaser of the Securities until six months have elapsed since the day on which the Financial Instruments Business Operator became an Underwriter.
Subsection 7 Miscellaneous Provisions
Article 45 The provisions set forth in each of the following items do not apply if the person specified in the relevant item is a Professional Investor; provided, however, that this does not apply to the cases specified by Cabinet Office Ordinance as those in which the public interest or the protection of Professional Investors could be compromised:
(i) Article 37; Article 38, items (iv) to (vi) inclusive; and Article 40, item (i): the other party that the Financial Instruments Business Operator, etc. solicits to conclude a Financial Instruments Transaction Contract;
(ii) Articles 37-2 to 37-6 inclusive; Article 40-2, paragraph (4); and Article 43-4: the other party to a Financial Instruments Transaction Contract for which a Financial Instruments Business Operator, etc. has received an offer or which a Financial Instruments Business Operator, etc. has concluded;
(iii) Article 41-4 and Article 41-5: the other party to an Investment Advisory Contract concluded by a Financial Instruments Business Operator, etc.; and
(iv) Articles 42-5 to 42-7 inclusive: the other party to a Discretionary Investment Contract concluded by a Financial Instruments Business Operator, etc.
Section 3 Accounting
Subsection 1 Financial Instruments Business Operators Engaged in Type I Financial Instruments Business
(The Business Year)
Article 46 The business year of a Financial Instruments Business Operator (limited to one that is engaged in Type I Financial Instruments Business; hereinafter the same applies in this Subsection) is from the first day of a month selected by the Financial Instruments Business Operator to the day on which one year has elapsed since said day; provided, however, that this does not apply to the first business year after changing the last day of the business year.
(Business Books and Documents)
Article 46-2 A Financial Instruments Business Operator shall prepare and archive its business books and documents pursuant to the provisions of Cabinet Office Ordinance.
(Submission, etc. of Business Reports)
Article 46-3 (1) Each business year, pursuant to the provisions of Cabinet Office Ordinance, a Financial Instruments Business Operator shall prepare a business report and submit it to the Prime Minister within three months after the end of the business year.
(2) In addition to submitting a business report pursuant to the provisions of the preceding paragraph, a Financial Instruments Business Operator shall report the state of its business and assets to the Prime Minister pursuant to the provisions of Cabinet Office Ordinance.
(3) If the Prime Minister finds it to be necessary and appropriate in the public interest or for the protection of investors, the Prime Minister, pursuant to the provisions of Cabinet Order, may order a Financial Instruments Business Operator to issue public notice of all or part of the business report referred to in paragraph (1).
(Public Inspection of Explanatory Documents)
Article 46-4 Each business year, a Financial Instruments Business Operator shall prepare explanatory documents stating the particulars specified by Cabinet Office Ordinance as pertinent to the state of its business and assets, and shall keep those explanatory documents at all of its business offices and offices and make them available for public inspection during the one–year period beginning from the day on which the period specified by Cabinet Order elapses following the end of each business year.
(Financial Instruments Transaction Liability Reserves)
Article 46-5 (1) A Financial Instruments Business Operator shall lay aside financial instruments transaction liability reserves, pursuant to the provisions of Cabinet Office Ordinance, in proportion to the transaction volume of the purchases and sales and other transactions of Securities and Derivatives Transactions, etc.
(2) The financial instruments transaction liability reserves referred to in the preceding paragraph must not be used other than when allocated to cover a loss that arises due to problematic conduct in connection with a purchase and sale or other transaction of Securities or a Derivatives Transaction, etc., or in cases otherwise specified by Cabinet Office Ordinance.
(Capital Adequacy Ratio)
Article 46-6 (1) A Financial Instruments Business Operator must calculate the ratio of the sum total of its stated capital, reserve funds, and other amounts specified by Cabinet Office Ordinance less the sum total of its fixed assets and any other things specified by Cabinet Office Ordinance, to the sum total of the amount specified by Cabinet Office Ordinance as the amount for covering possible risks which may arise due to fluctuations in the prices of the Securities held or due to other reasons (hereinafter referred to as the "Capital Adequacy Ratio"), and notify the Prime Minister of this ratio at the end of each month and in the cases specified by Cabinet Office Ordinance.
(2) A Financial Instruments Business Operator must not allow its Capital Adequacy Ratio to fall below 120 percent.
(3) A Financial Instruments Business Operator shall prepare documents stating its Capital Adequacy Ratio as of the last day of a Quarter (meaning each three-month period of the business year (for the first business year after changing the last day of the business year, each period specified by Cabinet Office ordinance); the same applies in Article 57-2, paragraph (5) and article 57-5, paragraphs (2) and (3)), keep them at all of its business offices and offices, and make them available for public inspection for the three-month period starting from the day on which one month has elapsed since the last day of the relevant month.
Subsection 2 Financial Instruments Business Operators Not Engaged in Type I Financial Instruments Business
(Business Books and Documents)
Article 47 A Financial Instruments Business Operator (other than one that is engaged in Type I Financial Instruments Business; hereinafter the same applies in this Subsection) shall prepare and archive its business books and documents pursuant to the provisions of Cabinet Office Ordinance.
(Submission of Business Reports)
Article 47-2 Each business year, pursuant to the provisions of Cabinet Office Ordinance, a Financial Instruments Business Operator shall prepare a business report and submit it to the Prime Minister within three months after the end of the business year.
(Public Inspection of Explanatory Documents)
Article 47-3 Each business year, pursuant to the provisions of Cabinet Office Ordinance, a Financial Instruments Business Operator shall prepare explanatory documents stating those of the particulars stated in the business report referred to in the preceding Article which are specified by Cabinet Office Ordinance as particulars that are found to be necessary in terms of investor protection, and shall keep them at all of its business offices and offices and make them available for public inspection during the one–year period beginning from the day on which the period specified by Cabinet Order elapses following the end of each business year.
Subsection 3 Registered Financial Institutions
(Business Books and Documents)
Article 48 A registered financial institution shall prepare and archive its business books and documents pursuant to the provisions of Cabinet Office Ordinance.
(Submission, etc. of Business Reports)
Article 48-2 (1) Each business year, pursuant to the provisions of Cabinet Office Ordinance, a registered financial institution shall prepare a business report and submit it to the Prime Minister within three months after the end of the business year.
(2) In addition to submitting a business report pursuant to the provisions of the preceding paragraph, a registered financial institution shall report the state of its business and assets to the Prime Minister pursuant to the provisions of Cabinet Office Ordinance.
(3) If the Prime Minister finds it to be necessary and appropriate in the public interest or for the protection of investors, the Prime Minister, pursuant to the provisions of Cabinet Order, may order a registered financial institution to give public notice of all or part of the business report under paragraph (1).
(Financial Instruments Transaction Liability Reserves)
Article 48-3 (1) A registered financial institution shall lay aside financial instruments transaction liability reserves, pursuant to the provisions of Cabinet Office Ordinance, in proportion to the transaction volume of the purchases and sales and other transactions of Securities and Derivatives Transactions, etc.
(2) The financial instruments transaction liability reserves referred to in the preceding paragraph must not be used other than when allocated to cover a loss that arises due to problematic conduct involving a purchase and sale or other transaction of Securities or a Derivatives Transaction, etc., or in cases otherwise specified by Cabinet Office Ordinance.
Subsection 4 Special Provisions for Foreign Corporations, etc.
(Special Provisions on the Submission of Business Reports)
Article 49 (1) With regard to the application of Article 46-3, paragraph (1) if a Financial Instruments Business Operator is a foreign corporation, in that paragraph, the phrase "within three months" shall be deemed to be replaced with "within the period specified by Cabinet Order."
(2) With regard to the application of Article 46-6, paragraph (1) if a Financial Instruments Business Operator is a foreign corporation, in that paragraph, the term "stated capital" shall be deemed to be replaced with "brought-in capital," the term "reserve funds" shall be deemed to be replaced with "reserve funds laid aside in its business offices and offices in Japan," and the term "fixed assets" shall be deemed to be replaced with "fixed assets of its business offices and offices in Japan."
(3) With regard to the application of Article 47-2 if a Financial Instruments Business Operator is a foreign corporation or an individual domiciled in a foreign state, and with regard to the application of Article 48-2, paragraph (1) if a registered financial institution is a foreign corporation, in those provisions, the phrase "within three months" is deemed to be replaced with "within the period specified by Cabinet Order".
(Submission of Other Documents)
Article 49-3 (1) Each business year, pursuant to the provisions of Cabinet Office Ordinance, a Financial Instruments Business Operator (but only a foreign corporation engaged in Type I Financial Instruments Business; hereinafter the same applies in this Subsection) shall submit a balance sheet, profit and loss statement, and other financial accounting documents prepared in connection with all of its business, as well as documents summarizing business in the relevant business year, to the Prime Minister within the period specified by Cabinet Order after the end of that business year.
(2) In addition to submitting documents pursuant to the provisions of the preceding paragraph, a Financial Instruments Business Operator shall report the state of its business and assets to the Prime Minister pursuant to the provisions of Cabinet Office Ordinance.
(Reserves for Loss)
Article 49-4 (1) Until the amount of money specified by Cabinet Order as referred to in Article 29-4, paragraph (1), item (iv), sub-item (a) is reached, a Financial Instruments Business Operator shall lay aside reserves for loss at its principal business office or office in Japan, pursuant to the provisions of Cabinet Office Ordinance, in at least the amount arrived at by multiplying the amount of profit from the business conducted at all business offices and offices in Japan that it has established for the purpose of engaging in the Financial Instruments Business (hereinafter referred to as "All Business Offices and Offices" in the following paragraph and following Article), by the rate of no more than ten percent that is specified by Cabinet Office Ordinance.
(2) The reserves for loss referred to in the preceding paragraph must not be used other than when allocated to cover a net loss linked to the business of All Business Offices and Offices of the Financial Instruments Business Operator, with the approval of the Prime Minister.
(Retention of Assets Within Japan)
Article 49-5 Pursuant to the provisions of Cabinet Office Ordinance, a Financial Instruments Business Operator must retain assets equivalent to the sum total of its financial instruments transaction liability reserves, reserves for loss, and the amount of liability on the accounts of All Business Offices and Offices as specified by Cabinet Order, in Japan.
Section 4 Supervision
(Notification of Suspension)
Article 50 (1) If a Financial Instruments Business Operator, etc. comes to fall under one of the following items, it must notify the Prime Minister of this without delay:
(i) it suspends its business (limited to Financial Instruments Business or services of a registered financial institution (hereinafter referred to as "Financial Instruments Business, etc." in this Section) or resumes business (with regard to a Financial Instruments Business Operator that has obtained the authorization referred to in Article 30, paragraph (1), this includes if it suspends or resumes the business subject to said authorization);
(ii) it discontinues business that was under the authorization referred to in Article 30, paragraph (1);
(iii) the Financial Instruments Business Operator is a corporation, and that corporation merges with another corporation (excluding if the Financial Instruments Business Operator is a corporation and that corporation disappears in the merger), succeeds to all or part of another corporation's business undertakings (limited to those in the Financial Instruments Business, etc.; hereinafter the same applies in this item and the following Article) in a company split, or acquires all or part of another corporation's business;
(iv) the Financial Instruments Business Operator (limited to one engaged in Securities Services; the same applies in the following item) acquires or comes to hold the majority of all shareholders', etc. voting rights in a bank, a Cooperative Financial Institution, or any other financial institution specified by Cabinet Order; in a corporation in a foreign state that engages in the same kind of business as that conducted by such persons; or in a Financial Instruments Business Operator (limited to a corporation), a foreign corporation that engages in Financial Instruments Business, or any other corporation specified by Cabinet Office Ordinance (collectively referred to as a "Bank, etc." in the following item and Article 56-2, paragraph (1));
(v) the Financial Instruments Business Operator comes to no longer hold the majority of all shareholders', etc. voting rights in a Bank, etc. in which it used to hold the majority of all shareholders', etc. voting rights, or such Bank, etc. merges, is dissolved, or discontinues the whole of its business;
(vi) the majority of all shareholders', etc. voting rights in the Financial Instruments Business Operator (limited to one engaged in Type I Financial Instruments Business or Investment Management Business) has come to be held by another corporation or other organization;
(vii) it files a petition to commence bankruptcy proceedings, rehabilitation proceedings, or reorganization proceedings; or
(viii) it falls under any other case specified by Cabinet Office Ordinance.
(2) Necessary particulars relevant to the determination of whether the majority of all shareholders', etc. voting rights are held as prescribed in item (iv) of the preceding paragraph are specified by Cabinet Office Ordinance in consideration of the manner in which they are held and other circumstances.
(Notification of Business Discontinuance)
Article 50-2 (1) If a Financial Instruments Business Operator, etc. comes to fall under one of the following items, the person specified in that item must notify the Prime Minister of this within 30 days from the day in question:
(i) the Financial Instruments Business Operator is an individual, and that individual dies: the heir;
(ii) the Financial Instruments Business Operator, etc. discontinues Financial Instruments Business, etc.: that corporation or individual;
(iii) the Financial Instruments Business Operator, etc. is a corporation, and that corporation disappears in a merger: the officer that represented the corporation;
(iv) the Financial Instruments Business Operator, etc. is a corporation, and that corporation is dissolved due to an order to commence bankruptcy proceedings: the bankruptcy trustee;
(v) the Financial Instruments Business Operator, etc. is a corporation, and that corporation is dissolved for reasons other than a merger or an order to commence bankruptcy proceedings: the liquidator;
(vi) the Financial Instruments Business Operator, etc. is a corporation, and that corporation has the whole or part of its business succeeded to in a company split: that corporation; or
(vii) the Financial Instruments Business Operator, etc. transfers the whole or part of its business: that corporation or individual.
(2) If a Financial Instruments Business Operator, etc. comes to fall under one of the items of the preceding paragraph (in item (vi) of the preceding paragraph, this is only if a Financial Instruments Business Operator, etc. has the whole of its business succeeded to in a company split, and in item (vii) of the preceding paragraph, this is only if a Financial Instruments Business Operator, etc. transfers the whole of its business), the Article 29 or Article 33-2 registration of the Financial Instruments Business Operator, etc. ceases to be valid.
(3) If a Financial Instruments Business Operator is an individual (limited to one engaged in Investment Advisory Business) and that individual dies, the heir may continue to engage in Financial Instruments Business for 60 days after the death of the decedent (if, during that period, a disposition to refuse registration under Article 29-4, paragraph (1) is reached or the discontinuation of Financial Instruments Business (limited to Investment Advisory Business; hereinafter the same applies in this paragraph to paragraph (5) inclusive) is ordered pursuant to Article 52, paragraph (1) as it applies through the replacement of certain terms pursuant to the provisions of the following paragraph, the heir may continue to engage in Financial Instruments Business until the day on which the disposition is reached or the discontinuation is ordered; hereinafter referred to as the "Business Continuation Period" in this paragraph). The same applies until a disposition to make a registration or deny a registration in connection with an application is reached, if the heir files an application for the registration referred to in Article 29 (or, if the heir is a Financial Instruments Business Operator and files an application for the registration of a change referred to in Article 31, paragraph (4); hereinafter the same applies in this paragraph) during the Business Continuation Period and the Business Continuation Period elapses.
(4) If it is permissible for an heir to continue engaging in Financial Instruments Business pursuant to the provisions of the preceding paragraph, the heir is deemed to be a Financial Instruments Business Operator (limited to one engaged in Investment Advisory Business), and the provisions of Articles 36 to 36-3 inclusive; Article 37; Article 37-3; Article 37-4; Articles 37-6 to 38-2 inclusive; Article 40; Articles 41 to 41-5 inclusive; Articles 44 to 44-3 inclusive; Article 45; Articles 47 to 47-3 inclusive; Article 49, paragraph (3); Article 49-4; Article 49-5; Article 51; Article 52, paragraph (1) (limited to the part that involves item (i) and items (vi) to (ix) inclusive); Article 52, paragraph (4) or (5); and Article 56-2 (limited to paragraph (1), (3) or (4)) (including the penal provisions linked with these provisions) apply. In this case, in Article 52, paragraph (1), the term "rescind its Article 29 registration" is deemed to be replaced with "order the discontinuation of Financial Instruments Business".
(5) With regard to the application of the provisions of Article 29-4, paragraph (1) if the discontinuation of Financial Instruments Business is ordered pursuant to Article 52, paragraph (1) as it applies through the replacement of certain terms pursuant to the provisions of the preceding paragraph, the heir that is subject to the order for discontinuation is deemed to be a person that has had the registration referred to in Article 29 rescinded pursuant to the provisions of Article 52, paragraph (1), and the day on which the discontinuation is ordered is deemed to be the day on which the registration referred to in Article 29 is rescinded pursuant to the provisions of Article 52, paragraph (1).
(6) If a Financial Instruments Business Operator, etc. seeks to discontinue Financial Instruments Business, etc. (excluding Investment Advisory and Agency Business; the same applies in paragraph (8) and Article 56, paragraph (1)), to implement a merger (limited to a merger in which the Financial Instruments Business Operator, etc. disappears), to dissolve for reasons other than merger or an order to commence bankruptcy proceedings, to have all or part of its business succeeded to in a company split, or to transfer all or part of its business, it must issue public notice of this and post a notice in a place easily seen by the public at all of its business offices and offices pursuant to the provisions of Cabinet Office Ordinance, by 30 days prior to the day on which it does so.
(7) If a Financial Instruments Business Operator, etc. issues a public notice under the preceding paragraph, it must notify the Prime Minister of this immediately.
(8) If a Financial Instruments Business Operator, etc. issues a public notice under paragraph (6) (unless it issues that public notice in connection with the succession of the whole or part of its business upon merger or in a company split or in connection with the transfer of the whole or part of its business), the Financial Instruments Business Operator, etc. must promptly complete the sales and purchases and other transactions of Securities and Derivatives Transactions, etc. it is conducting (referred to as "Customer Transactions" in Article 56 and Article 57-9) and return the assets that customers have deposited with it in connection with its Financial Instruments Business, etc. and the assets on its customers' accounts that are in its possession without delay.
(9) The provisions of Article 940, paragraph (1) (limited to the part that involves item (i)) and Article 940, paragraph (3) of the Companies Act apply mutatis mutandis if a Financial Instruments Business Operator, etc. (limited to one that is a company) issues a public notice under paragraph (6) through an Electronic Public Notice (meaning an Electronic Public Notice as provided for in Article 2, item (xxxiv) of that Act; the same applies hereinafter). The necessary technical replacement of terms for such a case is specified by Cabinet Order.
(10) The provisions of Article 940, paragraph (1) (limited to the part that involves item (i)) of the Companies Act and Article 940, paragraph (3); Article 941; Article 946; Article 947; Article 951; paragraph (2); Article 953; and Article 955 of that Act apply mutatis mutandis if a Financial Instruments Business Operator, etc. (limited to one that is a foreign company) issues a public notice under paragraph (6) through an Electronic Public Notice. The necessary technical replacement of terms for such a case is specified by Cabinet Order.
(Issuing a Business Improvement Order to a Financial Instruments Business Operator)
Article 51 If the Prime Minister finds it to be necessary and appropriate in the public interest or for the protection of investors as concerns a Financial Instruments Business Operator's business operations or the state of its assets, the Prime Minister, within the scope of this necessity, may order the Financial Instruments Business Operator to change its business methods or to otherwise take measures that are necessary for improving its business operations or the state of its assets.
(Issuing a Business Improvement Order to a Registered Financial Institution)
Article 51-2 If the Prime Minister finds it to be necessary and appropriate in the public interest or for the protection of investors as concerns a registered financial institution's business operations, the Prime Minister, within the scope of this necessity, may order the registered financial institution to change its business methods or to otherwise take measures that are necessary for improving its business operations.
(Supervisory Measures for Financial Instruments Business Operators)
Article 52 (1) If a Financial Instruments Business Operator falls under one of the following items, the Prime Minister may rescind its Article 29 registration, rescind its Article 30, paragraph (1) authorization, or order the suspension of all or a part of business activities during a fixed period of no longer than six months:
(i) it comes to fall under Article 29-4, paragraph (1), item (i), (ii), or (iii);
(ii) a Financial Instruments Business Operator engaged in Type I Financial Instruments Business, Type II Financial Instruments Business, or Investment Management Business comes to fall under Article 29-4, paragraph (1), item (iv);
(iii) a Financial Instruments Business Operator engaged in Type I Financial Instruments Business or Investment Management Business comes to fall under Article 29-4, paragraph (1), item (v), sub-item (a) or (b);
(iv) a Financial Instruments Business Operator engaged in Type I Financial Instruments Business comes to fall under Article 29-4, paragraph (1), item (vi), sub-item (b);
(v) it has received its Article 29 registration by wrongful means;
(vi) it violates a law or regulation (other than Article 46-6, paragraph (2)) or a disposition by a government agency which is based on a law or regulation, in connection with the Financial Instruments Business or services incidental thereto;
(vii) in light of the state of its business or assets, it is likely to become insolvent;
(viii) a fact has occurred in connection with the operation of Investment Advisory and Agency Business or Investment Management Business, which is detrimental to the investors' interests;
(ix) it commits a wrongful or extremely unjust act in connection with the Financial Instruments Business, and the circumstances surrounding this are particularly serious;
(x) it violates the conditions attached to its Article 30, paragraph (1) authorization; or
(xi) a Financial Instruments Business Operator that has obtained Article 30, paragraph (1) authorization becomes unable to satisfy the criteria set forth in Article 30-4, items (i) to (iii) inclusive or (v).
(2) If the officer of a Financial Instruments Business Operator (for a foreign corporation, this is limited to an officer stationed at its domestic business office or office and its domestic representative; hereinafter the same applies in this paragraph and paragraph (2) of the following Article) comes to fall under one of the categories in Article 29-4, paragraph (1), item (ii), sub-items (a) to (i) inclusive, is discovered to have fallen under one of the categories in sub-items (a) to (i) inclusive of that item at the time of the Article 29 registration, or comes to fall under one of the categories in item (vi) or items (viii) to (x) inclusive of the preceding paragraph, the Prime Minister may order the Financial Instruments Business Operator to dismiss that officer.
(3) If a Financial Instruments Business Operator that has obtained Article 30, paragraph (1) authorization comes to fall under Article 50, paragraph (1), item (ii), or if the Article 29 registration of the Financial Instruments Business Operator loses its validity pursuant to the provisions of Article 50-2, paragraph (2) or is rescinded pursuant to the provisions of paragraph (1), the following paragraph, Article 53, paragraph (3), Article 54 or Article 57-6, paragraph (3), that authorization ceases to be valid.
(4) If the Prime Minister is unable to ascertain the location of the business offices or offices of a Financial Instruments Business Operator or is unable to ascertain the whereabouts of a Financial Instruments Business Operator (in the case of a corporation, the whereabouts of the officer representing the corporation), the Prime Minister, pursuant to the provisions of Cabinet Office Ordinance, may issue public notice of that fact and rescind the registration of the Financial Instruments Business Operator if no filing is made by the Financial Instruments Business Operator even after 30 days past the day of the public notice.
(5) The provisions of Chapter III of the Administrative Procedure Act do not apply to a disposition under the preceding paragraph.
(Supervisory Measures for Registered Financial Institutions)
Article 52-2 (1) If a registered financial institution falls one of the following items, the Prime Minister may rescind its registration under Article 33-2, or order the suspension of all or a part of business activities during a fixed period of no longer than six months:
(i) it has come to fall under any of the items of Article 33-5, paragraph (1);
(ii) it has received its Article 33-2 registration by wrongful means;
(iii) it violates a law or regulation or a disposition by a government agency which is based on a law or regulation, in connection with the services of a registered financial institution or services incidental thereto;
(iv) a fact has occurred in connection with the operation of its Investment Advisory and Agency Business, which is detrimental to the investors' interests ; or
(v) it has committed a wrongful or unjust act in connection with the services of a registered financial institution, and the circumstances surrounding this are particularly serious.
(2) If the officer of a registered financial institution comes to fall under one of the categories in items (iii) to (v) inclusive of the preceding paragraph, the Prime Minister may order the registered financial institution to dismiss that officer.
(3) If the Prime Minister is unable to ascertain the location of the business offices or offices of a registered financial institution or is unable to ascertain the whereabouts of the officer representing the registered financial institution, the Prime Minister, pursuant to the provisions of Cabinet Office Ordinance, may issue public notice of that fact and rescind the registration of the registered financial institution if no filing is made by the registered financial institution even after 30 days past the day of the public notice.
(4) The provisions of Chapter III of the Administrative Procedure Act do not apply to a disposition under the preceding paragraph.
(Orders Involving the Capital Adequacy Ratio)
Article 53 (1) If a Financial Instruments Business Operator (limited to one engaged in Type I Financial Instruments Business; hereinafter the same applies in this Article) violates the provisions of Article 46-6, paragraph (2) and the Prime Minister finds it to be necessary and appropriate in the public interest or for the protection of investors, the Prime Minister, within the scope of this necessity, may order a change of business methods, order assets to be deposited, or issue orders with respect to matters that are otherwise necessary from a supervisory perspective.
(2) If a Financial Instruments Business Operator violates the provisions of Article 46-6, paragraph (2) (but only if the Capital Adequacy Ratio is less than 100 percent) and the Prime Minister finds it to be necessary and appropriate in the public interest or for the protection of investors, the Prime Minister, within the scope of this necessity, may order the suspension of all or a part of business activities during a fixed period of no longer than three months.
(3) If the Prime Minister orders the suspension of all or a part of business activities pursuant to the provisions of the preceding paragraph, and finds that the Capital Adequacy Ratio of the Financial Instruments Business Operator as of the day on which three months have elapsed since the day of the order continues to be less than 100 percent and that the Financial Instruments Business Operator's Capital Adequacy Ratio status is not likely to recover, the Prime Minister may rescind the Article 29 registration of that Financial Instruments Business Operator.
(Rescission of Registration Due to Non-commencement or Suspension of Business)
Article 54 If, without legitimate grounds for doing so, a Financial Instruments Business Operator, etc. does not commence business within three months of the day on which it is permitted to begin engaging in Financial Instruments Business, etc. or suspends business for three months or more continually, the Prime Minister may rescind the Article 29 or Article 33-2 registration of that Financial Instruments Business Operator, etc.
(Public Notice of Supervisory Measures)
Article 54-2 In the cases set forth as follows, the Prime Minister shall issue public notice indicating as follows, pursuant to the provisions of Cabinet Office Ordinance:
(i) the Prime Minister rescinds an Article 29 or Article 33-2 registration or an Article 30, paragraph (1) authorization, or orders the suspension of all or a part of business activities pursuant to the provisions of Article 52, paragraph (1) or Article 52-2, paragraph (1);
(ii) the Prime Minister orders the suspension of all or a part of business activities pursuant to the provisions of Article 53, paragraph (2); or
(iii) the Prime Minister rescinds an Article 29 or Article 33-2 registration pursuant to the provisions of Article 52, paragraph (4); Article 52-2, paragraph (3); Article 53, paragraph (3); or the preceding Article.
(Deletion of a Registration)
Article 55 (1) If an Article 29 or Article 33-2 registration loses its validity pursuant to the provisions of Article 50-2, paragraph (2) or if the Prime Minister rescinds an Article 29 or Article 33-2 registration pursuant to the provisions of Article 52, paragraph (1) or (4); Article 52-2, paragraph (1) or (3); Article 53, paragraph (3); or Article 54; the Prime Minister must delete that registration.
(2) If the Prime Minister rescinds an Article 30, paragraph (1) authorization pursuant to the provisions of Article 52, paragraph (1) or an Article 30, paragraph (1) authorization loses its validity pursuant to the provisions of Article 52, paragraph (3), the Prime Minister must delete the supplementary note indicating that the Article 30, paragraph (2) authorization has been given.
(Completion of Remaining Business)
Article 56 (1) The provisions of Article 50-2, paragraph (8) apply mutatis mutandis to a person that was a Financial Instruments Business Operator, etc. if that Financial Instruments Business Operator, etc. dissolves or discontinues Financial Instruments Business, etc., or has its Article 29 or Article 33-2 registration rescinded pursuant to the provisions of Article 52, paragraph (1); Article 52-2, paragraph (1); Article 53, paragraph (3); or Article 54. In such a case, the person that was the Financial Instruments Business Operator, etc. is deemed to still be a Financial Instruments Business Operator, etc. inasmuch as the task of completing Customer Transactions is concerned.
(2) Except in a case to which the provisions of the preceding paragraph are applicable, the provisions of Article 50-2, paragraph (8) apply mutatis mutandis to the Customer Transactions involved in the business of a Financial Instruments Business Operator if a Financial Instruments Business Operator that has obtained Article 30, paragraph (1) authorization discontinues the business to which that authorization pertains or has that authorization rescinded pursuant to the provisions of Article 52, paragraph (1). In such a case, the Financial Instruments Business Operator is deemed to still have Article 30, paragraph (1) authorization inasmuch as the task of completing the Customer Transactions involved in that business is concerned.
(Collection of Reports and Inspections)
Article 56-2 (1) Whenever 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 a Financial Instruments Business Operator, etc., a person that conducts transactions with a Financial Instruments Business Operator, etc., a Bank, etc. in which a Financial Instruments Business Operator, etc. (excluding a registered financial institution) holds the majority of all shareholders', etc. voting rights (hereinafter such a Bank, etc. is referred to as a "Specified Subsidiary Corporation" in this paragraph), a Holding Company (meaning a holding company as prescribed in Article 9, paragraph (4), item (i) of the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade; hereinafter the same applies in this Article) that has a Financial Instruments Business Operator, etc. as its Subsidiary Company (meaning a Subsidiary Company as prescribed in Article 29-4, paragraph (3); hereinafter the same applies in this Article), or the person that a Financial Instruments Business Operator, etc. has entrusted with its business(including a person who has received entrustment from such person (including entrustment via two or more layers); hereinafter the same applies in this paragraph), to submit reports or materials that should serve as a reference in connection with the business or assets of the Financial Instruments Business Operator, etc. (but may only order a Specified Subsidiary Corporation submit reports or materials that should serve as a reference in connection with the assets of the Financial Instruments Business Operator, etc. (excluding a registered financial institution)), and may have the relevant officials inspect the state of the business or assets, or the books and documents or any other articles, of a Financial Instruments Business Operator, etc., a Specified Subsidiary Corporation, a Holding Company that has a Financial Instruments Business Operator, etc. as its Subsidiary Company, or the person that a Financial Instruments Business Operator, etc. has entrusted with its business (but may only have the relevant officials inspect a Specified Subsidiary Corporation as is necessary in connection with the assets of the Financial Instruments Business Operator, etc. (excluding a registered financial institution), and may only have the relevant officials inspect a Holding Company that has a Financial Instruments Business Operator, etc. as its Subsidiary Company, or the person that a Financial Instruments Business Operator, etc. has entrusted with its business, as is necessary in connection with the business or assets of the Financial Instruments Business Operator, etc.).
(2) Whenever 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 the Major Shareholder (meaning a Major Shareholder as provided for in Article 29-4, paragraph (2); hereinafter the same applies in this paragraph) of a Financial Instruments Business Operator (limited to one engaged in Type I Financial Instruments Business or Investment Management Business, and excluding a foreign corporation; hereinafter the same applies in this paragraph) or the Major Shareholder of a Holding Company that has a Financial Instruments Business Operator as its Subsidiary Company to submit a notification or take measures referred to in Articles 32 to 32-3 inclusive (this means Article 32, paragraph (1) or (2); Article 32-2, paragraph (1); or Article 32-3, paragraph (1) as applied mutatis mutandis pursuant to Article 32-4 in the case of the Major Shareholder of a Holding Company that has a Financial Instruments Business Operator as its Subsidiary Company; hereinafter the same applies in this paragraph), and to submit reports or materials that should serve as a reference in connection with the business or assets of a Financial Instruments Business Operator, and may have the relevant officials inspect documents or other articles of such a Major Shareholder (but only as is necessary in connection with the notification or measures referred to in Articles 32 to 32-3 inclusive or the business or assets of the Financial Instruments Business Operator, etc.).
(3) In a case other than what is provided for in paragraph (1), whenever the Prime Minister finds it to be necessary and appropriate for ensuring compliance with the provisions of Article 36, paragraph (2), the Prime Minister may order the Parent Financial Institution, etc. (meaning a Parent Financial Institution, etc. provided for in Article 36, paragraph (4); hereinafter the same applies in this paragraph) or Subsidiary Financial Institution, etc. (meaning a Subsidiary Financial Institution, etc. provided for in Article 36, paragraph (5); hereinafter the same applies in this paragraph) of a Specified Financial Instruments Business Operator, etc. (meaning a Specified Financial Instruments Business Operator, etc. provided for in Article 36, paragraph (3); hereinafter the same applies in this paragraph) to submit reports or materials that should serve as a reference in connection with the business or assets of the Specified Financial Instruments Business Operator, etc., and may have the relevant officials inspect the state of the business or assets, or the books and documents or any other articles, of the Parent Financial Institution, etc. or the Subsidiary Financial Institution, etc. of the relevant Specified Financial Instruments Business Operator, etc.
(4) In a case other than what is provided for in paragraph (1), whenever the Prime Minister finds it to be necessary and appropriate for ensuring compliance with Article 44-3, the Prime Minister may order the Parent Bank, etc. (meaning a Parent Bank, etc. provided for in Article 31-4, paragraph (3); hereinafter the same applies in this paragraph) or Subsidiary Bank, etc. (meaning a Subsidiary Bank, etc. provided for in Article 31-4, paragraph (4); hereinafter the same applies in this paragraph) of a Financial Instruments Business Operator to submit reports or materials that should serve as a reference in connection with the business or assets of the Financial Instruments Business Operator, and may have the relevant officials inspect the state of the business or assets, or the books and documents or any other articles, of the Parent Bank, etc. or Subsidiary Bank, etc. of the relevant Financial Instruments Business Operator.
(Retention of Assets Within Japan)
Article 56-3 Beyond what is provided for in Article 49-5, if 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 a Financial Instruments Business Operator to keep the portion of its assets that is specified by Cabinet Order within Japan.
(Hearing)
Article 57 (1) Before seeking to refuse an Article 29 or Article 33-2 registration, an Article 30, paragraph (1) authorization, or an Article 31, paragraph (4) registration of a change, the Prime Minister must notify the applicant for registration or the Financial Instruments Business Operator, and have the relevant officials conduct a hearing regarding the applicant for registration or the Financial Instruments Business Operator.
(2) Irrespective of the category of proceeding for hearing statements of opinion under Article 13, paragraph (1) of the Administrative Procedure Act, before seeking to issue a disposition based on the provisions of Article 51; Article 51-2; Article 52, paragraph (1); Article 52-2, paragraph (1); Article 53; Article 54; or the preceding Article, the Prime Minister must conduct a hearing.
(3) Upon deciding to grant or to refuse an Article 29 or Article 33-2 registration, the an Article 30, paragraph (1) or Article 31, paragraph (6) authorization, an Article 31, paragraph (4) registration of a change, or an Article 35, paragraph (4) approval, to attach conditions pursuant to the provisions of Article 30-2, paragraph (1), or to issue a disposition based on the provisions of Article 51; Article 51-2; Article 52, paragraph (1) or (2); Article 52-2, paragraph (1) or (2); Article 53; Article 54; or the preceding Article, the Prime Minister must notify the applicant for registration or the Financial Instruments Business Operator, etc. of this in writing.
Section 4-2 Special Provisions on Special Financial Instruments Business Operators, etc.
Subsection 1 Special Financial Instruments Business Operators
(Notifications for Special Financial Instruments Business Operators)
Article 57-2 (1) If the total asset value (meaning the total monetary value of assets calculated pursuant to the provisions of Cabinet Office Ordinance; hereinafter the same applies in this Article) of a Financial Instruments Business Operator (limited to one engaged in Type I Financial Instruments Business, excluding foreign corporations; hereinafter the same applies in this Subsection) exceeds the amount of money specified by Cabinet Order as representing the scope of all assets required for ensuring the sound and appropriate operation of the business of the group consisting of the Financial Instruments Business Operator and its Subsidiary Corporations, etc. (hereinafter referred to as the "Total Asset Value Threshold" in this Article), the Financial Instruments Business Operator must notify the Prime Minister of this, of the total asset value, and of the basis for its calculation within two weeks from the day on which that value is exceeded; provided, however, that if the total asset value comes to be equal to or lower than the Total Asset Value Threshold after the Financial Instruments Business Operator has made the notification under the main clause of this paragraph, but the total asset value of the Financial Instruments Business Operator again comes to exceed the Total Asset Value Threshold by the time that two years have elapsed counting from the day on which the total asset value came to be equal to or lower than the Total Asset Value Threshold, the Financial Instruments Business Operator is not required to submit notification of this or of the total asset value and the basis for its calculation.
(2) A Special Financial Instruments Business Operator (meaning a Financial Instruments Business Operator that has made the notification under the provisions of the preceding paragraph, excluding one that comes to fall under paragraph (6), item (ii) after making that notification; hereinafter the same applies in this Section) shall submit the following documents within the period specified by Cabinet Order counting from the day on which it makes the notification under the provisions of the proceeding paragraph(hereinafter referred to as the "Notification Date" in this Subsection) if that Special Financial Instruments Business Operator has a Parent Company as of the Notification Date:
(i) a document in which it states the trade name or name of the Parent Company of the Special Financial Instruments Business Operator and other particulars specified by Cabinet Office Ordinance;
(ii) the latest Quarterly Securities Report of the company that, among the Parent Companies of the Special Financial Instruments Business Operator, itself has no Parent Company, and other documents in which it describes the state of the business and assets of the Parent Company of the Special Financial Instruments Business Operator and its Subsidiary Corporations, etc. pursuant to the provisions of Cabinet Office Ordinance;
(iii) if the group consisting of the Parent Company of the Special Financial Instruments Business Operator and its Subsidiary Corporations, etc. is under the supervision of an administrative organization based on other laws and regulations (including if the group is under the supervision of an administrative organization in a foreign state or any other equivalent organization based on foreign laws and regulations) with respect to the state of its business operations and assets, a document explaining this; and
(iv) if the Parent Company of the Special Financial Instruments Business Operator does the management and administration of the Special Financial Instruments Business Operator or if the Parent Company of the Special Financial Instruments Business Operator or its Subsidiary Corporation, etc. provides assistance related to fund procurement to the Special Financial Instruments Business Operator, a document in which it states the content and methods of this management and administration or assistance, pursuant to the provisions of Cabinet Office Ordinance.
(3) If a Special Financial Instruments Business Operator comes to have a Parent Company on or after the Notification Date, the Special Financial Instruments Business Operator must submit the documents set forth in the items of the preceding paragraph to the Prime Minister within the period specified by Cabinet Order, as calculated beginning from the day on which it came to have that Parent Company.
(4) If a particular stated in a document set forth in item (i), (iii) or (iv) of paragraph (2) changes (excluding a document specified by Cabinet Office Ordinance which concerns a Designated Parent Company as prescribed in Article 57-12, paragraph (3) or its Subsidiary Corporation, etc.), the Special Financial Instruments Business Operator (limited to one with a Parent Company) that has submitted the document set forth in the relevant item of paragraph (2) pursuant to the provisions of the preceding two paragraphs must notify the Prime Minister of this without delay, pursuant to the provisions of Cabinet Office Ordinance.
(5) For each Quarter, a Special Financial Instruments Business Operator (limited to one with a Parent Company) that submits the documents set forth in the items of paragraph (2) pursuant to the provisions of paragraph (2) or (3), shall submit the Quarterly Securities Report of the company that, among the Parent Companies of that Special Financial Instruments Business Operator, itself has no Parent Company, and submit other documents in which it describes the state of the business and assets of the Parent Company of the Special Financial Instruments Business Operator and its Subsidiary Corporations, etc. pursuant to the provisions of Cabinet Office Ordinance (excluding documents specified by Cabinet Office Ordinance which concern the Highest Designated Parent Company provided for in Article 57-12, paragraph (3) or its Subsidiary Corporations, etc.), to the Prime Minister within the period specified by Cabinet Order after the end of the Quarter.
(6) If a Special Financial Instruments Business Operator comes to fall under one of the following items, it must notify the Prime Minister of this without delay:
(i) it comes to no longer have a Parent Company; or
(ii) two years have elapsed counting from the day on which the total asset value came to be equal to or lower than the Total Asset Value Threshold, without the total asset value exceeding the Total Asset Value Threshold.
(7) If the Prime Minister accepts a notification under paragraph (1), the Prime Minister must note that the Financial Instruments Business Operator that has made such notification is a Special Financial Instruments Business Operator in said Financial Instruments Business Operator's registration.
(8) The term "Parent Company" as used in paragraphs (2) to (6) inclusive means a first company that has a second company as its Subsidiary Company (meaning a Subsidiary Company as prescribed in Article 29-4, paragraph (3); hereinafter the same applies in the following paragraph).
(9) The term "Subsidiary Corporation, etc." as used in paragraphs (1), (2), (4), and (5) means the Subsidiary Company of another company or any other person that falls under the requirements specified by Cabinet Order as a corporation or other organization that is closely related to that other company.
(Submission of Business Reports)
Article 57-3 (1) In and after the business year that includes the day on which the period specified by Cabinet Order elapses counting from the Notification Date, pursuant to the provisions of Cabinet Office Ordinance, a Special Financial Instruments Business Operator (limited to a Special Financial Instruments Business Operator with a Subsidiary Corporation, etc. (meaning a Subsidiary Corporation, etc. as prescribed in paragraph (9) of the preceding Article; hereinafter the same applies in this Subsection)) shall prepare a business report on a consolidated basis describing the state of the business and assets of the Special Financial Instruments Business Operator and its Subsidiary Corporation, etc., and submit that business report to the Prime Minister within three months after the end of each business year.
(2) In addition to submitting a business report pursuant to the provisions of the preceding paragraph, a Special Financial Instruments Business Operator shall report the state of the business and assets of the Special Financial Instruments Business Operator and its Subsidiary Corporations, etc. to the Prime Minister pursuant to the provisions of Cabinet Office Ordinance.
(3) If 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 a Special Financial Instruments Business Operator to make public notice of all or part of the business report referred to in paragraph (1), pursuant to the provisions of Cabinet Order.
(Public Inspection of Explanatory Documents)
Article 57-4 In and after the business year that includes the day on which the period specified by Cabinet Order elapses counting from the Notification Date, a Special Financial Instruments Business Operator shall prepare explanatory documents on a consolidated basis for the Special Financial Instruments Business Operator and its Subsidiary Corporations, etc., stating the particulars specified by Cabinet Office Ordinance as pertinent to the state of the business and assets of the Special Financial Instruments Business Operator and its Subsidiary Corporations, etc., and shall keep those explanatory documents at all of its business offices and offices and make them available for public inspection during the one–year period beginning from the day on which the period specified by Cabinet Order elapses following the end of each business year.
(Written Notification Stating the Soundness of Management)
Article 57-5 (1) In order to contribute to the sound and appropriate operation of the business of a Special Financial Instruments Business Operator, the Prime Minister shall establish criteria for whether the capital adequacy of the Special Financial Instruments Business Operator and its Subsidiary Corporations, etc. is appropriate in light of the assets, etc. held by the Special Financial Instruments Business Operator and its Subsidiary Corporations, etc. and other criteria that indicate soundness in the management of the Special Financial Instruments Business Operator and its Subsidiary Corporation, etc., as criteria by which the Special Financial Instruments Business Operator is to judge the soundness of its management.
(2) For each Quarter in and after the Quarter that includes the day on which the period specified by Cabinet Order elapses counting from the Notification Date, a Special Financial Instruments Business Operator shall submit a document to the Prime Minister in which it describes the soundness of its management as of the last day of the Quarter, as indicated by the criteria prescribed in the preceding paragraph (hereinafter simply referred to as the "Soundness of Management" in the following paragraph and the following Article), pursuant to the provisions of Cabinet Office Ordinance.
(3) For each Quarter in and after the Quarter that includes the day on which the period specified by Cabinet Order elapses counting from the Notification Date and pursuant to the provisions of Cabinet Office Ordinance, a Special Financial Instruments Business Operator shall keep a document in which it describes the Soundness of Management at all of its business offices and offices and make this document available for public inspection during the three-month period beginning from the day on which the period specified by Cabinet Order elapses counting from the end of the Quarter.
(Supervisory Measures Corresponding with the Soundness of Management)
Article 57-6 (1) If the Prime Minister finds it to be necessary and appropriate in the public interest or for the protection of investors in light of the Soundness of Management of a Special Financial Instruments Business Operator and its Subsidiary Corporations, etc., the Prime Minister, within the scope of this necessity, may order a Special Financial Instruments Business Operator to suspend all or a part of business activities during a fixed period of no longer than three months, may order it to change business methods or to deposit assets, and may issue orders to it in respect of matters that are otherwise necessary from a supervisory perspective.
(2) An order under the provisions of the preceding paragraph is to be given so as to correspond with the classification of the Soundness of Management of a Special Financial Instruments Business Operator and its Subsidiary Corporations, etc., and the Prime Minister must determine such classifications and the nature of the corresponding orders in advance and issue public notice of the same.
(3) If the Prime Minister orders a Special Financial Instruments Business Operator to suspend all or a part of its business activities pursuant to the provisions of paragraph (1), and the Soundness of Management of the Special Financial Instruments Business Operator and its Subsidiary Corporation, etc. does not improve and is found to have no prospect of improving as of the day on which three months have elapsed since the day of the order, the Prime Minister may rescind the Article 29 registration of the Special Financial Instruments Business Operator.
(Public Notice of Supervisory Measures)
Article 57-7 In the cases set forth as follows, the Prime Minister shall make a public notice indicating as follows, pursuant to the provisions of Cabinet Office Ordinance:
(i) the Prime Minister orders the suspension of all or a part of business activities pursuant to the provisions of paragraph (1) of the preceding Article; or
(ii) the Prime Minister rescinds an Article 29 registration pursuant to the provisions of paragraph (3) of the preceding Article.
(Deletion of Registration)
Article 57-8 (1) If the Prime Minister rescinds an Article 29 registration pursuant to the provisions of Article 57-6, paragraph (3), the Prime Minister must delete that registration.
(2) If the Prime Minister accepts a notification under the provisions of Article 57-2, paragraph (6), item (ii), the Prime Minister must delete the supplementary note indicating that the person is a Special Financial Instruments Business Operator as prescribed in paragraph (7) of that Article.
(Completion of Remaining Business)
Article 57-9 The provisions of Article 50-2, paragraph (8) apply mutatis mutandis to a person that was a Special Financial Instruments Business Operator if the Special Financial Instruments Business Operator has had the registration referred to in Article 29 rescinded pursuant to the provisions of Article 57-6, paragraph (3). In such a case, the person that was the Special Financial Instruments Business Operator is deemed to still be a Financial Instruments Business Operator inasmuch as the task of completing Customer Transactions is concerned.
(Collection of Reports and Inspections)
Article 57-10 (1) Whenever 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 the Subsidiary Company, etc. of a Special Financial Instruments Business Operator to submit reports or materials that should serve as a reference in connection with the assets of the Special Financial Instruments Business Operator, and may have the relevant officials inspect the state of the business or assets, or the books and documents or any other articles, of such a Subsidiary Company, etc. (but only as is necessary in connection with the property of the Special Financial Instruments Business Operator).
(2) The term "Subsidiary Company, etc." as used in the preceding paragraph means a second company, etc. with a parent company, etc. (meaning a company, etc. (meaning a company, partnership, or other equivalent business entity, including anything that is equivalent to these in a foreign state; hereinafter the same applies in this paragraph) specified by Cabinet Office Ordinance as a first company, etc. that controls the mechanism that decides the financial and operational or business policies of a second company, etc. (meaning the shareholders or other equivalent body; hereinafter referred to as the "Decision-Making Body" in this paragraph)) that controls its Decision-Making Body. In such a case, a second company, etc. whose Decision-Making Body is controlled by a parent company, etc. and its Subsidiary Company, etc. or whose Decision-Making Body is controlled by the Subsidiary Company, etc. of such a parent company, etc. is deemed to be a Subsidiary Company, etc. of that parent company, etc.
(Hearings)
Article 57-11 (1) Irrespective of the category of proceeding for hearing statements of opinion under Article 13, paragraph (1) of the Administrative Procedure Act, before seeking to issue a disposition based on the provisions of Article 57-6, paragraph (1) or (3), the Prime Minister must conduct a hearing.