Insurance Business Act(Act No. 105 of 1995)
Last Version: Act No. 37 of 2019
TOC
History

  • June 6, 2022
    • Last Version: Act No. 37 of 2019
    • Translated Date: July 7, 2021
    • Dictionary Version: 14.0
  • February 13, 2019
    • Last Version: Act No. 45 of 2014
    • Translated Date: March 27, 2015
    • Dictionary Version: 9.0
  • March 25, 2013
    • Last Version: Act No. 59 of 2009
    • Translated Date: June 2, 2010
    • Dictionary Version: 3.0
  • July 14, 2010
    • Last Version: Act No. 74 of 2007
    • Translated Date: October 15, 2009
    • Dictionary Version: 2.0

Insurance Business Act
Act No. 105 of June 7, 1995
Part I General Provisions(Articles 1 through 2-2)
Part II Insurance Companies
Chapter I General Provisions(Articles 3 through 8-2)
Chapter II Stock Companies and Mutual Companies That Conduct Insurance Business
Section 1 Special Provisions on Stock Companies That Conduct Insurance Business(Articles 9 through 17-7)
Section 2 Mutual Companies
Subsection 1 General Provisions(Articles 18 through 21)
Subsection 2 Incorporation(Articles 22 through 30-15)
Subsection 3 Rights and Obligations of Members(Articles 31 through 36)
Subsection 4 Administrative Organs
Division 1 General Meeting(Articles 37 through 41)
Division 2 Member Representatives Meeting(Articles 42 through 50)
Division 3 Establishment of Administrative Organs Other than General Meetings and Member Representatives Meeting(Articles 51 through 53-12)
Division 4 Directors and Board of Directors(Articles 53-13 through 53-16)
Division 5 Accounting Advisors(Article 53-17)
Division 6 Company Auditors and Board of Company Auditors(Articles 53-18 through 53-21)
Division 7 Accounting Auditors(Article 53-22 and Article 53-23)
Division 8 Audit and Supervisory Committee(Article 53-23-2 and Article 53-23-3)
Division 9 Nominating Committee and Executive Officer(Articles 53-24 through Article 53-32)
Division 10 Liability for Damages of Officers(Articles 53-33 through Article 53-37)
Subsection 5 Mutual Companies' Accounting
Division 1 Accounting Principles(Article 54)
Division 2 Financial Statements(Articles 54-2 through 54-10)
Division 3 Payment of Interest from Fund, Redemption of Fund, and Distributions of Surplus(Articles 55 through 55-4)
Division 4 Reserves for Redemption of Fund and Loss Reserves(Articles 56 through Article 59)
Subsection 6 Solicitation of Additional Fund(Article 60 and Article 60-2)
Subsection 7 Solicitation of Subscribers for Corporate Bonds Issued by Mutual Companies(Articles 61 through 61-10)
Subsection 8 Amendments to Articles of Incorporation(Article 62)
Subsection 9 Transfer of Business(Article 62-2)
Subsection 10 Miscellaneous Provisions(Articles 63 through 67-2)
Section 3 Entity Conversion
Subsection 1 Entity Conversion from Stock Companies to Mutual Companies(Articles 68 through 84-2)
Subsection 2 Entity Conversion from Mutual Companies to Stock Companies(Articles 85 through 96-16)
Chapter III Business(Articles 97 through 105-3)
Chapter IV Subsidiary Companies(Articles 106 through 108)
Chapter V Accounting(Articles 109 through 122-2)
Chapter VI Supervision(Articles 123 through 134)
Chapter VII Transfer of Insurance Contracts, Transfer or Acquisition of Business, and Entrustment of Business and Property Administration
Section 1 Transfer of Insurance Contracts(Articles 135 through 141)
Section 2 Transfer or Acquisition of Business(Article 142 and Article 143)
Section 3 Entrustment of Business and Property Administration(Articles 144 through Article 151)
Chapter VIII Dissolution, Mergers, Company Splits, and Liquidation
Section 1 Dissolution(Articles 152 through 158)
Section 2 Mergers
Subsection 1 General Provisions(Article 159)
Subsection 2 Merger Agreements(Articles 160 through 165)
Subsection 3 Merger Procedures
Division 1 Procedures for Dissolved Stock Companies(Articles 165-2 through 165-8)
Division 2 Procedures for Stock Companies Surviving an Absorption-Type Merger(Articles 165-9 through 165-13)
Division 3 Procedures for Stock Companies Incorporated by Consolidation-Type Merger(Article 165-14)
Division 4 Procedures for Dissolved Mutual Companies(Articles 165-15 through 165-18)
Division 5 Procedure for Mutual Companies Surviving an Absorption-Type Merger(Articles 165-19 through 165-21)
Division 6 Procedures for Mutual Companies Incorporated by a Consolidation-Type Merger(Article 165-22)
Division 7 Special Provisions on Stock Company Mergers(Article 165-23 and Article 165-24)
Division 8 Public Notice after Mergers(Article 166)
Subsection 4 Effectuation of Mergers(Articles 167 through 173)
Section 3 Company Splits(Articles 173-2 through 173-8)
Section 4 Liquidation(Articles 174 through 184)
Chapter IX Foreign Insurers
Section 1 General Provisions(Articles 185 through 193)
Section 2 Business and Accounting(Articles 193-2 through 199)
Section 3 Supervision(Articles 200 through 207)
Section 4 Discontinuation of Insurance Business(Articles 208 through 213)
Section 5 Miscellaneous Provisions(Articles 214 through 218)
Section 6 Special Provisions on Specified Corporations(Articles 219 through 240)
Chapter X Special Measures for the Protection of Policyholders
Section 1 Changes to Contract Terms(Articles 240-2 through 240-13)
Section 2 Dispositions by the Prime Minister Related to Business and Property Administration
Subsection 1 Suspension of Business, Orders for Merger Discussions, and Business and Property Administration(Article 241)
Subsection 2 Business and Property Administration(Articles 242 through 249-3)
Subsection 3 Changes to Contract Terms in Mergers(Articles 250 through 255-5)
Section 3 Order to Implement Procedures for Mergers(Articles 256 through 258)
Section 4 Financial Assistance Provided by Policyholders Protection Corporations
Subsection 1 Policyholders Protection Corporation
Division 1 General Provisions(Articles 259 through 265)
Division 2 Members(Articles 265-2 through 265-5)
Division 3 Establishment(Articles 265-6 through 265-11)
Division 4 Management(Articles 265-12 through 265-22)
Division 5 General Council Meetings(Articles 265-23 through 265-27-5)
Division 6 Business(Articles 265-28 through 265-31)
Division 7 Contributions(Articles 265-32 through 265-35)
Division 8 Finances and Accounting(Articles 265-36 through 265-44)
Division 9 Supervision(Articles 265-45 through 265-47)
Division 10 Miscellaneous Provisions(Article 265-48)
Subsection 2 Financial Assistance
Division 1 Requests for Financial Assistance(Articles 266 through 270-3)
Division 2 Succession of Insurance Contracts(Articles 270-3-2 through 270-3-14)
Division 3 Underwriting of Insurance Contracts(Articles 270-4 through 270-6-5)
Division 4 Financial Assistance for the Payment of Covered Insurance Proceeds(Article 270-6-6 and Article 270-6-7)
Subsection 3 Purchasing Insurance Claims(Articles 270-6-8 through 270-6-10)
Subsection 4 Miscellaneous Provisions(Articles 270-7 through 270-9)
Section 5 Miscellaneous Provisions(Articles 271 through 271-2-3)
Chapter XI Shareholders
Section 1 General Provisions(Articles 271-3 through 271-9)
Section 2 Special Provisions on Major Shareholders of Insurance Companies
Subsection 1 General Provisions(Article 271-10 and Article 271-11)
Subsection 2 Supervision(Articles 271-12 through 271-16)
Subsection 3 Miscellaneous Provisions(Article 271-17)
Section 3 Special Provisions on Insurance Holding Companies
Subsection 1 General Provisions(Articles 271-18 through 271-20)
Subsection 2 Business and Subsidiary Companies(Articles 271-21 through 271-22)
Subsection 3 Accounting(Articles 271-23 through 271-26)
Subsection 4 Supervision(Article 271-27 - Article 271-30)
Subsection 5 Miscellaneous Provisions(Article 271-31)
Section 4 Miscellaneous Provisions(Article 271-32 and Article 271-33)
Chapter XII Special Provisions on Small Amount and Short Term Insurers
Section 1 General Provisions(Articles 272 through 272-10)
Section 2 Business(Articles 272-11 through 272-14)
Section 3 Accounting(Articles 272-15 through 272-18)
Section 4 Supervision(Articles 272-19 through 272-28)
Section 5 Transfers of Insurance Contracts(Article 272-29 and Article 272-30)
Section 6 Shareholders
Subsection 1 Major Shareholders of Small Amount and Short Term Insurers(Articles 272-31 through 272-34)
Subsection 2 Small Amount and Short Term Insurance Holding Companies(Articles 272-35 through 272-40)
Subsection 3 Miscellaneous Provisions(Articles 272-41through 272-43)
Chapter XIII Miscellaneous Provisions(Article 273 and Article 274)
Part III Insurance Solicitation
Chapter I General Provisions(Article 275)
Chapter II Insurance Agents and Affiliated Insurance Companies
Section 1 Insurance Agents(Articles 276 through 282)
Section 2 Affiliated Insurance Companies(Articles 283 through 285)
Chapter III Insurance Brokers(Articles 286 through 293)
Chapter IV Business(Articles 294 through 301-2)
Chapter V Supervision(Articles 302 through 308)
Part IV Designated Dispute Resolution Organizations
Chapter I General Provisions(Articles 308-2 through 308-4)
Chapter II Business(Articles 308-5 through 308-17)
Chapter III Supervision(Articles 308-18 through 308-24)
Part V Miscellaneous Provisions(Articles 309 through 314)
Part VI Penal Provisions(Articles 315 through 339)
Part VII Special Provisions on Procedures Concerning Confiscation(Articles 340 through 342)
Supplementary Provisions
Part I General Provisions
(Purpose)
Article 1In view of the public nature of insurance business, the purpose of this Act is to protect policyholders, etc. by ensuring the sound and appropriate operation of business by persons conducting insurance business and by ensuring fairness in insurance solicitation, thereby contributing to the stability of the lives of of the people and the sound development of the national economy.
(Definitions)
Article 2(1)The term "insurance business" as used in this Act means the business (except business listed in the following items) of underwriting insurance for which premiums are received in exchange for an agreement to pay a fixed amount of insurance proceeds in connection with the life or death of an individual, insurance for which premiums are received in exchange for an agreement to compensate for damage caused by specific and accidental events, and other insurance listed in the items of Article 3, paragraph (4) or the items of Article 3, paragraph (5):
(i)those provided in other laws;
(ii)the following business:
(a)those which a local government enters into with its residents as the other parties;
(b)those which a company, etc. (meaning a company (including a foreign company; hereinafter the same applies in this item) or any other business operator (excluding that specified by Cabinet Order)) or an organization comprised of officers or employees (including former officers or employees; hereinafter the same applies in this item) enters into with its officers or employees, or their relatives (limited to those specified by Cabinet Order; hereinafter the same applies in this item) as the other parties;
(c)those which a labor union enters into with its union members (including former union members) or their relatives as the other parties;
(d)those which a company enters into with another company that belongs to the same group (meaning the group of a company and its subsidiary companies) as the other party;
(e)those which a school (meaning a school as prescribed in Article 1 of the School Education Act (Act No. 26 of 1947)) or an organization comprised of its students enters into with its students as the other parties;
(f)those which a local community organization (meaning a local community organization as prescribed in Article 260-2, paragraph (1) of the Local Autonomy Act (Act No. 67 of 1947) that falls under the requirements listed in the items of paragraph (2) of that Article) enters into with its members as the other party; and
(g)those specified by Cabinet Order as being equivalent to those listed in (a) through (f);
(iii)those for which the other parties are persons whose number does not exceed the number specified by Cabinet Order (except those specified by Cabinet Order).
(2)The term "insurance company" as used in this Act means a person that conducts insurance business under the license from the Prime Minister prescribed in Article 3, paragraph (1).
(3)The term "life insurance company" as used in this Act means an insurance company which has obtained the life insurance business license set forth in Article 3, paragraph (4).
(4)The term "non-life insurance company" as used in this Act means an insurance company which has obtained the non-life insurance business license set forth in Article 3, paragraph (5).
(5)The term "mutual company" as used in this Act means an association established pursuant to this Act for the purpose of conducting insurance business, whose policyholders are the members.
(6)The term "foreign insurer" as used in this Act means a person conducting insurance business in a foreign state in accordance with the laws and regulations of that foreign state (excluding insurance companies).
(7)The term "foreign insurance company, etc." as used in this Act means a foreign insurer which has obtained the license set forth in Article 185, paragraph (1) from the Prime Minister.
(8)The term "foreign life insurance company, etc." as used in this Act means a foreign insurance company, etc. which has obtained the foreign life insurance business license set forth in Article 185, paragraph (4).
(9)The term "foreign non-life insurance company, etc." as used in this Act means a foreign insurance company, etc. which has obtained the foreign non-life insurance business license set forth in Article 185, paragraph (5).
(10)The term "foreign mutual company" as used in this Act means a foreign corporation akin to a mutual company, or a similar foreign corporation, which was established in accordance with the laws and regulations of a foreign state.
(11)The term "all shareholders' voting rights" as used in this Act means voting rights of all shareholders or investors (in the case of a stock company, excluding voting rights related to shares which do not allow exercising voting rights for any of the matters which may be resolved at a shareholders' meeting, but including voting rights related to shares for which holders are deemed to have voting rights pursuant to the provisions of Article 879, paragraph (3) (Jurisdiction Over a Special Liquidation Case) of the Companies Act (Act No. 86 of 2005); hereinafter the same applies in this Article, the following Article, Article 100-2-2, Article 106, Article 107, Article 127, Article 260, Part II, Chapters XI and XII and Article 333).
(12)The term "subsidiary company" as used in this Act mean a company in which another company holds voting rights exceeding 50 percent of all shareholders' voting rights. In such a case, if a first company and one or more of its subsidiary companies, or if one or more of the subsidiary companies of such first company, own voting rights exceeding 50 percent of all shareholders' voting rights in a second company, the relevant second company is deemed to be the subsidiary company of the first company.
(13)The term "major shareholder threshold" as used in this Act means 20 percent (15 percent in the case if a person who satisfies the requirements specified by Cabinet Office Order as one with regard to which a fact exists that is expected to have a material effect on the decisions on the financial and business policies of the company, holds voting rights in the company) of all shareholders' voting rights.
(14)The term "insurance company's major shareholder" as used in this Act means a person that holds a number of voting rights in an insurance company equal to or exceeding the major shareholder threshold (including a person who holds such number of voting rights in the name of another person (or under a fictitious name); the same applies hereinafter), and is incorporated under the authorization set forth in Article 271-10, paragraph (1) or has obtained the authorization prescribed in Article 271-10, paragraph (1) or the proviso to Article 271-10, paragraph (2).
(15)In the case prescribed in paragraph (12) and the preceding paragraph, the voting rights held by a company or a person who holds voting rights is not to include any voting rights from shares or equity interests held in the form of trust property pertaining to a monetary or securities trust (limited to cases where the settlor or the beneficiary may exercise the voting rights or may give instructions to the company or the holder of the voting rights on the exercise of such voting rights) or any of the voting rights specified by Cabinet Office Order, but is to include voting rights from the shares or equity interests which are held as trust property and whose voting rights the other company or the person holding voting rights in the insurance company may, as a settlor or beneficiary, exercise or give instructions on the exercise (excluding those specified by Cabinet Office Order) and any voting rights from the shares which cannot be asserted against the issuer pursuant to the provisions of Article 147, paragraph (1) or Article 148, paragraph (1) of the Act on Book-Entry Transfer of Corporate Bonds and Shares (Act No. 75 of 2001).
(16)The term "insurance holding company" as used in this Act means a holding company (meaning a holding company as prescribed in Article 9, paragraph (4), item (i) (Holding Company) of the Act on Prohibiting Private Monopolization and Maintenance of Fair Trade (Act No. 54 of 1947); the same applies hereinafter) whose subsidiary companies are insurance companies, which has been incorporated under the authorization set forth in Article 271-18, paragraph (1) or which has obtained authorization prescribed in Article 271-18, paragraph (1) or the proviso to paragraph (3).
(17)The term "small amount and short term insurance business" as used in this Act means, among the insurance business, the business of underwriting only insurance that has a insurance period within the period of two years or less specified by Cabinet Order, and for which the insurance proceeds do not exceed the amount of ten million yen and is less than the amount specified by Cabinet Order (except those specified by Cabinet Order).
(18)The term "small amount and short term insurer" as used in this Act means a person who has obtained the registration set forth in Article 272, paragraph (1) and who conducts small amount and short term insurance business.
(19)The term "life insurance agent" as used in this Act means an officer (excluding officers with the authority of representation and company auditors, members of the audit and supervisory committees (hereinafter referred to as "audit and supervisory committee member") and members of audit committees (hereinafter referred to as "audit committee members"); hereinafter the same applies in this Article) or employee of a life insurance company (including foreign life insurance companies, etc.; hereinafter the same applies in this paragraph) or the employee of such a person, and any person delegated by a life insurance company or any person who received a re-entrustment from the relevant person (including an association or foundation that is not a corporation and has designated representative persons or administrators) or the officer or employee of these persons, who acts as an agent or intermediary for the conclusion of an insurance contract on behalf of the life insurance company.
(20)The term "non-life insurance agent" as used in this Act means an officer or employee of a non-life insurance company (including foreign companies, etc.; the same applies in the following paragraph), non-life insurance representative, or its officer or employee.
(21)The term "non-life insurance representative" as used in this Act means a person delegated by a non-life insurance company, or a person who received a re-entrustment from the relevant person, who acts as an agent or intermediary for the conclusion of insurance contracts on its behalf (including an association or foundation that is not a corporation and has designated representative persons or administrators), and who is not an officer or employee of the non-life insurance company.
(22)The term "small amount and short term insurance agent" as used in this Act means an officer or employee of a small amount and short term insurer , or a person delegated by a small amount and short term insurer, or a person who received a re-entrustment from the relevant person (including an association or foundation that is not a corporation and has designated representative persons or administrators) or an officer or employee of these persons, who acts as an agent or intermediary for the conclusion of insurance contracts on behalf of the small amount and short term insurer.
(23)The term "insurance agent" as used in this Act means a life insurance agent, a non-life insurance agent, or a small amount and short term insurance agent.
(24)The term "affiliated insurance company, etc." as used in this Act means the insurance company (including foreign insurance companies, etc.) or the small amount and short term insurer, which is to be the insurer in the insurance contracts solicited by life insurance agents, non-life insurance agents, or small amount and short term insurance agents.
(25)The term "insurance broker" as used in this Act means a person who acts as an intermediary for the conclusion of an insurance contract other than the intermediation that life insurance agents, non-life insurance agents, and small amount and short term insurance agents (including an association or foundation that is not a corporation and has designated representative persons or administrators) carry out on behalf of their affiliated insurance companies, etc.
(26)The term "insurance solicitation" as used in this Act means acting as an agent or intermediary for conclusion of an insurance contract.
(27)The term "means of public notice" as used in this Act means the means of public notice prescribed in Article 2, item (xxxiii) (Definitions) of the Companies Act with regard to stock companies and foreign companies that are foreign insurance companies, etc. and the method by which mutual companies and foreign insurance companies, etc. (excluding foreign companies; hereinafter the same applies in this paragraph) give public notice with regard to mutual companies and foreign insurance companies, etc. (except cases where provisions of this Act or other Acts prescribe that a means of publication in the Official Gazette is to be used).
(28)The term "designated dispute resolution organization" as used in this Act means a person who has obtained the designation under Article 308-2, paragraph (1).
(29)The term "life insurance business" as used in this Act means business conducted by a life insurance company pursuant to the provisions of Article 97, Article 98 and Article 99; business conducted by a life insurance company pursuant to the provisions of other laws; and insurance solicitation in which a life insurance agent conducts for the relevant life insurance company.
(30)The term "non-life insurance business" as used in this Act means business conducted by a non-life insurance company pursuant to the provisions of Article 97, Article 98 and Article 99 (excluding business for paying insurance proceeds, etc. (meaning the insurance proceeds, etc. set forth in Article 16-2 (Limitations on Insurance Proceeds, for Damage Caused by an Absence from Work) of the Act on Securing Compensation for Automobile Accidents (Act No. 97 of 1955)) from liability insurance as set forth in Article 5 (Compulsory Execution of Contracts for Liability Insurance or Mutual Aid Liability Insurance) of that Act (referred to as the "automobile damage liability insurance business" in paragraphs (32) and (34))); business conducted by a non-life insurance company pursuant to the provisions of any other laws; and insurance solicitation in which a non-life insurance agent conducts for the relevant non-life insurance company.
(31)The term "foreign life insurance business" as used in this Act means business conducted by a foreign life insurance company, etc. pursuant to the provisions of Article 97, Article 98, Article 99 and Article 100 as applied mutatis mutandis pursuant to Article 199; and insurance solicitation in which a life insurance agent conducts for the relevant foreign life insurance company, etc.
(32)The term "foreign non-life insurance business" as used in this Act means business conducted by a foreign non-life insurance company, etc. pursuant to the provisions of Article 97, Article 98, Article 99 and Article 100 as applied mutatis mutandis pursuant to Article 199 (excluding the automobile damage liability insurance business); and insurance solicitation in which a non-life insurance agent conducts for the relevant foreign non-life insurance company, etc.
(33)The term "specified life insurance business" as used in this Act means business that the underwriting member referred to in Article 219, paragraph (1), of a specified corporation referred to in the relevant paragraph, which has obtained a specified life insurance business license under paragraph (4) of that Article, conducts pursuant to the provisions of Article 97, Article 98, Article 99 and Article 100 as applied mutatis mutandis pursuant to Article 199; and insurance solicitation in which a life insurance agent conducts for the relevant underwriting member.
(34)The term "specified non-life insurance business" as used in this Act means business that the underwriting member referred to in Article 219, paragraph (1), of a specified corporation as set forth in the relevant paragraph, which has obtained a specified non-life insurance business license under paragraph (5) of that Article, conducts pursuant to the provisions of Article 97, Article 98, Article 99 and Article 100 as applied mutatis mutandis pursuant to Article 199 (excluding the automobile damage liability insurance business); and insurance solicitation in which a non-life insurance agent conducts for the relevant underwriting member.
(35)The term "small amount and short term insurance business" as used in this Act means business that a small amount and short term insurer conducts pursuant to the provisions of Article 272-11, paragraph (1); and insurance solicitation in which a small amount and short term insurance agent conducts for the relevant small amount and short term insurer.
(36)The term "insurance solicitation by insurance brokers" as used in this Act means the intermediation that an insurance broker performs for the conclusion of insurance contracts.
(37)The term "insurance business, etc." as used in this Act means life insurance business, non-life insurance business, foreign life insurance business, foreign non-life insurance business, specified life insurance business, specified non-life insurance business, small amount and short term insurance business, and insurance solicitation by insurance brokers.
(38)The term a "complaint processing procedure" as used in this Act means a procedure for processing the complaints related to insurance business, etc. (meaning complaints related to insurance business, etc.; the same applies in Article 308-7, Article 308-8 and Article 308-12).
(39)The term "dispute resolution procedure" as used in this Act means a procedure to resolve disputes related to insurance business, etc. (meaning disputes related to insurance business, etc. that can be settled between the parties; the same applies in Article 308-7, Article 308-8 and Articles 308-13 through 308-15) without using court proceedings.
(40)The term "business of dispute resolution, etc." as used in this Act means business for complaint processing procedures and dispute resolution procedures as well as business incidental thereto.
(41)The term "category of business of dispute resolution, etc." as used in this Act means categorization of business of dispute resolution, etc. such as life insurance business, non-life insurance business, foreign life insurance business, foreign non-life insurance business, specified life insurance business, specified non-life insurance business, small amount and short term insurance business, or insurance solicitation by insurance brokers.
(42)The term "basic contract for implementation of dispute resolution procedures" as used in this Act means a contract concluded between a designated dispute resolution organization and an insurance-related business (meaning an insurance company, foreign life insurance company, etc., licensed specified corporation as defined in Article 223, paragraph (1), small amount and short term insurer, or insurance broker; the same applies hereinafter) with regard to the implementation of business of dispute resolution, etc.
Article 2-2(1)A person listed in the following items is deemed to be a holder of voting rights in an insurance company, etc. (meaning insurance companies or small amount and short term insurers; the same applies hereinafter) amounting to the number specified in those items, and the provisions of Part II, Chapter XI, Sections 1 and 2, Chapters XII and XIII, and Parts V and VI apply to the person:
(i)an organization that is not a corporation (limited to an organization specified by Cabinet Office Order as that equivalent to a corporation):the number of voting rights in the insurance company, etc. that the organization holds in its own name;
(ii)a company required to prepare its financial statements and other documents on a consolidated basis pursuant to the provisions of Cabinet Office Order (referred to as "company subject to standards for consolidation" in the following item), for which the companies and other corporations to be consolidated (including organizations that are not corporations set forth in the preceding item; and hereinafter referred to as "companies, etc." in this paragraph) include an insurance company, etc., and that is not consolidated in any other company's financial statements or other documents:the number calculated pursuant to the provisions of Cabinet Office Order as representing the company's substantial influence on the insurance company, etc.;
(iii)if a company, etc. (excluding one that is consolidated in the financial statements and other documents of a company that falls under the type of company listed in the preceding item, limited to one that holds voting rights in an insurance company, etc.) that is not a company subject to standards for consolidation belongs to a group of companies, etc. (meaning the group of the relevant company, etc., the group of another company, etc. in which the relevant company, etc. holds majority voting rights, or the group of a company, etc. specified by Cabinet Office Order as a company, etc. to which the relevant company, etc. is otherwise closely related; hereinafter the same applies in this paragraph), and when the total number of voting rights held in an insurance company, etc. by all of the companies etc. belonging to the group of companies, etc. (hereinafter referred to as the "number of voting rights held by the group of companies, etc." in this item and the following item) is equal to or exceeds the major shareholder threshold (such group of companies, etc. are hereinafter referred to as "specified group of companies, etc." in this item and the following item), a company, etc. in the specified group of companies, etc., in which no other company, etc. holds majority voting rights:the number of voting rights held by the group of companies, etc. in the specified group of companies, etc.;
(iv)if no company, etc. in a specified group of companies, etc. falls under the type of company, etc. listed in the preceding item, a company, etc. whose assets in the balance sheet are the largest among the companies, etc. belonging to the specified group of companies, etc.:the number of voting rights held by the group of companies, etc. in the specified group of companies, etc.;
(v)an individual who, by virtue of holding majority voting rights in companies, etc. that hold voting rights in an insurance company, etc. (including any of the persons listed from item (ii) to the preceding item; hereinafter the same applies in this item), is deemed to hold at least 20 percent of all shareholders' voting rights in the insurance company, etc., in terms of the number of voting rights held in the insurance company, etc. by the companies, etc. (for those falling under any of the categories listed in the preceding items, the number specified in the relevant item), taken together (counting in any voting rights held by the relevant individual in the insurance company, etc.; the number thus calculated is hereinafter referred to as the "grand total number of voting rights" in this item):the grand total number of voting rights for the individual;
(vi)a person who holds voting rights in an insurance company, etc. (including a person falling under any of the categories listed in the preceding items; hereinafter the same applies in this item) who is deemed to hold at least 20 percent of all shareholders' voting rights in the insurance company, etc., in terms of the number of voting rights held by the relevant person in the insurance company, etc. (for a person falling under any of the categories listed in the preceding items, the number specified in the relevant item) and the number of voting rights held in the same insurance company, etc. by their joint holders (meaning any other holders of voting rights in the insurance company, etc. (including those falling under any of the categories listed in the preceding times) who have agreed with the relevant person on concerted action in acquiring or transferring the shares pertaining to the voting rights, or in exercising the voting and other rights as shareholders of that insurance company, etc. (excluding, where the person who holds the voting rights is a company falling under the category listed in item (ii), any company, etc. to be consolidated in the financial statements and other documents of the relevant company; excluding, where the person who holds the voting rights is a company, etc. falling under the category prescribed in item (iii) or (iv), any other company, etc. in the group of companies, etc. to which the relevant company, etc. belongs; and excluding, where the person who holds the voting rights is an individual falling under the category listed in the preceding item, any company, etc. in which the individual holds majority voting rights; but including any person who has a special relationship as specified by Cabinet Order with the person who holds the voting rights)) (for a joint holder falling under any of the categories listed in the preceding items, the number prescribed in the relevant item), taken together (the total number thus calculated is hereinafter referred to as the "number of voting rights jointly held" in this item):the number of voting rights jointly held;
(vii)a person specified by Cabinet Office Order as being equivalent to a person listed in any of the preceding items:the number calculated pursuant to the provisions of Cabinet Office Order as representing the person's substantive influence on the insurance companies, etc.
(2)In the case referred to in the items of the preceding paragraph, the provisions of paragraph (15) of the preceding Article apply mutatis mutandis to voting rights deemed to be held by a person listed in any of items of that paragraph and voting rights held by the holder of the voting rights.
Part II Insurance Companies
Chapter I General Provisions
(Licenses)
Article 3(1)A person may not conduct insurance business if the person has not obtained a license from the Prime Minister.
(2)The license set forth in the preceding paragraph consists of two types: a life insurance business license and a non-life insurance business license.
(3)The same person may not obtain both a life insurance business license and the non-life insurance business license.
(4)A life insurance business license is a license for business of underwriting the class of insurance as listed in item (i) or of underwriting the class of insurance as listed in item (ii) or (iii) in addition to the class listed in item (i):
(i)insurance for which premiums are received in exchange for an agreement to pay fixed insurance proceeds in connection with the survival or death of individuals (including the physical state of an individual whom a doctor has diagnosed as having no longer than a certain period of time left to live; hereinafter the same applies in this paragraph and the following paragraph) (excluding one pertaining only to death, as under (c) of the following item);
(ii)insurance for which insurance premiums are received in exchange for an agreement to pay fixed insurance proceeds in connection with the following grounds or to compensate for damage to the individual caused by such grounds:
(a)that an individual has contracted a disease;
(b)an individual's condition that was caused by an injury or disease;
(c)an individual's death that was directly caused by an injury;
(d)cases specified by Cabinet Office Order as those similar to what is listed in (a) or (b) (excluding the death of an individual); and
(e)an individual has undergone treatment (including those specified by Cabinet Office Order as a procedure similar to treatment) concerning those listed in (a), (b), or (d);
(iii)among the class of insurance listed in item (i) of the following paragraph, reinsurance pertaining to the class of insurance listed in the preceding two items.
(5)A non-life insurance business license is a license for business of underwriting the class of insurance listed in item (i) or of underwriting the class of insurance listed in item (ii) or (iii) in addition to the classes listed in item (i):
(i)insurance for which premiums are received in exchange for an agreement to compensate for damage caused by specific and accidental events (excluding the classes of insurance listed in the following item);
(ii)class of insurance listed in item (ii) of the preceding paragraph;
(iii)among the class of insurance listed in item (i) of the preceding paragraph, insurance related to the death of an individual between the time the person leaves their residence for overseas travel and the time they return to their residence (hereinafter referred to in this item as "overseas travel period") or the death of an individual directly caused by a disease contracted during the overseas travel period.
(6)Sureties under surety bond services (meaning business for guaranteeing the performance of contractual obligations or legal and regulatory obligations and receiving consideration therefor, which is conducted by setting the amount of consideration, establishing a reserve, and distributing the risks through reinsurance, based on actuarial science, or by using any other methods inherent to insurance) is deemed to be the underwriting of the class of insurance listed in item (i) of the preceding paragraph, and the consideration pertaining to the surety is deemed to be the insurance premium pertaining to the classes of insurance set forth in that item.
(Procedures for Applying for Licences)
Article 4(1)A person who seeks to obtain a license set forth in paragraph (1) of the preceding Article must submit a written application for the license stating the following particulars to the Prime Minister:
(i)trade name or name;
(ii)amount of stated capital or total amount of funds;
(iii)name of the director and company auditor (director, in case of a company with an audit and supervisory committee (meaning a stock company or mutual company with an audit and supervisory committee; the same applies hereinafter), or director and executive officer, in the case of a company with a nominating committee, etc. (meaning a stock company or mutual company with a nominating committee, audit committee, and compensation committee (hereinafter referred to as "nominating committees, etc."); the same applies hereinafter));
(iv)type of license sought; and
(v)location of the head office or principal office.
(2)The following documents and other documents specified by Cabinet Office Order must be attached to the written application for a license set forth in the preceding paragraph:
(i)articles of incorporation;
(ii)statement of business procedures;
(iii)general policy conditions; and
(iv)statement of calculation procedures for insurance premiums and policy reserves.
(3)In the case referred to in the preceding paragraph, if the articles of incorporation under item (i) of that paragraph have been created as electronic or magnetic records (meaning a record that is created by an electronic method, magnetic method or any other method which cannot be recognized by human perception and is specified by Cabinet Office Order as suitable for use in information processing by a computer; the same applies hereinafter), the electronic or magnetic records may be attached in lieu of documents.
(4)The documents listed in paragraph (2), items (ii) through (iv) must state the particulars specified by Cabinet Office Order.
(Licensing Examination Standards)
Article 5(1)When an application has been filed for a license set forth in Article 3, paragraph (1), the Prime Minister must examine whether it conforms to the following standards:
(i)the person who filed the application (hereinafter referred to as the "applicant" in this paragraph) has a sufficient financial basis to perform the business of an insurance company soundly and efficiently, and that the applicant has favorable prospects for income and expenditures pertaining to the relevant business;
(ii)in light of its personnel structure, etc., the applicant has the knowledge and experience necessary to perform the business of an insurance company appropriately, fairly, and efficiently, and that the applicant has sufficient social credibility; and
(iii)the particulars stated in the documents listed in paragraph (2), items (ii) and (iii) of the preceding Article conform to the following standards:
(a)the content of the insurance contracts is not likely to give negative impact on protection of the policyholders, the persons to be insured, beneficiaries of insurance proceeds, and other relevant persons (hereinafter referred to as "policyholders, etc.");
(b)no specific persons are subject to unfair discriminatory treatment under the content of the insurance contracts;
(c)the content of the insurance contracts poses no risk of encouraging or inducing acts that are harmful to public policy and good morals;
(d)the rights and obligations of the policyholders, etc. and other contents of the insurance contracts are specified clearly and simply for the policyholders, etc.; and
(e)any other standards specified by Cabinet Office Order;
(iv)the particulars stated in the documents listed in paragraph (2), item (iv) of the preceding Article conform to the following standards:
(a)the calculation procedures for insurance premiums and policy reserves are reasonable and proper, based on actuarial science;
(b)no specific persons are subject to unfair discriminatory treatment with regard to insurance premiums; and
(c)any other standards specified by Cabinet Office Order.
(2)If and to the extent that the Prime Minister finds it necessary for the public interest in view of examination standards prescribed in the preceding paragraph, the Prime Minister may impose conditions on the license referred to in Article 3, paragraph (1) or change those conditions.
(Administrative Organs)
Article 5-2An insurance company must be a stock company or a mutual company which has the following administrative organs:
(i)board of directors;
(ii)a board of company auditors, an audit and supervisory committee or a nominating committee, etc.; and
(iii)accounting auditors.
(Amount of Stated Capital or Total Amount of Funds)
Article 6(1)The amount of stated capital or total amount of funds (including the reserves for redemption of funds set forth in Article 56) of an insurance company must be equal to or greater than the amount specified by Cabinet Order.
(2)The amount specified by Cabinet Order under the preceding paragraph must not be less than one billion yen.
(Trade Names and Names)
Article 7(1)An insurance company, in its trade name or name, must use the letters specified by Cabinet Office Order for indicating that it is a life insurance company or a non-life insurance company.
(2)A person other than an insurance company, in its trade name or name, must not use any letters which would indicate that the person is an insurance company.
(Prohibition on Lending One's Name)
Article 7-2An insurance company must not have another person conduct insurance business in the name of that insurance company.
(Restriction on Concurrent Holding of Positions by Directors)
Article 8(1)Directors (or executive officers, in the case of a company with a nominating committee, etc.) engaging in the day-to-day business of an insurance company must not conduct the day-to-day business of any other company, except for the cases authorized by the Prime Minister.
(2)When an application has been filed for the authorization referred to in the preceding paragraph, the Prime Minister may only grant the authorization if the Prime Minister finds that the particulars given in the application are unlikely to interfere with the sound and appropriate management of the insurance company.
(Eligibility of Directors)
Article 8-2(1)The persons listed in the following items are to have the knowledge and experience specified in each item, and must have sufficient social credibility:
(i)a director engaged in day-to-day business of an insurance company (or a director and executive officer engaged in day-to-day business of an insurance company, in the case of a company with a nominating committee, etc.):knowledge and experience to carry out business management of an insurance company in an appropriate, fair and efficient manner;
(ii)an auditor of an insurance company (or audit and supervisory committee member, in the case of a company with an audit and supervisory committee):knowledge and experience to supervise the execution of duties of directors of an insurance company (or directors and accounting advisor, in case of a company with an accounting advisor (meaning a stock company or mutual company with an accounting advisor; the same applies hereinafter)) in an appropriate, fair, and efficient manner;
(iii)an audit committee member of an insurance company:knowledge and experience to supervise the execution of duties of executive officers and directors of an insurance company (or executive officers, directors and accounting advisors, in case of a company with an accounting advisor) in an appropriate, fair, and efficient manner.
(2)No person who has become subject to an order commencing bankruptcy proceedings and has not been released from bankruptcy restrictions, or a person who is treated the same manner as such a person under the laws and regulations of a foreign state, must be appointed as a director, executive officer or auditor of an insurance company.
Chapter II Stock Companies and Mutual Companies That Conduct Insurance Business
Section 1 Special Provisions on Stock Companies That Conduct Insurance Business
(Means of Public Notice)
Article 9(1)A stock company that conducts insurance business (hereinafter referred to as a "stock company" in this Section) must specify any of the following methods as the means of public notice in its articles of incorporation:
(i)publication in a daily newspaper that publishes the news on current events; or
(ii)electronic public notice (for stock companies and foreign insurance companies, etc. that are foreign companies, meaning the electronic public notice as defined in Article 2, item (xxxiv) (Definitions) of the Companies Act, and for mutual companies and a foreign insurance companies, etc. (that are other than foreign companies), any of those means of public notice meeting the definition provided in that item which allow many and unspecified persons to access the information that is published by electronic or magnetic means (meaning the electronic or magnetic means defined in that item); the same applies hereinafter).
(2)The provisions of Article 940, paragraph (1) (excluding item (ii)) and paragraph (3) (Public Notice Period of Electronic Public Notice) of the Companies Act apply mutatis mutandis to the cases if a stock company gives public notice under this Act in the form of an electronic public notice.In this case, any necessary technical replacement of terms is specified by Cabinet Order.
(Application for Offered Shares)
Article 10A stock company, when it gives notice pursuant to the provisions of Article 59, paragraph (1) (Application for Shares Solicited at Incorporation), Article 203, paragraph (1) (Applications for Offered Shares) or Article 242, paragraph (1) (Application for Offered Share Options) of the Companies Act, must give notice of the particulars listed in the items of Article 59, paragraph (1), the items of Article 203, paragraph (1) or the items of Article 242, paragraph (1), respectively, and any provisions in its articles of incorporation as set forth in the second sentence of Article 113 (including as applied mutatis mutandis pursuant to Article 272-18).
(Reference Date)
Article 11For the purpose of applying to a stock company the provisions of Article 124, paragraph (2) (Record Date) of the Companies Act, the term "three months" in that paragraph is deemed to be replaced with "three months (or four months for the right to exercise a voting right at an annual shareholders' meeting and any other right specified by Cabinet Office Order)".
(Qualifications of Directors)
Article 12(1)For the purpose of applying the provisions of Article 331, paragraph (1) (Qualifications of Directors) of the Companies Act (including as applied mutatis mutandis pursuant to Article 335, paragraph (1) (Qualifications of Company Auditors) and Article 402, paragraph (4) (Election of Executive Officers) of that Act) to a stock company, the term "an adult ward, a person under curatorship, or a person who is similarly treated under foreign laws and regulations" in Article 331, paragraph (1), item (ii) of that Act is deemed to be replaced with "a person specified by Cabinet Office Order as being unable to properly perform their duties due to a mental or physical disorder", and the term "this Act" in item (iii) of that paragraph is deemed to be replaced with "the Insurance Business Act, this Act".
(2)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) (Directors' Terms of Office) (including as applied mutatis mutandis pursuant to Article 334, paragraph (1) (Accounting Advisors' Terms of Office)), Article 336, paragraph (2) (Company Auditors' Terms of Office), Article 389, paragraph (1) (Limitation of Scope of Audit by Provisions of Articles of Incorporation), and the proviso to Article 402, paragraph (5) of the Companies Act does not apply to a stock company.
(Reference Documents for Shareholders Meetings and Voting Forms)
Article 13For the purpose of applying the provisions of Article 301, paragraph (1) (Delivery of Reference Documents for a Shareholders Meeting and Voting Forms), Article 432, paragraph (1) (Preparation and Retention of Account Books), Article 435, paragraphs (1) and (2) (Preparation and Retention of Financial Statements), Article 436, paragraphs (1) and (2) (Audit of Financial Statements), Article 439 (Special Provisions on Companies with Accounting Auditors), and Article 440, paragraph (1) (Public Notice of Financial Statements) of the Companies Act to a stock company, the term "Order of the Ministry of Justice" in the relevant provisions is deemed to be replaced with "Cabinet Office Order".
(Exclusion from Application of Provisions Regarding Requests to Inspect Account Books)
Article 14(1)The provisions of Article 433 (Request to Inspect Account Books) of the Companies Act do not apply to account books of a stock company and materials relating thereto.
(2)For the purpose of applying the provisions of Article 442, paragraph (3) (Keeping and Inspection of Financial Statements, etc.) of the Companies Act to a stock company, the term "and creditors" in that paragraph is deemed to be replaced with ", policyholders, beneficiaries of insurance proceeds, and other creditors and insurers".
(Reserves)
Article 15Notwithstanding the provisions of Article 445, paragraph (4) (Amounts of Stated Capital and Amounts of Reserves) of the Companies Act, in the case if a stock company pays dividends of surplus, it must record the amount equivalent to one-fifth of the amount of the deduction from surplus as a result of the payments of the dividends of surplus as capital reserves or retained earnings reserves (hereinafter referred to as "reserves"), pursuant to the provisions of Cabinet Office Order.
(Keeping and Inspection of Documents Related to Reduction of Stated Capital)
Article 16(1)A stock company must keep at each of its business offices the documents or electronic or magnetic records in which any proposal for a reduction (excluding the cases where the whole of the amount by which the reserves are reduced is appropriated to the stated capital) of the stated capital or reserves (hereinafter referred to as "stated capital, etc." in this Section) and any other particulars specified by Cabinet Office Order are stated or recorded, for a period ranging from two weeks before the date of the shareholders' meeting related to the resolution on the reduction (or, the date of the board of directors meeting if article 447, paragraph (3) (Reductions in Amount of Stated Capital) or Article 448, paragraph (3) (Reductions in Amount of Reserves) of the Companies Act Applies) to six months from the effective date of the reduction of the stated capital, etc.; provided, however, that this does not apply to the cases where only the amount of the reserves is reduced and all of the following conditions are met:
(i)an annual shareholders' meeting has decided on the particulars listed in the items of Article 448, paragraph (1) of the Companies Act; and
(ii)the amount set forth in Article 448, paragraph (1), item (i) of the Companies Act does not exceed the amount calculated in a manner specified by Cabinet Office Order as the amount of the deficit as of the date of the annual shareholders meeting referred to in the preceding item (or, in the cases provided for in the first sentence of Article 439 (Special Provisions on Companies with Accounting Auditors) of that Act, the date of authorization under Article 436, paragraph (3) (Audit of Financial Statements)).
(2)Shareholders, policyholders and other creditors of a stock company may make the following requests at any time during the operating hours of the company; provided, however, that they must pay the fees determined by the stock company if making a request set forth in item (ii) or (iv):
(i)a request to inspect the documents set forth in the preceding paragraph;
(ii)a request to be issued a certified copy or extract of the documents set forth in the preceding paragraph;
(iii)a request to inspect anything that shows the particulars recorded in the electronic or magnetic records set forth in the preceding paragraph in a means specified by Cabinet Office Order; or
(iv)a request to be provided with the particulars recorded in the electronic or magnetic records set forth in the preceding paragraph by the electronic or magnetic means (meaning any of the methods using an electronic data processing system or any other information and communication technology and specified by Cabinet Office Order; the same applies hereinafter) designated by the stock company, or to be issued a document stating the particulars.
(3)For the purpose of applying the provisions of paragraph (1), item (i) to the cases where the articles of incorporation include provisions set forth in Article 459, paragraph (1) (Provisions in the Articles of Incorporation for the Board of Directors to Determine Dividends of Surplus) of the Companies Act, the term "annual shareholders meeting" in that item is deemed to be replaced with "annual shareholders meeting or the board of directors under Article 436, paragraph (3) of the Companies Act".
(Objections by Creditors)
Article 17(1)If a stock company reduces the amount of its stated capital, etc. (excluding the cases where the whole amount by which the reserves are reduced is appropriated to the stated capital), policyholders or other creditors of the stock company may state their objections to the reduction in the amount of the stated capital, etc. to the stock company; provided, however, that this does not apply to the cases in which only the amount of the reserves is reduced and the company falls under all of the items of paragraph (1) of the preceding Article.
(2)If policyholders or other creditors of a stock company may raise their objections pursuant to the provisions of the preceding paragraph, the stock company must give public notice of the following particulars in the Official Gazette and by the means of public notice stipulated in the company's articles of incorporation; provided, however, that the period under item (iii) may not be less than one month:
(i)the details of the reduction in the amount of the stated capital, etc.;
(ii)the particulars specified by Cabinet Office Order regarding the financial statements of the stock company;
(iii)that policyholders or other creditors may raise their objections within a certain period of time; and
(iv)beyond what is set forth in the preceding three items, any particulars specified by Cabinet Office Order.
(3)If policyholders or other creditors do not raise any objections within the period under item (iii) of the preceding paragraph, the policyholders or other creditors are deemed to have approved the reduction in the amount of the stated capital, etc.
(4)If policyholders or other creditors raise objections within the period under paragraph (2), item (iii), the stock company referred to in paragraph (1) must make payment or provide equivalent security to the policyholders or other creditors, or entrust equivalent property to a trust company, etc. (meaning a trust company (a trust company as defined in Article 2, paragraph (2) (Definitions) of the Trust Business Act (Act No. 154 of 2004); the same applies hereinafter) or financial institution conducting trust business (meaning a financial institution approved under Article 1, paragraph (1) (Authorization for Concurrent Operation) of the Act on Provision of Trust Business by Financial Institutions (Act No. 43 of 1943)); the same applies hereinafter) for the purpose of ensuring that the policyholders or other creditors receive the payment; provided, however, that this does not apply to the cases where the reduction of the stated capital, etc. poses no risk of harming the interest of the policyholders or other creditors.
(5)The provisions of the preceding paragraph do not apply to the policyholders or to any rights held by other persons pertaining to insurance contracts (excluding insurance claims that have already arisen at the time of public notice under paragraph (2) due to the occurrence of insured events or for other grounds, and any other right specified by Cabinet Order (referred to as "insurance claims, etc." hereinafter in this Section, as well as in Section 3 and Chapter VIII, Sections 2 and 3)).
(6)A resolution pertaining to the reduction of the stated capital, etc. under Article 447, paragraph (1) (Reductions in Amount of Stated Capital) or Article 448, paragraph (1) (Reductions in Amount of Reserves) of the Companies Act is invalid if the number of policyholders who have raised their objections within the period set forth in paragraph (2), item (iii) (excluding the holders of policies under which insurance claims, etc. had already arisen at the time of public notice under that paragraph (but limited to those policies that would be terminated with the payment of the insurance claims, etc.); hereinafter the same applies in this paragraph and paragraph (4) of the following Article) exceeds one fifth of the total number of policyholders, and the amount specified by Cabinet Office Order as the credits (excluding insurance claims, etc.) belonging to the insurance contracts of the policyholders who have stated such objections exceeds one fifth of the total amount of credits belonging to the policyholders.
(7)Beyond what is provided for in the preceding paragraphs, any necessary particulars for the application of those provisions are specified by Cabinet Order.
(Effectuation)
Article 17-2(1)The reduction of the amounts listed in the following items takes effect on the dates specified by the items, respectively; provided, however, that this does not apply to the cases where the procedures under the preceding Article have not been completed, or if a resolution pertaining to the reduction of the stated capital, etc. under Article 447, paragraph (1) (Reductions in Amount of Stated Capital) or Article 448, paragraph (1) (Reductions in Amount of Reserves) of the Companies Act becomes null or void pursuant to the provisions of Article 17, paragraph (6):
(i)reduction of the capital:the date specified in Article 447, paragraph (1), item (iii) of the Companies Act; and
(ii)reduction of reserves:the date specified in Article 448, paragraph (1), item (iii) of the Companies Act.
(2)A stock company may change the dates specified in each item of the preceding paragraph at any time before those dates.
(3)Notwithstanding the provisions of paragraph (1), any reduction of the stated capital of a stock company is not effective unless it is approved by the Prime Minister.
(4)A reduction of the stated capital, etc. pursuant to the provisions of the preceding Article (or, pursuant to the provisions of that Article and the preceding paragraph for a reduction of the stated capital) is also effective against the policyholders who have stated their objections under that Article, paragraph (6) and other persons who hold any right (other than insurance claims, etc.) pertaining to insurance contracts involving the policyholders.
(Special Provisions on Registration)
Article 17-3(1)The following documents must be attached to a written application for a registration of change due to a reduction of the stated capital of a stock company, in addition to the documents specified in Articles 18, Article 19 (Documents to be Attached to Written Applications) and Article 46 (General Rules on Documents to be Attached) of the Commercial Registration Act (Act No. 125 of 1963):
(i)a document certifying that the public notice under Article 17, paragraph (2) has been given;
(ii)if any policyholder or other creditor has raised an objection under Article 17, paragraph (4), a document certifying that the company has made payment or provided equivalent security to the policyholder or other creditor, or has entrusted equivalent property to a trust company, etc. for the purpose of ensuring that the policyholder or other creditor receive the payment, or that the reduction of the stated capital poses no risk of harming the interest of the policyholder or other creditor; and
(iii)a document certifying that the number of policyholders who raised their objections under Article 17, paragraph (6) has not exceeded one fifth of the total number of policyholders as indicated in that paragraph, or a document certifying that the amount specified by Cabinet Office Order as belonging to the policyholders as indicated in that paragraph has not exceeded one fifth of the total amount as indicated in that paragraph.
(2)The provisions of Article 70 (Registration of Changes Due to a Reduction of Stated Capital) of the Commercial Registration Act do not apply to a registration of change due to a reduction of the stated capital of a stock company.
(Keeping and Inspection of Documents Related to a Reduction of Stated Capital)
Article 17-4(1)A stock company must keep at each of its business offices the documents or electronic or magnetic records in which the progress of the procedures provided for in Article 17 and any other particulars specified by Cabinet Office Order as related to the reduction of the capital, etc. are stated or recorded, for six months from the effective date of the reduction of the stated capital, etc.
(2)Shareholders, policyholders and other creditors of a stock company may make the following requests at any time during the operating hours of the company; provided, however, that they must pay the fees determined by the stock company if making a request set forth in item (ii) or (iv):
(i)a request to inspect the documents set forth in the preceding paragraph;
(ii)a request to be issued a certified copy or extract of the documents set forth in the preceding paragraph;
(iii)a request to inspect anything that shows the particulars recorded in the electronic or magnetic records set forth in the preceding paragraph in a means specified by Cabinet Office Order; or
(iv)a request to be provided with the particulars recorded in the electronic or magnetic records set forth in the preceding paragraph by the electronic or magnetic means designated by the stock company, or to be issued a document stating the particulars.
(Exclusions from Application)
Article 17-5(1)The provisions of Article 449 (Objections by the Creditors) of the Companies Act do not apply to the reduction of the stated capital, etc. of a stock company.
(2)For the purpose of applying to a stock company the provisions of Article 740, paragraph (1) (Special Provisions on Objection Procedures for Creditors) of the Companies Act, the following phrase is added after the term "Article 810" in that paragraph: ", or Article 17, Article 70, Article 165-7 (including as applied mutatis mutandis pursuant to Article 165-12 of the Insurance Business Act), Article 165-24 or Article 173-4 of the Insurance Business Act".
(Restrictions on Dividends of Surplus to Shareholders)
Article 17-6(1)If any amount is credited to assets in the balance sheet pursuant to the provisions of the first sentence of Article 113 (including as applied mutatis mutandis pursuant to Article 272-18), a stock company must not take any of the following actions unless the amount has been fully amortized:
(i)purchase of any share of the stock company at a request made under Article 138, item (i), (c) or item (ii), (c) (Method for Requests for Authorization of Transfer) of the Companies Act;
(ii)acquisition of any share of the stock company based on a decision under Article 156, paragraph (1) (Determination of Matters Regarding Acquisition of Shares) of the Companies Act (but limited to acquisition of any share of the stock company if Article 163 (Acquisition of Shares from Subsidiary Companies) or Article 165, paragraph (1) (Acquisition of Shares by Market Transactions) of that Act applies);
(iii)acquisition of any share of the stock company based on a decision under Article 157, paragraph (1) (Determination of Acquisition Price) of the Companies Act;
(iv)acquisition of any share of the stock company under Article 173, paragraph (1) (Effectuation) of the Companies Act (excluding the cases if no money or other property is delivered);
(v)purchase of any share of the stock company at a request made under Article 176, paragraph (1) (Demand for Sale) of the Companies Act;
(vi)purchase of any share of the stock company under Article 197, paragraph (3) (Auction of Shares) of the Companies Act;
(vii)purchase of any share of the stock company under Article 234, paragraph (4) (Treatment of Fractions) of the Companies Act (including as applied mutatis mutandis pursuant to Article 235, paragraph (2) (Treatment of Fractions) of that Act); and
(viii)dividend of surplus.
(2)The provisions of Article 463, paragraph (2) (Restrictions on Remedy Against Shareholders) of the Companies Act apply mutatis mutandis to the cases if a stock company, in violation of the provisions of the preceding paragraph, has taken any of the actions listed in the items of that Article.In this case, any necessary technical replacement of terms is specified by Cabinet Order.
(3)For the purpose of applying to a stock company the provisions of Article 446, item (vii) (Amounts of Surplus), Article 461, paragraph (2), item (ii), (a) and item (vi) of that paragraph (Restriction on Dividends) of the Companies Act, the term "Order of the Ministry of Justice" in these items is deemed to be replaced with "Cabinet Office Order".
(Particulars to be Registered in Registering the Incorporation)
Article 17-7(1)In registering the incorporation of a stock company, the particulars listed in the items of Article 911, paragraph (3) (Registration of a Stock Company's Incorporation) of the Companies Act must be registered, along with any provisions in its articles of incorporation in the second sentence of Article 113 (including as applied mutatis mutandis pursuant to Article 272-18).
(2)If any change has occurred in the particulars prescribed in the preceding paragraph, the stock company must complete the registration of the change within two weeks at the location of its head office.
Section 2 Mutual Companies
Subsection 1 General Provisions
(Legal Personality)
Article 18A mutual company is to be a corporation.
(Address)
Article 19The address of a mutual company is to be at the location of its principal office.
(Name)
Article 20A mutual company must use the letters "相互会社 (Sogo-Kaisha)" (which means "mutual company") in its name.
(Application, Mutatis Mutandis, of the Companies Act)
Article 21(1)The provisions of Article 8 (Prohibition on the Use of a Name, etc. That is Likely to Be Mistaken for That of a Company) of the Companies Act apply mutatis mutandis to the use of a trade name or any other name that may be misunderstood as a mutual company; the provisions of Article 9 (Liability of a Company That Permits Others to Use Its Trade Name) of that Act apply mutatis mutandis to a mutual company; the provisions of Part I, Chapter III, Section 1 (Employees of a Company) of that Act apply mutatis mutandis to the employees of a mutual company; the provisions of Section 2 of the relevant Chapter (excluding Article 18) (Commercial Agents of a Company) apply mutatis mutandis to a person acting as an agent or intermediary in transactions for a mutual company; and the provisions of Chapter IV of that Part (excluding Article 24) (Non-Competition after Business Transfer) apply mutatis mutandis to the cases if a mutual company either transfers its business, or takes over any business or operations, respectively.In this case, the term "company (including a foreign company, hereinafter the same applies in this Part)" in Article 10 (Managers) of that Act is deemed to be replaced with "mutual company"; any other necessary technical replacement of terms is specified by Cabinet Order.
(2)The provisions of Part II, Chapter I (excluding Articles 501 to 503) (General Provisions) of the Commercial Code (Act No. 48 of 1899) apply mutatis mutandis to the actions taken by a mutual company; the provisions of Chapter II of that Part (Buying and Selling) apply mutatis mutandis to the buying and selling carried out by a mutual company with a merchant or another mutual company (including any foreign mutual company); the provisions of Chapter III of that Part (Current Account) apply mutatis mutandis to the contracts pertaining to set-offs carried out by a mutual company with its usual counterparties; the provisions of Chapter V of that Part (excluding Article 545) (Brokerage Services) apply mutatis mutandis to a mutual company's actions as an intermediary with regard to commercial transactions between third parties; and the provisions of Chapter VI of that Part (excluding Article 558) (Commission Agent Services) and Article 595 (Duty of Care of Bailees) of the that Code apply mutatis mutandis to a mutual company, respectively.In this case, any necessary technical replacement of terms is specified by Cabinet Order.
(3)For the purpose of applying mutatis mutandis the provisions of the Companies Act to the provisions of this Part (excluding the preceding Section, paragraph (1), Article 67-2 and Article 217, paragraph (3)) and Part VI (excluding Article 332-2), the term "electronic or magnetic record" in the provisions of that Act (including other provisions of that Act as applied mutatis mutandis pursuant to the relevant provisions) is deemed to be replaced with "electronic or magnetic record (meaning the electronic or magnetic record prescribed in Article 4, paragraph (3) of the Insurance Business Act)"; the term "electronic or magnetic means" in that Act is deemed to be replaced with "electronic or magnetic means (meaning the electronic or magnetic means prescribed in Article 16, paragraph (2), item (iv) of the Insurance Business Act)"; and the term "Order of the Ministry of Justice" in that Act is deemed to be replaced with "Cabinet Office Order", respectively.
(4)For the purpose of applying mutatis mutandis the provisions of the Companies Act to the provisions of this Section (excluding paragraph (1), Divisions 1 and 2 of Subsection 4, and Article 67-2) and Chapter VIII, Section 4, the terms "stock company" and "company with a board of directors" in the provisions of that Act (including other provisions of that Act as applied mutatis mutandis pursuant to the relevant provisions) is deemed to be replaced with "mutual company"; the term "shareholder" in that Act is deemed to be replaced with "member"; the term "subsidiary company" in that Act is deemed to be replaced with "substantive subsidiary companies (meaning a substantive subsidiary companies prescribed in Article 33-2, paragraph (1) of the Insurance Business Act)"; the term "head office" in that Act is deemed to be replaced with "principal office"; the term "branch office" in that Act is deemed to be replaced with "secondary office"; the term "operating hours" in that Act is deemed to be replaced with "business hours"; the term "shareholders' meeting" in that Act is deemed to be replaced with "general meeting (or, a member representatives meeting, if the company has such a meeting)"; and the term "annual shareholders' meeting" in that Act is deemed to be replaced with "annual general meeting (or the annual member representatives meeting, if the company has a member representatives meeting)", respectively, unless provided otherwise.
Subsection 2 Incorporation
(Articles of Incorporation)
Article 22(1)In order to incorporate a mutual company, the incorporators are to prepare its articles of incorporation, and all the incorporators must sign or affix their names and seals to the articles of incorporation.
(2)The articles of incorporation set forth in the preceding paragraph may be prepared in the form of an electronic or magnetic record.In this case, actions specified by Cabinet Office Order must be taken in lieu of signing or affixing the names and seals, with respect to the information recorded in the electronic or magnetic record.
(Particulars Stated or Recorded in the Articles of Incorporation)
Article 23(1)The following particulars must be stated or recorded in the articles of incorporation of a mutual company:
(i)purposes;
(ii)name;
(iii)location of the principal office;
(iv)total amount of funds (including the reserves for redemption of funds under Article 56);
(v)provisions on the rights of fund contributors;
(vi)method of redemption of funds;
(vii)method of distributing dividends of surplus;
(viii)means of public notice; and
(ix)name and address of the incorporator.
(2)The means of the public notice listed in item (viii) of the preceding paragraph is one of the following methods:
(i)publication in a daily newspaper that publishes the news on current events; or
(ii)electronic public notice.
(3)Provisions in the articles of incorporation to the effect that electronic public notice is to be the means of public notice are to suffice for a mutual company to designate the means listed in item (ii) of the preceding paragraph as its means of public notice in its articles of incorporation.In this case, the company may designate the means listed in item (i) of the preceding paragraph as the means of public notice in case the electronic means is not available for public notice due to an accident or for any other compelling reason.
(4)The provisions of Article 30 (Certification of the Articles of Incorporation) of the Companies Act apply mutatis mutandis to certification of the articles of incorporation set forth in paragraph (1) of the preceding Article.In this case, the term "Article 33, paragraph (7) or (9), or Article 37, paragraph (1) or (2)" in Article 30, paragraph (2) of that Act is deemed to be replaced with "Article 33, paragraph (7) or (9) as applied mutatis mutandis pursuant to Article 24, paragraph (2) of the Insurance Business Act"; any other necessary technical replacement of terms is specified by Cabinet Order.
Article 24(1)If a mutual company is to be incorporated, the following particulars do not become effective unless they are stated or recorded in the articles of incorporation referred to in Article 22, paragraph (1):
(i)property that is agreed to be assigned to the mutual company after its establishment, its value, and the name of the assignor;
(ii)compensation or any other special benefit which the incorporators are to obtain by establishing the mutual company, and the names of the incorporators; and
(iii)expenses for the incorporation that are borne by the mutual company (excluding the fees for the certification of the articles of incorporation and the other expenses specified by Cabinet Office Order as posing no risk of harming the interest of the mutual company).
(2)The provisions of Article 33 (Election of an Inspector of Particulars Stated or Recorded in the Articles of Incorporation), Article 868, paragraph (1) (Jurisdiction over Non-Contentious Cases), Article 870, paragraph (1) (limited to the part involving items (i) and (iii)) (Hearing of Statements), Article 871 (Appending of Reasons), Article 872 (limited to the part involving item (iv)) (Immediate Appeals), Article 874 (limited to the part involving item (i)) (Restrictions on Appeal), Article 875 (Exclusion from Application of the Provisions of the Non-Contentious Cases Procedures Act) and Article 876 (Supreme Court Rules) of the Companies Act apply mutatis mutandis to investigations by an inspector of any of the particulars listed in the items of the preceding paragraph where the Article of incorporation of a mutual company include any entry or record of that particular.In this case, the term "rescind the manifestation of the intention to subscribe for the relevant shares issued at incorporation" in Article 33, paragraph (8) of that Act is deemed to be replaced with "resign from the office"; the term "Article 28, items (i) and (ii)" in paragraph (10), item (i) and the term "Article 28, item (i) or (ii)" in items (ii) and (iii) of that Article is deemed to be replaced with "Article 24, paragraph (1), item (i) of the Insurance Business Act", the term "items (i) and (ii) of that Article" in Article 33, paragraph (10), item (i) of that Act is deemed to be replaced with "that item", and the terms "Article 38, paragraph (1)" and "paragraph (3), item (ii) of the same Article" in Article 33, paragraph (11), item (iii) of that Act are deemed to be replaced with "Article 30-10, paragraph (1) of the Insurance Business Act" and "that paragraph", respectively; any other necessary technical replacement of terms is specified by Cabinet Order.
Article 25In addition to the particulars listed in the items of Article 23, paragraph (1) and the items of paragraph (1) of the preceding Article, any other particulars may be stated or recorded in the articles of incorporation of a mutual company, including those which, pursuant to the provisions of this Act, do not take effect unless prescribed in the articles of incorporation, so long as they do not violate the provisions of this Act.
(Keeping and Inspection of the Articles of Incorporation)
Article 26(1)The incorporators (or the mutual company after the establishment of the mutual company) must keep the articles of incorporation at the place designated by the incorporators (or each office of the mutual company after the establishment of the mutual company).
(2)The incorporators (after the establishment of the mutual company, the members and creditors of the mutual company) may make the following requests at any time during the hours designated by the incorporators (after the establishment of the mutual company, during its business hours); provided, however, that they must pay the fees determined by the incorporators (after the establishment of the mutual company, the mutual company) if making a request set forth in item (ii) or (iv):
(i)if the articles of incorporation have been prepared in writing, a request to inspect them;
(ii)a request to be issued a certified copy or extract of the articles of incorporation referred to in the preceding item;
(iii)if the articles of incorporation are prepared in the form of an electronic or magnetic record, a request to inspect anything that shows the particulars recorded in the electronic or magnetic record in a means specified by Cabinet Office Order; or
(iv)a request to be provided with the particulars recorded in the electronic or magnetic record set forth in the preceding item by the electronic or magnetic means designated by the incorporators (after the establishment of the mutual company, such mutual company), or to be issued a document stating the particulars.
(3)If the articles of incorporation are prepared in the form of an electronic or magnetic record, for the purpose of applying the provisions of paragraph (1) to a mutual company that is taking the measures specified by Cabinet Office Order as the measures that enable its secondary offices to respond to the requests listed in items (iii) and (iv) of the preceding paragraph, the term "each office" is deemed to be replaced with "principal office".
(Solicitation of Funds at Incorporation by a Mutual Company)
Article 27The incorporators must solicit contributions to the total amount of funds in incorporating a mutual company pursuant to the provisions of this Subsection.
(Offers to Contribute Funds)
Article 28(1)The incorporators must notify those who seek to offer contributions of funds in response to the solicitation under the preceding Article of the following particulars:
(i)date of the articles of incorporation and the name of the notary who certified them;
(ii)particulars listed in the items of Article 23, paragraph (1) and the items of Article 24, paragraph (1);
(iii)the place where the bank, etc. (meaning a bank (meaning a bank as defined in Article 2, paragraph (1) (Definitions, etc.) of the Banking Act (Act No. 59 of 1981); the same applies hereinafter), trust company, or any other entity specified by Cabinet Office Order as equivalent to a bank or trust company; hereinafter the same applies in this Part) handles the payment of contribution of funds; and
(iv)beyond what is set forth in the preceding three items, any other particulars specified by Cabinet Office Order.
(2)A person who offers to contribute funds in response to the solicitation under the preceding Article must deliver a document stating the following particulars to the incorporators:
(i)name and address of the person making the offer; and
(ii)amount of funds planned to be contributed.
(3)A person who makes an offer under the preceding paragraph may, in lieu of delivering the document prescribed in that paragraph, and pursuant to the provisions of Cabinet Order, provide the particulars that are required to be stated in the document by electronic or magnetic means, with the consent of the incorporators.In this case, the person who has made the offer is deemed to have delivered the document prescribed in that paragraph.
(4)The incorporators must immediately notify a person who has made an offer under paragraph (2) (hereinafter referred to as "offeror" in this Subsection) of any changes in the particulars listed in the items of paragraph (1) and of the particulars affected by the changes.
(5)It is sufficient for a notice or demand to be sent by the incorporators to an offeror at the address specified under paragraph (2), item (i) (where the offeror has notified the incorporators of a different place or contact address for the receipt of notices or demands, to that place or contact address).
(6)The notice or demand under the preceding paragraph is deemed to have arrived at the time the notice or demand would normally have arrived.
(Allocation of Funds)
Article 29(1)The incorporators are to select among the offerors the persons who must contribute funds, and must determine the amount of contribution to be allocated to each of them.In this case, the incorporators may reduce the amounts of the contributions of funds to be made by such offerors from the amount prescribed in paragraph (2), item (ii) of the preceding Article.
(2)The incorporators, without delay following any decision under the preceding paragraph, must notify the offerors of the amount of contributions of funds to be made by each of them.
(Special Provisions on Offers to Contribute Funds as Solicited at Incorporation and the Allocation Thereof)
Article 30The provisions of the preceding two Articles do not apply to the cases if a person who seeks to contribute funds as solicited at incorporation concludes a contract stipulating the contribution of the total amount of such funds.
(Fund Subscription)
Article 30-2The persons listed in the following items are to be fund subscribers solicited at incorporation in the amounts specified in the items:
(i)offerors:the amount of their contributions of funds as allocated by the incorporators; and
(ii)a person who, under a contract as set forth in the preceding Article, has subscribed for the total amount of funds solicited at incorporation:the amount of funds subscribed for.
(Payment of Funds)
Article 30-3(1)Each fund subscriber solicited at incorporation must, without delay following the receipt of the notice under Article 29, paragraph (2), pay the full amount of money pertaining to their contribution of funds solicited at incorporation, at the place payment is handled that is listed in Article 28, paragraph (1), item (iii).
(2)The incorporators must notify any fund subscriber solicited at incorporation who has not made the payment set forth in the preceding paragraph that the payment is to be made by the date designated thereby.
(3)The notice under the preceding paragraph must be given no later than two weeks before the date prescribed in that paragraph.
(4)No assignment of the right to become a fund subscriber of a mutual company at its incorporation by making a payment pursuant to the provisions of paragraph (1) may be duly asserted against the mutual company thus established.
(5)A fund subscriber solicited at incorporation who has received the notice under paragraph (2), if they fail to make the payment by the date prescribed in that paragraph, loses their right to become a fund contributor of a mutual company at incorporation by making the payment.
(Certificate of Deposit for Monies Paid)
Article 30-4(1)The incorporators may request the bank, etc. that handled the payment pursuant to the provisions of paragraph (1) of the preceding Article to issue a certificate of deposit for monies equivalent to the amount paid in pursuant to the provisions of that paragraph.
(2)The bank, etc. that issued the certificate referred to in the preceding paragraph may not assert against the mutual company after its establishment due to anything stated on the certificate which differs from the fact or due to the existence of restrictions regarding the return of money paid in pursuant to the provisions of paragraph (1) of the preceding Article.
(Restrictions on the Invalidation or Recession of Subscription)
Article 30-5(1)Fund subscribers solicited at incorporation may make the requests listed in the items of Article 26, paragraph (2) at any time during the hours designated by the incorporators; provided, however, that they must pay the fees determined by the incorporators if making a request set forth in item (ii) or (iv) of that paragraph.
(2)The proviso to Article 93, paragraph (1) (Concealment of True Intent) and the provisions of Article 94, paragraph (1) (Fictitious Manifestation of Intention) of the Civil Code (Act No. 89 of 1896) do not apply to the manifestation of an intention to offer or allocate contributions of funds solicited at incorporation, and of a contract under Article 30.
(3)After the establishment of the mutual company, a fund subscriber solicited at incorporation may not cancel their contribution of funds solicited at incorporation on the grounds of an error, fraud or duress.
(Solicitation of Members)
Article 30-6(1)The incorporators, pursuant to the provisions of this Subsection, must solicit members in incorporating a mutual company.
(2)One hundred or more members are required for incorporating a mutual company.
(Application for Membership)
Article 30-7(1)The incorporators must notify those who are seeking to apply for membership in response to the solicitation under paragraph (1) of the preceding Article of the following particulars:
(i)date of the articles of incorporation and the names of the notary who certified them;
(ii)particulars listed in the items of Article 23, paragraph (1) and the items of Article 24, paragraph (1);
(iii)names and addresses of the fund contributors (including the fund subscribers), and the amount of contribution (including the amount to be contributed) by each of the contributors;
(iv)number of the members to be solicited at incorporation;
(v)any provisions in the articles of incorporation under the second sentence of Article 113 (including as applied mutatis mutandis pursuant to Article 272-18); and
(vi)beyond what is set forth in the preceding items, any other particular specified by Cabinet Office Order.
(2)A person who applies for membership in response to the solicitation under paragraph (1) of the preceding Article must prepare and submit two copies of the signed document stating the following particulars to the incorporators:
(i)name and address of the person applying for membership; and
(ii)type of insurance related to the insurance contract that the person is seeking to conclude with the mutual company.
(3)A person who files an application under the preceding paragraph may, in lieu of submitting the document prescribed in that paragraph, and pursuant to the provisions of Cabinet Order, provide the particulars that are required to be stated in the document by electronic or magnetic means, with the consent of the incorporators.In this case, the person who has filed the application is deemed to have submitted the document prescribed in that paragraph.
(4)The provisions of Article 30-5, paragraph (2) apply mutatis mutandis to the manifestation of an intention to apply for membership prior to the establishment of a mutual company.In this case, any necessary technical replacement of terms is specified by Cabinet Order.
(Organizational Meetings)
Article 30-8(1)If all the payments have been completed for contributions comprising the total amount of funds, and the number of persons who have submitted to the incorporators the documents set forth in paragraph (2) of the preceding Article has reached the number set forth in paragraph (1), item (iv) of the same Article (referred to as "completion of payments, etc." in the following paragraph), the incorporators, without delay, must convene a meeting of the prospective members of the mutual company (hereinafter referred to as an "organizational meeting" in this Section).
(2)After the completion of payments, etc., the incorporators may convene an organizational meeting at any time when they find it necessary.
(3)An organizational meeting may adopt resolutions only on the particulars provided for in this Section, the discontinuation of the incorporation of the mutual company, the conclusion of organizational meetings, and other particulars regarding the incorporation of the mutual company.
(4)Each prospective member is entitled to one vote at an organizational meeting.
(5)Resolutions at an organizational meeting are adopted by a three-quarters majority of the votes, provided that at least half of the prospective members are present.
(6)The provisions of Article 67 (Determination to Convene an Organizational Meeting), Article 68 (excluding items in paragraph (2)) (Notices of Convocation for Organizational Meetings), Articles 70 and Article 71 (Delivery of Voting Forms and Reference Documents for an Organizational Meeting), Article 73, paragraph (4) (Resolutions at Organizational Meetings), Articles 74 through 76 (Proxy Voting, Voting in Writing, and Voting by Electronic or Magnetic Means), Articles 78 through 80 (Accountability of Incorporators, Authority of the Chairperson, and Resolutions for Postponement or Adjournment), and Article 81 (excluding paragraph (4)) (Minutes) of the Companies Act apply mutatis mutandis to organizational meetings of a mutual company; and the provisions of Article 830 (Action for a Declaratory Judgment as to the Absence or Invalidity of a Resolution of a Shareholders' Meeting, etc.), Article 831 (Action to Revoke a Resolution of a Shareholders' Meeting, etc.), Article 834 (limited to the part pertaining to items (xvi) and (xvii)) (Defendant), Article 835, paragraph (1) (Jurisdiction over Actions), Article 836, paragraphs (1) and (3) (Order to Provide Security), Article 837 (Mandatory Consolidation of Oral Arguments, etc.), Article 838 (Persons Affected by a Judgment Being Upheld), Article 846 (Liability for Damages If a Judgment Is Entered Against the Plaintiff), and Article 937, paragraph (1) (limited to the part pertaining to item (i), (g)) (Commissioning of Registration by Judicial Decision) of that Act apply mutatis mutandis to an action for a declaratory judgment as to the absence or invalidity of a resolution of a mutual company's organizational meeting and to an action to rescind a resolution of a mutual company's organizational meeting, respectively.In this case, the terms "shareholders at incorporation" in those provisions (excluding Article 67, paragraph (2) and Article 831, paragraph (1) of that Act), and "shareholders at incorporation (excluding shareholders at incorporation who may not exercise their voting rights on all matters which may be resolved at organizational meetings. The same applies in the following Article to Article 71)" in Article 67, paragraph (2) of that Act is deemed to be replaced with "prospective members"; the term "two weeks (or one week if the stock company to be incorporated is not a public company, except if the particulars listed in paragraph (1), item (iii) or item (iv) of the preceding Article are decided, (or if a shorter period of time is provided for in the articles of incorporation if the stock company to be incorporated is a stock company other than a company with board of directors, the shorter period of time))" in Article 68, paragraph (1) of that Act is deemed to be replaced with "two weeks"; the term "in writing in the following cases" in Article 68, paragraph (2) is deemed to be replaced with "in writing"; the term "Article 27, item (v), or Article 59, paragraph (3), item (i)" in Article 68, paragraph (5) is deemed to be replaced with "Article 30-7, paragraph (2), item (i) of the Insurance Business Act"; the term "a shareholder, etc. (or, if the shareholders' meeting, etc. set forth in each such item is an organizational meeting or a class organizational meeting, a shareholder, etc., a shareholder at incorporation, a director at incorporation, or a company auditor at incorporation)" in Article 831, paragraph (1) is deemed to be replaced with "members, directors, auditors, or liquidators ( members, directors or liquidators, in the case of a company with an audit and supervisory committee, or members, directors, executive officers or liquidators, in the case of a company with a nominating committee, etc.), or prospective members, directors at incorporation (meaning directors at incorporation as set forth in Article 30-10, paragraph (1) of the Insurance Business Act; hereinafter the same applies in this paragraph) or company auditors at incorporation (meaning the company auditors at incorporation set forth in paragraph (1) of that Article; hereinafter the same applies in this paragraph) of a mutual company"; and the term "a shareholder (or, if the relevant resolution is the resolution of an organizational meeting, shareholders at incorporation) or director (or, in cases of a company with an audit and supervisory committee, directors who are audit and supervisory committee members or other directors; the same applies hereinafter in this paragraph), company auditor or liquidator pursuant to the provisions of Article 346 (1) (including as applied mutatis mutandis pursuant to Article 479 (4)), and if such resolution is a resolution at an organizational meeting or class organizational meeting, this is to include a director at incorporation (if a stock company to be incorporated is a company with an audit and supervisory committee, directors at incorporation who are audit and supervisory committee members at incorporation or other directors at incorporation) or a company auditor at incorporation" in the same paragraph of the Companies Act is deemed to be replaced with "directors (in the case of a company with an audit and supervisory committee, directors who are audit and supervisory committee members or other directors), company auditors, liquidators, prospective members, directors at incorporation (if a mutual company to be incorporated is a company with an audit and supervisory committee, directors at incorporation who are audit and supervisory committee members at incorporation (meaning an audit and supervisory committee member at incorporation prescribed in Article 30-10, paragraph (2) of the Insurance Business Act) or other directors at incorporation) or company auditors at incorporation"; and any other necessary technical replacement of terms is specified by Cabinet Order.
(Reporting of the Particulars of Incorporation)
Article 30-9(1)The incorporators must report the particulars of the incorporation of a mutual company at the organizational meeting.
(2)In the cases listed in the following items, the incorporators must submit or provide at the organizational meeting the document or electronic or magnetic records in which the particulars specified in the relevant items are stated or recorded:
(i)if the articles of incorporation provide for the particulars listed in the items of Article 24, paragraph (1) (excluding the particulars specified in the items of Article 33, paragraph (10) of the Companies Act in the cases listed in the items as applied mutatis mutandis pursuant to Article 24, paragraph (2)):the content of the report set forth in Article 33, paragraph (4) as applied mutatis mutandis pursuant to Article 24, paragraph (2) that is to be submitted by the inspector under Article 33, paragraph (2) as applied mutatis mutandis pursuant to Article 24, paragraph (2); and
(ii)in the case listed in Article 33, paragraph (10), item (iii) of the Companies Act as applied mutatis mutandis pursuant to Article 24, paragraph (2):the content of the verification provided in Article 33, paragraph (10), item (iii) of that Act as applied mutatis mutandis pursuant to Article 24, paragraph (2).
(Election of Directors at Incorporation)
Article 30-10(1)The election of the directors at incorporation (meaning the persons who become directors at the incorporation of a mutual company; the same applies hereinafter), accounting advisors at incorporation (meaning the persons who become accounting advisors at the incorporation of a mutual company; the same applies hereinafter), auditors at incorporation (meaning the persons who become company auditors at the incorporation of a mutual company; the same applies hereinafter) and accounting auditors at incorporation (meaning the persons who become accounting auditors at the incorporation of a mutual company; the same applies hereinafter) must be made by a resolution of the organizational meeting.
(2)If a mutual company to be incorporated is a company with an audit and supervisory committee, the directors at incorporation under the preceding paragraph must be elected separately for directors at incorporation who are audit and supervisory committee members at incorporation (meaning a person who is to become an audit and supervisory committee member at the time of incorporation of a mutual company; the same applies hereinafter) and other directors at incorporation.
(3)Three or more persons must be elected as directors at incorporation.
(4)Three or more persons must be elected as auditors at incorporation if the mutual company to be incorporated is a company with a board of company auditors (meaning a stock company or mutual company which has a board of company auditors; the same applies hereinafter).
(5)If a mutual company to be incorporated is a company with an audit and supervisory committee, three or more persons must be elected as directors at incorporation who are audit and supervisory committee members at incorporation.
(6)A person who is precluded from being a director (in case of a company with an audit and supervisory committee, a director who is an audit and supervisory committee member or other director), accounting advisor, company auditor or accounting auditors of the mutual company after its establishment, pursuant to the provisions of Article 8-2, paragraph (2), Article 53-2, paragraph (1) (including as applied mutatis mutandis pursuant to Article 53-5, paragraph (1)), Article 333, paragraph (1) or (3) of the Companies Act as applied mutatis mutandis pursuant to Article 53-4, or Article 337, paragraph (1) or (3) of that Act as applied mutatis mutandis pursuant to Article 53-7 may not be elected as director at incorporation (in case where the incorporated mutual company is a company with an audit and supervisory committee, a director at incorporation who is an audit and supervisory committee member at incorporation and other director at incorporation), accounting advisor at incorporation, auditor at incorporation or accounting auditors at incorporation, respectively.
(7)Directors at incorporation, accounting advisors at incorporation, auditors at incorporation or accounting auditors at incorporation who are elected pursuant to the provisions of paragraphs (1) and (2) may be dismissed by a resolution of the organizational meeting at any time prior to the establishment of the mutual company.
(8)The provisions of Article 47 (Appointment, etc. of Representative Directors at Incorporation) of the Companies Act apply mutatis mutandis to the appointment and removal of the representative director at incorporation (meaning the person who becomes representative director at the incorporation of a mutual company; the same applies hereinafter) of a mutual company (other than a company with a nominating committee, etc.); and the provisions of Article 48 (Appointment of Committee Members at Incorporation) of that Act apply mutatis mutandis to the appointment of committee members at incorporation (meaning the persons who become members of the nominating committee, etc. at the incorporation of a mutual company; the same applies hereinafter) of a mutual company (limited to a company with a nominating committee, etc.), the election of its executive officers at incorporation (meaning the persons who become executive officers at the incorporation of a mutual company; the same applies hereinafter) and the appointment of its representative executive officer at incorporation (meaning the person who becomes the representative executive officer at the incorporation of a mutual company; the same applies hereinafter), and the removal and dismissal of those persons, respectively.In this case, any necessary technical replacement of terms is specified by Cabinet Order.
(Investigations by Directors at Incorporation)
Article 30-11(1)The directors at incorporation (meaning the directors at incorporation and auditors at incorporation where the mutual company to be incorporated is a company with auditors (meaning a stock company or mutual company that has company auditors; the same applies hereinafter)) must investigate the following particulars without delay after their election:
(i)that, with respect to the properties contributed in kind, etc. in the cases listed in Article 33, paragraph (10), item (i) or (ii) of the Companies Act as applied mutatis mutandis pursuant to Article 24, paragraph (2) (if listed in Article 33, paragraph (10), item (ii) as applied mutatis mutandis pursuant to Article 24, paragraph (2), limited to the securities referred to in that item), the value stated or recorded in the articles of incorporation is reasonable;
(ii)that the verification provided for in Article 33, paragraph (10), item (iii) of the Companies Act as applied mutatis mutandis pursuant to Article 24, paragraph (2) is appropriate;
(iii)that the funds solicited at the incorporation of the mutual company have been fully subscribed for;
(iv)that the payments pursuant to the provisions of Article 30-3, paragraph (1) have been completed;
(v)that the number of prospective members is not less than 100; and
(vi)that, in addition to the particulars listed in the preceding five items, the procedures for the incorporation of the mutual company do not violate laws and regulations or the articles of incorporation.
(2)The provisions of Article 93, paragraphs (2) and (3) (Investigation by Directors at Incorporation), and Article 94 (Special Provisions in Case Directors at Incorporation are Incorporators) of the Companies Act apply mutatis mutandis to the investigation under the preceding paragraph.In this case, any necessary technical replacement of terms is specified by Cabinet Order.
(Amendments to the Articles of Incorporation at Incorporation)
Article 30-12(1)The incorporators may not make any amendment to the articles of incorporation once the notice under Article 29, paragraph (2) has been given, notwithstanding the provisions of Article 33, paragraph (9) of the Companies Act as applied mutatis mutandis pursuant to Article 24, paragraph (2).
(2)Notwithstanding the provisions of Article 30, paragraph (2) of the Companies Act as applied mutatis mutandis pursuant to Article 23, paragraph (4), the articles of incorporation may be amended by a resolution at an organizational meeting.
(3)If an organizational meeting has adopted a resolution to amend the articles of incorporation in a manner that changes any of the particulars listed in the items of Article 24, paragraph (1), the incorporators may resign from their offices, provided that they do so within two weeks of the adoption of the resolution.
(Timing of Establishment)
Article 30-13(1)A mutual company is established by registering its incorporation at the locality of its principal office.
(2)A person who has submitted the document set forth in Article 30-7, paragraph (2) to the incorporators, without delay following the establishment of the mutual company and after the mutual company has received the license prescribed in Article 3, paragraph (1) or made a registration under Article 272, paragraph (1), must apply for an insurance contract with the mutual company.
(Application, Mutatis Mutandis, of the Companies Act)
Article 30-14The provisions of Part II, Chapter I, Section 8 (excluding Article 52, paragraph (2), item (ii) and Article 52-2) (Liability of the Incorporators) and Article 103, paragraph (4) (Liability of the Incorporators) of the Companies Act apply mutatis mutandis to the liabilities of incorporators, directors at incorporation or auditors at incorporation of a mutual company.In this case, the term "(in this paragraph and in item (ii), excluding those who contributed in kind under Article 28, item (i) or the assignor of the properties under item (ii) of the same Article)" in Article 52, paragraph (2) (Liability for Insufficiency of Value of Properties Contributed) of that Act is deemed to be replaced with "(excluding the assignor of the properties under Article 24, paragraph (1), item (i) of the Insurance Business Act)"; the term "Article 28, item (i) or (ii)" in Article 52, paragraph (2), item (i) is deemed to be replaced with "Article 24, paragraph (1), item (i) of the Insurance Business Act"; the term "Article 33, paragraph (10), item (iii)" in Article 52, paragraph (3) is deemed to be replaced with "Article 33, paragraph (10), item (iii) as applied mutatis mutandis pursuant to Article 24, paragraph (2) of the Insurance Business Act"; and in Article 103, paragraph (4) of that Act, the phrase "In cases where the solicitation under Article 57, paragraph (1) is carried out", is deemed to be deleted, and the terms "the solicitation" and "the preceding paragraph" are deemed to be replaced with "solicitation under Article 27 or Article 30-6, paragraph (1) of the Insurance Business Act" and "(excluding Article 52, paragraph (2), item (ii) and Article 52-2)", respectively; any other necessary technical replacement of terms is specified by Cabinet Order.
(Actions to Invalidate Incorporation)
Article 30-15The provisions of Article 828, paragraph (1) (limited to the part involving item (i)) and paragraph (2) (limited to the part pertaining to item (i)) (Actions to Invalidate Acts Concerning the Organization of a Company), Article 834 (limited to the part involving item (i)) (Defendant), Article 835, paragraph (1) (Jurisdiction over Actions), Article 836, paragraphs (1) and (3) (Order to Provide Security), Articles 837 through 839 (Mandatory Consolidation of Oral Arguments, etc., Persons Affected by a Judgment Being Upheld, Effects of a Judgment of Invalidity, Revocation or Rescission), Article 846 (Liability for Damages If a Judgment Is Entered Against the Plaintiff), and Article 937, paragraph (1) (limited to the part involving item (i), (a)) (Commissioning of Registration by a Judicial Decision) of the Companies Act apply mutatis mutandis to an action to invalidate the incorporation of a mutual company.In this case, the term "a shareholder, etc. (meaning a shareholder, director or liquidator (or, for a company with company auditors, it means a shareholder, director, company auditor or liquidator, and for a company with a nominating committee, etc., it means a shareholder, director, executive officer or liquidator); hereinafter the same applies in this Section)" in Article 828, paragraph (2), item (i) of that Act is deemed to be replaced with "members, directors, liquidators, in case of a company with an audit and supervisory committee, or members, directors or liquidators (or members, directors, executive officers, or liquidators, in the case of a company with an audit and supervisory committee)"; any other necessary technical replacement of terms is specified by Cabinet Order.
Subsection 3 Rights and Obligations of Members
(Obligations of Members)
Article 31The obligations of a member are limited to the amount of their insurance premium payments.
(Notices and Demands)
Article 32(1)It is sufficient for any notice or demand to an applicant for membership, or member of a mutual company to be sent to the place or contact address of which the applicant or member has notified the incorporators or mutual company; provided, however, that this does not apply to a notice or demand on any particular pertaining to the insurance relationship.
(2)The notice or demand in the main text of the preceding paragraph is deemed to have arrived at the time when the notice or demand would normally have arrived.
(3)The provisions of the main text of paragraph (1) and the preceding paragraph apply mutatis mutandis to the cases if a document is delivered to the members in giving a notice under Article 299, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to Article 41, paragraph (1) or if the particulars that are required to be stated in the document are provided by electronic or magnetic means.In this case, the term "to have arrived" in the preceding paragraph is deemed to be replaced with "to have been effected by delivery of the document or provision of the particulars by electronic or magnetic means"; and any other necessary technical replacement of terms is specified by Cabinet Order.
(Members List)
Article 32-2(1)A mutual company, pursuant to the provisions of Cabinet Office Order, must prepare a members list in which it states or records the particulars specified by Cabinet Office Order as particulars required for the members list.
(2)A mutual company must keep its members list at its principal office.
(3)A member or creditor may make the following requests at any time during the business hours of the mutual company.In this case, the member or creditor must disclose the reason for their request:
(i)if the members list has been prepared in writing, a request to inspect or copy the written document; or
(ii)if the members list has been prepared in the form of an electronic or magnetic record, a request to inspect or copy anything that shows the particulars recorded in the electronic or magnetic record in a means specified by Cabinet Office Order.
(4)A mutual company may not reject a request made under the preceding paragraph unless it falls under any of the following cases:
(i)the member or creditor making the request (hereinafter referred to as "requestor" in this paragraph) does so for the purpose other than of conducting an investigation in connection with securing or exercising their rights;
(ii)the requestor makes a request for the purpose of precluding the mutual company from performing its business or harming the common interest of the members;
(iii)the requestor makes a request for the purpose of informing a third party of any fact learned by inspecting or copying the members list for a profit; or
(iv)the requestor has, within the past two years, informed a third party of any fact learned by inspecting or copying the members list for a profit.
(Reference Date)
Article 33(1)For the purpose of specifying the persons who exercise their rights as members, a mutual company may deem the persons who are members on a certain date within four months prior to the date of exercising the rights as the members who are to enforce the rights.
(2)A mutual company that has fixed the "certain date" set forth in the preceding paragraph must give public notice of that date no later than two weeks before the date; provided, however, that this does not apply to the cases in which the date is designated by the articles of incorporation.
(3)The rights set forth in paragraph (1) do not include any right provided for otherwise in this Act or the rights specified by Cabinet Order such as the right to distribution of surplus.
(Benefits Provided for the Exercise of the Rights of a Member or Representative Member)
Article 33-2(1)A mutual company must not provide a person with economic benefits for the exercise of their member's rights or representative member's rights (limited to benefits given on the account of the mutual company or its substantive subsidiary companies (meaning a corporation whose management is deemed to be controlled by the mutual company pursuant to the provisions of Cabinet Office Order, such as a stock company in which the mutual company holds the majority of all shareholders' voting rights; the same applies hereinafter)).
(2)The provisions of Article 120, paragraphs (2) through (5) (Benefits Provided for the Exercise of a Shareholder's Right) of the Companies Act apply mutatis mutandis to the case set forth in the preceding paragraph; and the provisions of Part VII, Chapter II, Section 2 (excluding Article 847, paragraph (2), Article 847-2, Article 847-3, Article 849, paragraph (2), and paragraphs (6) through (11), Article 851, paragraph (1), item (i) and paragraph (2), and Article 853, paragraph (1), items (ii) and (iii)) (Liability Actions, etc. Against a Stock Company) of that Act apply mutatis mutandis to an action for the return of benefits under Article 120, paragraph (3) of that Act as applied mutatis mutandis pursuant to this paragraph, respectively.In this case, the term "shareholder, etc." and "stock company, etc." in these provisions (excluding Article 847-4, paragraph (2), Article 848 and Article 849, paragraph (3) of that Act) are deemed to be replaced with "members" and "mutual company", respectively; the term "paragraph (1)" in Article 120, paragraphs (3) and (4) of that Act is deemed to be replaced with "Article 33-2, paragraph (1) of the Insurance Business Act"; the term "all shareholders" in Article 120, paragraph (5) is deemed to be replaced with "all members"; the term "A shareholder (excluding a holder of shares less than one unit who is unable to exercise rights pursuant to the provisions of the articles of incorporation) having the shares" in Article 847, paragraph (1) (Liability Actions, etc. by Shareholders) of that Act is deemed to be replaced with "person who has been a member"; the term "a shareholder, etc. (meaning a shareholder, a qualified former shareholder or a shareholder of an ultimate, wholly owning parent company, etc.; the same applies hereinafter in this Section)" and "the shareholder, etc." in Article 847-4, paragraph (2) (Court Costs for an Action Pursuing Liability) is deemed to be replaced with "member" and "the member", respectively; the phrase "the stock company or the wholly owned subsidiary company resulting from the share exchange, etc. (hereinafter referred to as "stock company, etc." in this Section)" in Article 848 (Jurisdiction of an Action) of that Act is deemed to be replaced with "mutual company"; the phrase "relating to an action for pursuing liability, etc. (in cases of a qualified former shareholder, limited to one related to the liabilities or obligations for which the fact causing them occurs by the time when the act listed in the items of Article 847-2 (1) becomes effective; in cases of a shareholder of an ultimate, wholly owning parent company, etc., limited to the action pursuing specific liability)" in Article 849, paragraph (1) (Intervention) of that Act is deemed to be replaced with "relating to an action for pursuing liability, etc."; the phrase "In order for a stock company, etc., wholly owning parent company resulting from the share exchange, etc., or ultimate, wholly owning parent company, etc. to intervene in a suit relating to an action for pursuing liability, etc. to assist a director (excluding an audit and supervisory committee member and audit committee member), executive officer, liquidator or a person who was formerly in such a position of a stock company that is the relevant stock company, etc., wholly owned subsidiary company resulting from the share exchange, etc. of the relevant wholly owning parent company resulting from the share exchange, etc., or wholly owned subsidiary company, etc. of the relevant ultimate, wholly owning parent company, etc." in paragraph (3) of that Article is deemed to be replaced with "In order to intervene in a suit relating to an action for pursuing liability, etc. to assist a director (excluding an audit and supervisory committee member and audit committee member), executive officer, liquidator or a person who was formerly in such a position of a mutual company", and any other necessary technical replacement of terms is specified by Cabinet Order.
(Grounds for Withdrawal)
Article 34(1)A member is to withdraw their membership on any of the following grounds:
(i)termination of the insurance relationship; or
(ii)occurrence of grounds specified in the articles of incorporation.
(2)In the event of a member's death (excluding where the death falls under the any of the grounds set forth in the items of the preceding paragraph) or for a member that has ceased to exist in a merger, the heir or any other general successor assumes the right and obligations of the member.
(3)If there are two or more general successors for the general successor referred to in the preceding paragraph (meaning general successors by inheritance and limited to those who have not made the payment of insurance premiums in whole or in part; hereinafter the same applies in this paragraph), the general successors assume the obligations of making the insurance premium payments jointly and severally.
(4)If there are two or more general successors (limited to general successors by inheritance; hereinafter the same applies in this paragraph), the general successors may not exercise the member's rights that they have assumed, unless they designate one person to exercise the rights.
(Claims for a Refund)
Article 35A withdrawn member may, pursuant to the terms of the articles of incorporation or insurance contract, claim refund of the money associated with their rights; provided, however, that this does not apply to the cases in which the withdrawn member is replaced by another person as a member.
(Prescription)
Article 36If a claim for refund set forth in the preceding Article has not been exercised for three years from the time when it becomes exercisable, it is extinguished by prescription.
Subsection 4 Administrative Organs
Division 1 General Meeting
(Voting Rights)
Article 37Each member is entitled to one vote at a general meeting.
(Authority of the General Meeting)
Article 37-2The general meeting may resolve only the particulars provided for in this Act and the particulars provided for in the articles of incorporation.
(Resolutions of a General Meeting)
Article 37-3(1)Unless otherwise provided for in this Act or the articles of incorporation, a resolution of the general meeting is adopted by the majority vote of the attending members at a session if at least half of the members are present.
(2)A general meeting may not adopt a resolution on any other particular than particulars listed in Article 298, paragraph (1), item (ii) of the Companies Act as applied mutatis mutandis pursuant to Article 41, paragraph (1); provided, however, that this does not apply to a request for the appointment of a person set forth in Article 316, paragraph (1) or (2) of that Act as applied mutatis mutandis pursuant to Article 41, paragraph (1), or for the attendance of the accounting auditors set forth in Article 398, paragraph (2) of that Act as applied mutatis mutandis pursuant to Article 53-23.
(Right to Demand the Convocation of the General Meeting)
Article 38(1)Members who have consecutively been a member for the preceding six months or more (or, if shorter period is prescribed in the articles of incorporation, such period) that account for not less than three thousandths (or if lesser proportion is prescribed in the articles of incorporation, that proportion) of all members, or three thousand (or if smaller number is prescribed in the articles of incorporation) or more members of a mutual company (or, in small amount and short term insurer that is a mutual company specified by Cabinet Order (hereinafter referred to as a "specified mutual company"), members equal to or exceeding the number specified by Cabinet Order), may, by showing matters which are a purpose for a general meeting (limited to matters on which the general meeting may adopt a resolution; hereinafter the same applies in this Division) and the reason for convocation, demand that the directors convene a general meeting.
(2)In the following cases, members who have made a demand pursuant to the provisions of the preceding paragraph may convene a general meeting with the permission of the court:
(i)if the convocation procedures are not taken without delay after the demand pursuant to the provisions of the preceding paragraph is made; or
(ii)if the notice for the convocation of the general meeting which designates, as the date of the general meeting, a date falling within the period of eight weeks (or if any period less than that is provided for in the articles of incorporation, that period) from the day the demand pursuant to the provisions of the preceding paragraph is made, is not given.
(3)The provisions of Article 868, paragraph (1) (Jurisdiction over Non-Contentious Cases), Article 869 (Prima Facie Showing), Article 871 (Appending of Reasons), Article 874 (limited to the part involving item (iv)) (Restrictions on Appeal), Article 875 (Exclusion from Application of the Provisions of the Non-Contentious Cases Procedures Act) and Article 876 (Supreme Court Rules) of the Companies Act apply mutatis mutandis to the preceding paragraph.In this case, any necessary technical replacement of terms is specified by Cabinet Order.
(Right to Submit Proposals)
Article 39(1)Members who have been a member consecutively for the preceding six months or more (or, if a shorter period is prescribed in the articles of incorporation, that period) that account for no less than one thousandth (or if lesser proportion is prescribed in the articles of incorporation, that proportion) of all members, or one thousand (or in case if a smaller number is prescribed by the articles of incorporation) or more members of a mutual company (or, in a specified mutual company, members equal to or exceeding the number prescribed by Cabinet Order), may demand that the directors include certain items (limited to matters on which the general meeting may adopt a resolution) in the agenda for a general meeting.In this case, the demand must be submitted no later than eight weeks (or any shorter period prescribed by the articles of incorporation) prior to the date of the general meeting.
(2)A member may submit a proposal at a general meeting with respect to any agenda item for the meeting; provided, however, that this does not apply to cases in which the proposal is in violation of any laws or regulations, the articles of incorporation, or if three years have not elapsed since the day on which a proposal that is substantially the same has not been approved by at least one tenth of the votes of the members (or any smaller proportion prescribed by the articles of incorporation) of the general meeting.
(3)Members accounting for at least one thousandth (or any smaller proportion prescribed by the articles of incorporation) of all members, or one thousand (or any smaller number prescribed by the articles of incorporation) or more members of a mutual company (or, in a specified mutual company, members equal to or exceeding the number specified by Cabinet Order set forth in paragraph (1)), who have been members of the mutual company consecutively for the preceding six months (or any shorter period prescribed by the articles of incorporation), may demand the directors that, no later than eight weeks (or any shorter period prescribed by the articles of incorporation) prior to the date of the general meeting, members be notified of the outline of any proposal to be submitted by the relevant member with respect to an agenda item of the meeting (or, if a notice is to be given under Article 299, paragraph (2) (excluding the items (i) and (ii)) or (3) of the Companies Act as applied mutatis mutandis pursuant to Article 41, paragraph (1), the outline to be stated in, or recorded on, that notice); provided, however, that this does not apply to the cases where the proposal is in violation of any laws or regulations or the articles of incorporation, or where three years have not elapsed since the day on which a proposal that is substantially the same has not been approved by at least one tenth of the membership (or any smaller proportion prescribed by the articles of incorporation) in the general meeting.
(Right to Demand the Election of Inspector for a General Meeting)
Article 40(1)A mutual company or members that account for at least one thousandth (or any smaller proportion prescribed by the articles of incorporation) of all members, or one thousand (or any smaller number prescribed by the articles of incorporation) or more members of a mutual company (or, in a specified mutual company, members equal to or exceeding the number specified by Cabinet Order set forth in paragraph (1) of the preceding Article), who have been members of the mutual company consecutively for the preceding six months (or any shorter period prescribed by the articles of incorporation), may file a petition with the court, prior to a session of the general meeting, for the election of an inspector who is to investigate the convocation procedures and method of resolution of the general meeting.
(2)The provisions of Article 306, paragraphs (3) through (7) (Election of Inspector on Calling Procedures of Shareholders' Meeting) and Article 307 (Determination by The Court of the Calling of Shareholders' Meeting) of the Companies Act apply mutatis mutandis to the preceding paragraph.In this case, the term "preceding two paragraphs" in Article 306, paragraph (3) of that Act is deemed to be replaced with "Article 40, paragraph (1) of the Insurance Business Act"; the term "stock company" in Article 306, paragraphs (4) and (7) is deemed to be replaced with "mutual company"; the term "shareholders' meeting" in Article 307 of that Act is deemed to be replaced with "general meeting"; and the term "shareholders" in Article 307, paragraph (1), item (ii) of that Act is deemed to be replaced with "members"; any other necessary technical replacement of terms is specified by Cabinet Order.
(3)The provisions of Article 868, paragraph (1) (Jurisdiction over Non-Contentious Cases), Article 870, paragraph (1) (limited to the part pertaining to item (i)) (Hearing of Statements), Article 871 (Appending of Reasons), Article 872 (limited to the part involving item (iv)) (Immediate Appeal), Article 874 (limited to the part involving item (i)) (Restrictions on Appeal), Article 875 (Exclusion from Application of the Provisions of the Non-Contentious Cases Procedures Act) and Article 876 (Supreme Court Rules) of the Companies Act apply mutatis mutandis to the preceding two paragraphs.In this case, any necessary technical replacement of terms is specified by Cabinet Order.
(Application, Mutatis Mutandis, of the Companies Act)
Article 41(1)The provisions of Article 296 (Convocation of Shareholders Meetings), Article 298 (excluding the proviso to paragraphs (2) and (3)) (Determination to Convoke a Shareholders Meeting), Article 299 (excluding the items of paragraph (2)) (Notice of Convocation for a Shareholders Meeting), Articles 300 to 302 (Omission of Convocation Procedures, Delivery of Voting Forms and Reference Documents for a Shareholders Meeting), Articles 310 through 312 (Proxy Voting, Voting in Writing, Voting by Electronic or Magnetic Means), Articles 314 to 317 (Accountability of Directors, etc., Authority of Chairperson, Investigation of Materials Submitted to the Shareholders Meeting, Resolution for Postponement or Adjournment), Article 318 (excluding paragraph (5)) (Minutes), Article 319 (excluding paragraph (4)) (Omission of Resolution of Shareholders' Meetings) and Article 320 (Omission of Reports to Shareholders Meetings) of the Companies Act apply mutatis mutandis to the general meeting of a mutual company.In this case, the terms "stock company" and "company with board of directors" in those provisions are deemed to be replaced with "mutual company"; the term "head office" in those provisions are deemed to be replaced with "principal office"; the term "operating hours" in those provisions is deemed to be replaced with "business hours"; the term "annual shareholders' meeting" in Article 296, paragraph (1) of that Act is deemed to be replaced with "annual general meeting"; the term "paragraph (4) of the following Article" in Article 296, paragraph (3), and the term "paragraph (4) of the preceding Article" in Article 298, paragraphs (1) and (4) of that Act are deemed to be replaced with "Article 38, paragraph (2) and Article 50, paragraph (2) of the Insurance Business Act"; the term "(excluding shareholders who may not exercise their voting rights on all matters which may be resolved at a shareholders' meetings. The same applies in the following Article to Article 302)" in Article 298, paragraph (2) is deemed to be deleted; the term "two weeks (or one week if the stock company is not a public company, except if the particulars listed in paragraph (1), item (iii) or (iv) of the preceding Article are decided, (or if a shorter period of time is provided for in the articles of incorporation if the stock company is a stock company other than the company with board of directors, that shorter period of time))" in Article 299, paragraph (1) of that Act is deemed to be replaced with "two weeks"; the term "in the following cases" in Article 299, paragraph (2) is deemed to be deleted; the term "reference documents for a shareholders meeting" in Articles 301 and 302 of that Act is deemed to be replaced with "reference documents for a general meeting"; the term "shareholders (excluding the shareholders who may not exercise their voting rights on all matters which may be resolved at the shareholders' meeting under the preceding paragraph. The same applies hereinafter in paragraph (4) of the following Article and in Article 312, paragraph (5))" in Article 310, paragraph (7) of that Act is deemed to be replaced with "members"; the term "Article 297" in Article 316, paragraph (2) of that Act is deemed to be replaced with "Article 38 of the Insurance Business Act"; the term "branch offices" in Article 318, paragraph (3) of that Act is deemed to be replaced with "secondary offices"; and the term "all shareholders (limited to those who may exercise their voting rights with respect to the particular)" in Article 319, paragraph (1) of that Act is deemed to be replaced with "all members"; any other necessary technical replacement of terms is specified by Cabinet Order.
(2)The provisions of Article 830 (Action for a Declaratory Judgment as to the Absence or Invalidity of a Resolution of a Shareholders Meeting), Article 831 (Action to Revoke a Resolution of a Shareholders Meeting), Article 834 (limited to the part involving items (xvi) and (xvii)) (Defendant), Article 835, paragraph (1) (Jurisdiction over Actions), Article 836, paragraphs (1) and (3) (Order to Provide Security), Article 837 (Mandatory Consolidation of Oral Arguments), Article 838 (Persons Affected by a Judgment Being Upheld), Article 846 (Liability for Damages If a Judgment Is Entered Against the Plaintiff), and Article 937, paragraph (1) (limited to the part involving item (i), (g)) (Commissioning of Registration by a Judicial Decision) of the Companies Act apply mutatis mutandis to an action for a declaratory judgment as to the absence or invalidity of a resolution of the general meeting of a mutual company and to an action to rescind a resolution of the general meeting of a mutual company.In this case, the term "a shareholder, etc. (or, if the shareholders meeting, etc. set forth in each such item is an organizational meeting or a class organizational meeting, a shareholder, etc., a shareholder at incorporation, a director at incorporation or a company auditor at incorporation)" in Article 831, paragraph (1) of that Act is deemed to be replaced with "members, directors, company auditors or liquidators of a mutual company (members, directors or liquidator, in the case of a company with an audit and supervisory committee, or members, directors, executive officers or liquidators, in the case of a company with a nominating committee, etc.)"; and the term "a shareholder (or, if the relevant resolution is the resolution of an organizational meeting, shareholders at incorporation) or director (or, in cases of a company with audit and supervisory committee, directors who are audit and supervisory committee members or other directors; the same applies hereinafter in this paragraph), company auditor or liquidator pursuant to the provisions of Article 346 (1) (including cases where it is applied mutatis mutandis pursuant to Article 479 (4)), and if such resolution is the resolution of an organizational meeting or class organizational meeting, it is to include a director at incorporation (if a stock company to be incorporated is a company with an audit and supervisory committee, directors at incorporation who are audit and supervisory committee members at incorporation or other directors at incorporation) or a company auditor at incorporation)" in Article 831, paragraph (1) of that Act is deemed to be replaced with "members or directors (or, in the case of a company with an audit and supervisory committee, directors who are audit and supervisory committee members or other directors; hereinafter the same applies in this paragraph), company auditors or liquidators (including a person who assumes the rights and obligations of a director, company auditor or liquidator pursuant to the provisions of Article 53-12, paragraph (1) of the Insurance Business Act (including the cases where it is applied mutatis mutandis pursuant to Article 180-5, paragraph (4) of that Act)"; any other necessary technical replacement of terms is specified by Cabinet Order.
Division 2 Member Representatives Meeting
(Establishment of a Member Representatives Meeting and Representative Members' Terms of Office)
Article 42(1)A mutual company may, pursuant to the provisions of its articles of incorporation, establish an administrative organ composed of the representative members elected from among its members (hereinafter referred to as "member representatives meeting"), in lieu of a general meeting.
(2)The articles of incorporation set forth in the preceding paragraph must specify the particulars prescribed by Cabinet Office Order, such as the number, term of office, and method of election of representative members.
(3)The term of office of a representative member must not exceed four years.
(Voting Rights of Representative Members)
Article 43Each representative member is entitled to one vote at member representatives meetings.
(Authority of the Member Representatives Meeting)
Article 43-2(1)The member representatives meeting may resolve only the particulars provided for in this Act and the particulars provided for in the articles of incorporation.
(2)Any provisions in the articles of incorporation to the effect that the directors, executive officers, board of directors or any organ other than the general meeting or member representatives meeting may decide on a particular which requires a resolution of the general meeting (or the member representatives meeting, if the company has such a meeting) pursuant to the provisions of this Act are null and void.
(Method of Adopting Resolutions of the Member Representatives Meeting)
Article 44(1)Unless otherwise provided for in this Act or the articles of incorporation, a resolution at a member representatives meeting is adopted by the majority vote of the attending representative members at a session if at least half of the representative members are present; provided, however, that the number of the representative members required to attend the member representatives meeting is not to be less than one-third of the total number of representative members, notwithstanding the provisions of the articles of incorporation.
(2)The member representatives meeting may not adopt a resolution on any particulars other than particulars listed in Article 298, paragraph (1), item (ii) of the Companies Act as applied mutatis mutandis pursuant to Article 49, paragraph (1); provided, however, that this does not apply to the election of the person set forth in Article 316, paragraph (1) or (2) of that Act as applied mutatis mutandis pursuant to Article 49, paragraph (1), or to the request of the attendance of accounting auditors under Article 398, paragraph (2) of that Act as applied mutatis mutandis pursuant to Article 53-23.
(Exercise of Voting Rights by Proxy)
Article 44-2(1)A representative member, may exercise their voting right by proxy if the articles of incorporation include any provisions to that effect.In this case, the representative member is to designate only one proxy, and the representative member or proxy must submit a document certifying the authority of proxy to the mutual company.
(2)Only a representative member may become a proxy referred to in the preceding paragraph.
(3)The provisions of Article 310 (excluding paragraphs (1) and (5)) (Exercise of Voting Rights by Proxy) of the Companies Act apply mutatis mutandis to paragraph (1).In this case, the term "preceding paragraph" in paragraph (2) of that Article and the term "paragraph (1)" in paragraph (3) of that Article are deemed to be replaced with "Article 44-2, paragraph (1) of the Insurance Business Act"; the term "stock company" in Article 310, paragraphs (3), (4), (6) and (7) is deemed to be replaced with "mutual company"; the term "Article 299, paragraph (3)" in Article 310, paragraph (4) is deemed to be replaced with "Article 299, paragraph (3) as applied mutatis mutandis pursuant to Article 49, paragraph (1) of the Insurance Business Act"; and the phrase "shareholders (excluding the shareholders who may not exercise their voting rights on all matters which may be resolved at the shareholders' meeting under the preceding paragraph. The same applies in paragraph (4) of the following Article and in Article 312, paragraph (5))" in Article 310, paragraph (7) is deemed to be replaced with "members"; any other necessary technical replacement of terms is specified by Cabinet Order.
(Right to Demand Convocation of Member Representatives Meeting)
Article 45(1)Members that account for at least three thousandths (or any smaller proportion prescribed by the articles of incorporation) of all members, or three thousand (or any smaller number prescribed by the articles of incorporation) or more members of a mutual company (or, in a specified mutual company, members equal to or exceeding the number specified by Cabinet Order set forth in Article 38, paragraph (1)), who have been members of the mutual company consecutively for the preceding six months (or any shorter period prescribed by the articles of incorporation), or nine (or any smaller number prescribed by the articles of incorporation) or more representative members may demand the directors to convene a member representatives meeting by indicating the proposed agenda for the meeting (limited to particulars on which the member representatives meeting may adopt a resolution; hereinafter the same applies in this Division) and the reason for the convocation.
(2)In the following cases, a member or a representative member who made a demand pursuant to the provisions of the preceding paragraph may convene a member representatives meeting with the permission of the court:
(i)if the convening procedure is not taken without delay after a demand pursuant to the provisions of the preceding paragraph is made; or
(ii)if a notice for the convocation of a member representatives meeting which designates, as the date of the member representatives meeting, a date falling within the period of eight weeks (or any shorter period prescribed by the articles of incorporation) from the day the demand pursuant to the provisions of the preceding paragraph is made, is not given.
(3)The provisions of Article 868, paragraph (1) (Jurisdiction over Non-Contentious Cases), Article 869 (Prima Facie Showing), Article 871 (Appending of the Reason), Article 874 (limited to the part involving item (iv)) (Restrictions on Appeal), Article 875 (Exclusion from Application of the Provisions of the Non-Contentious Cases Procedures Act) and Article 876 (Supreme Court Rules) of the Companies Act apply mutatis mutandis to the preceding paragraph.In this case, any necessary technical replacement of terms is specified by Cabinet Order.
(Right to Submit Proposals)
Article 46(1)Members that account for at least one thousandth (or any smaller proportion prescribed by the articles of incorporation) of all members, or one thousand (or any smaller number prescribed by the articles of incorporation) or more members of a mutual company (or, in a specified mutual company, members equal to or exceeding the number specified by Cabinet Order set forth in Article 39, paragraph (1)), who have been members of the mutual company consecutively for the preceding six months (or any shorter period prescribed by the articles of incorporation), or three (or any smaller number prescribed by the articles of incorporation) or more representative members may demand the directors to include certain items (limited to matters on which the member representatives meeting may adopt a resolution) in the agenda for the member representatives meeting.In this case, the demand must be submitted no later than eight weeks (or any shorter period prescribed by the articles of incorporation) prior to the date of the member representatives meeting.
(2)Representative members may submit a proposal at a member representatives meeting with respect to any agenda item for the meeting; provided, however, that this does not apply to cases where the proposal is in violation of any laws or regulations or the articles of incorporation, or if three years have not elapsed since the day on which a proposal that is substantially the same has not been approved at a member representatives meeting by at least one tenth of the representative members (or any smaller proportion prescribed by the articles of incorporation).
(3)Members that account for at least one thousandth (or any smaller proportion prescribed by the articles of incorporation) of all members, or one thousand (or any smaller number prescribed by the articles of incorporation) or more members of a mutual company (or, in a specified mutual company, members equal to or exceeding the number specified by Cabinet Order set forth in Article 39, paragraph (1)), who have been members of the mutual company consecutively for the preceding six months (or any shorter period prescribed by the articles of incorporation), or three (or any smaller number prescribed by the articles of incorporation) or more representative members may demand the directors that, no later than eight weeks (or any shorter period prescribed by the articles of incorporation) prior to the date of the member representatives meeting, members be notified of the outline of any proposal to be submitted with respect to an agenda item of the meeting (or, if a notice is to be given under Article 299, paragraph (2) (excluding the items) or (3) of the Companies Act as applied mutatis mutandis pursuant to Article 49, paragraph (1), the outline to be stated in, or recorded on, that notice); provided, however, that this does not apply to the cases in which the proposal is in violation of any laws or regulations or the articles of incorporation, or if three years have not elapsed since the day on which a proposal that is substantially the same has not been approved at a member representatives meeting by at least one tenth of the representative members (or any smaller proportion prescribed by the articles of incorporation).
(Right to Demand the Election of an Inspector for Member Representatives Meeting)
Article 47(1)A mutual company, members that account for at least one thousandth (or any smaller proportion prescribed by the articles of incorporation) of all members, or one thousand (or any smaller number prescribed by the articles of incorporation) or more members of a mutual company (or, in a specified mutual company, members equal to or exceeding the number specified by Cabinet Order set forth in Article 39, paragraph (1)), who have been members of the mutual company consecutively for the preceding six months (or any shorter period prescribed by the articles of incorporation), or three (or any smaller number prescribed by the articles of incorporation) or more representative members may file a petition with the court, prior to the session of the member representatives meeting, for the election of an inspector who is to investigate the convocation procedures and method of resolution related to the meeting.
(2)The provisions of Article 306, paragraphs (3) through (7) (Election of an Inspector for the Convocation Procedures of a Shareholders Meeting) and Article 307 (Determination by the Court of the Calling of Shareholders Meeting) of the Companies Act apply mutatis mutandis to the preceding paragraph.In this case, the term "preceding two paragraphs" in Article 306, paragraph (3) of that Act is deemed to be replaced with "Article 40, paragraph (1) of the Insurance Business Act"; the term "stock company" in Article 306, paragraphs (4) and (7) is deemed to be replaced with "mutual company"; the term "shareholders' meeting" in Article 307 of that Act is deemed to be replaced with "member representatives meeting"; and the term "shareholders" in paragraph (1), item (ii) of that Article is deemed to be replaced with "representative members"; any other necessary technical replacement of terms is specified by Cabinet Order.
(3)The provisions of Article 868, paragraph (1) (Jurisdiction over Non-Contentious Cases), Article 870, paragraph (1) (limited to the part involving item (i)) (Hearing of Statements), Article 871 (Appending of the Reason), Article 872 (limited to the part involving item (iv)) (Immediate Appeal), Article 874 (limited to the part involving item (i)) (Restrictions on Appeal), Article 875 (Exclusion from Application of the Provisions of the Non-Contentious Cases Procedures Act) and Article 876 (Supreme Court Rules) of the Companies Act apply mutatis mutandis to the preceding two paragraphs.In this case, any necessary technical replacement of terms is specified by Cabinet Order.
(Delivery of Reference Documents and Voting Forms for Member Representatives Meetings)
Article 48(1)The directors (or, if members or representative members convene the member representatives meeting pursuant to the provisions of Article 45, paragraph (2), the members or representative members; hereinafter the same applies in this Article), when giving a notice under Article 299, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to paragraph (1) of the following Article following the deemed replacement of terms, must deliver the representative members documents stating the information that should serve as a reference with regard to the exercise of voting rights pursuant to the provisions of Cabinet Office Order.
(2)If the directors give notices by electronic or magnetic means referred to in Article 299, paragraph (3) of the Companies Act as applied mutatis mutandis pursuant to paragraph (1) of the following Article following the deemed replacement of terms to the representative members who have given consent under the same paragraph, the directors may, in lieu of delivering the documents pursuant to the provisions of the preceding paragraph, provide the particulars that are required to be stated in the documents by electronic or magnetic means; provided, however, that if requested by any representative member, they must deliver the documents to the representative member.
(3)If the matters listed in Article 298, paragraph (1), item (iii) of the Companies Act as applied mutatis mutandis pursuant to paragraph (1) of the following Article following the deemed replacement of terms are decided, the directors, when giving a notice under Article 299, paragraph (1) of that Act as applied mutatis mutandis pursuant to paragraph (1) of the following Article following the deemed replacement of terms, must deliver to the representative members documents to be used by the representative members to exercise their voting rights (hereinafter referred to as "voting forms" in this Article) pursuant to the provisions of Cabinet Office Order.
(4)If the directors give a notice by electronic or magnetic means referred to in Article 299, paragraph (3) of the Companies Act as applied mutatis mutandis pursuant to paragraph (1) of the following Article following the deemed replacement of terms to the representative members who have given consent under the same paragraph, the directors may, in lieu of delivering the voting forms pursuant to the provisions of the preceding paragraph, provide the particulars that are required to be stated in the documents by electronic or magnetic means; provided, however, that if requested by any representative member, the directors must deliver the voting form to the representative member.
(5)If the particulars listed in Article 298, paragraph (1), item (iv) of the Companies Act as applied mutatis mutandis pursuant to paragraph (1) of the following Article following the deemed replacement of terms are decided, the directors, when giving a notice to the representative members who have given consent under Article 299, paragraph (3) of the Companies Act by electronic or magnetic means referred to in the same paragraph, must provide the representative members with the particulars that are required to be stated in the voting forms by electronic or magnetic means pursuant to the provisions of Cabinet Office Order.
(6)In the cases prescribed in the preceding paragraph, if any representative member who has not given their consent under Article 299, paragraph (3) of the Companies Act as applied mutatis mutandis pursuant to paragraph (1) of the following Article following the deemed replacement of terms requests, no later than one week prior to the date of the member representatives meeting, to be provided the particulars that are required to be stated in the voting forms by electronic or magnetic means, the directors must immediately provide the particulars to the representative member by electronic or magnetic means pursuant to the provisions of Cabinet Office Order.
(Application, Mutatis Mutandis, of the Companies Act)
Article 49(1)The provisions of Article 296 (Convocation of Shareholders' Meetings), Article 298 (excluding paragraphs (2) and (3)) (Determination to Convoke a Shareholders' Meeting), Article 299 (excluding paragraph (2), items (i) and (ii)) (Notice of Calling of Shareholders' Meetings), Article 300 (Omission of Calling Procedures), Article 311 (Voting in Writing), Article 312 (Voting by Electronic or Magnetic Method), Articles 314 through 317 (Accountability of Directors, etc., Authority of Chairperson, Investigation of Materials Submitted to a Shareholders' Meeting, Resolution for Postponement or Adjournment) and Article 318 (excluding paragraph (5)) (Minutes) of the Companies Act apply mutatis mutandis to the member representatives meeting.In this case, the terms "stock company" and "company with board of directors" in those provisions are deemed to be replaced with "mutual company"; the term "head office" in those provisions is deemed to be replaced with "principal office"; the term "operating hours" in those provisions is deemed to be replaced with "business hours"; the term "shareholder" in those provisions (excluding Article 298, paragraph (1) (excluding items), Article 298, paragraph (4), Article 311, paragraph (4), Article 312, paragraph (5), Article 314 and Article 318, paragraph (4)) is deemed to be replaced with "representative member"; the term "annual shareholders' meeting" in Article 296, paragraph (1) of that Act is deemed to be replaced with "annual member representatives meeting"; the term "paragraph (4) of the following Article" in Article 296, paragraph (3) is deemed to be replaced with "Article 45, paragraph (2) of the Insurance Business Act"; the terms "paragraph (4) of the preceding Article" and "shareholder" in Article 298, paragraph (1) (excluding the items) and Article 298, paragraph (4) of that Act are deemed to be replaced with "Article 45, paragraph (2) of the Insurance Business Act" and "member or representative member", respectively; the phrase "two weeks (or one week if the stock company is not a public company, except if the particulars listed in items (iii) and (iv), paragraph (1) of the preceding Article are decided, (or if a shorter period of time is provided for in the articles of incorporation if the stock company is a stock company other than the company with board of directors, that shorter period of time))" in Article 299, paragraph (1) of that Act is deemed to be replaced with "two weeks"; the term "in the following cases" in Article 299, paragraph (2) is deemed to be deleted; the term "shareholders" in Article 311, paragraph (4) and Article 312, paragraph (5) of that Act is deemed to be replaced with "members"; the terms "by the shareholders" and "common interest of the shareholders" in Article 314 of that Act are deemed to be replaced with "by the representative members" and "common interest of the representative members", respectively; the term "Article 297" in Article 316, paragraph (2) of that Act is deemed to be replaced with "Article 45 of the Insurance Business Act"; the term "branch offices" in Article 318, paragraph (3) of that Act is deemed to be replaced with "secondary offices"; and the term "shareholders" in Article 318, paragraph (4) of that Act is deemed to be replaced with "members"; any other necessary technical replacement of terms is specified by Cabinet Order.
(2)The provisions of Article 830 (Action for a Declaratory Judgment as to the Absence or Invalidity of a Resolution of a Shareholders Meeting), Article 831 (Action to Revoke a Resolution of a Shareholders Meeting), Article 834 (limited to the part involving items (xvi) and (xvii)) (Defendant), Article 835, paragraph (1) (Jurisdiction over Actions), Article 836, paragraphs (1) and (3) (Order to Provide Security), Article 837 (Mandatory Consolidation of Oral Arguments, etc.), Article 838 (Persons Affected by a Judgment Being Upheld), Article 846 (Liability for Damages If a Judgment Is Entered Against the Plaintiff), and Article 937, paragraph (1) (limited to the part involving item (i), (g)) (Commissioning of Registration by Judicial Decision) of the Companies Act apply mutatis mutandis to an action for a declaratory judgment as to the absence or invalidity of a resolution of the member representatives meeting of a mutual company and to an action to revoke a resolution of the member representatives meeting of a mutual company.In this case, the term "a shareholder, etc. (or, if the shareholders meeting, etc. set forth respectively in each such item is an organizational meeting or a class organizational meetings, a shareholder, etc., a shareholder at incorporation, a director at incorporation or a company auditor at incorporation)" in Article 831, paragraph (1) of that Act is deemed to be replaced with "members, directors, company auditors or liquidators of a mutual company (members, directors or liquidators, in the case of a company with an audit and supervisory committee, or members, directors, executive officers or liquidators, in the case of a company with a nominating committee, etc.)"; and the term "a shareholder (or, if the relevant resolution is the resolution of an organizational meeting, shareholders at incorporation) or director (or, in cases of a company with an audit and supervisory committee, directors who are audit and supervisory committee members or other directors; the same applies hereinafter in this paragraph), company auditor or liquidator pursuant to the provisions of Article 346 (1) (including as applied mutatis mutandis pursuant to Article 479 (4)), and if such resolution is a resolution of an organizational meeting or class organizational meeting, it is to include a director at incorporation (if a stock company to be incorporated is a company with audit and supervisory committee, directors at incorporation who are audit and supervisory committee members at incorporation or other directors at incorporation) or a company auditor at incorporation)" in Article 831, paragraph (1) of that Act is deemed to be replaced with "members, or directors (in the case of a company with an audit and supervisory committee, directors who are audit and supervisory committee members or other directors; the same applies in this paragraph), company auditors or liquidators (including a person who assumes the rights and obligations of a director, executive officer or liquidator pursuant to the provisions of Article 53-12, paragraph (1) of the Insurance Business Act (including as applied mutatis mutandis pursuant to Article 180-5, paragraph (4) of that Act)"; any other necessary technical replacement of terms is specified by Cabinet Order.
(Right to Demand the Convocation of General Meeting)
Article 50(1)Even if a mutual mompany has established a member representatives meeting pursuant to the provisions of Article 42, paragraph (1), members that account for at least five thousandths (or any smaller proportion prescribed by the articles of incorporation) of all members (or, in a specified mutual company, members equal to or exceeding the number specified by Cabinet Order), who have been members of the mutual company consecutively for the preceding six months (or any shorter period prescribed by the articles of incorporation), may demand the directors to convene the general meeting with the purpose of abolishing the member representatives meeting or changing any particular prescribed by the articles of incorporation pursuant to the provisions of paragraph (2) in that Article, by indicating the proposed agenda for the meeting and the reason for the convocation.
(2)In the following cases, the members who made a demand pursuant to the provisions of the preceding paragraph may convene a general meeting with the permission of the court:
(i)if the convening procedure is not taken without delay after a demand pursuant to the provisions of the preceding paragraph; or
(ii)if a notice for the convocation of the general meeting which designates, as the date of the general meeting, a date falling within the period of eight weeks (or any shorter period provided for in the articles of incorporation) from the day of a demand pursuant to the provisions of the preceding paragraph is not given.
(3)The provisions of Article 868, paragraph (1) (Jurisdiction over Non-Contentious Cases), Article 869 (Prima Facie Showing), Article 871 (Appending of the Reason), Article 874 (limited to the part invovling item (iv)) (Restrictions on Appeal), Article 875 (Exclusion from Application of the Provisions of the Non-Contentious Cases Procedures Act) and Article 876 (Supreme Court Rules) of the Companies Act apply mutatis mutandis to the preceding paragraph.In this case, any necessary technical replacement of terms is specified by Cabinet Order.
(4)If a resolution changing any particular prescribed by the articles of incorporation pursuant to the provisions of Article 42, paragraph (2) is adopted by the general meeting convened pursuant to the provisions of the preceding three paragraphs, the member representatives meeting may not adopt a resolution amending the articles of incorporation regarding the particular thus changed, unless three years have elapsed since the day on which the amendment of the articles of incorporation came into effect regarding the particular.
Division 3 Establishment of Administrative Organs Other than General Meetings and Member Representatives Meetings
(Administrative Organs)
Article 51(1)A mutual company must have in place the following administrative organs:
(i)board of directors; and
(ii)company auditors, advisory committee or nominating committee, etc.
(2)A mutual company may have accounting advisors, a board of company auditors or accounting auditors pursuant to the provisions of the articles of incorporation.
(3)A mutual company that is an insurance company and a mutual company listed in Article 272-4, paragraph (1), item (i), (b) (other than a company with an audit and supervisory committee and company with a nominating committee, etc.) must have in place a board of company auditors and a accounting auditors.
(4)A company with an audit and supervisory committee and a company with a nominating committee, etc. must not have any company auditors.
(5)A company with an audit and supervisory committee and a company with a nominating committee, etc. must have a accounting auditors.
(6)A company with a nominating committee, etc. must not have an audit and supervisory committee.
(Election)
Article 52(1)Officers (meaning directors, accounting advisors and company auditors; hereinafter the same applies in this Division) and accounting auditors is elected by a resolution of the general meeting (or the member representatives meeting, if the company has such a meeting; hereinafter the same applies in this Subsection).
(2)In case of a company with an audit and supervisory committee, the election of directors under the preceding paragraph must be made separately for directors who are advisory committee members and other directors.
(3)In adopting a resolution under paragraph (1), substitute officers may be elected as prescribed by Cabinet Office Order as a precaution against cases in which there are no officers (in case of a company with an audit and supervisory committee, a director who is an audit and supervisory committee member or other director, or an accounting advisor; hereinafter the same applies in this paragraph) in office or if there is a vacancy which results in a shortfall in the number of officers prescribed by this Act or the articles of incorporation.
(Relationship between a Mutual Company and Its Officers)
Article 53The relationship held by a mutual company with its officers and accounting auditors are governed by the provisions on mandate.
(Qualifications of Directors)
Article 53-2(1)The provisions of Article 331, paragraph (1) of the Companies Act as applied following the deemed replacement of terms pursuant to the provisions of Article 12, paragraph (1) apply mutatis mutandis to directors of a mutual company.In this case, in item (iii) of that paragraph, the term "of the Financial Instruments and Exchange Act;" is deemed to be replaced with "of the Financial Instruments and Exchange Act; a crime under Article 549, Article 550, Articles 552 through 555, or Article 557 of the Act on Special Measures for the Reorganization Proceedings of Financial Institutions (Act No. 95 of 1996)", and the phrase "a crime under Article 266, Article 267, Articles 269 through 271, or Article 273 of the Corporate Reorganization Act (Act No. 154 of 2002);" is deemed to be deleted.
(2)A director who is an audit and supervisory committee member may not concurrently serve as an executive director (in the case of a mutual company, meaning a director listed in the items of Article 53-13, paragraph (1) and other director who executed the business of the mutual company, and in case of a stock company, meaning a director listed in the items of Article 363, paragraph (1) of the Companies Act and other director who executed the business of the stock company; the same applies hereinafter), manager or any other employee of a company with an audit and supervisory committee or its substantive subsidiary companies, or as an accounting advisor (or, where the accounting advisor is a corporation, any member of that corporation who is to carry out the relevant duties) or executive officer of the relevant substantive subsidiary companies.
(3)A director of a company with a nominating committee, etc. may not concurrently serve as a manager or any other employee of the company with a nominating committee, etc.
(4)A mutual company must have three or more directors.
(5)A company with an audit and supervisory committee is to have at least three directors who are advisory committee members, and the majority of those directors must be outside directors (meaning a director of a mutual company who satisfies all of the following requirements; the same applies hereinafter):
(i)a person who is not an executive director, etc. (meaning an executive director or executive officer, or manager or other employee; the same applies hereinafter) of the mutual company or its substantive subsidiary companies, and who has not served as an executive director, etc. of the mutual company or its substantive subsidiary companies within ten years before assuming the office;
(ii)in the case of a person who served as a director, accounting advisor (or, where the accounting advisor is a corporation, any member of that corporation who is to carry out its duties) or a company auditor of the mutual company or its substantive subsidiary companies at any time within ten years before assuming the office (excluding a person who was an executive director, etc.), the person is not to have served as an executive director, etc. of the mutual company or its substantive subsidiary companies within ten years before assuming the office of the director, accounting advisor or company auditor; and
(iii)a person who is not a spouse or relative within the second degree of kinship of a director, executive officer, manager or other important employee of the mutual company.
(Directors' Terms of Office)
Article 53-3(1)A director's term of office is to continue until the conclusion of the annual general meeting (or the annual member representatives meeting, if the company has a member representatives meeting; hereinafter the same applies in this Subsection) for the last business year which ends within two years from the time of their election; provided, however, that this does not preclude the shortening of the their term of office by the articles of incorporation or by a resolution of the general meeting.
(2)For the purpose of applying the provisions of the preceding paragraph to a director (excluding a director who is an audit and supervisory committee member) of a company with an audit and supervisory committee, the term "two years" in that paragraph is deemed to be replaced with "one year".
(3)The proviso to paragraph (1) does not apply to the term of office of a director who is an audit and supervisory committee member.
(4)The provisions of the main clause of paragraph (1) do not exclude a company from providing that the term of office of a director who is an audit and supervisory committee member elected as a substitute for a director who is an audit and supervisory committee member that resigned before the expiry of their term of office is to be until the time of expiry of the term of office of the resigned director who is an audit and supervisory committee member.
(5)For the purpose of applying the provisions of paragraph (1) to the directors of a company with a nominating committee, etc., the term "two years" in that paragraph is deemed to be replaced with "one year".
(6)The provisions of Article 332, paragraph (7) (excluding item (iii)) (Directors' terms of office) of the Companies Act apply mutatis mutandis to the terms of office of the directors of a mutual company.In this case, the term "preceding paragraphs" in that paragraph is deemed to be replaced with "Article 53-3, paragraphs (1) to (5) of the Insurance Business Act"; any other necessary technical replacement of terms is specified by Cabinet Order.
(Qualifications of Accounting Advisors)
Article 53-4The provisions of Article 333 (Qualifications of Accounting Advisors) and Article 334 (excluding Article 332, paragraph (2) and Article 332, paragraph (7), item (iii) of the Companies Act as applied mutatis mutandis pursuant to Article 334, paragraph (1)) (Accounting Advisors' Terms of Office) of the Companies Act apply mutatis mutandis to the accounting advisors of a mutual company.In this case, any necessary technical replacement of terms is specified by Cabinet Order.
(Qualifications of Company Auditors)
Article 53-5(1)The provisions of Article 53-2, paragraph (1) apply mutatis mutandis to the company auditors of a mutual company.In this case, any necessary technical replacement of terms is specified by Cabinet Order.
(2)A company auditor of a mutual company may neither concurrently serve as a director, or manager or any other employee of that mutual company or its substantive subsidiary companies, nor concurrently serve as an executive officer or accounting advisor (or, if the accounting advisor is a corporation, any member of that corporation who is to carry out relevant duties) of the substantive subsidiary companies.
(3)A company with a board of company auditors must have three or more company auditors, of whom half or more of them are outside company auditors (meaning those company auditors of a mutual company who falls under all of the following requirements; the same applies hereinafter):
(i)a person who has not served as a director, accounting advisor (or, where the accounting advisor is a corporation, any member of that corporation who is to carry out relevant duties; the same applies in the following item), executive officer, manager or any other employee of the relevant mutual company or its substantive subsidiary companies within ten years before the assumption of office;
(ii)in the case of a person who served as a company auditor of the relevant mutual company or its substantive subsidiary companies at any time within ten years before assuming the office, the person did not serve as a director, accounting advisor, executive officer, manager or any other employee of the relevant mutual company or its substantive subsidiary companies within ten years before assuming the office of the relevant company auditor; and
(iii)a person who is not a spouse or relative within the second degree of kinship of a director, manager or other important employee of the relevant mutual company.
(Company Auditors' Terms of Office)
Article 53-6(1)Company auditors' terms of office continues until the conclusion of the annual general meeting for the last business year which ends within four years from the time of their election.
(2)The provisions of Article 336, paragraphs (3) and (4) (limited to the part pertaining to item (ii)) (Company Auditors' Terms of Office) of the Companies Act apply mutatis mutandis to the company auditors of a mutual company.In this case, the term "paragraph (1)" in paragraph (3) of that Article is deemed to be replaced with "Article 53-6, paragraph (1) of the Insurance Business Act"; any other necessary technical replacement of terms is specified by Cabinet Order.
(Qualifications of Accounting Auditorss)
Article 53-7The provisions of Article 337 (Qualifications of Financial Auditor) and Article 338, paragraphs (1) and (2) (Financial Auditor's Terms of Office) of the Companies Act apply mutatis mutandis to the accounting auditors of a mutual company; and the provisions of Article 338, paragraph (3) of that Act apply mutatis mutandis to the accounting auditors of a mutual company other than that set forth in Article 53-14, paragraph (5), respectively.In this case, the term "Article 435, paragraph (2)" in Article 337, paragraph (3), item (i) of that Act is deemed to be replaced with "Article 54-3, paragraph (2) of the Insurance Business Act"; any other necessary technical replacement of terms is specified by Cabinet Order.
(Dismissal)
Article 53-8(1)Officers and accounting auditors of a mutual company may be dismissed at any time by a resolution of the general meeting.
(2)A person dismissed pursuant to the provisions of the preceding paragraph is entitled to demand from the mutual company compensation for damage arising from the dismissal, except if there are legitimate grounds for the dismissal.
(Dismissal of a Accounting Auditor by Company Auditors)
Article 53-9(1)The company auditor may dismiss a accounting auditor if that accounting auditor falls under any of the following items:
(i)the auditor has breached their professional obligations or neglected their duties;
(ii)the auditor has engaged in conduct unbecoming of a accounting auditor; or
(iii)the auditor has difficulty in, or is unable to cope with the execution of their duties due to a mental or physical disorder.
(2)Any dismissal pursuant to the provisions of the preceding paragraph must be made by the unanimous consent of all company auditors, if the company has two or more company auditors.
(3)If an accounting auditor is dismissed pursuant to the provisions of paragraph (1), the company auditor (or, if the company has two or more company auditors, a company auditor appointed from among themselves) must report the fact and the reason for dismissal to the first general meeting convened after the dismissal.
(4)For the purpose of applying the provisions of the preceding three paragraphs to a company with a board of company auditors, the term "company auditor" in paragraph (1) is deemed to be replaced with "board of company auditors"; the phrase "company auditors, if the company has two or more company auditors" in paragraph (2) is deemed to be replaced with "company auditors"; and the term "company auditor (or, if the company has two or more company auditors, a company auditor appointed from among themselves)" in the preceding paragraph is deemed to be replaced with "company auditor appointed by the board of company auditors".
(5)For the purpose of applying the provisions of paragraphs (1) through (3) to a company with an audit and supervisory committee, the term "company auditor" in paragraph (1) is deemed to be replaced with "audit and supervisory committee", the phrase "company auditors, if the company has two or more company auditors" in paragraph (2) is deemed to be replaced with "advisory committee members", the phase "the company auditor (or, where the company has two or more company auditors, a company auditor appointed from among themselves)" in paragraph (3) is deemed to be replaced with "the audit and supervisory committee member".
(6)For the purpose of applying the provisions of paragraphs (1) through (3) to a company with a nominating committee, etc., the term "company auditor" in paragraph (1) is deemed to be replaced with "audit committee"; the term "company auditors, where the company has two or more company auditors" in paragraph (2) is deemed to be replaced with "audit committee members"; and the term "company auditor (or, if the company has two or more company auditors, a company auditor appointed from among themselves)" in paragraph (3) is deemed to be replaced with "audit committee member appointed by the committee".
(Method of Adopting Resolution for Election of Officers)
Article 53-10(1)Notwithstanding the provisions of Article 37, paragraph (1) and Article 44, paragraph (1), resolutions of the general meeting for the election or dismissal of officers are adopted by a majority vote (or any larger proportion prescribed by the articles of incorporation) of the attending members (or, if the company has a member representatives meeting, the representative members) at a session if at least half (or any other proportion larger than one third prescribed by the articles of incorporation) of the members (or the representative members) are present.
(2)Notwithstanding the provisions of the preceding paragraph, in a case where the dismissal of a director who is an audit and supervisory committee member or a company auditor is to be resolved, it must be adopted by a resolution set forth in Article 62, paragraph (2).
(Application, Mutatis Mutandis, of the Companies Act)
Article 53-11The provisions of Article 342-2, paragraphs (1) through (3) (Statement of Opinions on the Election of a Director, etc. who is an Audit and Supervisory Committee Member) of the Companies Act apply mutatis mutandis to statement of opinions on election, dismissal or resignation of a director who is an audit and supervisory committee member of a mutual company; the provisions of paragraph (4) of that Article apply mutatis mutandis to statement of opinions on election, dismissal or resignation of a director who is not an audit and supervisory committee member of a mutual company; the provisions of Article 343 (Consent of Company Auditors to Election of Company Auditors) (excluding paragraph (4)) of that Act apply mutatis mutandis to the election of the company auditors of a mutual company; the provisions of Article 344 (Determination of Content of Proposal on the Election of Financial Auditor) of that Act apply mutatis mutandis to the election of the accounting auditors of a mutual company; the provisions of Article 344-2 (Consent of the Audit and Supervisory Committee to the Election of Directors who are Audit and Supervisory Committee Members) (excluding paragraph (3)) of that Act apply mutatis mutandis to election of a director who is an audit and supervisory committee member of a mutual company; and the provisions of Article 345 (Statement of Opinions on Election of Accounting Advisors) of that Act apply mutatis mutandis to the statement of opinions regarding the election or dismissal, or resignation of the accounting advisors, company auditors or accounting auditors of a mutual company.In this case, the term "Article 298, paragraph (1), item (i)" in paragraph (3) of that Article is deemed to be replaced with "Article 298, paragraph (1), item (i) as applied mutatis mutandis pursuant to Article 41, paragraph (1) or Article 49, paragraph (1) of the Insurance Business Act"; any other necessary technical replacement of terms is specified by Cabinet Order.
(Measures for Vacancies Arising Among the Officers)
Article 53-12(1)If a mutual company has no officers (in the case of a company with an audit and supervisory committee, a director who is an audit and supervisory committee member or other director, or accounting auditors; hereinafter the same applies in this Article) or if there any vacancies among the officers which results in a shortfall in the number of officers prescribed by this Act or the articles of incorporation, an officer who retired from office due to the expiration of their term of office or resignation is to retain the rights and obligations of an officer until a newly elected officer (including a person who is to temporarily carry out the duties of an officer referred to in the following paragraph) assumes their office.
(2)In the case prescribed in the preceding paragraph, the court may, if it finds it necessary, appoint a person to temporarily carry out the duties of an officer, in response to a petition filed by an interested party.
(3)The court may, if it has appointed a person to temporarily carry out the duties of an officer referred to in the preceding paragraph, specify the amount of the remuneration to be paid to the person by the mutual company.
(4)If a mutual company has no accounting auditors or if any vacancy occurs resulting in a shortfall in the number of accounting auditorss prescribed by the articles of incorporation, and an accounting auditors is not elected without delay, the company auditor must appoint a person to temporarily carry out the duties of accounting auditors.
(5)The provisions of Article 337 of the Companies Act as applied mutatis mutandis pursuant to Article 53-7 and the provisions of Article 53-9 apply mutatis mutandis to the person who is to temporarily carry out the duties of accounting auditors referred to in the preceding paragraph.In this case, any necessary technical replacement of terms is specified by Cabinet Order.
(6)For the purpose of applying the provisions of paragraph (4) to a company with a board of company auditors, the term "company auditor" in that paragraph is deemed to be replaced with "board of company auditors".
(7)For the purpose of applying the provisions of paragraph (4) to a company with an audit and supervisory committee, the term "company auditor" in that paragraph is deemed to be replaced with "audit and supervisory committee".
(8)For the purpose of applying the provisions of paragraph (4) to a company with a nominating committee, etc., the term "company auditor" in that paragraph is deemed to be replaced with "audit committee".
(9)The provisions of Article 868, paragraph (1) (Jurisdiction over Non-Contentious Cases), Article 870, paragraph (1) (limited to the part involving item (i)) (Hearing of Statements), Article 871 (Appending of the Reason), Article 872 (limited to the part involving item (iv)) (Immediate Appeal), Article 874 (limited to the part involving item (i)) (Restrictions on Appeal), Article 875 (Exclusion from Application of the Provisions of the Non-Contentious Cases Procedures Act), Article 876 (Supreme Court Rules) and Article 937, paragraph (1) (limited to the part involving item (ii), (a) and (c)) (Commissioning of Registration by a Judicial Decision) of the Companies Act apply mutatis mutandis to paragraphs (2) and (3).In this case, any necessary technical replacement of terms is specified by Cabinet Order.
Division 4 Directors and Board of Directors
(Authority of the Directors)
Article 53-13(1)The following directors execute the business of a mutual company:
(i)a representative director; and
(ii)a director other than a representative director, who is appointed by resolution of the board of directors as the director who is to execute the business of the mutual company.
(2)The directors listed in the items of the preceding paragraph must report the status of the execution of their duties to the board of directors at least once every three months.
(Authority of the Board of Directors)
Article 53-14(1)A board of directors is composed of all of the directors.
(2)The board of directors is to carry out the following duties:
(i)deciding the execution of the mutual company's business;
(ii)supervising the execution of duties by directors; and
(iii)appointing and removing representative directors.
(3)The board of directors must appoint the representative director from among the directors.
(4)The board of directors may not delegate decisions on the execution of important business, such as the following particulars, to directors:
(i)the appropriation of and acceptance of assignment of important assets;
(ii)borrowing a significantly large amount;
(iii)the election and dismissal of an important employee including a manager;
(iv)the establishment, change or closing of secondary offices and other important structures;
(v)the particulars specified by Cabinet Office Order as material particulars of the solicitation of persons who subscribe for bonds (meaning the bonds as defined in that Article), such as the particular listed in Article 61, item (i);
(vi)revision of a system necessary for ensuring that the execution of duties by directors complies with laws and regulations and the articles of incorporation, and of any other system specified by Cabinet Office Order as a system necessary for ensuring propriety in the business of a mutual company as well as the business of a corporate group consisting of the relevant mutual company and its substantive subsidiary companies; or
(vii)exemption from liability under Article 53-33, paragraph (1) pursuant to the provisions of the articles of incorporation under Article 426, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to Article 53-36 following the deemed replacement of terms.
(5)In a mutual company that is an insurance company and a mutual company listed in Article 272-4, paragraph (1), item (i), (b), the board of directors must decide on the particulars listed in item (vi) of the preceding paragraph.
(Application, Mutatis Mutandis, of the Companies Act)
Article 53-15The provisions of Article 350 (Liability for Damages Caused by Directors' Actions), Article 352 (Authority of Persons Who Perform Duties on Behalf of Directors), Articles 354 to 357 (Apparent Representative Directors, Duty of Loyalty, Restrictions on Competition and Conflict of Interest Transactions, Director's Duty to Report), Article 358 (excluding paragraph (1), item (ii)) (Election of Inspector of Execution of Operation), Article 359 (Decision by the Court to Call a Shareholders Meeting), Article 360, paragraph (1) (Prohibition of Directors' Actions by the Shareholders), Article 361 (Remuneration for Directors) and Article 365, paragraph (2) (Restrictions on Competition and Transactions with Companies with a Board of Directors) of the Companies Act apply mutatis mutandis to the directors of a mutual company; the provisions of Article 349, paragraphs (4) and (5) (Representatives of Companies), and Article 351 (Measures When Vacancy Arises in the Office of a Representative Director) of that Act apply mutatis mutandis to the representative director of a mutual company; the provisions of Article 868, paragraph (1) (Jurisdiction over Non-Contentious Cases), Article 869 (Prima Facie Showing), Article 870, paragraph (1) (limited to the part involving item (i)) (Hearing of Statements), Article 871 (Appending of Reasons), Article 872 (limited to the part involving item (iv)) (Immediate Appeal), Article 874 (limited to the part involving items (i) and (iv)) (Restrictions on Appeal), Article 875 (Exclusion from Application of the Provisions of the Non-Contentious Cases Procedures Act) and Article 876 (Supreme Court Rules) of that Act apply mutatis mutandis to the directors or representative director of a mutual company; and the provisions of Article 937, paragraph (1) (limited to the part involving item (ii), (a) and (c)) (Commissioning of Registration by Judicial Decision) of that Act apply mutatis mutandis to the representative director of a mutual company.In this case, the term "shareholders meeting" in Article 356, paragraph (1) of that Act is deemed to be replaced with "board of directors"; the term "shareholders" in Article 358, paragraph (1) of that Act is deemed to be replaced with "members or representative members"; the phrase "shareholders who hold not less than 3 percent of the voting rights (or, if a lesser proportion is prescribed in the articles of incorporation, such proportion) of all shareholders (excluding shareholders who may not exercise their voting rights on all matters which may be resolved at shareholders meetings)" in Article 358, paragraph (1), item (i) of that Act is deemed to be replaced with "members that account for at least three thousandths (or any smaller proportion prescribed by the articles of incorporation) of all members, or three thousand (or any smaller number prescribed by the articles of incorporation) or more members of a mutual company (or, in a specified mutual company, members equal to or exceeding the number specified by Cabinet Order set forth in Article 38, paragraph (1) of the Insurance Business Act), who have been members of the mutual company consecutively for the preceding six months (or any shorter period prescribed by the articles of incorporation) (or, where the company has a member representatives meeting, those persons, or nine (or any other smaller number prescribed by the articles of incorporation) or more representative members)"; the term "shareholders" in Article 358, paragraph (7) is deemed to be replaced with "members or representative members"; the term "shareholders" in Article 359, paragraph (1), item (ii) of that Act is deemed to be replaced with "members (or, where the company has a member representatives meeting, representative members)"; and the terms "shareholders having the shares" and "substantial detriment" in Article 360, paragraph (1) of that Act is deemed to be replaced with "persons who have been members" and "irreparable damage", respectively; any other necessary technical replacement of terms is prescribed by Cabinet Order.
(Management of Boards of Directors)
Article 53-16The provisions of Part II, Chapter IV, Section 5, Subsection 2 (excluding Article 367, and Article 371, paragraphs (3) and (5)) (Operations) of the Companies Act apply mutatis mutandis to the management of the board of directors of a mutual company; and the provisions of Article 868, paragraph (1) (Jurisdiction over Non-Contentious Cases), Article 869 (Prima Facie Showing), Article 870, paragraph (2) (limited to the part involving item (i)) (Hearing of Statements), Article 870-2 (Forwarding Copy of Petition and Other Procedures), the main clause of Article 871 (Appending of the Reason), Article 872 (limited to the part involving item (v)) (Immediate Appeal), Article 872-2 (Forwarding Copy of Petition for Immediate Appeal and Other Procedures), the main text of Article 873 (Stay of Execution of the Judicial Decision of the Prior Instance), Article 875 (Exclusion from Application of the Provisions of the Non-Contentious Cases Procedures Act) and Article 876 (Supreme Court Rules) of that Act apply mutatis mutandis to an application for permission under Article 371, paragraph (2) or (4) of that Act as applied mutatis mutandis pursuant to this Article following the deemed replacement of terms. In this case, the terms "shareholder" and "at any time during the business hours of a stock company" in Article 371, paragraph (2) (Minutes) of that Act is deemed to be replaced with "member (or, if the company has a member representatives meeting, the representative members)" and "with the permission of the court", respectively; the term "parent company or subsidiary company" in Article 371, paragraph (6) is deemed to be replaced with "substantive subsidiary companies prescribed in Article 33-2, paragraph (1) of the Insurance Business Act"; the term "Article 363, paragraph (2)" in Article 372, paragraphs (2) and (3) (Omission of Report to Board of Directors) of that Act is deemed to be replaced with "Article 53-13, paragraph (2) of the Insurance Business Act"; the term "Article 417, paragraph (4)" in Article 372, paragraph (3) is deemed to be replaced with "Article 417, paragraph (4) as applied mutatis mutandis pursuant to Article 53-30, paragraph (5) of the Insurance Business Act"; the term "Article 399-13, paragraph (5)" in Article 373, paragraph (1) (Resolution of Board of Directors by Special Directors) of that Act is deemed to be replaced with "Article 53-23-3, paragraph (5) of the Insurance Business Act"; the term Article 362, paragraph (4), items (i) and (ii) or Article 399-13, paragraph (4), items (i) and (ii) " is deemed to be replaced with "Article 53-14, paragraph (4), items (i) and (ii) or Article 53-23-3, paragraph (4), items (i) and (ii) of that Act"; the term "Article 362, paragraph (4), items (i) and (ii) or Article 399-13, paragraph (4), items (i) and (ii)" in paragraph (2) of that Article is deemed to be replaced with "Article 53-14, paragraph (4), items (i) and (ii) or Article 53-23-3, paragraph (4), items (i) and (ii) of the Insurance Business Act"; and the term "Article 399-14" in paragraph (4) of that Article is deemed to be replaced with "Article 399-14 as applied mutatis mutandis pursuant to Article 53-23-3, paragraph (7) of the Insurance Business Act", and any other necessary technical replacement of terms is specified by Cabinet Order.
Division 5 Accounting Advisors
(Authority of Accounting Advisors)
Article 53-17The provisions of Part II, Chapter IV, Section 6 (excluding Article 378, paragraph (1), item (ii) and Article 378, paragraph (3)) (Accounting Advisors) of the Companies Act apply mutatis mutandis to the accounting advisors of a mutual company.In this case, the terms "Article 435, paragraph (2)", "supplementary schedules thereof, the temporary financial statements (meaning the temporary financial statements provided for in Article 441, paragraph (1), hereinafter the same applies in this Chapter)" and "Article 444, paragraph (1)" in Article 374, paragraph (1) (Authority of Accounting Advisors) of that Act is deemed to be replaced with "Article 54-3, paragraph (2) of the Insurance Business Act", "annexed detailed statement" and "Article 54-10, paragraph (1) of the Insurance Business Act", respectively; the term "Article 333, paragraph (3), item (ii) or (iii)" in Article 374, paragraph (5) is deemed to be replaced with "Article 333, paragraph (3), item (ii) or (iii) as applied mutatis mutandis pursuant to Article 53-4 of the Insurance Business Act"; the term "Article 436, paragraph (3), Article 441, paragraph (3) or Article 444, paragraph (5)" in Article 376, paragraph (1) (Attendance at Board of Directors Meetings) of that Act is deemed to be replaced with "Article 54-4, paragraph (3) or Article 54-10, paragraph (5) of the Insurance Business Act"; the term "Article 368, paragraph (2)" in Article 376, paragraph (3) of that Act is deemed to be replaced with "Article 368, paragraph (2) as applied mutatis mutandis pursuant to Article 53-16 of the Insurance Business Act"; and the term "Article 319, paragraph (1)" in Article 378, paragraph (1), item (i) (Keeping and Inspection of Financial Statements by Accounting Advisors) of that Act is deemed to be replaced with "Article 319, paragraph (1) as applied mutatis mutandis pursuant to Article 41, paragraph (1) of the Insurance Business Act"; any other necessary technical replacement of terms is specified by Cabinet Order.
Division 6 Company Auditors and Board of Company Auditors
(Authority of Company Auditors)
Article 53-18(1)The company auditors are to audit the execution of duties by directors (or, in a company with an accounting advisor, directors and accounting advisors).In this case, the company auditors must prepare audit reports pursuant to the provisions of Cabinet Office Order.
(2)The company auditors may at any time request a business report from the directors and accounting advisors, managers and other employees, or investigate the status of the business and property of the mutual company.
(3)If it is necessary for the purpose of carrying out their duties, the company auditors may request a business report from substantive subsidiary companies of the mutual company, or investigate the status of the business and property of such substantive subsidiary companies.
(4)The substantive subsidiary companies set forth in the preceding paragraph may refuse to submit reports or undergo investigation as set forth in that paragraph if there are legitimate grounds for doing so.
(Authority of Board of Company Auditors)
Article 53-19(1)The board of company auditors is to be composed of all company auditors.
(2)The board of company auditors is to carry out the following duties; provided, however, that a decision under item (iii) may not preclude company auditors from exercising their authority:
(i)preparing audit reports;
(ii)appointing and removing full-time company auditors; and
(iii)deciding on the particulars of the execution of the duties of company auditors, such as audit policy and method of investigating the status of the business and property of the company with a board of company auditors.
(3)The board of company auditors must appoint full-time company auditors from among the company auditors.
(4)The company auditors must report the status of the execution of their duties to the board of company auditors whenever the latter so requests.
(Application, Mutatis Mutandis, of the Companies Act)
Article 53-20The provisions of Articles 382 to 385 (Duty to Report to Directors, Duty to Attend Board of Directors Meetings, Duty to Report to Shareholders' Meetings, Prohibition of Directors' Actions by the Company Auditors), Article 386 (excluding paragraph (1), items (ii) and (iii), and paragraph (2), items (iii) and (iv)) (Representation of Company in Actions between Company with Auditors and Directors), Article 387 (Remunerations for Company Auditors) and Article 388 (Requests for Indemnification of Expenses) of the Companies Act apply mutatis mutandis to the company auditors of a mutual company.In this case, the term "Article 373, paragraph (1)" in Article 383, paragraph (1) of that Act is deemed to be replaced with "Article 373, paragraph (1) as applied mutatis mutandis pursuant to Article 53-16 of the Insurance Business Act"; the term "proviso to Article 366, paragraph (1)" in Article 383, paragraph (2) is deemed to be replaced with "proviso to Article 366, paragraph (1) as applied mutatis mutandis pursuant to Article 53-16 of the Insurance Business Act"; the term "Article 373, paragraph (2)" in Article 383, paragraph (4) is deemed to be replaced with "Article 373, paragraph (2) as applied mutatis mutandis pursuant to Article 53-16 of the Insurance Business Act"; the term "Article 349, paragraph (4), Article 353 and Article 364" in Article 386, paragraph (1) of that Act and the term "Article 349, paragraph (4)" in Article 386, paragraph (2) is deemed to be replaced with "Article 349, paragraph (4) as applied mutatis mutandis pursuant to Article 53-15 of the Insurance Business Act"; the phrase "a request (limited to a request to file an action to pursue the liabilities of directors) pursuant to the provisions of Article 847, paragraph (1), Article 847-2, paragraph (1) or (3) (including cases where it is applied mutatis mutandis pursuant to paragraph (4) and (5) of the relevant Article), or Article 847-3, paragraph (1)" in Article 386, paragraph (2), item (i) of that Act is deemed to be replaced with "a request for institution of action under Article 847, paragraph (1) as applied mutatis mutandis pursuant to Article 53-37 of the Insurance Business Act"; and the terms "Article 849, paragraph (4)" and "Article 850, paragraph (2)" in Article 386, paragraph (2), item (ii) of that Act is deemed to be replaced with "Article 849, paragraph (4) as applied mutatis mutandis pursuant to Article 53-37 of the Insurance Business Act" and "Article 850, paragraph (2) as applied mutatis mutandis pursuant to Article 53-37 of the Insurance Business Act", respectively; any other necessary technical replacement of terms is specified by Cabinet Order.
(Management of Boards of Company Auditors)
Article 53-21The provisions of Part II, Chapter IV, Section 8, Subsection 2 (Operations) of the Companies Act apply mutatis mutandis to the management of the board of company auditors of a mutual company; and the provisions of Article 868, paragraph (1) (Jurisdiction over Non-Contentious Cases), Article 869 (Prima Facie Showing), Article 870, paragraph (2) (limited to the part involving item (i)) (Hearing of Statements), Article 870-2 (Forwarding Copy of Petition and other procedures), the main clause of Article 871 (Appending of the Reason), Article 872 (limited to the part involving item (v)) (Immediate Appeal), Article 872-2 (Forwarding Copy of Petition for Immediate Appeal and other procedures), the main clause of Article 873 (Stay of Execution of the Judicial Decision of the Prior Instance), Article 875 (Exclusion from Application of the Provisions of the Non-Contentious Cases Procedures Act) and Article 876 (Supreme Court Rules) of that Act apply mutatis mutandis to the application for permission under Article 394, paragraph (2) of that Act (including as applied mutatis mutandis pursuant to Article 394, paragraph (3); hereinafter the same applies in this Article) as applied mutatis mutandis pursuant to this Article. In this case, the term "shareholder" in Article 394, paragraph (2) (Minutes) of that Act is deemed to be replaced with "member (or, if the company has a member representatives meeting, representative member)"; the term "and to the cases in which it is necessary for the purpose of exercising the rights of a member of the parent company" in Article 394, paragraph (3) is deemed to be deleted; and the term "parent company or subsidiary company" in Article 394, paragraph (4) is deemed to be replaced with "substantive subsidiary companies as defined in Article 33-2, paragraph (1) of the Insurance Business Act"; any other necessary technical replacement of terms is specified by Cabinet Order.
Division 7 Accounting Auditors
(Authority of an Accounting Auditor)
Article 53-22(1)The accounting auditor audits the financial statements (meaning the financial statements as defined in Article 54-3, paragraph (2); hereinafter the same applies in this Subsection), annexed detailed statements thereto and consolidated financial statements (meaning the consolidated financial statements as defined in Article 54-10, paragraph (1)) of the mutual company pursuant to the provisions of the following Subsection.In this case, the accounting auditors must prepare financial audit reports pursuant to the provisions of Cabinet Office Order.
(2)The accounting auditors may at any time inspect and copy the following materials or request reports on accounting from the directors and accounting advisors and managers or other employees:
(i)an accounting book (meaning the accounting book as defined in Article 54-2, paragraph (1); hereinafter the same applies in this Subsection) or if equivalent materials are prepared in writing, that document; and
(ii)if accounting books or equivalent materials are prepared in the form of an electronic or magnetic record, anything that displays the data recorded in the electronic or magnetic record in a manner specified by Cabinet Office Order.
(3)If it is necessary for the purpose of carrying out their duties, the accounting auditors may request a report on accounting from a substantive subsidiary company of the company with accounting auditors, or investigate the status of the business and property of the company with accounting auditors or such substantive subsidiary company.
(4)The substantive subsidiary companies set forth in the preceding paragraph may refuse to submit a report or undergo investigation as set forth in that paragraph if there are legitimate grounds for doing so.
(5)The accounting auditors must not employ a person falling under any of the following items in carrying out their duties:
(i)a person listed in Article 337, paragraph (3), item (i) or (ii) of the Companies Act as applied mutatis mutandis pursuant to Article 53-7;
(ii)a person who is a director, executive officer, accounting advisor or company auditor, or manager or any other employee of the company with accounting auditors or its substantive subsidiary companies; or
(iii)a person who is in continuous receipt of remuneration from the company with accounting auditors or its substantive subsidiary companies for any business other than those carried out as a certified public accountant or auditing corporation.
(6)For the purpose of applying the provisions of paragraph (2) to a mutual company that is a company with a nominating committee, etc., the term "directors" in that paragraph is deemed to be replaced with "directors, executive officers".
(Application, Mutatis Mutandis, of the Companies Act)
Article 53-23The provisions of Articles 397 through 399 (Report to Company Auditors, Statement of Opinions at the Annual Shareholders' Meeting, Involvement of Company Auditors in Decision on Remunerations for Accounting Auditors) of the Companies Act apply mutatis mutandis to the accounting auditors of a mutual company.In this case, the term "Article 396, paragraph (1)" in Article 398, paragraph (1) of that Act is deemed to be replaced with "Article 53-22, paragraph (1) of the Insurance Business Act"; any other necessary technical replacement of terms is specified by Cabinet Order.
Division 8 Audit and Supervisory Committee
(Authorities of Audit and Supervisory Committee)
Article 53-23-2(1)An audit and supervisory committee is organized by all audit and supervisory committee members.
(2)Audit and supervisory committee members must be directors.
(3)An audit and supervisory committee performs the following duties:
(i)supervising the execution of duties of directors (in cases of a company with an accounting advisor, directors and accounting advisors) and preparing an audit report;
(ii)determining the content of proposals regarding the election and dismissal of accounting advisors and the refusal to reelect accounting advisors to be submitted to a general meeting; and
(iii)deciding the opinions of the audit and supervisory committee prescribed in Article 342-2, paragraph (4) of the Companies Act as applied mutatis mutandis pursuant to Article 53-11 and Article 361, paragraph (6) of that Act as applied mutatis mutandis pursuant to Article 53-15.
(4)If audit and supervisory committee members make the following requests to a company with an audit and supervisory committee with respect to the execution of their duties (limited to those related to the execution of duties of the audit and supervisory committee; hereinafter the same applies in this paragraph), the relevant company with an audit and supervisory committee may not refuse the request except if it proves that the expense or debt relating to the request is not necessary for the execution of the duties of the relevant audit and supervisory committee members:
(i)request for advancement of the expenses;
(ii)request for the indemnification of the expenses paid and interests thereon from and including the day of payment; or
(iii)requests for payment (or, if such debt is not yet incurred, provision of reasonable security) to the creditor of a debt incurred.
(5)The provisions of Articles 399-3 to 399-6 of the Companies Act (Investigations by the Audit and Supervisory Committee, Duty to Report to Board of Directors, Duty to Report to Shareholders Meeting, and Enjoinment of Acts of Directors by Audit and Supervisory Committee Members) and Article 399-7 (excluding paragraphs (3), (4) and paragraph (5), items (iii) and (iv)) (Representative of a Company in Actions between a Company with an Audit and Supervisory Committee and Directors) apply mutatis mutandis to an audit and supervisory committee or audit and supervisory committee member of a company with audit and supervisory committee.In this case, the term "Article 349, paragraph (4), Article 353, and Article 364" in paragraph (1) of that Article and the term "Article 349, paragraph (4)" in paragraph (5) of that Article is deemed to be replaced with "Article 349, paragraph (4) as applied mutatis mutandis pursuant to Article 53-15 of the Insurance Business Act"; the term "a request (limited to a request to file an action to pursue the liabilities of directors) pursuant to the provisions of Article 847, paragraph (1), Article 847-2, paragraph (1) or (3) (including as applied mutatis mutandis pursuant to paragraph (4) and (5) of the relevant Article), or Article 847-3, paragraph (1)" of item (i) of that paragraph is deemed to be replaced with "a request under Article 847, paragraph (1) as applied mutatis mutandis pursuant to Article 53-37 of the Insurance Business Act"; the terms "Article 849, paragraph (4)" and "Article 850, paragraph (2)" in item (ii) of that paragraph are deemed to be replaced with "Article 849, paragraph (4) of that Article as applied mutatis mutandis to Article 53-37 of the Insurance Business Act" and "Article 850, paragraph (2) as applied mutatis mutandis pursuant to Article 53-37 of that Act", respectively; and any other necessary technical replacement of terms is specified by Cabinet Order.
(6)The provisions of Part II, Chapter IV, Section 9-2, Subsection 2 (Operations) of the Companies Act apply mutatis mutandis to operation of an audit and supervisory committee of a company with an audit and supervisory committee, and the provisions of Article 868, paragraph (1) (Jurisdiction over Non-Contentious Cases), Article 869 (Prima Facie Showing), Article 870, paragraph (2) (limited to the part pertaining to item (i)) (Hearing of Statements), the main text of Article 871 (Appending of the Reason), Article 872 (limited to the part involving item (iv)) (Immediate Appeal), the main clause of Article 873 (Stay of Execution of the Judicial Decision of the Prior Instance), Article 875 (Exclusion from Application of the Provisions of the Non-Contentious Cases Procedures Act) and Article 876 (Supreme Court Rules) of that Act apply mutatis mutandis to a petition for a permission under Article 399-11, paragraph (2) of that Act as applied mutatis mutandis pursuant to this paragraph (including as applied mutatis mutandis pursuant to paragraph (3) of that Article; hereinafter the same applies in this paragraph).In this case, the term "a shareholder" in paragraph (2) of that Article (Minutes) is deemed to be replaced with "a member (or, where the company has a member representatives meeting, such representative members)"; the term "cases where it is necessary for the purpose of pursuing the liability of directors or accounting advisors by a creditor of a company with an audit and supervisory committee and to the cases where it is necessary for the purpose of exercising the rights of a member of the parent company" in paragraph (3) of that Article is deemed to be replaced with "cases where it is necessary for the purpose of pursuing the liability of directors or accounting advisors by a creditor of a company with an audit and supervisory committee"; the term "or its parent company or subsidiary company" in paragraph (4) of that Article is deemed to be replaced with "or its substantive subsidiary companies prescribed in Article 33-2, paragraph (1) of the Insurance Business Act"; and any other necessary technical replacement of terms is specified by Cabinet Order.
(Authority of Board of Directors of Company with an Audit and Supervisory Committee)
Article 53-23-3(1)Board of directors of a company with an audit and supervisory committee perform the following duties notwithstanding of provisions of Article 53-14:
(i)deciding the following particulars and execution of other business operations of the company with an audit and supervisory committee:
(a)basic management policy;
(b)the particulars specified by Cabinet Office Order as those necessary for the execution of the duties of the audit and supervisory committee;
(c)the development of systems necessary to ensure that the execution of the duties by the directors complies with the laws and regulations and the articles of incorporation, and other systems prescribed by Cabinet Office Order as systems necessary to ensure the properness of operations of a mutual company and of operations of a corporate group consisting of the relevant mutual company and its substantive subsidiary companies;
(ii)supervising the execution of duties by directors; and
(iii)appointing and removing representative directors.
(2)The board of directors of a company with an audit and supervisory committee must determine matters listed in item (i), (a) to (c) of the preceding paragraph.
(3)Board of directors of a company with an audit and supervisory committee must appoint representative directors from among the directors (excluding directors who are audit and supervisory committee members).
(4)Board of directors of a company with an audit and supervisory committee may not delegate the decision on the execution of the following matters and other material business operations to directors:
(i)the disposal of and acceptance of assignment of material assets;
(ii)borrowing a significant amount of money;
(iii)the election and dismissal of an important employee including managers;
(iv)the establishment, changes or closing of important structures including branch offices;
(v)matters listed in Article 61, item (i) and other matters specified by Cabinet Office Order as material particulars regarding the solicitation of persons who subscribe corporate bonds (meaning corporate bonds prescribed in the relevant Article); and
(vi)exemption from liability under Article 53-33, paragraph (1) pursuant to provisions of the articles of incorporation under Article 426, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to Article 53-36 following the deemed replacement of terms.
(5)Notwithstanding the provisions of the preceding paragraph, if a majority of directors of a company with an audit and supervisory committee are outside directors, the board of directors of the company with an audit and supervisory committee may delegate to directors the decision on execution of material business operations by its resolution; provided, however, that this does not apply to the following particulars:
(i)decisions of the particulars listed in the items of Article 298, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to Article 41, paragraph (1) or Article 49, paragraph (1);
(ii)decisions on the content of proposals to be submitted to a general meeting (excluding those regarding the election and dismissal of accounting auditors and the refusal to reelect accounting auditors);
(iii)approval under Article 356, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to Article 53-15;
(iv)decision of the directors to convene the board of directors meeting pursuant to the provisions of the proviso to Article 366, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to Article 53-16;
(v)decision of persons representing a company with an audit and supervisory committee pursuant to the provisions of Article 399-7, paragraph (1), item (i) of the Companies Act as applied mutatis mutandis pursuant to paragraph (5) of the preceding Article;
(vi)particulars listed in item (vi) of the preceding paragraph;
(vii)approvals under Article 54-4, paragraph (3) and Article 54-10, paragraph (5);
(viii)decisions on the content of contract relating to the acts listed in the items of Article 62-2, paragraph (1);
(ix)decisions on the content of an entity conversion plan; and
(x)decisions on the content of merger contract.
(6)Notwithstanding the provisions of the preceding two paragraphs, a company with an audit and supervisory committee may stipulate in the articles of incorporation that all or part of decisions of execution of material business operations (excluding particulars listed in items of the preceding paragraph) may be delegated to directors by the resolution of the board of directors.
(7)The provisions of Article 399-14 (Call of the Board of Directors by Audit and Supervisory Committee) of the Companies Act apply mutatis mutandis to convocation of board of directors meeting of a company with an audit and supervisory committee. In such case, any necessary technical replacement of terms is specified by Cabinet Order.
Division 9 Nominating Committee and Executive Officer
(Appointment of Committee Members)
Article 53-24(1)Each nominating committee, audit committee, and compensation committee (hereinafter simply referred to as "each committee" in this Article, the following Article and Article 64) are composed of three or more committee members.
(2)The members of each committee are appointed from among the directors by a resolution of the board of directors.
(3)The majority of the members of each committee must be outside directors.
(4)An audit committee member may not concurrently serve as an executive officer or executive director of a company with a nominating committee, etc. or its substantive subsidiary companies, or as an accounting advisor (or, where the accounting advisor is a corporation, any staff member of the corporation, who is to carry out the relevant duties) or manager or any other employee of a substantive subsidiary companies of a company with a nominating committee, etc..
(Removal of Committee Members)
Article 53-25(1)A committee member may be removed at any time by a resolution of the board of directors.
(2)The provisions of Article 401, paragraphs (2) to (4) (Removal of Committee Members), Article 868, paragraph (1) (Jurisdiction over Non-Contentious Cases), Article 870, paragraph (1) (limited to the part involving item (i)) (Hearing of Statements), Article 871 (Appending of Reasons), Article 872 (limited to the part involving item (iv)) (Immediate Appeals), Article 874 (limited to the part involving item (i)) (Restrictions on Appeal), Article 875 (Exclusion from Application of the Provisions of the Non-Contentious Cases Procedures Act), Article 876 (Supreme Court Rules) and Article 937, paragraph (1) (limited to the part pertaining to item (ii), (a) and (c)) (Commissioning of Registration by Judicial Decision) of the Companies Act apply mutatis mutandis to the committee members of a company with a nominating committee, etc.In this case, the term "paragraph (1) of the preceding Article" in Article 401, paragraph (2) of that Act is deemed to be replaced with "Article 53-24, paragraph (1) of the Insurance Business Act"; any other necessary technical replacement of terms is specified by Cabinet Order.
(Election of Executive Officers)
Article 53-26(1)A company with a nominating committee, etc. must have one or more executive officers.
(2)An executive officer is elected by a resolution of the board of directors.
(3)The relationship between a company with a nominating committee, etc. and its executive officers are governed by the provisions on mandate.
(4)The provisions of Article 53-2, paragraph (1) apply mutatis mutandis to an executive officer.
(5)An executive officer may serve concurrently as a director.
(6)An executive officer's term of office continues until the conclusion of the first board of directors meeting convened after the conclusion of the annual general meeting for the last business year ending within one year from the time of their election; provided, however, that this does not preclude the shortening of their term of office by the articles of incorporation.
(7)The provisions of Article 402, paragraph (8) (Election of Executive Officers) of the Companies Act apply mutatis mutandis to the terms of office of the executive officers of a mutual company.In this case, the term "the preceding paragraph" in that paragraph is deemed to be replaced with "Article 53-26, paragraph (6) of the Insurance Business Act"; any other necessary technical replacement of terms is specified by Cabinet Order.
(Dismissal of Executive Officers)
Article 53-27(1)An executive officer may be dismissed at any time by a resolution of the board of directors.
(2)An executive officer dismissed pursuant to the provisions of the preceding paragraph may demand from the company with a nominating committee, etc. compensation for damage arising from the dismissal, unless the company has legitimate grounds for their dismissal.
(3)The provisions of Article 401, paragraphs (2) to (4) of the Companies Act as applied mutatis mutandis pursuant to Article 53-25, paragraph (2), and the provisions of Article 868, paragraph (1) (Jurisdiction over Non-Contentious Cases), Article 870, paragraph (1) (limited to the part involving item (i)) (Hearing of Statements), Article 871 (Appending of the Reason), Article 872 (limited to the part involving item (iv)) (Immediate Appeal), Article 874 (limited to the part involving item (i)) (Restrictions on Appeal), Article 875 (Exclusion from Application of the Provisions of the Non-Contentious Cases Procedures Act), Article 876 (Supreme Court Rules) and Article 937, paragraph (1) (limited to the part involving item (ii), (a) and (c)) (Commissioning of Registration by a Judicial Decision) of that Act apply mutatis mutandis to the cases if a mutual company has no executive officer or any vacancy in the number of executive officers prescribed by the articles of incorporation.In this case, any necessary technical replacement of terms is specified by Cabinet Order.
(Authority of the Nominating Committee)
Article 53-28(1)The nominating committee is to determine the contents of proposals to be submitted to the general meeting regarding the election and dismissal of directors (or, in a company with accounting advisors, directors and accounting advisors).
(2)The audit committee carries out the following duties:
(i)supervising the execution of duties by executive officers, etc. (meaning executive officers and directors, or, in a company with accounting advisors, executive officers, directors and accounting advisors; hereinafter the same applies in this Division) and preparing audit reports; and
(ii)determining the content of proposals to be submitted to the general meeting regarding the election and dismissal of accounting auditors, and the non-reappointment of accounting auditors.
(3)Notwithstanding the provisions of Article 361, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to Article 53-15, and the provisions of Article 379, paragraphs (1) and (2) of that Act as applied mutatis mutandis pursuant to Article 53-17, the compensation committee is to determine the contents of remunerations, etc. (meaning the property considerations received from the mutual company in exchange for execution of duties, such as remunerations and bonuses; hereinafter the same applies in this paragraph) for individual executive officers, etc. If an executive officer serves concurrently as a manager or any other employee of the company with a nominating committee, etc., the same applies to the content of remunerations, etc. for the manager or other employees.
(4)A company with a nominating committee, etc. may not refuse any of the following requests made to it by a committee member with respect to the execution of their duties (limited to a request regarding the execution of the duties of the nominating committee, etc. to which the committee member belongs; hereinafter the same applies in this paragraph), unless the company with a nominating committee, etc. proves that the expenses or obligations pertaining to the request are not necessary for the execution of the duties of the committee member:
(i)a request for advance payment of expenses;
(ii)a request for reimbursement of paid expenses and any interest incurred from the date of payment; or
(iii)a request for payment of any obligation incurred (or, if the obligation is not due yet, providing reasonable security) to the creditor.
(5)The provisions of Articles 405 to 407 (Investigations by Audit Committees, Duty to Report to the Board of Directors, Prohibition of Executive Officers' Actions, etc. by Audit Committee Members), Article 408 (excluding paragraph (3), paragraph (4), and paragraph (5), items (iii) and (iv)) (Representation of a Company with Nominating Committee in Actions between the Company and Its Executive Officers or Directors) and Article 409 (Methods for Decisions on Remuneration by the Compensation Committee) of the Companies Act apply mutatis mutandis to the nominating committee, etc. or committee members of a company with a nominating committee, etc.In this case, the term "provisions of Article 349, paragraph (4) applied mutatis mutandis under Article 420, paragraph (3), and the provisions of Article 353 and Article 364" in Article 408, paragraph (1) of that Act is deemed to be replaced with "provisions of Article 349, paragraph (4) as applied mutatis mutandis pursuant to Article 420, paragraph (3) as applied mutatis mutandis pursuant to Article 53-32 of the Insurance Business Act"; the term "Article 349, paragraph (4) applied mutatis mutandis under Article 420, paragraph (3)" in Article 408, paragraph (5) is deemed to be replaced with "Article 349, paragraph (4) as applied mutatis mutandis pursuant to Article 420, paragraph (3) as applied mutatis mutandis pursuant to Article 53-32 of the Insurance Business Act"; the term "a request (limited to a request to file an action to pursue the liabilities of directors) pursuant to the provisions of Article 847, paragraph (1), Article 847-2, paragraph (1) or (3) (including as applied mutatis mutandis pursuant to paragraph (4) and (5) of the relevant Article), or Article 847-3, paragraph (1)" in Article 408, paragraph (3), item (i) of that Act is deemed to be replaced with "a request for filing an action under Article 847, paragraph (1) as applied mutatis mutandis pursuant to Article 53-37 of the Insurance Business Act"; the terms "Article 849, paragraph (4)" and "Article 850, paragraph (2)" in Article 408, paragraph (3), item (ii) of that Act are deemed to be replaced with "Article 849, paragraph (4) as applied mutatis mutandis pursuant to Article 53-37 of the Insurance Business Act" and "Article 850, paragraph (2) as applied mutatis mutandis pursuant to Article 53-37 of the Insurance Business Act", respectively; and the term "Article 404, paragraph (3)" in Article 409, paragraph (2) of that Act is deemed to be replaced with "Article 53-28, paragraph (3) of the Insurance Business Act"; any other necessary technical replacement of terms is specified by Cabinet Order.
(6)The provisions of Part II, Chapter IV, Section 10, Subsection 3 (Operation of Nominating Committee) of the Companies Act apply mutatis mutandis to the management of the nominating committee, etc. of a company with a nominating committee, etc.; and the provisions of Article 868, paragraph (1) (Jurisdiction over Non-Contentious Cases), Article 869 (Prima Facie Showing), Article 870, paragraph (1) (limited to the part involving item (i)) (Hearing of Statements), Article 870-2 (Forwarding Copy of Petition and other procedures),the main text of Article 871 (Appending of the Reason), Article 872 (limited to the part involving item (v)) (Immediate Appeal), Article 872-2 (Forwarding Copy of Petition for Immediate Appeal and Other Procedures), the main text of Article 873 (Stay of Execution of the Judicial Decision of the Prior Instance), Article 875 (Exclusion from Application of the Provisions of the Non-Contentious Cases Procedures Act) and Article 876 (Supreme Court Rules) of that Act apply mutatis mutandis to the application for permission under Article 413, paragraph (3) of that Act (including as applied mutatis mutandis pursuant to Article 413, paragraph (4); hereinafter the same applies in this paragraph) as applied mutatis mutandis pursuant to this Article. In this case, the term "shareholder" in Article 413, paragraph (3) (Minutes) is deemed to be replaced with "member (or, if the company has a member representatives meeting, representative member)"; the phrase "and where it is necessary for the purpose of exercising the rights of a member of the parent company" in Article 413, paragraph (4) is deemed to be deleted"; and the term "or its parent company or subsidiary company" in Article 413, paragraph (5) of that Act is deemed to be replaced with "or its substantive subsidiary companies as defined in Article 33-2, paragraph (1) of the Insurance Business Act; any other necessary technical replacement of terms is specified by Cabinet Order.
(Authority of the Directors of a Company with a Nominating Committee)
Article 53-29The directors of a company with a nominating committee, etc. may not execute the business of the company with a nominating committee, etc. unless otherwise provided for in this Act or any order based on this Act.
(Authority of the Board of Directors of a Company with a Nominating Committee)
Article 53-30(1)Notwithstanding the provisions of Article 53-14, the board of directors of a company with a nominating committee, etc. are to carry out the following duties:
(i)making decisions on the following particulars and any other decision on the execution of the business of the company with a nominating committee, etc.:
(a)basic management policy;
(b)particulars specified by Cabinet Office Order as necessary for the execution of the duties of the audit committee;
(c)in a mutual company with two or more executive officers, the particulars of the relationship between executive officers, such as allocation of duties and line of control among executive officers;
(d)the directors to receive requests for the convocation of a board of directors meeting under Article 417, paragraph (2) of the Companies Act as applied mutatis mutandis pursuant to paragraph (5); and
(e)establishment of a system to ensure that the execution of duties by executive officers conforms to the laws and regulations and the articles of incorporation, and any other system required by Cabinet Office Order to ensure the properness of operations of a mutual company and of operations of a corporate group consisting of the relevant cutual company and its substantive subsidiary companies: and
(ii)supervising the execution of duties by executive officers, etc.
(2)The board of directors of a company with a nominating committee, etc. must decide on the particulars listed in item (i), (a) through (e) of the preceding paragraph.
(3)The board of directors of a company with a nominating committee, etc. may not delegate to a director the execution of duties listed in paragraph (1), item (i) or (ii).
(4)The board of directors of a company with a nominating committee, etc. may delegate to an executive officer, decisions on the execution of the company's business by adopting a resolution; provided, however, that this does not apply to the following particulars:
(i)decisions on the particulars listed in the items of Article 298, paragraph (1) of the Companies Act as applied mutatis mutandis to Article 41, paragraph (1) or Article 49, paragraph (1);
(ii)decisions on the content of proposals to be submitted to the general meeting (excluding those regarding the election and dismissal of directors, accounting advisors and accounting auditors, and the non-reappointment of accounting auditors);
(iii)authorization under Article 356, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to Article 53-15 (including as applied mutatis mutandis pursuant to the first sentence of Article 419, paragraph (2) of that Act as applied mutatis mutandis pursuant to Article 53-32);
(iv)designation of the directors to convene a board of directors meeting under the proviso to Article 366, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to Article 53-16;
(v)appointment of committee members pursuant to the provisions of Article 53-24, paragraph (2) and removal of committee members pursuant to the provisions of Article 53-25, paragraph (1);
(vi)election of executive officers pursuant to the provisions of Article 53-26, paragraph (2) and dismissal of executive officers pursuant to the provisions of Article 53-27, paragraph (1);
(vii)designation of persons to represent the company with a nominating committee, etc. pursuant to the provisions of Article 408, paragraph (1), item (i) of the Companies Act as applied mutatis mutandis pursuant to Article 53-28, paragraph (5);
(viii)appointment of the representative executive officer pursuant to the provisions of the first sentence of Article 420, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to Article 53-32 and removal of the representative executive officer pursuant to the provisions of Article 420, paragraph (2) of that Act as applied mutatis mutandis pursuant to Article 53-32;
(ix)exemption from liability under Article 53-33, paragraph (1) pursuant to the provisions of the articles of incorporation under Article 426, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to Article 53-36 following the deemed replacement of terms;
(x)authorization under Article 54-4, paragraph (3) and Article 54-10, paragraph (5);
(xi)decisions on the content of any contract involving the acts listed in the items of Article 62-2, paragraph (1);
(xii)decisions on the content of any entity conversion plan; and
(xiii)decisions on the content of any merger agreement.
(5)The provisions of Article 417 (Operations of Board of Directors of Company With a Nominating Committee) of the Companies Act apply mutatis mutandis to the operation of the board of directors of a company with a nominating committee, etc.In this case, the term "paragraph (1), item (i)-2 of the preceding Article" in paragraph (2) of that Article is deemed to be replaced with "Article 53-30, paragraph (1), item (i), (d) of the Insurance Business Act"; any other necessary technical replacement of terms is specified by Cabinet Order.
(Authority of Executive Officers)
Article 53-31The executive officers carry out the following duties:
(i)making decisions on the execution of the business of the company with a nominating committee, etc. as delegated by a resolution of the board of directors under paragraph (4) of the preceding Article; and
(ii)executing the business operations of a company with a nominating committee, etc.
(Application, Mutatis Mutandis, of the Companies Act)
Article 53-32The provisions of Article 419 (excluding the second sentence of paragraph (2)) (Executive Officer's Duty to Report to Audit Committee Members), Article 421 (Apparent Representative Executive Officers) and Article 422, paragraph (1) (Prohibition of Executive Officers' Actions by Shareholders) of the Companies Act apply mutatis mutandis to the executive officers of a company with a nominating committee, etc.; the provisions of Article 420 (Representative Executive Officers) apply mutatis mutandis to the representative executive officer of a company with a nominating committee, etc.; the provisions of Article 868, paragraph (1) (Jurisdiction over Non-Contentious Cases), Article 869 (Prima Facie Showing), Article 870, paragraph (1) (limited to the part involving item (i)) (Hearing of Statements), Article 871 (Appending of the Reason), Article 872 (limited to the part involving item (iv)) (Immediate Appeal), Article 874 (limited to the part involving items (i) and (iv)) (Restrictions on Appeal), Article 875 (Exclusion from Application of the Provisions of the Non-Contentious Cases Procedures Act) and Article 876 (Supreme Court Rules) of that Act apply mutatis mutandis to the executive officers or representative executive officer of a company with a nominating committee, etc.; and the provisions of Article 937, paragraph (1) (limited to the part involving item (ii), (a) and (c)) (Commissioning of Registration by a Judicial Decision) of that Act apply mutatis mutandis to the representative executive officer of a company with a nominating committee, etc..In this case, the term "Article 355, Article 356 and Article 365, paragraph (2)" in the first sentence of Article 419, paragraph (2) of that Act is deemed to be replaced with "Article 355, Article 356 and Article 365, paragraph (2) as applied mutatis mutandis pursuant to Article 53-15 of the Insurance Business Act"; the term "Article 357" in Article 419, paragraph (3) is deemed to be replaced with "Article 357 as applied mutatis mutandis pursuant to Article 53-15 of the Insurance Business Act"; the terms "Article 349, paragraphs (4) and (5)", "Article 352" and "Article 401, paragraphs (2) to (4)" in Article 420, paragraph (3) of that Act are deemed to be replaced with "Article 349, paragraphs (4) and (5) as applied mutatis mutandis pursuant to Article 53-15 of the Insurance Business Act", "Article 352 as applied mutatis mutandis pursuant to Article 53-15 of that Act" and "Article 401, paragraphs (2) to (4) as applied mutatis mutandis pursuant to Article 53-25 of the Insurance Business Act", respectively; and the term "shareholders having the shares" in Article 422, paragraph (1) of that Act is deemed to be replaced with "persons who have been members"; any other necessary technical replacement of terms is specified by Cabinet Order.
Division 10 Liability for Damages of Officers
(Liability for Damages of Officers to a Mutual Company)
Article 53-33(1)Directors, executive officers, accounting advisors, company auditors, or accounting auditors (hereinafter referred to as "officers, etc." in this Division) who have been negligent in their duties are liable to compensate the mutual company for any damage resulting from the negligence.
(2)If a director or executive officer has conducted a transaction set forth in Article 356, paragraph (1), item (i) (Restrictions on Competition and Transactions Involving a Conflict of Interest) of the Companies Act in violation of the provisions of Article 356, paragraph (1) of that Act as applied mutatis mutandis pursuant to Article 53-15 (including as applied mutatis mutandis pursuant to the first sentence of Article 419, paragraph (2) of that Act as applied mutatis mutandis pursuant to the preceding Article; hereinafter the same applies in this paragraph), the amount of the profits obtained by the director, executive officer or a third party as a result of such transaction is presumed to be the amount of the damage set forth in the preceding paragraph.
(3)If a mutual company incurs any damage as a result of a transaction set forth in Article 356, paragraph (1), item (ii) or (iii) of the Companies Act as applied mutatis mutandis pursuant to Article 53-15 (including as applied mutatis mutandis pursuant to the first sentence of Article 419, paragraph (2) of that Act as applied mutatis mutandis pursuant to the preceding Article), the following directors or executive officers are presumed to have been negligent in their duties:
(i)the directors or executive officers set forth in Article 356, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to Article 53-15 (including as applied mutatis mutandis pursuant to the first sentence of Article 419, paragraph (2) of that Act as applied mutatis mutandis pursuant to the preceding Article);
(ii)the directors or executive officers who decided that the mutual company is to carry out the transaction; or
(iii)the directors who agreed with the board of directors' resolution approving such a transaction (in a company with a nominating committee, etc., limited to the cases in which such transaction is carried out between the company with a nominating committee, etc. or is a transaction in which there is a conflict of interest between the company with a nominating committee, etc. and the directors).
(4)The provisions of the preceding paragraph do not apply to the case listed in Article 356, paragraph (1), item (ii) or (iii) of the Companies Act as applied mutatis mutandis pursuant to Article 53-15, if a director prescribed in that paragraph (excluding a director who is an audit and supervisory committee member) obtains an approval from the audit and supervisory committee for the transaction.
(Exemption from Liability for Damages to a Mutual Company)
Article 53-34Officers, etc. may not be exempted from the liability under paragraph (1) of the preceding Article without the consent of all members.
(Liability of Officers for Damages to Third Parties)
Article 53-35(1)Officers, etc. are liable to compensate for any damage incurred by a third party as a result of their bad faith or gross negligence in carrying out their duties.
(2)The provisions of the preceding paragraph also apply when the persons listed in the following items have performed the acts provided for in the relevant items; provided, however, that this does not apply to the cases in which those persons prove that they did not fail to exercise due care in carrying out their duties:
(i)directors and executive officers: the following acts:
(a)giving false notice with respect to a material particular of which notice is required to be given in soliciting funds or subscribers for corporate bonds (meaning the corporate bonds as defined in Article 61), or entering a false statement or record in materials used in explaining the business or any other particular of the mutual company for the purpose of the solicitation;
(b)entering a false statement or record of a material particular that is required to be stated or recorded in financial statements and business reports, and annexed detailed statements thereto;
(c)making a false registration; and
(d)giving a false public notice (including the measures provided for in Article 54-7, paragraph (3));
(ii)accounting advisors:entering a false statement or record with regard to a material particular that is required to be stated or recorded in financial statements and annexed detailed statements thereto, and accounting advisors' reports;
(iii)auditors, audit and supervisory committee members and audit committee members:entering a false statement or record with regard to a material particular that is required to be stated or recorded in an audit report; and
(iv)accounting auditors:entering a false statement or record with regard to a material particular that is required to be stated or recorded in a financial audit report.
(Application, Mutatis Mutandis, of the Companies Act)
Article 53-36The provisions of Article 425 (excluding paragraph (1), item (ii), the second sentence of paragraphs (4) and (5)) (Partial Exemption from Liability), Article 426 (excluding paragraphs (4) to (6)) (Provisions of the Articles of Incorporation on Exemption by Directors), Article 427 (Limited Liability Contracts), Article 428 (Special Provisions on Transactions Carried Out by a Director for themselves) and Article 430 (Officers' Joint and Several Liability, etc.) of the Companies Act apply mutatis mutandis to the liability for damages of the officers, etc. of a mutual company.In this case, the terms "Article 423, paragraph (1)" and "Article 424" in those provisions are deemed to be replaced with "Article 53-33, paragraph (1) of the Insurance Business Act" and "Article 53-34 of the Insurance Business Act", respectively; the term "resolution of a shareholders meeting (if there is a wholly owning parent company, etc. (meaning a wholly owning parent company, etc. as prescribed in Article 847-3, paragraph (1); hereinafter the same applies in this Section) in a stock company, if the relevant liabilities are special liabilities (meaning special liabilities as prescribed in Article 847-3, paragraph (4); the same applies in this Section), the shareholders meeting of the relevant stock company and the relevant wholly owning parent company, etc.; hereinafter the same applies in this Article)" in Article 425, paragraph (1) of that Act is deemed to be replaced with "resolution set forth in Article 62, paragraph (2) of the Insurance Business Act"; the phrase "the directors (if there is an ultimate, wholly owning parent company, etc., when the liability to be exempted pursuant to the provisions of the relevant paragraph are special liabilities, the directors of the relevant stock company and the relevant ultimate, wholly owning parent company, etc.)" in paragraph (2) of that Article is deemed to be replaced with "the directors"; the phrase "directors (if there is an ultimate, wholly owing parent company, etc. in these companies, if the liabilities to be exempted pursuant to the provisions of paragraph (1) are special liabilities, the directors of the relevant companies and the relevant ultimate, wholly owing parent company, etc.)" in paragraph (3) of that Article is deemed to be replaced with "directors"; the phrase "the consent of directors with respect to an exemption from liability under the provisions of the articles of incorporation pursuant to the provisions of that paragraph (limited to exemptions from liability for directors (excluding those who are audit committee members) and executive officers) is to be obtained, and to the cases if a proposal regarding such exemption from liability" in Article 426, paragraph (2) of that Act is deemed to be replaced with "a proposal regarding an exemption from liability pursuant to the provisions of the articles of incorporation under that paragraph (limited to exemptions from liability for directors (excluding those who are audit committee members) and executive officers)"; the phrase "apply mutatis mutandis to cases if a proposal to amend the articles of incorporation to create provisions of the articles of incorporation pursuant to the provisions of the preceding paragraph (limited to provisions of the articles of incorporation to the effect that directors (excluding those who are audit and supervisory committee members or audit committee members) and executive officers may be exempted from the liability) is submitted to a shareholders meeting, to cases where the consent of directors with respect to exemption from liability under the provisions of the articles of incorporation pursuant to the provisions of that paragraph (limited to exemption from liability of directors (excluding those who are audit and supervisory committee members or audit committee members) and executive officers) is to be obtained, and to the cases if a proposal regarding such exemption from liability is submitted to the board of directors. In this case, 'directors (if there is an ultimate, wholly owing parent company, etc. in these companies, if the liabilities to be exempted pursuant to the provisions of paragraph (1) are special liabilities, the directors of the relevant companies and the relevant ultimate, wholly owning parent company, etc.)' in paragraph (3) of the relevant Article is deemed to be replaced with 'directors' in Article 426, paragraph (2) of that Act" is deemed to be replaced with "mutatis mutandis to cases if a proposal to amend the articles of incorporation to create provisions of the articles of incorporation pursuant to the provisions of the preceding paragraph (limited to provisions of the articles of incorporation to the effect that directors (excluding those who are audit and supervisory committee members or audit committee members) and executive officers may be exempted from the liability) is submitted to a shareholders meeting, to cases where the consent of directors with respect to exemption from liability under the provisions of the articles of incorporation pursuant to the provisions of that paragraph (limited to exemption from liability of directors (excluding those who are audit and supervisory committee members or audit committee members) and executive officers) is to be obtained, and to the cases if a proposal regarding such exemption from liability is submitted to the board of directors"; the phrase "shareholders having not less than three hundredths (or, if lesser proportion is prescribed in the articles of incorporation, such proportion) of the votes of all shareholders (excluding officers, etc. subject to the liability referred to in paragraph (3)) state objections during the period provided for in that paragraph" in Article 426, paragraph (7) is deemed to be replaced with "members representing at least three thousandths (or any smaller proportion prescribed by the articles of incorporation) of all members (excluding the number of members who are Officers, etc. subject to the liability referred to in paragraph (3)) of a mutual company (or, in a specified mutual company, members equal to or exceeding the number specified by Cabinet Order set forth in Article 38, paragraph (1) of the Insurance Business Act) state objections during the period provided for in paragraph (3)"; the portion "state objections during the period provided for in that paragraph (if there is a wholly owning parent company, etc. in a stock company, when the liabilities to be exempted according to the provisions of the articles of incorporation pursuant to the provisions of paragraph (1), if shareholders having not less than three-hundredths (or, if a lesser proportion is prescribed in the articles of incorporation, such proportion) of voting rights of all shareholders (excluding officers, etc. subject to the liability referred to in paragraph (3)) of the relevant stock company or shareholders having not less than three-hundredths (or, if lesser proportion is prescribed in the articles of incorporation, the relevant proportion) of voting rights of all shareholders (excluding officers, etc. subject to the liability referred to in paragraph (3)) of the relevant wholly owning parent company state objections set forth in paragraphs (3) or (5) during the period set forth in the relevant paragraphs respectively)" in Article 426, paragraph (7) is deemed to be replaced with "state objections during the period provided for in paragraph (3)"; the phrase "mutatis mutandis to cases if a proposal to amend the articles of incorporation to create provisions of the articles of incorporation under the provisions of paragraph (1) (limited to the provisions of the articles of incorporation to the effect that contracts may be entered into with directors (excluding those who are audit and supervisory committee members or audit committee members)) is submitted to a shareholders meeting. In this case, the phrase "directors (if there is an ultimate, wholly owning parent company, etc. in these companies, if the liabilities to be exempted pursuant to the provisions of paragraph (1) are special liabilities, the directors of the relevant companies and the relevant ultimate, wholly owning parent company, etc.)' in paragraph (3) of that Article is deemed to be replaced with 'directors' in Article 427, paragraph (3) of that Act" is deemed to be replaced with "mutatis mutandis to cases if a proposal to amend the articles of incorporation to create provisions of the articles of incorporation under the provisions of paragraph (1) (limited to the provisions of the articles of incorporation to the effect that contracts may be entered into with directors (excluding those who are audit and supervisory committee members or audit committee members)) is submitted to a shareholders meeting"; the phrase "at the first shareholders meeting (if the relevant stock company is an ultimate, wholly owning parent company, etc., when the relevant damage is related to special liabilities, shareholders meeting of the relevant stock company and the relevant ultimate, wholly owning parent company, etc.) convened thereafter" in paragraph (4) of that Article is deemed to be replaced with "at the first shareholders meeting convened thereafter"; and the term "Article 425, paragraphs (4) and (5)" in paragraph (5) of that Article is deemed to be replaced with "the first sentence of Article 425, paragraph (4)"; any other necessary technical replacement of terms is prescribed by Cabinet Order.
(Actions to Enforce Liability against a Mutual Company)
Article 53-37The provisions of Part VII, Chapter II, Section 2 (excluding Article 847, paragraph (2), Article 847-3, Article 849, paragraphs (2), and paragraphs (6) through (11), Article 851, paragraph (1), item (i) and Article 851, paragraph (2), and Article 853, paragraph (1), items (ii) and (iii)) (Liability Actions, etc. Against a Stock Company) of the Companies Act apply mutatis mutandis to an action for accountability in a mutual company; and the provisions of Section 3 of the relevant Chapter (excluding Article 854, paragraph (1), item (i), (a) and Article 854, paragraphs (2) to (4)) (Action to Dismiss the Officer of a Stock Company) and Article 937, paragraph (1) (limited to the part involving item (i), (j)) (Commissioning of Registration by a Judicial Decision) of that Act apply mutatis mutandis to an action to dismiss the officer of a mutual company.In this case, the term "shareholder, etc." and "stock company, etc." in these provisions (excluding Article 847-4, paragraph (2), Article 848 and Article 849, paragraph (3)) is deemed to be replaced with "member" and "mutual company", respectively; the terms "A shareholder (excluding a holder of shares less than one unit who is unable to exercise rights pursuant to the provisions of the articles of incorporation) having the shares" and "Article 423, paragraph (1)" in Article 847, paragraph (1) (Action for Pursuing Liability, etc. by Shareholders) of that Act is deemed to be replaced with "persons who have been members" and "Article 53-33, paragraph (1) of Insurance Business Act", respectively; the terms "a shareholder, etc. (meaning shareholder, a qualified former shareholder or a shareholder of an ultimate, wholly owning parent company, etc.; hereinafter the same applies in this Section)" and "the shareholder, etc." in Article 847, paragraph (2) (Court Costs for an Action Pursing Liability) of that Act is deemed to be replaced with "member" and "the member", respectively; the term "the stock company or a wholly owned subsidiary company resulting from the share exchange, etc. (hereinafter referred to as "stock company, etc." in this Section)" in Article 848 (Jurisdiction of an Action) of that Act is deemed to be replaced with "the mutual company"; the phrase "a suit relating to an action for pursuing liability, etc. (in cases of a qualified former shareholder, limited to one related to the liabilities or obligations for which the fact causing them occurs by the time when the act listed in the items of Article 847-2, paragraph (1) becomes effective; in cases of a shareholder of an ultimate, wholly owning parent company, etc., limited to the action pursuing specific liability)" in Article 849, paragraph (1) (Intervention) of that Act is deemed to be replaced with "a suit relating to an action to enforce liability, etc."; the phrase "In order for a stock company, etc., wholly owning parent company resulting from the share exchange, etc., or ultimate, wholly owning parent company, etc. to intervene in a suit relating to an action for pursuing liability, etc. to assist a director (excluding an audit and supervisory committee member and audit committee member), executive officer, liquidator or a person who was formerly in such a position of a stock company that is the relevant stock company, etc., wholly owned subsidiary company resulting from the share exchange, etc. of the relevant wholly owning parent company resulting from the share exchange, etc., or wholly owned subsidiary company, etc. of the relevant ultimate, wholly owning parent company, etc." in paragraph (3) of that Article is deemed to be replaced with "In order to intervene in a suit relating to an action to enforce liability, etc. to assist a director (excluding an audit and supervisory committee member and audit committee member), executive officer, liquidator or a person who was formerly in such a position of a mutual company"; and the provisions of Article 854, paragraph (1), item (i) of that Act is deemed to be replaced with "members representing at least three thousandths (or any smaller proportion prescribed by the articles of incorporation) of all members, or three thousand (or any smaller number prescribed by the articles of incorporation) or more members of a mutual company (or, in a specified mutual company, members equal to or exceeding the number specified by Cabinet Order set forth in Article 38, paragraph (1) of the Insurance Business Act), who have been members of the mutual company without interruption for the preceding six months (or any shorter period prescribed by the articles of incorporation) (or, if the company has a member representatives meeting, those members or nine (or any smaller number prescribed by the articles of incorporation) or more representative members)"; any other necessary technical replacement of terms is prescribed by Cabinet Order.
Subsection 5 Mutual Companies' Accounting
Division 1 Accounting Principles
Article 54A mutual company's accounting is subject to the business accounting practices generally accepted as fair and appropriate.
Division 2 Financial Statements
(Preparation and Preservation of Accounting Books)
Article 54-2(1)A mutual company, must prepare accurate accounting books in a timely manner pursuant to the provisions of Cabinet Office Order.
(2)A mutual company must preserve its accounting books and important materials regarding its business for ten years from the time of the closing of the account books.
(3)The court may, upon petition or by its own authority, order a party to the litigation to submit its accounting books in whole or in part.
(Preparation and Preservation of Financial Statements)
Article 54-3(1)A mutual company, must prepare a balance sheet as of the date of its establishment pursuant to the provisions of Cabinet Office Order.
(2)A mutual company, pursuant to the provisions of Cabinet Office Order, must prepare financial statements (meaning the balance sheet, profit and loss statement, proposal on appropriation of surplus or disposal of losses and any other statement specified by Cabinet Office Order as necessary and appropriate in order to indicate the status of the mutual company's property and profits or losses; hereinafter the same applies in this Division) and a business report for each business year and their annexed detailed statements.
(3)The financial statements, business report, and their annexed detailed statements may be prepared in the form of an electronic or magnetic record.
(4)A mutual company must preserve its financial statements and their annexed detailed statements for ten years from the time of preparation of the financial statements.
(Auditing of Financial Statements)
Article 54-4(1)In a mutual company (other than a company with accounting auditors), the financial statements and business report and their annexed detailed statements under paragraph (2) of the preceding Article, must be audited by the company auditors pursuant to the provisions of Cabinet Office Order.
(2)In a company with accounting auditors, the documents listed in the following items must be audited by the persons listed in the relevant items pursuant to the provisions of Cabinet Office Order:
(i)the financial statements and their annexed detailed statements set forth in paragraph (2) referred to in the preceding Article:the company auditors (the audit and supervisory committee, in the case of a company with an audit and supervisory committee, or the audit committee, in case of a company with a nominating committee, etc.) and accounting auditors; and
(ii)the business report and its annexed detailed statements referred to in paragraph (2) of the preceding Article:the company auditors (the audit and supervisory committee, in the case of a company with an audit and supervisory committee, or the audit committee, in the case of a company with a nominating committee, etc.).
(3)The financial statements and business report, and their annexed detailed statements audited pursuant to the provisions of the preceding two paragraphs must be approved by the board of directors.
(Provision of Financial Statements to Members)
Article 54-5In giving a notice of convocation of the annual general meeting (or, where the company has a member representatives meeting, the annual member representatives meeting; hereinafter the same applies in this Subsection), the directors, pursuant to the provisions of Cabinet Office Order, must provide the members (or, in a mutual company with a member representatives meeting, representative members; hereinafter the same applies in this Subsection) with the financial statements and business report (including any audit report or financial audit report) that have been approved under paragraph (3) of the preceding Article.
(Submission of Financial Statements at the Annual General Meeting)
Article 54-6(1)The directors must submit or provide the financial statements and business report approved under Article 54-4, paragraph (3) at the annual general meeting.
(2)The financial statements submitted or provided pursuant to the provisions of the preceding paragraph must be approved at the annual general meeting.
(3)The directors must report the content of the business report submitted or provided pursuant to the provisions of paragraph (1) at the annual general meeting.
(4)In a company with accounting auditors, for the purpose of applying the provisions of the preceding two paragraphs to the cases in which the financial statements approved under Article 54-4, paragraph (3) satisfy the requirements specified by Cabinet Office Order for accurate indication of the status of a mutual company's property and profits or losses in compliance with the laws and regulations and the articles of incorporation, the term "financial statements" in paragraph (2) is be deemed to be replaced with "proposal on appropriation of surplus or disposal of losses"; and the term "business report" in the preceding paragraph is deemed to be replaced with "financial statements (excluding the proposal on appropriation of surplus or disposal of losses) and business report".
(Public Notice of Financial Statements)
Article 54-7(1)A mutual company pursuant to the provisions of Cabinet Office Order, must give public notice of its balance sheet (or, in a mutual company set forth in Article 53-14, paragraph (5), its balance sheet, and profit and loss statement) without delay after the conclusion of the annual general meeting.
(2)Notwithstanding the provisions of the preceding paragraph, it is sufficient for a mutual company which adopts, as its means of public notice, publication in a daily newspaper that publishes the news on current events, to give public notice of the outline of the balance sheet set forth in that paragraph.
(3)Pursuant to the provisions of Cabinet Office Order, the mutual company set forth in the preceding paragraph, without delay after the conclusion of the annual general meeting, may take measures to make the information contained in the balance sheet provided for in paragraph (1) available to many and unspecified persons by electronic or magnetic means over a continuous period of five years from the date on which the annual general meeting was concluded.In this case, the provisions of the preceding two paragraphs do not apply.
(4)The provisions of the preceding three paragraphs do not apply to a mutual company which is to submit its securities report to the Prime Minister pursuant to the provisions of Article 24, paragraph (1) (Submission of Securities Report) of the Financial Instruments and Exchange Act (Act No. 25 of 1948).
(Keeping and Inspection of Financial Statements)
Article 54-8(1)A mutual company must keep its financial statements and business report for each business year, and their annexed detailed statements (including the audit report or financial audit report; hereinafter referred to as "financial statements, etc." in this Article) at its principal office for a period of five years from the day that is two weeks before the date of the annual general meeting (or, in the case of Article 319, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to Article 41, paragraph (1), the date of the proposal set forth in that paragraph).
(2)A mutual company must keep the copies of its financial statements, etc. for each business year at its secondary offices for a period of three years from the day that is two weeks before the date of its annual general meeting (or, in the case of Article 319, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to Article 41, paragraph (1), the date of the proposal set forth in that paragraph); provided, however, that this does not apply to the cases where the financial statements, etc. have been prepared in the form of an electronic or magnetic record, if the mutual company adopts the measures specified by Cabinet Office Order in order to enable its secondary offices to meet the requests listed in items (iii) and (iv) of the following paragraph.
(3)The creditors and insured persons of a mutual company, such as policyholders and beneficiaries of insurance proceeds, may make the following requests at any time during the business hours of the mutual company; provided, however, that they must pay the fees determined by the mutual company in making a request set forth in item (ii) or (iv):
(i)if the financial statements, etc. have been prepared in writing, a request to inspect or copy the documents;
(ii)a request to be issued a certified copy or extract of the documents referred to in the preceding item;
(iii)if the financial statements, etc. are prepared in the form of an electronic or magnetic record, a request to inspect anything that shows the particulars recorded in the electronic or magnetic record in a means specified by Cabinet Office Order; or
(iv)a request to be provided with the particulars recorded in the electronic or magnetic record set forth in the preceding item by the electronic or magnetic means determined by the mutual company, or to be issued a document stating the particulars.
(Order to Submit Financial Statements)
Article 54-9The court may, upon petition or by its own authority, order a party to litigation to submit in whole or in part the financial statements and their annexed detailed statements.
(Consolidated Financial Statements)
Article 54-10(1)A company with accounting auditors may, pursuant to the provisions of Cabinet Office Order, prepare consolidated financial statements (meaning those statements specified by Cabinet Office Order as necessary and appropriate in order to indicate the status of the property and profits or losses of a corporate group consisting of the company with accounting auditors and its substantive subsidiary companies; hereinafter the same applies in this Article) for each business year.
(2)Consolidated financial statements may be prepared in the form of an electronic or magnetic record.
(3)An entity that is a mutual company set forth in Article 53-14, paragraph (5) as of the last day of a business year which must submit a securities report to the Prime Minister pursuant to the provisions of Article 24, paragraph (1) of the Financial Instruments and Exchange Act, must prepare consolidated financial statements for the business year.
(4)Consolidated financial statements must be audited by the company auditors (the audit and supervisory committee, in the case of a company with an audit and supervisory committee, or the audit committee, in case of a company with a nominating committee, etc.) and accounting auditors, pursuant to the provisions of Cabinet Office Order.
(5)The consolidated financial statements audited pursuant to the provisions the preceding paragraph must be approved by the board of directors.
(6)The provisions of Article 54-5 and Article 54-6, paragraphs (1) and (3) apply mutatis mutandis to consolidated financial statements.In this case, the term "content of the business report" in Article 54-6, paragraph (3) is deemed to be replaced with "content of the consolidated financial statements and the result of audit under Article 54-10, paragraph (4)"; any other necessary technical replacement of terms is specified by Cabinet Order.
Division 3 Payment of Interest from Fund, Redemption of Fund, and Distributions of Surplus
(Restrictions on Payment of Interest from Funds)
Article 55(1)Payment of interest from funds may be made in an amount not exceeding the amount of net assets on the balance sheet after the sum total of the following amounts (referred to as "maximum limit of interest payment" in Article 55-3, paragraph (3), item (i)) has been deducted therefrom:
(i)the total amount of funds;
(ii)the loss reserves and the reserves for redemption of funds set forth in Article 56 (including the total amount of any reduction of the reserves for redemption of funds pursuant to the provisions of Article 59, paragraph (2); the same applies in the following paragraph); and
(iii)other amounts specified by Cabinet Office Order.
(2)Redemption of funds or distribution of surplus may be made in an amount not exceeding the amount of net assets on the balance sheet after deducting the sum total of the following amounts (referred to as "maximum limit of redemption, etc." in Article 55-3, paragraph (3), item (ii)); provided, however, that such redemption or distribution may only be made after the amount credited to assets in the balance sheet pursuant to the provisions of the first sentence of Article 113 (including as applied mutatis mutandis pursuant to Article 272-18) has been amortized in full:
(i)the total amount of funds;
(ii)the loss reserves and the reserves for redemption of funds set forth in Article 56;
(iii)the amount of interest from funds paid under the preceding paragraph;
(iv)the loss reserves required to be set aside for the accounting period; and
(v)other amounts specified by Cabinet Office Order.
(3)If a mutual company has made any payment of interest from funds, or redemption of funds or distribution of surplus in violation of the provisions of the preceding two paragraphs, a creditor of the mutual company may have the mutual company refund the money.
(Distributions of Surplus)
Article 55-2(1)Any distribution of surplus must be made in conformity with the standards specified by Cabinet Office Order for fair and equitable distribution.
(2)A mutual company, if the company makes an appropriation of surplus for each accounting period as the particulars listed in Article 23, paragraph (1), item (vii) prescribed in its articles of incorporation, it must set aside at least the amount calculated by multiplying the appropriable amount specified by Cabinet Office Order by a certain proportion as the reserves for distributing surplus to members pursuant to the provisions of Cabinet Office Order.
(3)The certain proportion set forth in the preceding paragraph must not be less than the proportion specified by Cabinet Office Order.
(4)Notwithstanding the provisions of the preceding two paragraphs, a mutual company may, if there are unavoidable circumstances in view of the status of its settlement of account, prescribe in its articles of incorporation that, so far as the appropriation of surplus for the accounting period is concerned, the company is to set aside as the reserves specified by Cabinet Office Order under paragraph (2) the amount calculated by multiplying the amount prescribed by Cabinet Office Order under paragraph (2) by a proportion that is smaller than that prescribed by Cabinet Office Order under the preceding paragraph.
(5)The provisions in the articles of incorporation referred to in the preceding paragraph do not take effect unless it is approved by the Prime Minister.
(Liability for Payment of Interest from Funds)
Article 55-3(1)If a mutual company has paid any interest from funds in violation of the provisions of Article 55, paragraph (1), or made any redemption of funds or distribution of surplus in violation of the provisions of paragraph (2) of the same Article, the persons who were granted money due to these actions (hereinafter referred to as "payment of interest from funds, etc." in this Article and the following Article) and the persons listed in the following items are to jointly and severally assume the obligation to pay to the mutual company the corresponding amount of money as that the persons have been granted:
(i)the executing person who has carried out any duty related to the payment of interest from funds, etc. (meaning the executive director (or, in a company with a nominating committee, etc., executive officer) or any other person specified by Cabinet Office Order as having participated, in the course of duties, in the execution of duties to be carried out by the executive director); and
(ii)if the annual general meeting has adopted a resolution pertaining to a proposal related to the appropriation of surplus or disposal of losses (limited to the cases in which the content of the proposal approved by the resolution are in violation of the provisions of Article 55, paragraph (1) or (2)), the person specified by Cabinet Office Order as the director who has presented the proposal to the annual general meeting.
(2)Notwithstanding the provisions of the preceding paragraph, a person listed in the items of that paragraph is not to assume the obligation under that paragraph, if the person proves that they did not fail to exercise due care in carrying out their duties.
(3)A person listed in the items of paragraph (1) may not be exempted from the obligation pursuant to the provisions of that paragraph; provided, however, that this does not apply if all of the members agree to exempt the person from the obligation to the amount prescribed in the relevant items in the cases listed in the following items:
(i)in the case of a payment of interest from funds:maximum limit of interest payment; or
(ii)in the case of a redemption of funds or distribution of surplus (excluding the cases set forth in the proviso to Article 55, paragraph (2)):maximum limit of redemption, etc.
(Restrictions on the Right to Obtain Reimbursement from Members)
Article 55-4If a mutual company has made any payment of interest from funds, etc. in violation of the provisions of Article 55, paragraph (1) or (2), a member without knowledge of the violation is not obliged to meet any request for reimbursement made by a person listed in the items of paragraph (1) of the preceding Article who has paid the money prescribed in that paragraph.
Division 4 Reserves for Redemption of Funds and Loss Reserves
(Establishment of Reserve for Redemption of Funds)
Article 56(1)A mutual company, in redeeming its funds, must set aside the amount of money to be redeemed as the reserves for redemption of funds.
(2)A mutual company, if it has been released from any debt pertaining to its funds, must deduct the amount of debt thus relieved from the total amount of its funds and set it aside as the reserves for redemption of funds.
(Reduction of Reserve for Redemption of Funds)
Article 57(1)A mutual company may reduce the amount of the reserves for redemption of funds by a resolution of the general meeting (or the member representatives meeting, if the company has such a meeting).
(2)The resolution set forth in the preceding paragraph must be a resolution under Article 62, paragraph (2).
(3)In addition to the documents prescribed in Articles 18, 19 and 46 of the Commercial Registration Act, the following documents must be attached to a written application for registration of change due to any reduction of the reserves for redemption of funds pursuant to the provisions of paragraph (1):
(i)a written statement certifying that the company has given public notice under Article 17, paragraph (2) as applied mutatis mutandis pursuant to the following paragraph following the deemed replacement of terms;
(ii)if a policyholder or other creditor has raised their objection under Article 17, paragraph (4) as applied mutatis mutandis pursuant to the following paragraph following the deemed replacement of terms, a document certifying that the company has made payment or provided equivalent security to such policyholder or other creditor or entrusted equivalent property to a trust company, etc. for the purpose of ensuring that the policyholder or other creditor receive the payment, or that the reduction of the reserves for redemption of funds poses no risk of harming the interest of the policyholder or other creditor; and
(iii)a document certifying that the number of the policyholders who have stated their objections under Article 17, paragraph (6) as applied mutatis mutandis pursuant to the following paragraph following the deemed replacement of terms has not exceeded one fifth of the total number of policyholders set forth in that paragraph, or a document certifying that the amount specified by Cabinet Office Order as belonging to those policyholders has not exceeded one fifth of the total amount set forth in that paragraph.
(4)The provisions of Article 16, paragraph (1) (excluding the proviso) and paragraph (2), Article 17 (excluding the proviso to paragraph (1)), Article 17-2, paragraph (4), and Article 17-4 apply mutatis mutandis to a reduction of the reserves for redemption of funds under paragraph (1).In this case, the term "reduction of the stated capital, etc." in those provisions is deemed to be replaced with "reduction of the reserves for redemption of funds"; the terms "A stock company" and "ranging from two weeks before the date of the shareholders' meeting pertaining to the resolution on the reduction of the stated capital, etc. (or, the date of the board of directors meeting if Article 447, paragraph (3) (Reductions in Amount of Stated Capital) or Article 448, paragraph (3) (Reductions in Amount of Reserves) of the Companies Act applies) to six months from the effective date of the reduction of the capital, etc." in Article 16, paragraph (1) are deemed to be replaced with "In the case of Article 57, paragraph (1), a mutual company" and "ranging from two weeks before the date of the general meeting (or the member representatives meeting, if the company has such a meeting) pertaining to the resolution under that paragraph to six months from the date of the reduction of the reserves for redemption of funds" respectively; the phrase "If a stock company reduces the amount of its stated capital, etc. (excluding the cases where the whole of the amount by which the reserves are reduced is appropriated to the capital)" in Article 17, paragraph (1) is deemed to be replaced with "In the case of Article 57, paragraph (1)"; and the term "Article 447, paragraph (1) (Reductions in Amount of the Stated Capital) or Article 448, paragraph (1) (Reductions in Amount of Reserves) of the Companies Act" in Article 17, paragraph (6) is deemed to be replaced with "Article 57, paragraph (1)"; any other necessary technical replacement of terms is specified by Cabinet Order.
(5)Any reduction of the reserves for redemption of funds pursuant to the provisions of paragraph (1) does not take effect unless it is approved by the Prime Minister.
(6)The provisions of Article 828, paragraph (1) (limited to the part involving item (v)) and (2) (limited to the part involving item (v)) (Actions to Invalidate Acts Concerning the Organization of a Company), Article 834 (limited to the part involving item (v)) (Defendant), Article 835, paragraph (1) (Jurisdiction over Actions), Articles 836 through 839 (Order to Provide Security, Mandatory Consolidation of Oral Arguments, Persons Affected by If a Judgment Being Upheld, Effects of a Judgment of Invalidity, Revocation or Rescission), Article 846 (Liability for Damages If a Judgment Is Entered Against the Plaintiff), and Article 937, paragraph (1) (limited to the part involving item (i), (d)) (Commissioning of Registration by a Judicial Decision) of the Companies Act apply mutatis mutandis to an action to invalidate a reduction of the reserves for redemption of funds.In this case, the term "shareholders, etc." in Article 828, paragraph (2), item (v) of that Act is deemed to be replaced with "members, directors, company auditors or liquidators (members, directors or liquidators, in the case of a company with an audit and supervisory committee, or members, directors, executive officers or liquidators, in the case of a company with a nominating committee, etc.) of a mutual company"; any other necessary technical replacement of terms is specified by Cabinet Order.
(Loss Reserve)
Article 58A mutual company must set aside at least three thousandths of the amount expended in each accounting period for appropriation of surplus (including the part of the reserves set forth in Article 55-2, paragraph (2) that is to be set aside pursuant to the provisions of Cabinet Office Order) as the loss reserve, until the time as its funds (including the reserves for redemption of funds set forth in Article 56) reach their full amount (or any larger amount prescribed by the articles of incorporation).
(Reduction of Loss Reserve to Compensate for Losses)
Article 59(1)The loss reserves may not be reduced, except in the case of allocating it to loss compensation.
(2)By derogation from Article 57, the reserves for redemption of funds may be reduced to compensate for the losses, if the loss reserves are not sufficient to cover the losses.
Subsection 6 Solicitation of Additional Fund
(Solicitation of Additional Funds)
Article 60(1)A mutual company, even after its establishment, may solicit additional funds by a resolution of the general meeting (or the member representatives meeting, if the company has such a meeting; hereinafter the same applies in this paragraph).In this case, the mutual company must determine the amount of the additional funds by a resolution of the general meeting.
(2)The resolution specified in the preceding paragraph must be a resolution under Article 62, paragraph (2).
(Offer of Contributions of Funds)
Article 60-2(1)A mutual company must notify the persons who seek to make an offer to contribute funds in response to solicitation referred to in paragraph (1) of the preceding Article of the following particulars:
(i)particulars listed in Article 23, paragraph (1), item (ii) and items (iv) through (vi);
(ii)the amount of the additional funds to be solicited, the rights held by the contributors to the funds and the method of redemption of the funds;
(iii)payment date; and
(iv)place where the payment of contribution of funds is handled at the banks, etc.
(2)A person who offers to contribute to funds in response to the solicitation under paragraph (1) of the preceding Article must submit a document stating the following particulars to the mutual company:
(i)name and address of the person who makes the offer; and
(ii)planned amount of contribution of funds.
(3)In addition to the documents specified in Article 18 and Article 46 of the Commercial Registration Act as applied mutatis mutandis pursuant to Article 67, the following documents must be attached to the written application for registration of change due to any solicitation of additional funds under paragraph (1) of the preceding Article:
(i)a document certifying the offer of a contribution of funds or a contract under Article 30 as applied mutatis mutandis pursuant to the following paragraph; and
(ii)a document certifying that payment has been made to the funds under Article 30-3, paragraph (1) as applied mutatis mutandis pursuant to the following paragraph.
(4)The provisions of Article 28, paragraphs (3) through (6), Articles 29 through 30-2, Article 30-3 (excluding paragraphs (2) and (3)), Article 30-5, paragraphs (2) and (3) of this Act and Article 209, paragraph (1) (Timing of Shareholders Status) (excluding item (ii)) of the Companies Act apply mutatis mutandis to the solicitation of additional funds under paragraph (1) of the preceding Article. In this case, the term "incorporators" in those provisions is deemed to be replaced with "mutual company"; the term "preceding paragraph" in Article 28, paragraph (3) is deemed to be replaced with "Article 60-2, paragraph (2)"; the terms "the items of paragraph (1)" and "paragraph (2)" in Article 28, paragraph (4) are deemed to be replaced with "Article 60-2 the items of paragraph (1)" and "paragraph (2) of the same Article", respectively; the term "paragraph (2), item (i)" in Article 28, paragraph (5) is deemed to be replaced with "Article 60-2, paragraph (2), item (i)"; the term "paragraph (2), item (ii) of the preceding Article" in Article 29, paragraph (1) is deemed to be replaced with "Article 60-2, paragraph (2), item (ii)"; the term "the preceding two Articles" in Article 30 is deemed to be replaced with "Article 60-2, paragraph (1) (excluding item (iii)), and Article 28, paragraphs (3) to (6) and the preceding Article as applied mutatis mutandis pursuant to paragraph (4) of the same Article"; the terms "without delay" and "Article 28, paragraph (1), item (iii)" in Article 30-3, paragraph (1) are deemed to be replaced with "on the date set forth in Article 60-2, paragraph (1), item (iii)" and "Article 60-2, paragraph (1), item (iv)", respectively; the term "solicited at incorporation who has received the notice under paragraph (2), unless they make the payment by the date set forth in that paragraph" in Article 28, paragraph (5) is deemed to be replaced with ", unless they make the payment by the date set forth in paragraph (1)"; and the term "After the establishment of the mutual company" in Article 30-5, paragraph (3) is deemed to be replaced with "After a year has elapsed since the date of registration of change due to a solicitation of additional funds under Article 60, paragraph (1)"; any other necessary technical replacement of terms is specified by Cabinet Order.
(5)The provisions of Article 828, paragraph (1) (limited to the part pertaining to item (ii)) and (2) (limited to the part involving item (ii)) (Actions to Invalidate Acts Concerning the Organization of a Company), Article 834 (limited to the part involving item (ii)) (Defendant), Article 835, paragraph (1) (Jurisdiction over Actions), Article 836, paragraphs (1) and (3) (Order to Provide Security), Articles 837 to 840 (Mandatory Consolidation of Oral Arguments, Persons Affected by a Judgment Being Upheld, Effects of a Judgment of Invalidity, Revocation or Rescission, Effects of a Judgment Invalidating New Share Issue), Article 846 (Liability for Damages If a Judgment Is Entered Against the Plaintiff), and Article 937, paragraph (1) (limited to the part involving item (i), (b)) (Commissioning of Registration by a Judicial Decision) of the Companies Act apply mutatis mutandis to an action to invalidate a solicitation of additional funds under paragraph (1) of the preceding Article; and the provisions of Article 868, paragraph (1) (Jurisdiction over Non-Contentious Cases), the main clause of Article 871 (Appending of the Reason), Article 872 (limited to the part involving item (ii)) (Immediate Appeal), the main clause of Article 873 (Stay of Execution of the Judicial Decision of the Prior Instance), Articles 875 to 877 (Exclusion from Application of the Provisions of the Non-Contentious Cases Procedures Act, Supreme Court Rules, Mandatory Consolidation of Hearings, etc.) and Article 878, paragraph (1) (Effect of Judicial Decision) of that Act apply mutatis mutandis to an application under Article 840, paragraph (2) of that Act as applied mutatis mutandis pursuant to this paragraph.In this case, the term "shareholders, etc." in Article 828, paragraph (2), item (ii) of that Act is deemed to be replaced with "members, directors, company auditors or liquidators (members, in the case of a company with an audit and supervisory committee, or, members, directors, executive officers or liquidators, in the case of a company with a nominating committee, etc.)"; any other necessary technical replacement of terms is specified by Cabinet Order.
Subsection 7 Solicitation of Subscribers for Corporate Bonds Issued by a Mutual Company
(Decision of the Particulars of Corporate Bonds for Subscription)
Article 61Before a mutual company seeks to solicit persons to subscribe for the corporate bonds that it issues (meaning the monetary claims against the mutual company which accrue as a result of any allocation made by the mutual company pursuant to the provisions of this Act and which are to be redeemed under the conditions that have been fixed with regard to the following particulars; hereinafter the same applies in this Subsection), the mutual company must establish the following particulars with regard to the corporate bonds for subscription (meaning the corporate bonds that will be allocated to the persons who have subscribed for the corporate bonds in response to the solicitation; hereinafter the same applies in this Subsection):
(i)the total monetary amount of the corporate bonds for subscription;
(ii)the monetary amount of each corporate bond for subscription;
(iii)the interest rate on the corporate bonds for subscription;
(iv)the method and due date of redemption of the corporate bonds for subscription;
(v)the method and deadline of interest payment;
(vi)if corpotate bond certificates are to be issued, that fact;
(vii)if it is to be arranged that the corporate bondholder may not make in whole or in part a demand under Article 698 of the Companies Act as applied mutatis mutandis pursuant to Article 61-5, that fact;
(viii)if it is to be arranged that the corporate bond manager may take the action listed in Article 61-7, paragraph (4), item (ii) without a resolution of the bondholders meeting, that fact;
(ix)the amount to be paid in for each corporate bond for subscription (meaning the amount of money to be paid in exchange for each corporate bond for subscription: hereinafter the same applies in this Subsection) or the minimum amount thereof, or the method of calculating the amount;
(x)due date for payment of the money in exchange for the corporate bonds for subscription;
(xi)if it is to be arranged that the corporate bonds for subscription will not be issued in their entirety if the persons to whom the corporate bonds for subscription will be allocated have not been established by a certain date for the total monetary amount of the corporate bonds, that fact and that certain date; and
(xii)beyond what is set forth in the preceding items, particulars specified by Cabinet Office Order.
(Offer to Subscribe for Corporate Bonds)
Article 61-2(1)A mutual company must notify the persons who seek to make an offer to subscribe for corporate bonds in response to a solicitation under the preceding Article of the following particulars:
(i)name of the mutual company;
(ii)particulars listed in the items of the preceding Article pertaining to the solicitation; and
(iii)beyond what is set forth in the preceding two items, the particulars specified by Cabinet Office Order.
(2)A person who offers to subscribe for corporate bonds in response to the solicitation under the preceding Article must submit a document stating the following particulars to the mutual company:
(i)name and address of the person who makes the offer;
(ii)the total par value of the corporate bonds for which they seek to subscribe and the number of bonds by par value; and
(iii)if the mutual company has prescribed the minimum amount under item (ix) of the preceding Article, the preferred amount to be paid in.
(3)A person who makes an offer under the preceding paragraph may, in lieu of submitting the document prescribed in that paragraph, and pursuant to the provisions of Cabinet Order, provide the particulars that are required to be stated in the document by electronic or magnetic means, with the consent of the mutual company.In this case, the person who has made the offer is deemed to have submitted the document prescribed in that paragraph.
(4)The provisions of paragraph (1) do not apply to the cases where the mutual company has issued to the person who seeks to make an offer under paragraph (1) the prospectus prescribed in Article 2, paragraph (10) (Definitions) of the Financial Instruments and Exchange Act that states the particulars listed in the items of paragraph (1), or to any other case specified by Cabinet Office Order as posing no risk to the protection of persons who seek to offer to subscribe for corporate bonds.
(5)The mutual company must immediately notify a person who has made an offer under paragraph (2) (hereinafter referred to as "offeror" in this Subsection) of any change in the particulars listed in the items of paragraph (1) and the particular affected by the change.
(6)It is sufficient for a notice or demand to an offeror to be sent by the mutual company to the address specified under paragraph (2), item (i) (or to any other place or contact address of which the offeror has notified the mutual company for the receipt of notices or demands).
(7)The notice or demand in the preceding paragraph is deemed to have arrived at the time when the notice or demand would normally have arrived.
(Allocation of Corporate Bonds for Subscription)
Article 61-3(1)The mutual company must select from among the offerors the persons to receive allocation of the corporate bonds for subscription, and determine the par value, and the number by name, of the corporate bonds for subscription to be allocated to each of those persons.In this case, the mutual company may reduce the number of the corporate bonds for subscription to be allocated to each offeror from the number prescribed in paragraph (2), item (ii) of the preceding Article.
(2)The mutual company must notify the offerors, no later than the day prior to the date referred to in Article 61, item (x) of the par value, and the number by name, of the corporate bonds for subscription that will be allocated to each offeror.
(Special Provisions on Offers for Corporate Bonds for Subscription and the Allocation Thereof)
Article 61-4The provisions of the preceding two Articles do not apply to the cases if a person who seeks to subscribe for corporate bonds concludes a contract for the subscription for the total amount of those corporate bonds.
(Application, Mutatis Mutandis, of the Companies Act)
Article 61-5The provisions of Articles 680 through 683 (Bondholders of Bonds for Subscription, Bond Registry, Delivery of Document Stating Matters to Be Stated in Bond Registry, Management of Bond Registry), Article 684 (excluding paragraphs (4) and (5)) (Keeping of the Bond Registry and Making It Available for Inspection) and Articles 685 to 701 (Notices to Bondholders, Exercise of Rights by Co-owners, Assignment of Bonds with Issued Certificates, Perfection of Assignment of Bonds, Presumption of Rights, Stating or Recording Matters to Be Stated in Bond Registry Without Request from Bondholders, Stating or Recording Matters to Be Stated in Bond Registry as Requested by Bondholders, Pledges of Bonds with Issued Certificates, Perfection of Pledge of Bonds, Entries in Bond Registry Regarding Pledges, Delivery of Documents Stating Matters to Be Stated in Bond Registry Regarding Pledges, Perfection Requirements for Bonds Belonging to Trust Property, etc., Issuing of Bond Certificates, Matters to Be Stated on Bond Certificates, Conversions between Registered Bonds and Bearer Bonds, Loss of Bond Certificates, Redemption of Bonds where Coupons are Missing, Extinctive Prescription of Right to Claim Redemption of Bonds) of the Companies Act apply mutatis mutandis to the cases if a mutual company issues corporate bonds.In this case, the term "bond-issuing company" in those provisions is deemed to be replaced with "corporate bond issuing mutual company"; the term "the preceding Article" in Article 680, item (ii) of that Act is deemed to be replaced with "Article 61-4 of the Insurance Business Act"; the term "Article 676, items (iii) though (viii)" in Article 681, item (i) of that Act is deemed to be replaced with "Article 61, items (iii) through (viii) of the Insurance Business Act"; the term "Article 720, paragraph (1)" in Article 685, paragraph (5) of that Act is deemed to be replaced with "Article 720, paragraph (1) as applied mutatis mutandis pursuant to Article 61-8, paragraph (2) of the Insurance Business Act"; and the term "Article 676, item (vii)" in Article 698 of that Act is deemed to be replaced with "Article 61, item (vii) of the Insurance Business Act"; any other necessary technical replacement of terms is specified by Cabinet Order.
(Designation of a Corporate Bond Manager)
Article 61-6In issuing bonds, a mutual company must designate a corporate bond manager to be entrusted with the receipt of payments, preservation of claims and other corporate bond administration on behalf of the corporate bondholders; provided, however, that this does not apply to the cases where the par value of each corporate bond is one hundred million yen or more, or any other case specified by Cabinet Office Order as posing no risk to the protection of corporate bondholders.
(Authority of a Corporate Bond Manager)
Article 61-7(1)The corporate bond manager is to have the authority to carry out any action in or out of court to receive payments of claims on the corporate bonds for the corporate bondholders, or to secure the realization of claims on the corporate bonds.
(2)If the corporate bond manager has received any payment under the preceding paragraph, the corporate bondholders may demand the payment of the redeemed amount of corporate bonds and interest thereon from the corporate bond manager.In this case, the corporate bondholders must demand the payment of the redeemed amount in exchange for corporate bond certificates, and the payment of the interest in exchange for coupons, if the issuance of corporate bond certificates is specified.
(3)If a claim under the first sentence of the preceding paragraph has not been exercised for ten years from the time when it becomes exercisable, it is extinguished by prescription.
(4)The corporate bond manager may not take the following actions without a resolution of the corporate bondholders meeting; provided, however, that this does not apply to the actions listed in item (ii), if there is a provision with respect to the particulars listed in Article 61, item (viii):
(i)suspension of the payment for the entirety of the corporate bonds, exemption from any liability resulting from a default on their debt, or settlement (excluding the actions listed in the following item);
(ii)procedural actions with respect to the entirety of the corporate bonds, or any action involved in bankruptcy proceedings, rehabilitation proceedings, corporate reorganization proceedings or proceedings for special liquidation (excluding the action set forth in paragraph (1)).
(5)If the corporate bond manager has taken the act listed in item (ii) of the preceding paragraph without a resolution of the corporate bondholders meeting pursuant to the proviso to that paragraph, the corporate bond manager must give public notice of this without delay, and notify each of the known corporate bondholders of this.
(6)A public notice under the preceding paragraph must be made in accordance with the means of public notice adopted by the corporate bond issuing mutual company; provided, however, that the public notice must be given by way of publication in the Official Gazette, if that means is an electronic public notice.
(7)If it is necessary to take the action listed in paragraph (1) or the items of paragraph (4) with respect to the bonds with whose administration the corporate bond manager has been entrusted, the corporate bond manager may investigate the status of the business and property of the corporate bond issuing mutual company with the permission of the court.
(8)The provisions of Article 703 (Qualifications of Bond Managers), Article 704 (Obligations of Bond Managers), Articles 707 through 714 (Appointment of Special Agent, Method of Acts of Bond Managers, Special Provisions on Multiple Bond Managers, Liability of Bond Manager, Resignation of Bond Managers, Liability of Bond Managers after Resignation, Dismissal of Bond Managers, Succession of Bond Manager's Administration of Bonds), Article 868, paragraph (4) (Jurisdiction over Non-Contentious Cases), Article 869 (Prima Facie Showing), Article 870, paragraph (1) (limited to the part pertaining to item (ii)) (Hearing of Statements), Article 871 (Appending of the Reason), Article 872 (limited to the part pertaining to item (iv)) (Immediate Appeal), Article 874 (limited to the part pertaining to items (i) and (iv)) (Restrictions on Appeal), Article 875 (Mandatory Consolidation of Hearings, etc.) and Article 876 (Supreme Court Rules) of the Companies Act apply mutatis mutandis to a corporate bond manager.In this case, the term "bond-issuing company" in those provisions is deemed to be replaced with "corporate bond issuing mutual company"; the term "this Act" in Article 710, paragraph (1) of that Act is deemed to be replaced with "the Insurance Business Act"; and the term "Article 702" in Article 711, paragraph (2) of that Act is deemed to be replaced with "Article 61-6 of the Insurance Business Act"; any other necessary technical replacement of terms is specified by Cabinet Order.
(Bondholders Meeting)
Article 61-8(1)The bondholders are to organize a corporate bondholders meeting for each class of the corporate bond (meaning the class of bond set forth in Article 681, item (i) of the Companies Act as applied mutatis mutandis pursuant to Article 61-5).
(2)The provisions of Part IV, Chapter III (excluding Article 715 and Article 740, paragraph (3)) (Bondholders' Meeting), Part VII, Chapter II, Section 7 (Action to Rescind Performance by a Company That Issues Bonds), Article 868, paragraph (4) (Jurisdiction over Non-Contentious Cases), Article 869 (Prima Facie Showing), Article 870, paragraph (1) (limited to the part pertaining to items (vii) through (ix)) (Hearing of Statements), Article 871 (Appending of the Reason), Article 872 (limited to the part pertaining to item (iv)) (Immediate Appeal), Article 873 (Stay of Execution of the Judicial Decision of the Prior Instance), Article 874 (limited to the part pertaining to item (iv)) (Restrictions on Appeal), Article 875 (Mandatory Consolidation of Hearings, etc.) and Article 876 (Supreme Court Rules) of the Companies Act apply mutatis mutandis to the cases if a mutual company issues bonds.In this case, the term "bond-issuing company" in those provisions are deemed to be replaced with "corporate bond issuing mutual company"; the term "under Article 705, paragraphs (1) through (3), and under Articles 708 and 709" in Article 737, paragraph (2) (Execution of Resolutions of Bondholders' Meetings) of that Act is deemed to be replaced with "of Article 61-7, paragraphs (1) through (3) of the Insurance Business Act, and the provisions of Articles 708 and 709 as applied mutatis mutandis pursuant to Article 61-7, paragraph (8) of that Act"; and the term "the provisions of Article 449, Article 627, Article 635, Article 670, Article 779 (including as applied mutatis mutandis pursuant to Article 781, paragraph (2)), Article 789 (including as applied mutatis mutandis pursuant to Article 793, paragraph (2)), Article 799 (including as applied mutatis mutandis pursuant to Article 802, paragraph (2)) or Article 810 (including as applied mutatis mutandis pursuant to Article 813, paragraph (2))" in Article 740, paragraph (1) (Special Provisions on Objection Procedures for Creditors) of that Act is deemed to be replaced with "Article 17 (excluding the proviso to paragraph (1)) of the Insurance Business Act as applied mutatis mutandis pursuant to Article 57, paragraph (4) of that Act, and Articles 88 and 165-17 (including as applied mutatis mutandis pursuant to Article 165-20 of that Act) of that Act"; any other necessary technical replacement of terms is specified by Cabinet Order.
(Application of the Secured Bond Trust Act)
Article 61-9For the purpose of applying the Secured Bond Trust Act (Act No. 52 of 1905) and other laws and regulations specified by Cabinet Order, the corporate bonds, pursuant to the provisions of Cabinet Order, are to be deemed to be corporate bonds as defined in Article 2, item (xxiii) (Definitions) of the Companies Act.
(Special Provisions on Short-Term Corporate Bonds)
Article 61-10(1)A bond registry is not required for the corporate bonds which meet all of the following requirements (referred to as "short-term corporate bonds" in the following paragraph):
(i)the par value of each corporate bond is not less than one hundred million yen;
(ii)the due date for redemption of the principal is fixed on a day within one year from the payment date of the total amount of the corporate bonds, and no judgment has been made authorizing installment payments;
(iii)the due date for interest payment is fixed on the same day as the due date for redemption under the preceding item; and
(iv)no security is furnished pursuant to the provisions of the Secured Bond Trust Act.
(2)The provisions of Articles 61-6 to 61-8 do not apply to short-term corporate bonds.
Subsection 8 Amendment to Articles of Incorporation
Article 62(1)An amendment to the articles of incorporation requires a resolution of the general meeting (or the member representatives meeting, if the company has such a meeting).
(2)Notwithstanding the provisions of Article 37-3, paragraph (1) and Article 44, paragraph (1), the resolution set forth in the preceding paragraph is adopted by a three-quarter majority vote of the attending members at a session if at least half of the members are present (or by a three-quarter majority vote of the attending representative members at a session of a member representatives meeting at which at least half of the representative members are present).
Subsection 9 Transfer of Business
Article 62-2(1)A mutual company, before it takes any of the following actions, must have the contract for the action authorized by a resolution of the general meeting no later than the day prior to the effective date of the action:
(i)transfer of the whole business;
(ii)transfer of any material part of the business (excluding the cases in which the book value of the assets to be transferred by the transfer does not exceed one fifth (or any smaller proportion prescribed by the articles of incorporation) of the amount of the total assets of the mutual company as calculated by the method specified by Cabinet Office Order);
(ii)-2transfer of the whole or part of shares or equity interests in its substantive subsidiary companies (limited to a transfer which falls under all of the following sub-items):
(a)the book value of the shares or equity interests to be assigned by the transfer exceeds one-fifth (or any smaller proportion prescribed by the articles of incorporation) of the amount of the total assets of the mutual company calculated by the method specified by Cabinet Office Order; and
(b)the mutual company does not hold the majority of the total voting rights of the substantive subsidiary companies as of the date when the transfer takes effect;
(iii)acquisition of the whole of business of another company (including a mutual company, foreign company or any other corporation); or
(iv)acquisition at any time within two years after the establishment of the mutual company (limited to the cases in which the mutual company was incorporated pursuant to the provisions of Subsection 2; hereinafter the same applies in this item) of any asset that has existed since before its establishment and is to be used constantly for conducting its business; provided, however, that this does not apply to the cases in which the proportion of the amount listed in (a) to that listed in (b) does not exceed one fifth (or any smaller proportion prescribed by the articles of incorporation):
(a)the total book value of the property to be delivered in exchange for the asset;
(b)the amount of the net assets of the mutual company as calculated by the method specified by Cabinet Office Order.
(2)The resolution set forth in the preceding paragraph must be a resolution under paragraph (2) of the preceding Article.
Subsection 10 Miscellaneous Provisions
(Non-Member Contract)
Article 63(1)A mutual company may, by provisions in its articles of incorporation, exclude from its membership the holders of non-participating policies or any other class of insurance policy specified by Cabinet Office Order.
(2)The articles of incorporation set forth in the preceding paragraph must specify in addition to the class of insurance policy to which that paragraph applies, other particulars specified by Cabinet Office Order.
(3)A mutual company must not underwrite the insurance policies set forth in paragraph (1) that exceed the limit specified by Cabinet Office Order.
(4)Pursuant to the provisions of Cabinet Office Order, a mutual company, if it underwrites any of the insurance policies set forth in paragraph (1), must separate the accounting for those insurance policies from that for the insurance policies held by the members who are policyholders.
(5)The provisions of Part III, Chapter VII (Marine Insurance) of the Commercial Code apply mutatis mutandis to the insurance policies set forth in paragraph (1) (limited to those which fall under the category of a marine insurance contract).In this case, any necessary technical replacement of terms is specified by Cabinet Order.
(6)Beyond what is prescribed in the preceding paragraphs, necessary particulars of the insurance policies set forth in paragraph (1) is specified by Cabinet Office Order.
(Application, Mutatis Mutandis, of the Companies Act)
Article 63-2The provisions of Article 824 (Dissolution Order for a Company), Article 826 (Duty of a Government Agency to Give Notice to the Minister of Justice), Article 868, paragraph (1) (Jurisdiction over Non-Contentious Cases), Article 870, paragraph (1) (Hearing of Statements) (limited to the part involving item (x)), the main text of Article 871 (Appending of the Reason), Article 872 (Immediate Appeal) (limited to the part involving item (iv)), the main text of Article 873 (Stay of Execution of the Judicial Decision of the Prior Instance), Article 875 (Exclusion from Application of the Provisions of the Non-Contentious Cases Procedures Act), Article 876 (Supreme Court Rules), Article 904 (Participation of the Minister of Justice) and Article 937, paragraph (1) (Commissioning of Registration by a Judicial Decision) (limited to the part involving item (iii), (b)) of the Companies Act apply mutatis mutandis to an order for dissolution of a Mutual Company; and the provisions of Article 825 (Special Provisions on a Temporary Restraining Order Concerning Property of a Company), Article 868, paragraph (1), Article 870, paragraph (1) (limited to the part involving item (i)), Article 871, Article 872 (limited to the parts pertaining to items (i) and (iv)), Article 873, Article 874 (Restrictions on Appeal) (limited to the part involving items (ii) and (iii)), Article 875, Article 876, Article 905 and Article 906 (Special Provisions on a Temporary Restraining Order Concerning Property of a Company) of that Act apply mutatis mutandis to preservation of properties of a mutual company in case if a petition under Article 824, paragraph (1) of that Act as applied mutatis mutandis pursuant to this Article has been filed.In this case, any necessary technical replacement of terms is specified by Cabinet Order.
(Registration of Incorporation)
Article 64(1)A mutual company must complete its registration of incorporation at the locality of its principal office within two weeks from the date of conclusion of the organizational meeting (or from the date of resignation of the incorporators pursuant to the provisions of Article 30-12, paragraph (3)).
(2)The following particulars must be registered in the registration under the preceding paragraph:
(i)particulars listed in Article 23, paragraph (1), item (i), item (ii) and items (iv) through (vii);
(ii)the location of the offices;
(iii)the names of the directors (excluding directors of a company with an audit and supervisory committee);
(iv)the name and address of the representative director (excluding the cases set forth in item (xii));
(v)if the company is a company with accounting advisors, that fact, and the names of the accounting advisors and the place set forth in Article 378, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to Article 53-17;
(vi)if the company is a company with auditors, that fact and the names of the company auditors;
(vii)if the company is a company with a board of company auditors, that fact, and if there are outside auditors among its auditors, that fact;
(viii)if the company is a company with a accounting auditors, that fact and the names of the accounting auditors;
(ix)the name of a person appointed pursuant to the provisions of Article 53-12, paragraph (4) to temporarily carry out the duties of a accounting auditor;
(x)if it is prescribed that the special directors (meaning the special directors prescribed in Article 373, paragraph (1) of the Companies Act; the same applies hereinafter) may adopt a resolution under that paragraph as applied mutatis mutandis pursuant to Article 53-16, the following particulars:
(a)the fact that the special directors may adopt a resolution under Article 373, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to Article 53-16;
(b)the names of the special directors; and
(c)the fact that any outside directors among the directors are outside directors;
(xi)if the company is a company with an audit and supervisory committee, that fact and the following particulars:
(a)the names of directors who are audit and supervisory committee members and other directors;
(b)for the directors who are outside directors, the fact that they are outside directors; and
(c)if there is a provision in the articles of incorporation in relation to delegation of decision to directors for the execution of important business under Article 53-23-3, paragraph (6), that fact;
(xii)if the company is a company with a nominating committee, etc., that fact and the following particulars:
(a)the fact that any outside directors among the directors are outside directors;
(b)the names of the members of each committee and its executive officers; and
(c)the name and address of its representative executive officer;
(xiii)provisions in the articles of incorporation for the exemption from liabilities of directors, executive officers, accounting advisors, company auditors or accounting auditors under Article 426, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to Article 53-36;
(xiv)provisions in the articles of incorporation for the conclusion of contracts regarding the limit of the liabilities to be assumed by directors (excluding directors who are executive directors, etc.), accounting advisors, company auditors, or accounting auditors under Article 427, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to Article 53-36;
(xv)if the company seeks to take measures referred to in Article 54-7, paragraph (3), among the particulars necessary for allowing many and unspecified persons to receive the information contained in the balance sheet set forth in paragraph (1) of that Article, those specified by Cabinet Office Order;
(xvi)provisions in the articles of incorporation for the means of public notice under Article 23, paragraph (1), item (viii);
(xvii)if the provisions in the articles of incorporation set forth in the preceding item specify electronic public notice as the means of public notice, the following particulars:
(a)particulars prescribed in Article 911, paragraph (3), item (xxviii), (a) (Registration of Incorporation of a Stock Company) of the Companies Act which are necessary for ensuring that the information made public by electronic public notice is available to many and unspecified persons; and
(b)provisions in the articles of incorporation under the second sentence of Article 23, paragraph (3); and
(xviii)provisions in the articles of incorporation under the second sentence of Article 113 (including as applied mutatis mutandis pursuant to Article 272-18).
(3)The provisions of Article 915, paragraph (1) (Registration of a Change), Article 916 (limited to the part involving item (i)) (Registration of Relocation of Head Office to a District under the Jurisdiction of Another Registry), Article 918 (Registration of a Manager) and Part VII, Chapter IV, Section 2, Subsection 2 (excluding Article 932) (Registration at the Location of a Branch Office) of the Companies Act apply mutatis mutandis to a mutual company; and the provisions of Article 917 (limited to the part involving item (i)) (Registration of a Provisional Disposition, etc. Suspending Execution of Duties) of that Act apply mutatis mutandis to the directors, executive officers, accounting advisors, company auditors, representative director, committee members of each committee or representative executive officer of a mutual company.In this case, the phrase "the items of Article 911, paragraph (3) and the items of the three preceding Articles" in Article 915, paragraph (1) of that Act is deemed to be replaced with "the items of Article 64, paragraph (2) of the Insurance Business Act"; any other necessary technical replacement of terms is specified by Cabinet Order.
(Application for Registration of Incorporation)
Article 65The following documents must be attached to a written application referred to in paragraph (1) of the preceding Article, in addition to the documents set forth in Article 18, Article 46 and Article 47, paragraph (3) of the Commercial Registration Act as applied mutatis mutandis pursuant to Article 67:
(i)articles of incorporation;
(ii)a document certifying the offer to contribute funds or the contract set forth in Article 30;
(iii)list of prospective members;
(iv)in the case of a solicitation of members, a document certifying each prospective member's application for membership;
(v)if the articles of incorporation state or record the particulars listed in the items of Article 24, paragraph (1), the following documents:
(a)a document stating the investigation report of the inspector or the directors at incorporation (or the directors at incorporation and company auditors at incorporation, if the mutual company to be incorporated is a company with auditors) and its annexed documents;
(b)in the case listed in Article 33, paragraph (10), item (ii) of the Companies Act as applied mutatis mutandis pursuant to Article 24, paragraph (2), a document certifying the market value of the securities set forth in that item; and
(c)in the case listed in Article 33, paragraph (10), item (iii) of the Companies Act as applied mutatis mutandis pursuant to Article 24, paragraph (2), a document stating the verification set forth in that item and attached documents thereto;
(vi)a certified copy of the juridical decision on the report of the inspector;
(vii)a certificate of deposit of money referred to in Article 30-4, paragraph (1);
(viii)a document regarding the appointment of the representative director at incorporation by the directors at incorporation;
(ix)if the mutual company to be incorporated is a company with a nominating committee, etc., a document regarding the election of the executive officers at incorporation, and the appointment of the committee members at incorporation and representative executive officer at incorporation;
(x)minutes of the organizational meeting;
(xi)a document certifying that the directors at incorporation, company auditors at incorporation, and representative director at incorporation (if a mutual company to be incorporated is a company with an audit and supervisory committee, directors at incorporation who are audit and supervisory committee members at incorporation, other directors at incorporation, and representative director at incorporation, or if a mutual company to be incorporated is a company with a nominating committee, etc., directors at incorporation, committee members at incorporation, executive officers at incorporation and representative executive officer at incorporation) elected or appointed pursuant to the provisions of this Act have accepted the assumption of office;
(xii)if accounting advisors at incorporation or accounting auditors at incorporation have been elected, the following documents:
(a)a document certifying that they have accepted the assumption of office;
(b)if those persons are corporations, certificates of registered information for the corporations; provided, however, that this does not apply to the cases in which the principal offices of those corporations are located within the district under the jurisdiction of the relevant registry office; and
(c)if those persons are not corporations, a document certifying that the accounting advisors at incorporation meet the requirement of Article 333, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to Article 53-4, or that the accounting auditors at incorporation meet the requirement of Article 337, paragraph (1) of that Act as applied mutatis mutandis pursuant to Article 53-7; and
(xiii)if it is prescribed that the special directors may adopt a resolution under Article 373, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to Article 53-16, a document certifying the appointment of the special directors and their acceptance of the assumption of office.
(Registries)
Article 66A registry office is to keep a register of mutual companies.
(Application, Mutatis Mutandis, of the Companies Act and the Commercial Registration Act to the Registration of Mutual Companies)
Article 67The provisions of Part VII, Chapter IV, Section 1 (excluding Article 907) (General Provisions) of the Companies Act, and the provisions of Articles 1-3 to 5 (Registry Office, Delegation of Affairs, Suspension of Affairs, Registrar, Disqualification of Registrar), Articles 7 through 15 (Corporate Number, Prohibition on Carrying Out of Registries and Other Documents, Loss and Restoration of Registries, Prevention of Loss of Registry, Issuance of Certificate of Registered Matters, Issuance of Documents Specifying Extract of Matters Registered, Inspection of Annexed Documents, Certificate of Seal Impression, Certification of Matters Required for Verification of Measures to Identify the Creator of Electronic or Magnetic Records and Other Matters, Fees, Registration Upon Application by a Relevant Party, Registration upon Commission), Articles 17 through 27 (Method of Application for Registration, Documents to Be Attached to Written Application, Electronic or Magnetic Record to be Attached to Written Application, Special Provisions on Documents to be Attached, Submission of Seal Impression, Acceptance of Applications, Receipt, Order of Registration, Identity Confirmation by Registrar, Dismissal of Application, Registration to be Made After Lapse of Period for Filing Action, Change in Administrative Zone, etc., Prohibition of Registration of Identical Trade Name at Same Location), Article 31 (Registration of Exemption of Liabilities Upon Transfer of Enterprise or Business), Article 33 (Cancellation of Registration of Trade Name), Articles 44 through 46 (Registration of Company's Manager, General Provisions on Documents to be Attached), Article 47, paragraphs (1) and (3) (Registration of Incorporation), Articles 48 through 55 (Registration to be Made at Location of Branch Offices, Registration of Relocation of Head Office, Registration of Change of Directors and Other Officers, Registration of Change of Person Who is to Temporarily Perform Duties of Accounting Auditors), and Articles 132 through 148 (Correction, Application for Cancellation, Ex Officio Cancellation, Exclusion from Application of the Administrative Procedure Act, Exclusion from Application of the Act on Access to Information Held by Administrative Organs, Exclusion from Application of the Act on Protection of Personal Information Held by Administrative Organs, Request for Review, Handling of Request for Review Case, Exclusion from Application of the Administrative Appeal Act, Delegation to Order of the Ministry) of the Commercial Registration Act apply mutatis mutandis to a registration regarding a mutual company.In this case, the terms "trade name", "business office (or, in a company, head office; hereinafter the same applies in this Article)" and "business office pertaining to" in Article 27 of the Commercial Registration Act are deemed to be replaced with "trade name or name", "principal office" and "principal office pertaining to", respectively; the term "shareholders' meeting or class shareholders' meeting" in Article 46, paragraph (2) of that Act is deemed to be replaced with "general meeting (or the member representatives meeting, if the company has such a meeting)"; the terms "Article 319, paragraph (1) (including the cases where it is applied mutatis mutandis pursuant to Article 325 of the Companies Act) or Article 370 (including as applied mutatis mutandis pursuant to Article 490, paragraph (5) of that Act) of the Companies Act" and "shareholders meeting or class shareholder meeting" in Article 46, paragraph (3) of that Act are deemed to be replaced with "Article 319, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to Article 41, paragraph (1) of the Insurance Business Act, or Article 370 of the Companies Act as applied mutatis mutandis pursuant to Article 53-16 or 180-15 of the Insurance Business Act" and "general meeting", respectively; the term "Article 416, paragraph (4) of the Companies Act" in Article 46, paragraph (4) is deemed to be replaced with "Article 53-30, paragraph (4) of the Insurance Business Act"; and the terms "head office" and "branch offices" in the provisions of Articles 48 through 53 of that Act are deemed to be replaced with "principal office" and "secondary offices", respectively; any other necessary technical replacement of terms is specified by Cabinet Order.
(Application, Mutatis Mutandis, of the Companies Act on Electronic Public Notice)
Article 67-2The provisions of Article 940, paragraphs (1) and (3) (Public Notice Period of Electronic Public Notice), Article 941 (Electronic Public Notice Investigation), Article 946 (Obligation of Investigation), Article 947 (Cases If an Electronic Public Notice Investigation Is Unable to Be Carried Out), Article 951, paragraph (2) (Keeping and Inspection of Financial Statements), Article 953 (Order for Improvement), and Article 955 (Statements in an Investigation Record Book) of the Companies Act apply mutatis mutandis to the cases if a mutual company gives public notice under this Act or any other law in the form of an electronic public notice.In this case, the terms "Article 440, paragraph (1)" and "annual shareholders' meeting" in Article 940, paragraph (1), item (ii) of that Act are deemed to be replaced with "Article 54-7, paragraph (1) of the Insurance Business Act" and "annual general meeting (or the annual member representatives meeting, if the company has a member representatives meeting)", respectively; the term "the preceding two paragraphs" in Article 940, paragraph (3) of that Act is deemed to be replaced with "paragraph (1)"; and the term "public notice under this Act or any other law (excluding the public notice under Article 440, paragraph (1)" in Article 941 of that Act is deemed to be replaced with "public notice under the Insurance Business Act (excluding the public notice under Article 54-7, paragraph (1) of that Act"; any other necessary technical replacement of terms is specified by Cabinet Order.
Section 3 Entity Conversion
Subsection 1 Entity Conversion from a Stock Company to a Mutual Company
(Entity Conversion)
Article 68(1)A stock insurance company may convert to a mutual insurance company.
(2)A stock company that is a small amount and short term insurer may convert to a mutual company that is a small amount and short term insurer.
(3)Any entity conversion under the preceding two paragraphs (hereinafter referred to as "entity conversion" in this Subsection) must solicitat funds in order to raise the total amount of the funds of the mutual company after the entity conversion to the amount exceeding the amount specified in the following items in accordance with the category of the cases set forth in the items:
(i)entity conversion under paragraph (1):the amount specified by Cabinet Order set forth in Article 6, paragraph (1); or
(ii)entity conversion under the preceding paragraph:the amount specified by Cabinet Order set forth in Article 272-4, paragraph (1), item (ii).
(4)The total amount of the funds set forth in the preceding paragraph may be comprised in whole or in part of the reserves set aside at the time of entity conversion.In this case, the converting company is not to be required to solicit funds under that paragraph to the extent covered by the reserve.
(5)The reserves set forth in the preceding paragraph are deemed to be the reserves for redemption of funds, to which the provisions of this Act (excluding Article 56) apply.
(6)In the case of an entity conversion, the converting company may set aside loss reserves in addition to the reserves set forth in paragraph (4).
(Authorization of Entity Conversion Plan)
Article 69(1)If a stock company seeks to convert to a mutual company, it must prepare an entity conversion plan to be approved by a resolution at a shareholders meeting.
(2)The resolution set forth in the preceding paragraph must be a resolution under Article 309, paragraph (2) (Resolution of Shareholders Meetings) of the Companies Act.
(3)If a stock company seeks to adopt a resolution under paragraph (1), the stock company must provide an outline of the entity conversion plan in the notice to be given pursuant to Article 299, paragraph (1) (Notices of Convocation for Shareholders Meetings) of the Companies Act.
(4)A stock company must state the following particulars in its entity conversion plan:
(i)the total amount of funds of the mutual company to be established by the entity conversion (hereinafter referred to as "converted mutual company" in this Subsection);
(ii)the amount of the reserves set forth in paragraph (4) of the preceding Article and of the loss reserves set forth in paragraph (6) of that Article;
(iii)the particulars of compensation to shareholders and holders of share options;
(iv)the particulars of the rights of policyholders after the entity conversion; and
(v)the day on which the entity conversion takes effect (hereinafter referred to as "effective date" in this Subsection) and other particulars specified by Cabinet Office Order.
(5)A stock company which has adopted a resolution under paragraph (1), within two weeks from the date of the resolution, must notify each of the registered pledgees of shares and the registered pledgees of share options of the planned entity conversion that it will carry out an entity conversion.
(6)A notice under the preceding paragraph may be replaced by a public notice.
(7)The provisions of Article 219, paragraph (1) (limited to the part involving item (v)), paragraph (2) (limited to part involving item (iii)) and paragraph (3) (Public Notice in Relation to Submission of Share Certificate), Article 220 (Cases in which Share Certificates Cannot be Submitted), and Article 293, paragraph (1) (limited to the part involving item (ii)) (Public Notice in Relation to Submission of Share Option Certificate) of the Companies Act apply mutatis mutandis to a converting stock company.In this case, the term "membership company after entity conversion prescribed in Article 744, paragraph (1), item (i)" in Article 219, paragraph (2), item (iii) of that Act is deemed to be replaced with "mutual company after entity conversion prescribed in Article 69, paragraph (4), item (i) of the Insurance Business Act", and any other necessary technical replacement of terms is specified by Cabinet Order.
(Keeping and Inspection of Documents Related to Entity Conversion Plans)
Article 69-2(1)A converting stock company, for the period from the day on which the entity conversion plan began to be kept to the effective date, must keep at each of its business offices the documents or electronic or magnetic records in which the details of the entity conversion plan and any other particulars specified by Cabinet Office Order are stated or recorded.
(2)The phrase "the day on which the entity conversion plan began to be kept" in the preceding paragraph refers to the earliest of the date listed in the following items:
(i)the day two weeks before the date of the shareholders meeting set forth in paragraph (1) of the preceding Article (or, in the case of Article 319, paragraph (1) (Omission of Resolution of Shareholders Meetings) of the Companies Act, the date of proposal under that paragraph);
(ii)if the converting stock company has issued share options, the date of notice under Article 777, paragraph (3) of the Companies Act as applied mutatis mutandis pursuant to Article 71 or the date of public notice set forth in Article 777, paragraph (4) of that Act as applied mutatis mutandis pursuant to Article 71, whichever is earlier; or
(iii)the date of public notice under paragraph (2) of the following Article.
(3)The creditors of a converting stock company, such as shareholders and policyholders, may make the following requests to the stock company at any time during its operating hours; provided, however, that they must pay the fees determined by the stock company in making a request set forth in item (ii) or (iv):
(i)a request to inspect the documents set forth in paragraph (1);
(ii)a request to be issued a certified copy or extract of the documents set forth in paragraph (1);
(iii)a request to inspect anything that shows the particulars recorded in the electronic or magnetic records set forth in paragraph (1) in a means specified by Cabinet Office Order; or
(iv)a request to be provided with the particulars recorded in the electronic or magnetic records set forth in paragraph (1) by the electronic or magnetic means specified by the converting stock company, or to be issued a document stating the particulars.
(4)The converted mutual company, for six months from the effective date, must keep at each of its offices the documents or electronic or magnetic records in which the details of the entity conversion plan and any other particulars specified by Cabinet Office Order are stated or recorded.
(5)Policyholders or other creditors of a converted mutual company may make the following requests to the company at any time during its business hours; provided, however, that they must pay the fees determined by the converted mutual company in making a request set forth in item (ii) or (iv):
(i)a request to inspect the documents set forth in the preceding paragraph;
(ii)a request to be issued a certified copy or extract of the documents set forth in the preceding paragraph;
(iii)a request to inspect anything that shows the particulars recorded in the electronic or magnetic records set forth in the preceding paragraph in a means specified by Cabinet Office Order; or
(iv)a request to be provided with the particulars recorded in the electronic or magnetic records set forth in the preceding paragraph by the electronic or magnetic means determined by the converted mutual company, or to be issued a document stating the particulars.
(Objections of Creditors)
Article 70(1)Policyholders or other creditors of a converting stock company may state to the company their objections to the entity conversion.
(2)A converting stock company must publish the following particulars in the Official Gazette and by the means of public notice prescribed by its articles of incorporation; provided, however, that the period referred to in item (iv) may not be shorter than one month:
(i)the fact that an entity conversion will be carried out;
(ii)the name and address of the converted mutual company;
(iii)particulars specified by Cabinet Office Order as pertaining to the financial statements of the converting stock company;
(iv)the fact that policyholders or other creditors of the converting stock company may raise their objections within a certain period of time; and
(v)beyond what is set forth in the preceding items, particulars specified by Cabinet Office Order.
(3)If policyholders or other creditors have not raised their objections within the period set forth in item (iv) of the preceding paragraph, those policyholders or creditors are deemed to have approved the entity conversion.
(4)If policyholders or other creditors have raised their objection under paragraph (2), item (iv), the converting stock company must make payments or provide equivalent security to the policyholders or other creditors, or entrust equivalent property to a trust company, etc. for the purpose of ensuring that the policyholders or other creditors receive the payment; provided, however, that this does not apply to the cases where the entity conversion poses no risk of harming the interest of the policyholders or other creditors;
(5)The provisions of the preceding paragraph do not apply to the policyholders or any rights held by other persons pertaining to insurance contracts (other than the right to insurance claims, etc.).
(6)A resolution of authorization under Article 69, paragraph (1) is null and void if the number of the policyholders who have stated their objections within the period set forth in paragraph (2), item (iv) (excluding the holders of policies under which right to insurance claims, etc. had already accrued at the time of public notice under the paragraph (2) (but limited to those policies that are to be terminated with the payment of the insurance claims, etc.); hereinafter the same applies in this paragraph and the following paragraph) exceeds one fifth of the total number of policyholders, and the amount specified by Cabinet Office Order as the credits (other than the right to insurance claims, etc.) belonging to the insurance contracts of the policyholders who have raised such objections exceeds one fifth of the total amount of credits belonging to the policyholders.
(7)An entity conversion carried out pursuant to the provisions of the preceding paragraphs is also to be effective against the policyholders who have raised their objections under the preceding paragraph and other persons who hold any right (other than the right to insurance claims, etc.) pertaining to the insurance contracts involving the policyholders.
(8)Beyond what is provided for in the preceding paragraphs, necessary particulars for the application of those provisions are specified by Cabinet Order.
(Demand for Purchase of Share Options)
Article 71The provisions of Article 777 (Demand for Purchase of Share Options), Article 778 (Determination on Value of Share Options), Article 868, paragraph (1) (Jurisdiction over Non-Contentious Cases), Article 870, paragraph (2) (limited to the part involving item (ii)) (Hearing of Statements), Article 870-2 (Forwarding Copy of Petition and other procedures), the main text of Article 871 (Appending of the Reason), Article 872 (limited to the part involving item (v)) (Immediate Appeal), Article 872-2 (Forwarding Copy of Petition for Immediate Appeal and Other Procedures), the main text of Article 873 (Stay of Execution of the Judicial Decision of the Prior Instance), Article 875 (Mandatory Consolidation of Hearings, etc.) and Article 876 (Supreme Court Rules) of the Companies Act apply mutatis mutandis to the cases where the converting stock company has issued share options.In this case, the term "converted membership company" in Article 778, paragraph (1), Article 778, paragraph (2), and Article 778, paragraph (4) of that Act is deemed to be replaced with "converted mutual company (meaning a converted mutual company prescribed in Article 69, paragraph (4), item (i) of the Insurance Business Act)"; any other necessary technical replacement of terms is specified by Cabinet Order.
(Contract during a Procedure of Entity Conversion)
Article 72(1)A converting stock company, if it seeks to conclude an insurance contract on or after the day following the date of public notice under Article 70, paragraph (2), must notify the prospective policyholder the fact that the company is going through the procedure of entity conversion and obtain their consent.
(2)A policyholder who has given their consent referred to in the preceding paragraph is deemed not to be a policyholder for the purpose of applying the provisions of the following Article through Article 77.
(Policyholders Meeting)
Article 73If the number of the policyholders who have stated their objections within the period set forth in Article 70, paragraph (2), item (iv) or the amount of their credits as specified by Cabinet Office Order set forth in paragraph (6) of the same Article has not exceeded the proportion specified in that paragraph, the directors of the converting stock company must convene a policyholders meeting without delay following the completion of the procedures prescribed in the same Article.
(Method of Adopting Resolution)
Article 74(1)Each policyholder is entitled to one vote at the policyholders meeting.
(2)A resolution of the policyholders meeting is adopted by a three-quarter majority vote of the policyholders attending a session if at least half of the policyholders are present.
(3)The provisions of Article 67, paragraph (1) (Determination to Call Organizational Meetings), Article 68 (excluding the items in paragraph (2) and paragraphs (5) to (7)) (Notices of Calling of Organizational Meetings), Articles 70 and 71 (Giving of Organizational Meeting Reference Documents and Voting Forms), Articles 74 to 76 (Proxy Voting, Voting in Writing, Voting by Electronic or Magnetic Method), Articles 78 through 80 (Accountability of Incorporators, Authority of Chairperson, Resolution for Postponement or Adjournment), Article 81, paragraphs (1) through (3) (Minutes), and Article 316, paragraph (1) (Investigation of Materials Submitted to the Shareholders Meeting) of the Companies Act apply mutatis mutandis to the policyholders meeting; and the provisions of Article 830 (Action for a Declaratory Judgment as to the Absence or Invalidity of a Resolution of a Shareholders Meeting, etc.), Article 831 (Action to Revoke a Resolution of a Shareholders Meeting, etc.), Article 834 (limited to the parts pertaining to items (xvi) and (xvii)) (Defendant), Article 835, paragraph (1) (Jurisdiction over Actions), Article 836, paragraphs (1) and (3) (Order to Provide Security), Article 837 (Mandatory Consolidation of Oral Arguments, etc.), Article 838 (Persons Affected by a Judgment Being Upheld), Article 846 (Liability for Damages If a Judgment Is Entered Against the Plaintiff), and Article 937, paragraph (1) (limited to the part involving item (i), (g)) (Commissioning of Registration by a Judicial Decision) of that Act apply mutatis mutandis to an action for a declaratory judgment as to the absence or invalidity of a resolution of the policyholders meeting and to an action to rescind a resolution of the policyholders meeting. In this case, the terms "incorporators", "shareholders at incorporation" and "stock company" in those provisions are deemed to be replaced with "converting stock company", "policyholders" and "mutual company", respectively; the term "in the following cases" in Article 68, paragraph (2) of that Act is deemed to be deleted; the term "head office" in Article 74, paragraph (6) of that Act is deemed to be replaced with "principal office"; the term "shareholders" in Article 74, paragraph (7) of that Act is deemed to be replaced with "members"; and the terms "a shareholder, etc. (or, if the shareholders' meeting, etc. set forth respectively in each such item is an organizational meeting or a class organizational meetings, a shareholder, etc., a shareholder at incorporation, a director at incorporation or a company auditor at incorporation)" and "a shareholder (or, if the relevant resolution is the resolution of an organizational meeting, shareholders at incorporation) or director (or, in cases of a company with an audit and supervisory committee, directors who are audit and supervisory committee members or other directors; hereinafter the same applies in this paragraph), company auditor or liquidator pursuant to the provisions of Article 346 (1) (including as applied mutatis mutandis pursuant to Article 479, paragraph (4)), and if such resolution is a resolution of an organizational meeting or class organizational meeting, a director at incorporation (if a stock company to be incorporated is a company with an audit and supervisory committee, directors at incorporation who are audit and supervisory committee members at incorporation or other directors at incorporation))" in Article 831, paragraph (1) of that Act are deemed to be replaced with "policyholders, directors, company auditors or liquidators (in the case of a company with an audit and supervisory committee, policyholders, directors or liquidators, or in the case of a company with a nominating committee, etc., policyholders, directors, executive officers or liquidators" and "directors (in the case of a company with an audit and supervisory committee, directors who are audit and supervisory committee members or other directors), company auditors or liquidators", respectively; any other necessary technical replacement of terms is specified by Cabinet Order.
(4)It is sufficient for a notice or demand to a policyholder to be sent by the converting stock company to the place or address which the policyholder has notified to the stock company for the receipt of notices or demands.
(5)The notice or demand set forth in the preceding paragraph is deemed to have arrived at the time when the notice or demand would normally have arrived.
(6)The provisions of the preceding two paragraphs apply mutatis mutandis to the delivery of documents to policyholders in giving a notice under Article 68, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to paragraph (3) and provision by electronic or magnetic means of the particulars that are required to be stated in the documents.In this case, the term "to have arrived" in the preceding paragraph is deemed to be replaced with "to have been effected by delivery of the document or provision of the particulars by electronic or magnetic means"; and any other necessary technical replacement of terms is specified by Cabinet Order.
(Report of Directors)
Article 75The directors must report to the policyholders meeting the particulars related to an entity conversion.
(Resolution of Policyholders Meeting)
Article 76(1)The policyholders meeting, in its resolutions, must adopt the articles of incorporation of the converted mutual company and other particulars required for the organization of the converted mutual company, and elect the persons to become directors of the converted mutual company.
(2)If the converted mutual company is a company with an audit and supervisory committee, the persons to become directors of the converted mutual company under the preceding paragraph must be separately elected for persons to become directors of the converted mutual company who will become audit and supervisory committee members after the entity conversion and the persons to become other directors of the converted mutual company.
(3)In the following cases, the policyholders meeting must elect the persons set forth in the relevant items:
(i)if the converted mutual company is a company with accounting advisors, the persons to serve as accounting advisors of the converted mutual company;
(ii)if the converted mutual company is a company with auditors, the persons to become company auditors of the converted mutual company; and
(iii)if the converted mutual company is a company with accounting auditors, the persons to become accounting auditors of the converted mutual company.
(4)The resolution set forth in Article 69, paragraph (1) may be changed by a resolution under paragraph (1); provided, however, that the change may not harm the interest of the creditors of the converting stock company.
(5)A change referred to in the preceding paragraph that has the risk of causing any damage to the interest of shareholders is subject to the authorization of the shareholders meeting.In this case, the provisions of Article 69, paragraph (2) apply mutatis mutandis.
(6)The resolution of authorization set forth in Article 69, paragraph (1) loses its effect without the authorization of the shareholders meeting set forth in the preceding paragraph.
(7)The policyholders meeting may not adopt a resolution on any other particular than that listed in Article 67, paragraph (1), item (ii) of the Companies Act as applied mutatis mutandis pursuant to Article 74, paragraph (3); provided, however, that this does not apply to a decision on the articles of incorporation of the converted mutual company or on any other particular that is necessary for the organization of the converted mutual company, and the election of the persons specified in paragraphs (1) and (3).
(Policyholder Representatives Meeting)
Article 77(1)The converting stock company may, by a resolution under Article 69, paragraph (1), establish an administrative organ composed of representative members elected from among the policyholders (hereinafter referred to as "policyholder representatives meeting") in lieu of the policyholders meeting.
(2)The resolution set forth in the preceding paragraph must specify the particulars specified by Cabinet Office Order, such as the number and election method of representative members.
(3)Policyholders of a converting stock company (excluding the holders of the policies for which the right to insurance claims, etc. had already accrued at the time of public notice under the following paragraph (but limited to those policies that would be terminated with the payment of the insurance claims, etc.); the same applies in that paragraph and paragraph (5)) may state to the converting stock company their objections to the resolution set forth in paragraph (1).
(4)A converting stock company must give public notice of the following particulars within two weeks from the date of the resolution set forth in paragraph (1); provided, however, that the period referred to in item (ii) may not be shorter than one month:
(i)content of the resolution set forth in paragraph (1);
(ii)the fact that policyholders of the converting stock company may raise their objections within a certain period of time; and
(iii)beyond what is set forth in the preceding two items, particulars specified by Cabinet Office Order.
(5)A resolution under paragraph (1) is to be null and void if the number of policyholders who have raised their objections within the period set forth in item (ii) of the preceding paragraph exceeds one fifth of the total number of policyholders, and the amount specified by Cabinet Office Order as the credits (other than the right to insurance claims, etc.) belonging to the insurance contracts of the policyholders who have stated such objections exceeds one fifth of the total amount of credits belonging to the policyholders.
(6)The provisions of Article 44-2 (excluding the second sentence of paragraph (3)) and Article 73 through the preceding Article apply mutatis mutandis to the policyholder representatives meeting.In this case, the term "the preceding paragraph" in Article 310, paragraph (2) of the Companies Act as applied mutatis mutandis pursuant to the first sentence of Article 44-2, paragraph (3) and the term "paragraph (1)" in Article 310, paragraph (3) is deemed to be replaced with "Article 44-2, paragraph (1) of the Insurance Business Act"; the term "Article 299, paragraph (3)" in Article 310, paragraph (4) is deemed to be replaced with "Article 68, paragraph (3) as applied mutatis mutandis pursuant to Article 74, paragraph (3) of the Insurance Business Act"; the term "shareholders (excluding the shareholders who may not exercise their voting rights on all matters which may be resolved at the shareholders' meeting under the preceding paragraph; hereinafter the same applies in paragraph (4) of the following Article and Article 312, paragraph (5))" in Article 310, paragraph (7) is deemed to be replaced with "policyholders or members"; the term "Articles 74 through 76" in Article 74, paragraph (3) is deemed to be replaced with "Articles 75 and 76"; and the term "policyholder" in Article 74, paragraph (4) is deemed to be replaced with "representative member"; any other necessary technical replacement of terms is specified by Cabinet Order.
(Solicitation of Funds in Entity Conversion)
Article 78(1)If a converting stock company, seeks to solicit funds for the converted mutual company, it must solicit the required amount of such funds without delay following the conclusion of the policyholders meeting or policyholder representatives meeting (or, in the case of Article 76, paragraph (5), following the authorization of the shareholders' meeting set forth in that paragraph).
(2)A converting stock company must notify the persons who seek to offer contributions to its funds in response to a solicitation under the preceding paragraph of the following particulars:
(i)particulars listed in Article 23, paragraph (1), item (ii) and items (iv) through (vi);
(ii)amount of the additional funds to be solicited, the rights held by the contributors to the funds and the method of redemption of the funds;
(iii)payment date; and
(iv)place where the payment of contribution of funds is handled at the banks, etc.
(3)The provisions of Article 28, paragraphs (2) through (6), Articles 29 through 30-2, Article 30-3 (excluding paragraphs (2) and (3)), and Article 30-5, paragraphs (2) and (3) apply mutatis mutandis to a solicitation under paragraph (1). In this case, the term "incorporators" in those provisions is deemed to be replaced with "converting stock company"; the terms "funds solicited at incorporation" and "funds of a mutual company at incorporation" in those provisions are deemed to be replaced with "funds solicited under Article 78, paragraph (1)"; the term "the items in paragraph (1)" in Article 28, paragraph (4) is deemed to be replaced with "the items of Article 78, paragraph (2)"; the term "the preceding two Articles" in Article 30 is deemed to be replaced with "Article 78, paragraph (2) (excluding item (iii)) and Article 28, paragraphs (2) through (6) as applied mutatis mutandis pursuant to Article 30, paragraph (3)"; the term "mutual company thus established" in Article 30-4, paragraph (4) is deemed to be replaced with "converted mutual company"; and the term "After the establishment of the mutual company" in Article 30-5, paragraph (3) is deemed to be replaced with "After the entity conversion"; any other necessary technical replacement of terms is specified by Cabinet Order.
(Policyholders Meeting after Solicitation of Funds)
Article 79(1)In the case of paragraph (1) of the preceding Article, the directors of the converting stock company, without delay after the total amount of the funds solicited under that paragraph has been paid, must convene a second policyholders meeting or policyholder representatives meeting.
(2)The persons to become directors (or directors and company auditors, if the converted mutual company is a company with auditors) of the converted mutual company must investigate whether the total amount of the funds solicited under paragraph (1) of the preceding Article has been subscribed for and paid, and report the result to the policyholders meeting or policyholder representatives meeting set forth in the preceding paragraph.
(3)The provisions of Article 94 (Special Provisions in case Directors at Incorporation are Incorporators) of the Companies Act apply mutatis mutandis to the policyholders meeting or policyholder representatives meeting set forth in paragraph (1), if all or some of the persons to serve as directors of the converted mutual company are directors or executive officers of the converting stock company.In this case, the phrase "the particulars listed in the items of paragraph (1) of the preceding Article" in paragraph (1) of the same Article is deemed to be replaced with "whether the total amount of the funds solicited under Article 78, paragraph (1) of the Insurance Business Act has been subscribed for and paid"; any other necessary technical replacement of terms is specified by Cabinet Order.
(Authorization of Entity Conversion)
Article 80(1)An entity conversion is not to take effect without the authorization of the Prime Minister.
(2)When an application has been filed for the authorization referred to in the preceding paragraph, the Prime Minister must examine whether it conforms to the following standards:
(i)the converted mutual company has a sufficient financial basis to execute the business of an insurance company, etc. in a sound and efficient manner;
(ii)the entity conversion poses no risk of harming the rights of policyholders; and
(iii)beyond what is set forth in the preceding two items, the entity conversion poses no risk of precluding the sound business operation of an insurance company, etc.
(Effectuation of Entity Conversion)
Article 81(1)A converting stock company becomes a mutual company on the effective date.
(2)The shares and share options of a converting stock company becomes null and void on the effective date.
(3)The policyholders of a converting stock company becomes a member of the converted mutual company on the effective date.
(4)The provisions of the preceding three paragraphs do not apply to the cases if a procedure under Article 70 has not been completed or if the entity conversion has been abandoned.
(Public Notice of Entity Conversion)
Article 82(1)A converted mutual company, without delay following the entity conversion, must give public notice of the fact that an entity conversion has been carried out and the particulars specified by Cabinet Office Order. The same applies to the cases if a converting stock company has abandoned the planned entity conversion after giving public notice pursuant to the provisions of Article 70, paragraph (2).
(2)A converted mutual company, for six months following the effective date, must keep at each of its offices the documents or electronic or magnetic records in which the progress of the procedure under Article 70 and any other particulars specified by Cabinet Office Order as being involved in an entity conversion are stated or recorded.
(3)Policyholders or other creditors of a converted mutual company may make the following requests to the mutual company at any time during its business hours; provided, however, that they must pay the fees determined by the mutual company in making a request set forth in item (ii) or (iv):
(i)a request to inspect the documents set forth in the preceding paragraph;
(ii)a request to be issued a certified copy or extract of the documents set forth in the preceding paragraph;
(iii)a request to inspect anything that shows the particulars recorded in the electronic or magnetic records set forth in the preceding paragraph in a means specified by Cabinet Office Order; or
(iv)a request to be provided with the particulars recorded in the electronic or magnetic records set forth in the preceding paragraph by the electronic or magnetic means specified by the converted mutual company, or to be issued a document stating the particulars.
(Pledge on Former Shares)
Article 83The provisions of Article 151, paragraph (1) (excluding the items) and Article 154, paragraphs (1) and (2) (limited to the part pertaining to item (ii)) (Effect of Pledge of Shares) of the Companies Act apply mutatis mutandis to the monies which the shareholders are entitled to receive as a result of an entity conversion of a stock company.In this case, the term "monies, etc. (limited to monies), or monies under paragraph (2) of that Article" in paragraph (1) of that Article is deemed to be replaced with "money", and the term "membership company after entity conversion as prescribed in Article 744, paragraph (1), item (i)" in paragraph (2), item (ii) of that Article is deemed to be replaced with "converted mutual company prescribed in Article 69, paragraph (4), item (i) of the Insurance Business Act", and any other necessary technical replacement of terms is specified by Cabinet Order.
(Registration)
Article 84(1)If a stock company has carried out an entity conversion, the converting stock company must make a registration of dissolution within two weeks from the date of entity conversion at the locality of its head office and within three weeks from the relevant date at the locality of its branch offices; and the converted mutual company must complete registration of incorporation within two weeks from the date of entity conversion at the locality of its principal office and within three weeks from the relevant date at the locality of its secondary offices.
(2)The following documents must be attached to a written application for the registration of incorporation of a mutual company under the preceding paragraph, in addition to those specified in Articles 18, 19 and 46 of the Commercial Registration Act as applied mutatis mutandis pursuant to Article 67:
(i)entity conversion plan;
(ii)articles of incorporation;
(iii)a document certifying that a public notice under Article 70, paragraph (2) has been given;
(iv)the minutes of the shareholders' meeting and policyholders meeting (or those of the policyholder representatives meeting, if the company has such a meeting);
(v)if any policyholder or other creditor has raised their objection under Article 70, paragraph (4), a document certifying that the company has made payment or provided equivalent security to the policyholder or other creditor, or entrusted equivalent property to a trust company, etc. for the purpose of ensuring that the policyholder or other creditor receive the payment, or a document certifying that the entity conversion has no risk of harming the interest of the policyholder or other creditor;
(vi)a document certifying that the number of policyholders who have raised their objections under Article 70, paragraph (6) has not exceeded one fifth of the total number of policyholders, or a document certifying that the amount specified by Cabinet Office Order set forth in that paragraph as the credits belonging to those policyholders has not exceeded one fifth of the total amount set forth in that paragraph;
(vii)if the converting stock company is a company issuing share certificates, a document certifying that a public notice has been given under the main clause of Article 219, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to Article 69, paragraph (7), or a document certifying that the company has not issued share certificates for all of the shares;
(viii)if the converting stock company has issued share options, a document certifying that a public notice has been given under Article 293, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to Article 69, paragraph (7), or a document certifying that the company has not issued any stock option certificate under that paragraph;
(ix)a document certifying that the directors (directors and company auditors, if the converted mutual company is a company with auditors, or directors who are audit and supervisory committee members or other directors, if the converted mutual company is a company with an audit and supervisory committee) of the converted mutual company have accepted the assumption of office;
(x)if accounting advisors or accounting auditors have been elected for the converted mutual company, the following documents:
(a)a document certifying that those persons have accepted the assumption of office;
(b)if those persons are corporations, certificates of registered information for the corporations; provided, however, that this does not apply to the cases where the principal offices of the corporations are located within the district under the jurisdiction of the relevant registry office; and
(c)if those persons are not corporations, a document certifying that the accounting advisors meet the requirement of Article 333, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to Article 53-4, or that the accounting auditors meet the requirement of Article 337, paragraph (1) of that Act as applied mutatis mutandis pursuant to Article 53-7;
(xi)if funds have been solicited, a document certifying the offer to contribute funds or the contract under Article 30 as applied mutatis mutandis pursuant to Article 78, paragraph (3); and
(xii)if funds have been solicited, a document certifying that payment has been made to the funds under Article 30-3, paragraph (1) as applied mutatis mutandis pursuant to Article 78, paragraph (3).
(3)The provisions of Articles 76 and 78 (Registration of Entity Conversion) of the Commercial Registration Act apply mutatis mutandis to the case referred to in paragraph (1).In this case, any necessary technical replacement of terms is specified by Cabinet Order.
(Action to Invalidate an Entity Conversion)
Article 84-2(1)The invalidation of an entity conversion may only be asserted in an action filed within six months from the effective date.
(2)An action to invalidate an entity conversion may only be filed by a person who was a shareholder, etc. (meaning a person who was a shareholder, director, company auditor or liquidator (in the case of a company with an audit and supervisory committee, a shareholder, director or liquidator, or, in the case of a company with a nominating committee, etc., a shareholder, director, executive officer or liquidator); hereinafter the same applies in this Section) of the converting stock company on the effective date, or a member, etc. (meaning a member, director, company auditor or liquidator (in the case of a company with an audit and supervisory committee, a member, director or liquidator, or in the case of a company with a nominating committee, etc., a member, director, executive officer or liquidator); hereinafter the same applies in this Section) or bankruptcy trustee of the converted mutual company or a creditor of the converted mutual company who has not approved of the entity conversion.
(3)An action to nullify an entity conversion is to be filed against the converted mutual company.
(4)The provisions of Article 835, paragraph (1) (Jurisdiction over Actions), Articles 836 through 839 (Order to Provide Security, Mandatory Consolidation of Oral Arguments, etc., Persons Affected by a Judgment Being Upheld), Article 846 (Liability for Damages If a Judgment Is Entered Against the Plaintiff) and Article 937, paragraph (3) (limited to the part involving item (i)) (Commissioning of Registration by a Judicial Decision) of the Companies Act apply mutatis mutandis to an action to invalidate an entity conversion; the provisions of Article 840 (Effects of a Judgment of Invalidity of New Share Issue) of that Act apply mutatis mutandis to a judgment of invalidity of an entity conversion accompanied by the solicitation of funds set forth in Article 78, paragraph (1); and the provisions of Article 868, paragraph (1) (Jurisdiction over Non-Contentious Cases), the main text of Article 871 (Appending of the Reason), Article 872 (limited to the part involving item (ii)) (Immediate Appeal), the main text of Article 873 (Stay of Execution of the Judicial Decision of the Prior Instance), Articles 875 through 877 (Mandatory Consolidation of Hearings, Supreme Court Rules, Mandatory Consolidation of Hearings) and Article 878, paragraph (1) (Effects of a Judicial Decision) of that Act apply mutatis mutandis to an application under Article 840, paragraph (2) of that Act as applied mutatis mutandis pursuant to this paragraph. In this case, the term "shareholder" in Article 878, paragraph (1) is deemed to be replaced with "shareholder or member"; any other necessary technical replacement of terms is specified by Cabinet Order.
Subsection 2 Entity Conversion from a Mutual Company to a Stock Company
(Entity Conversion)
Article 85(1)A mutual insurance company may convert to a stock company that is an insurance company.
(2)A mutual company that is a small amount and short term insurance company may convert to a stock company that is a small amount and short term insurance company.
(Authorization of Entity Conversion Plan)
Article 86(1)A mutual company, if it seeks to carry out an entity conversion under the preceding Article (hereinafter referred to as "entity conversion" in this Subsection), must prepare an entity conversion plan to be approved by a resolution of the general meeting (or the member representatives meeting, if the company has such a meeting; hereinafter the same applies in this Subsection).
(2)The resolution set forth in the preceding paragraph must be a resolution prescribed in Article 62, paragraph (2).
(3)A mutual company, if it seeks to adopt a resolution under paragraph (1), must provide an outline of the entity conversion plan in the notice to be given pursuant to Article 299, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to Article 41, paragraph (1) or Article 49, paragraph (1).
(4)A mutual company must prescribe the following particulars in its entity conversion plan:
(i)the purpose, trade name, location of the head office, and total number of authorized shares of the stock company to be established by the entity conversion (hereinafter referred to as "converted stock company" in this Subsection);
(ii)beyond what is set forth in the preceding item, particulars specified by the articles of incorporation of the converted stock company;
(iii)names of the directors of the converted stock company;
(iv)the particulars specified in the following sub-items in accordance with the categories set forth in the respective items:
(a)if the converted stock company is a company with accounting advisors, the names of the accounting advisors of the converted stock company;
(b)if the converted stock company is a company with auditors, the names of the company auditors of the converted stock company; or
(c)if the converted stock company is a company with accounting auditors, the names of the accounting auditors of the converted stock company;
(v)the number of shares (or the classes of share and the number of shares by class, if the converted stock company is a company with class shares) to be acquired by the members of the converting mutual company or the method of calculating the number, and the particulars of the stated capital and reserves of the converted stock company;
(vi)particulars related to the allocation of the shares set forth in the preceding item to the members of the converting mutual company;
(vii)the amount of, and calculation method for, any money granted to the members of the converting mutual company;
(viii)particulars related to the allocation of the money set forth in the preceding item to the members of the converting mutual company;
(ix)the method of selling any additional fraction of shares to be issued as a result of the allocation of shares to the members of the converting mutual company and any other particular specified by Cabinet Office Order regarding the sale;
(x)the method of purchasing any fraction of shares arising under the preceding item and any other particular specified by Cabinet Office Order regarding the purchase;
(xi)particulars related to the rights of policyholders after the entity conversion; and
(xii)the day on which the entity conversion takes effect (hereinafter referred to as "effective date" in this Subsection) and any other particular specified by Cabinet Office Order.
(5)A mutual company, as a particular to be prescribed by the articles of incorporation pursuant to the provisions of item (ii) of the preceding paragraph, must include in the converted stock company's articles of incorporation the principles pertaining to the policy dividends set forth in Article 114, paragraph (1) (including as applied mutatis mutandis pursuant to Article 272-18).
(6)If a converted stock company is a company with an audit and supervisory committee, the matters listed in paragraph (4), item (iii) must be specified separately for directors who are advisory committee members and other directors.
(Keeping and Inspection of Documents Related to Entity Conversion Plans)
Article 87(1)A converting mutual company, for the period from the date on which the entity conversion plan began to be kept to the effective date, must keep at each of its offices, documents or electronic or magnetic records in which the entity conversion plan and any other particulars specified by Cabinet Office Order are stated or recorded.
(2)The term "the date on which the entity conversion plan began to be kept" in the preceding paragraph refers to the date listed in any of the following items, whichever is earlier:
(i)the day that is two weeks before the date of the general meeting set forth in paragraph (1) of the preceding Article (or, in the case of Article 319, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to Article 41, paragraph (1), the date of proposal under that paragraph); or
(ii)the date of public notice under paragraph (2) of the following Article.
(3)Policyholders or other creditors of a converting mutual company may make the following requests to the company at any time during its business hours; provided, however, that they must pay the fees determined by the mutual company in making a request set forth in item (ii) or (iv):
(i)a request to inspect the documents set forth in paragraph (1);
(ii)a request to be issued a certified copy or extract of the documents set forth in paragraph (1);
(iii)a request to inspect anything that shows the particulars recorded in the electronic or magnetic records set forth in paragraph (1) in a means specified by Cabinet Office Order; or
(iv)a request to be provided with the particulars recorded in the electronic or magnetic records set forth in paragraph (1) by the electronic or magnetic means determined by the converting mutual company, or to be issued a document stating the particulars.
(4)The converted stock company, for six months from the effective date, must keep at each of its business offices the documents or electronic or magnetic records in which the content of the entity conversion plan and any other particulars specified by Cabinet Office Order are stated or recorded.
(5)The creditors of a converted stock company, such as shareholders and policyholders, may make the following requests to the company at any time during its operating hours; provided, however, that they must pay the fees determined by the converted stock company in making a request set forth in item (ii) or (iv):
(i)a request to inspect the documents set forth in the preceding paragraph;
(ii)a request to be issued a certified copy or extract of the documents set forth in the preceding paragraph;
(iii)a request to inspect anything that shows the particulars recorded in the electronic or magnetic records set forth in the preceding paragraph in a means specified by Cabinet Office Order; or
(iv)a request to be provided with the particulars recorded in the electronic or magnetic records set forth in the preceding paragraph by the electronic or magnetic means determined by the converted stock company, or to be issued a document stating the particulars.
(Objections of Creditors)
Article 88(1)Policyholders or other creditors of a converting mutual company may raise their objections on the entity conversion to the company.
(2)A converting mutual company must give public notice of the following particulars in the Official Gazette and by the means of public notice prescribed in its articles of incorporation; provided, however, that the period referred to in item (iii) may not be shorter than one month:
(i)the fact that an entity conversion will be carried out;
(ii)the trade name and address of the converted stock company;
(iii)the fact that policyholders or other creditors of the converting mutual company may raise their objections within a certain period of time; and
(iv)beyond what is set forth in the preceding three items, particulars specified by Cabinet Office Order.
(3)If no policyholders or other creditors have raised their objections within the period set forth in item (iii) of the preceding paragraph, the policyholders or creditors are deemed to have approved the entity conversion.
(4)If any policyholder or other creditor has raised their objection within the peiod set forth in paragraph (2), item (iii), the converting mutual company must make payment or provide equivalent security to the policyholder or other creditor, or entrust equivalent property to a trust company, etc. for the purpose of ensuring that the policyholder or other creditor receives the payment; provided, however, that this does not apply to the cases in which the entity conversion has no risk of harming the interest of the policyholder or other creditor;
(5)The provisions of the preceding paragraph do not apply to the policyholders or any rights held by other persons pertaining to insurance contracts (other than the right to insurance claims, etc.).
(6)A resolution of authorization under Article 86, paragraph (1) is to be null and void if the number of the policyholders who have raised their objections within the period set forth in paragraph (2), item (iii) (excluding the holders of policies under which the right to insurance claims, etc. had already accrued at the time of public notice under paragraph (2) (but limited to those policies that would be terminated with the payment of the insurance claims, etc.); hereinafter the same applies in this paragraph and in the following paragraph) exceeds one fifth of the total number of policyholders, and the amount specified by Cabinet Office Order as the credits (other than the right to insurance claims, etc.) belonging to the insurance contracts of the policyholders who have raised the objections exceeds one fifth of the total amount of credits belonging to the policyholders.
(7)An entity conversion carried out pursuant to the provisions of the preceding paragraphs is also to be effective against the policyholders who have raised their objections under the preceding paragraph and other persons who hold any right (other than the right to insurance claims, etc.) pertaining to the insurance contracts involving the policyholders.
(8)If a converting mutual company seeks to conclude an insurance contract on or after the day following the date of public notice under paragraph (2), the comapny must notify the prospective policyholder of the fact that it is going through an entity conversion procedure.
(9)Beyond what is provided for in the preceding paragraphs, necessary particulars for the application of those provisions are specified by Cabinet Order.
(Redemption of Funds)
Article 89(1)A converting mutual company, if it has any amount of unredeemed funds, must redeem the full amount of its funds as specified by the entity conversion plan; provided, however, that this does not apply to the amount of credits pertaining to the funds delivered for the purpose of contribution in kind in issuing shares under Article 92.
(2)The provisions of Article 55, paragraph (2) and Article 56 do not apply to an entity conversion from a mutual company to a stock company.
(Allocation of Shares or Monies to Members)
Article 90(1)The members of a converting mutual company is to receive allocation of the converted stock company's shares or monies as specified by the entity conversion plan.
(2)The allocation of shares or monies set forth in the preceding paragraph must be made in accordance with the amount of contribution of each member (meaning the amount calculated pursuant to the provisions of Cabinet Office Order as equivalent to the balance of the amount paid by a member as the insurance premiums and the profits obtained by investing the money received as the insurance premiums which have not been allocated to the payment of benefits such as insurance proceeds or refunds, or to business or other expenditures, after deducting the amount of assets to be retained for the performance of obligations under the insurance contract with the member).
(3)The provisions of Article 234, paragraph (1) (excluding all items), and paragraphs (2) through (5) (Treatment of Fractions), Article 868, paragraph (1) (Jurisdiction over Non-Contentious Cases), Article 869 (Prima Facie Showing), Article 871 (Appending of the Reason), Article 874 (limited to the part involving item (iv)) (Restrictions on Appeal), Article 875 (Exclusion from Application of the Provisions of the Non-Contentious Cases Procedures Act) and Article 876 (Supreme Court Rules) of the Companies Act apply mutatis mutandis to the allocation of shares to the members of a converting mutual company pursuant to the provisions of the preceding two paragraphs.In this case, any necessary technical replacement of terms is specified by Cabinet Order.
(4)Beyond what is provided for in the preceding three paragraphs, particulars required for the allocation of shares or monies in the case of an entity conversion are specified by Cabinet Order.
(Amount of Surplus in Entity Conversion)
Article 91(1)A converting mutual company must determine the amount of surplus in entity conversion as a particular to be prescribed by the articles of incorporation pursuant to the provisions of Article 86, paragraph (4), item (ii).
(2)A converted stock company may not distribute the surplus in excess of the amount of the net assets on the balance sheet after deduction of the amount of surplus in entity conversion.
(3)The amount of surplus in entity conversion is the total amount calculated for all the withdrawn members as specified by Cabinet Office Order in accordance with Cabinet Office Order set forth in paragraph (2) of the preceding Article.
(4)Beyond what is provided for in paragraph (1) and the preceding paragraph, the amount to be set aside as capital reserves on entity conversion, the reduction of surplus in entity conversion, and other particulars required for calculations of the entity conversion is specified by Cabinet Office Order.
(Issuance of Shares on Entity Conversion)
Article 92A converting mutual company may, in carrying out the entity conversion, issue shares of the converted stock company, in addition to the allocation of shares under Article 90, paragraph (1).In this case, the entity conversion plan must specify the following particulars:
(i)the number of the shares to be issued pursuant to the provisions of this Article (hereinafter referred to as "shares issued on entity conversion" in this Subsection) (or, in a company with class shares, the classes and number of the shares issued on entity conversion; hereinafter the same applies in this Subsection);
(ii)the amount to be paid for the shares issued on entity conversion (meaning the amount of money to be paid, or of non-monetary properties to be delivered, in exchange for a share issued on entity conversion; hereinafter the same applies in this Subsection);
(iii)if contribution is to be made in the form of non-monetary property, that fact and the content and value of the property;
(iv)the date of the payment of money in exchange for the shares issued on entity conversion or the delivery of the property set forth in the preceding item;
(v)particulars of the stated capital and capital reserves to be increased.
(Offer to Subscribe for Shares Issued on Entity Conversion)
Article 93(1)A converting mutual company must notify the persons who seek to make an offer to subscribe for shares issued on entity conversion of the following particulars:
(i)the trade name of the converted stock company;
(ii)particulars listed in the items of the preceding Article;
(iii)places payment of money is handled, if payment of money is to be made; and
(iv)beyond what is set forth in the preceding three items, particulars specified by Cabinet Office Order.
(2)A person who offers to subscribe for shares issued on entity conversion must submit a document stating the following particulars to the converting mutual company:
(i)the name and address of the person who makes the offer; and
(ii)the number of shares issued on entity conversion for which the person seeks to subscribe.
(3)A person who makes an offer under the preceding paragraph may, in lieu of submitting the document prescribed in that paragraph, and pursuant to the provisions of Cabinet Order, provide the particulars that are required to be stated in the document by electronic or magnetic means, with the consent of the converting mutual company.In this case, the person who has made the offer is deemed to have submitted the document prescribed in that paragraph.
(4)If there are changes to the the particulars listed in the items of paragraph (1), the converting mutual company must immediately notify a person who has made an offer under paragraph (2) (hereinafter referred to as "offeror" in this Subsection) to that effect and the particulars that have been changed.
(5)It is sufficient for a notice or demand to an offeror to be sent by the converting mutual company to the address referred to in paragraph (2), item (i) (or to any other place or contact address of which the offeror has notified the mutual company for the receipt of notices or demands).
(6)The notice or demand set forth in the preceding paragraph is deemed to have arrived at the time when the notice or demand would normally have arrived.
(7)The provisions of Article 10 apply mutatis mutandis to a notice to be given by the converting mutual company pursuant to the provisions of paragraph (1).In this case, any necessary technical replacement of terms is specified by Cabinet Order.
(Allocation of Shares Issued on Entity Conversion)
Article 94(1)The converting mutual company must select from among the offerors the persons to receive allocation of the shares issued on entity conversion, and determine the number of the shares issued on entity conversion to be allocated to those persons.In this case, the mutual company may reduce the number of the shares issued on entity conversion to be allocated to each offeror from the number prescribed in paragraph (2), item (ii) of the preceding Article.
(2)The converting mutual company must notify the offerors, no later than the day prior to the date referred to in Article 92, item (iv) of the number of the shares issued on entity conversion that will be allocated to each offeror.
(Subscription for Shares Issued on Entity Conversion)
Article 95An offeror is to be the subscriber for shares issued on entity conversion for the number of the shares allocated by the converting mutual company.
(Performance of Contribution)
Article 96(1)Subscribers for shares issued on entity conversion (other than those who deliver properties under Article 92, item (iii) (hereinafter referred to as "properties contributed in kind" in this Subsection)), by the date set forth in item (iv) of the same Article, must pay the full amount to be paid for the shares issued on entity conversion allocated to them at the place where the payment under Article 93, paragraph (1), item (iii) is handled.
(2)Subscribers for shares issued on entity conversion (limited to those who deliver properties contributed in kind), by the date set forth in Article 92, item (iv), must deliver the properties contributed in kind equivalent to the full amount to be paid for the shares issued on entity conversion allocated to them.
(3)Subscribers for shares issued on entity conversion may not offset their obligation of payment under paragraph (1) or delivery under the preceding paragraph (hereinafter referred to as "performance of contribution" in this Subsection) against any claim against the converting mutual company.
(4)An assignment of the right to become a holder of shares issued on entity conversion by performance of contribution may not be duly asserted against the converted stock company.
(5)Subscribers for shares issued on entity conversion who do not perform contribution is to lose their right to become a holder of shares issued on entity conversion by the performance of contribution.
(Timing of Obtaining Shareholder Status)
Article 96-2(1)A subscriber for shares issued on entity conversion, on the effective date, is to become the holder of the shares issued on entity conversion for which they have performed contribution.
(2)In the cases listed in the items of Article 213-2, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to Article 96-4-2, a subscriber of shares issued on entity conversion may exercise the rights of shareholders with respect to the relevant shares issued on entity conversion for which the performance of contribution is disguised, only after the payment or contribution prescribed in those items or the payment pursuant to the provisions of Article 96-4-3, paragraph (1) is made.
(3)A person who accepts assignment of shares issued on entity conversion under the preceding paragraph or the right to become shareholder may exercise the right of shareholders with respect to the relevant shares issued on entity conversion; provided, however, that this does not apply when the person had acted in bad faith or with gross negligence.
(Restrictions on the Invalidation or Recession of Subscription)
Article 96-3(1)The proviso to Article 93, paragraph (1) (Concealment of True Intention) and the provisions of Article 94, paragraph (1) (Fictitious Manifestation of Intention) of the Civil Code do not apply to the manifestation of an intention to offer to subscribe for shares issued on entity conversion or to the manifestation of an intention to allocate them.
(2)A subscriber for shares issued on entity conversion may not rescind their subscription for shares issued on entity conversion on the grounds of error, fraud, or duress, after one year has elapsed since the effective date or after the subscriber has exercised any right regarding their shares.
(Contribution of Non-Monetary Property)
Article 96-4The provisions of Article 207 (Contribution of Property Other than Monies), Article 212 (excluding paragraph (1), item (i)) (Liabilities of Persons Who Subscribed for Shares with Unfair Amount to Be Paid in), Article 213 (excluding paragraph (1), items (i) and (iii)) (Liabilities of Directors in Case of Shortfall in Value of Property contributed), Article 868, paragraph (1) (Jurisdiction over Non-Contentious Cases), Article 870, paragraph (1) (limited to the part involving items (i) and (iv)) (Hearing of Statements), Article 871 (Appending of the Reason), Article 872 (limited to the part involving item (iv)) (Immediate Appeal), Article 874 (limited to the part involving item (i)) (Restrictions on Appeal), Article 875 (Exclusion from Application of the Provisions of the Non-Contentious Cases Procedures Act) and Article 876 (Supreme Court Rules) of the Companies Act apply mutatis mutandis to the particulars listed in Article 92, item (iii); and the provisions of Part VII, Chapter II, Section 2 (excluding Article 847-2, paragraph (9), Article 847-3, Article 849, paragraph (2) item (ii), paragraph (7) and paragraph (10), item (ii), Article 850, paragraph (4) and Article 853, paragraph (1), item (iii)) (Liability Actions Against a Stock Company) of that Act apply mutatis mutandis to an action for payment under Article 212 (excluding paragraph (1), item (i)) of that Act as applied mutatis mutandis pursuant to this Article. In this case, the term "director" in Article 207, paragraph (10), item (i) of that Act is deemed to be replaced with "director of the converting mutual company set forth in Article 86, paragraph (1) of the Insurance Business Act"; the terms "Article 209, paragraph (1)" and "Article 199, paragraph (1), item (iii)" in Article 207, paragraph (2) are deemed to be replaced with "Article 96-2, paragraph (1) of the Insurance Business Act" and "Article 92, item (iii) of that Act", respectively; the terms "Article 199, paragraph (1), item (iii)" and "application for subscription for shares for subscription or their manifestation of intention related to the contract provided for in Article 205, paragraph (1)" in Article 212, paragraph (2) of that Act are deemed to be replaced with "Article 92, item (iii) of the Insurance Business Act" and "application", respectively; and the term "shareholders having the shares" in Article 847, paragraphs (1) and (2) (Action for Pursuing Liability, etc. by Shareholders) of that Act is deemed to be replaced with "shareholders having the shares (or, if six months (or any shorter period prescribed by the articles of incorporation; hereinafter the same applies in this paragraph) have not elapsed since the effective date of an entity conversion, persons who had been members from the period six months prior to the date of the entity conversion and have been holding the shares without interruption since the effective date of the entity conversion)"; the phrase "A person who had been a shareholder of a stock company continuously for six months or more (or, if a shorter period is prescribed in the articles of incorporation, such period) before the day when the acts listed in the following items occur until that day" in Article 847-2, paragraph (1) (Action for Pursuing Liability, etc. by Former Shareholders) of that Act is deemed to be replaced with "A person who had been a shareholder of a converted stock company continuously for six months or longer (or, if a shorter period is prescribed in the articles of incorporation, such period) before the day when the acts listed in the following items occur until the relevant day (or, if such date is before the expiration of six months from the day when the entity conversion takes effect (or, within the shorter period, if such term is provided in the articles of incorporation; hereinafter the same applies in this paragraph; a person who had been a member continuously from the day six months prior to the relevant date to the date when the entity conversion takes effect, and who has continuously held the shares from the date when the entity conversion takes effect)"; the phrase "continuously from six months or more (or, if a shorter period is prescribed in the articles of incorporation, such period) before the day when the acts listed in the following items until that day" in paragraph (2) of that Article is deemed to be replaced with "A person who had been a shareholder of a converted stock company continuously for six months or longer (or, if a shorter period is prescribed in the articles of incorporation, such period) before the day when the acts listed in the following items occur until the relevant day (or, if such date is before the expiration of six months from the day when the entity conversion takes effect (or, within the shorter period, if such term is provided in the articles of incorporation; hereinafter the same applies in this paragraph, a person who had been a member continuously from the day six months prior to the relevant date to the date when the entity conversion takes effect, and who has continuously held the shares from the date when the entity conversion takes effect)"; the phrase "A person who had been a shareholder of a stock company continuously for six months or more (or, if a shorter period is prescribed in the articles of incorporation, such period) before the day when the acts listed in the following items occur until that day" in that paragraph is deemed to be replaced with "A person who had been a shareholder of a converted stock company continuously for six months or more (or, if a shorter period is prescribed in the articles of incorporation, such period or longer) on the day when the acts listed in the following items occur until that day"; the phrase ", a qualified former shareholder or a shareholder of an ultimate, wholly owning parent company, etc." in Article 847-4, paragraph (2) (Court Costs for an Action Pursing Liability) is deemed to be replaced with "or a qualified former shareholder (meaning a former shareholder prescribed in Article 947-2 of the Companies Act as applied mutatis mutandis pursuant to Article 96-4 of the Insurance Business Act who becomes eligible to file a suit under paragraph (6) of that Article pursuant to the main clauses of paragraphs (1) and (3) of that Article; hereinafter the same applies in this Section)"; the term "a suit relating to an action for pursuing liability, etc. (in cases of a qualified former shareholder, limited to one related to the liabilities or obligations for which the fact causing them occurs by the time when the act listed in the items of Article 847-2, paragraph (1) becomes effective; in cases of a shareholder of an ultimate, wholly owning parent company, etc., limited to the action pursuing specific liability)" in Article 849, paragraph (1) (Intervention) of that Act is deemed to be replaced with "an action demanding payment under Article 212 (excluding paragraph (1), item (i) as applied mutatis mutandis pursuant to Article 96-4 of the Insurance Business Act (in case of a qualified former shareholder, limited to an action relating to liabilities and obligations in which the fact which gave rise to the action occurred before the time when the act listed in items of Article 847-2, paragraph (1) as applied mutatis mutandis pursuant to Article 96-4 of that Act) took effect)", and any other necessary technical replacement of terms is specified by Cabinet Order.
(Liabilities of Subscribers of Shares for Subscription for Which the Performance of Contribution Is Disguised)
Article 96-4-2The provisions of Article 213-2 (Liabilities of Subscribers of Shares for Subscription for which the Performance of Contribution is Disguised) of the Companies Act apply mutatis mutandis to subscribers of shares issued on entity conversion; and the provisions of Part VII, Chapter 2, Section 2 (excluding Article 847-3, Article 849, paragraph (2) item (ii), paragraph (7), and paragraph (10) item (ii), and Article 853, paragraph (1), item (iii)) (Action for Pursing the Liability, etc. of a Stock Company) of that Act apply mutatis mutandis to an action seeking payment or delivery under Article 213-2, paragraph (1) of that Act as applied mutatis mutandis pursuant to this Article.In this case, the term "a stock company" in that paragraph is deemed to be replaced with "a mutual company which implements entity conversion prescribed in Article 86, paragraph (1) of the Insurance Business Act"; the phrase "Article 208, paragraph (1)" in item (i) of that paragraph is deemed to be replaced with "Article 96, paragraph (1) of the Insurance Business Act"; the term "Article 208, paragraph (2)" in item (ii) of that paragraph is deemed to be replaced with "Article 96, paragraph (2) of the Insurance Business Act"; the term "all shareholders" in paragraph (2) of that paragraph is deemed to be replaced with "all members (or all shareholders after the entity conversion)"; the phrase "having the shares consecutively for the preceding six months or longer" in Article 847, paragraphs (1) and (2) (Action for Pursuing Liability, etc. by Shareholders) of that Act is deemed to be replaced with "having the shares consecutively for the preceding six months or longer"; the term "shareholders having the shares" in Article 847, paragraphs (1) and (2) (Action for Pursuing Liability, etc. by Shareholders) of that Act is deemed to be replaced with "shareholders having the shares (or, where six months (or any shorter period prescribed by the articles of incorporation; hereinafter the same applies in this paragraph) have not elapsed since the effective date of an entity conversion, persons who had been members from six months prior until the effective date of the entity conversion and have been holding the shares without interruption since the effective date of the entity conversion)"; the phrase "A person who had been a shareholder of a stock company continuously for six months or longer (or, if a shorter period is prescribed in the articles of incorporation, such period) before the day when the acts listed in the following items occur until that day" in Article 847-2, paragraph (1) (Action for Pursuing Liability, etc. by Former Shareholders) of that Act is deemed to be replaced with "A person who had been a shareholder of a converted stock company continuously for six months or longer (or, if a shorter period is prescribed in the articles of incorporation, such period) before the day when the acts listed in the following items occur until that day (or, if such date is before the expiration of six months from the day when the entity conversion takes effect (or, within the shorter period, if such term is provided in the articles of incorporation; hereinafter the same applies in this paragraph, a person who had been a member continuously from the day six months prior to the relevant date to the date when the entity conversion takes effect, and who has continuously held the shares from the date when the entity conversion takes effect)"; the phrase "continuously from six months or longer (or, if a shorter period is prescribed in the articles of incorporation, such period) before the day when the acts listed in the following items until that day" in paragraph (2) of that Article is deemed to be replaced with "A person who had been a shareholder of a converted stock company continuously for six months or more (or, if a shorter period is prescribed in the articles of incorporation, such period) before the day when the acts listed in the following items occur until the relevant day (or, if such date is before the expiration of six months from the day when the entity conversion takes effect (or, within the shorter period, if such term is provided in the articles of incorporation; hereinafter the same applies in this paragraph, a person who had been a member continuously from the day six months prior to the relevant date to the date when the entity conversion takes effect, and who has continuously held the shares from the date when the entity conversion takes effect)"; the phrase "A person who had been a shareholder of a stock company continuously for six months or more (or, if a shorter period is prescribed in the articles of incorporation, such period) before the day when the acts listed in the following items occur until that day" in that paragraph is deemed to be replaced with "A person who had been a shareholder of a converted stock company continuously for six months or longer (or, if a shorter period is prescribed in the articles of incorporation, such period) on the day when the acts listed in the following items occur until that day"; the phrases "Article 55, Article 102-2, paragraph (2), Article 103, paragraph (3), Article 120, paragraph (5), Article 213-2, paragraph (2), Article 286-2, paragraph (2), Article 424 (including as applied mutatis mutandis pursuant to Article 486, paragraph (4)), proviso to Article 462, paragraph (3), Article 464, paragraph (2), and Article 465, paragraph (2)", "these provisions", and "Article 847-2, paragraph (9)" in paragraph (9) of that Article are deemed to be replaced with "Article 213-2, paragraph (2)", "that paragraph" and "Article 847-2, paragraph (9) as applied mutatis mutandis pursuant to Article 96-4-2 of the Insurance Business Act"; the phrase "a suit relating to an action for pursuing liability, etc. (in cases of a qualified former shareholder, limited to one related to the liabilities or obligations for which the fact causing them occurs by the time when the act listed in the items of Article 847-2, paragraph (1) becomes effective; in cases of a shareholder of an ultimate, wholly owning parent company, etc., limited to the action pursuing specific liability)" in Article 849, paragraph (1) (Intervention) of that Act is deemed to be replaced with "an action demanding payment under Article 213-2, paragraph (1) as applied mutatis mutandis pursuant to Article 96-4-2 of the Insurance Business Act (in case of a qualified former shareholder, limited to an action relating to liabilities and obligations in which the fact which gave rise to the action occurred before the time when the act listed in items of Article 847-2, paragraph (1) as applied mutatis mutandis pursuant to Article 96-4-2 of that Act took effect))", and any other necessary technical replacement of terms is specified by Cabinet Order.
(Liabilities of Directors in the Case of Disguising the Performance of Contribution)
Article 96-4-3(1)In the cases listed in the items of Article 213-2, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to the preceding Article, a person prescribed by Cabinet Office Order as a director (including executive officers, in cases of a company with a nominating committee, etc.) involved in the disguising the performance of contribution by a subscriber of shares issued on entity conversion are liable to make the payment prescribed in the relevant items to the mutual company implementing the entity conversion; provided, however, that this does not apply to cases in which the person (excluding the person who disguised the performance of contribution) proves that they did not fail to exercise due care with respect to the performance of their duties.
(2)If a subscriber of shares issued on entity conversion is liable to make the payment prescribed in the items of Article 213-2, paragraph (1) of the Companies Act as applied mutatis mutandis pursuant to the preceding Article, if the person prescribed in the preceding paragraph is liable as set forth in that paragraph, these persons are to be joint and several obligors.
(Share Exchange on Entity Conversion)
Article 96-5(1)A converting mutual company may, at the time of entity conversion, carry out a share exchange on entity conversion (meaning an exchange of shares whereby a converting mutual company causes all of the shares of the converted stock company to be acquired by another stock company (hereinafter referred to as "wholly owning parent company resulting from the share exchange" in this Subsection) at the same time as the entity conversion; hereinafter the same applies in this Subsection).
(2)A converting mutual company, in carrying out a share exchange on entity conversion, must conclude a contract for share exchange on entity conversion with the wholly owning parent company resulting from the share exchange.
(3)The provisions of Article 791 (excluding paragraph (1), item (i) and paragraph (3)) (Keeping and Inspection of Documents Related to an Absorption-Type Split or Share Exchange) of the Companies Act apply mutatis mutandis to a converting mutual company carrying out a share exchange on entity conversion; the provisions of Article 309, paragraph (2) (excluding all items) (Resolution of Shareholders' Meetings), Article 324, paragraph (2) (excluding all items) (Resolution of Class Meetings) and Part V, Chapter V, Section 2, Subsection 2, Division 1 (excluding Article 795, paragraph (4), items (i) and (ii), Article 796, paragraph (2), item (i), (b), Article 799, paragraph (1), items (i) and (ii), Article 800, Article 801, paragraphs (1) and (2), Article 801, paragraph (3), items (i) and (ii), and Article 801, paragraph (5)) (Procedures for Stock Company) of that Act apply mutatis mutandis to a wholly owning parent company resulting from the share exchange; and the provisions of Article 868, paragraph (1) (Jurisdiction over Non-Contentious Cases), Article 870, paragraph (2) (limited to the part involving item (ii)) (Hearing of Statements), Article 870-2 (Forwarding Copy of Petition and Other Procedures), the main text of Article 871 (Appending of the Reason), Article 872 (limited to the part involving item (v)) (Immediate Appeal), Article 872-2 (Forwarding Copy of Petition for Immediate Appeal and Other Procedures), the main text of Article 873 (Stay of Execution of the Judicial Decision of the Prior Instance), Article 875 (Exclusion from Application of the Provisions of the Non-Contentious Cases Procedures Act) and Article 876 (Supreme Court Rules) of that Act apply mutatis mutandis to an application under Article 798, paragraph (2) of that Act as applied mutatis mutandis pursuant to this paragraph.In this case, any necessary technical replacement of terms is specified by Cabinet Order.
(Allocation of Shares of Wholly Owning Parent Company for Share Exchange to Members)
Article 96-6(1)Notwithstanding the provisions of Article 90, paragraph (1), the members of a converting mutual company carrying out a share exchange on entity conversion, as prescribed by the entity conversion plan, is to receive allocation of shares issued, or monies granted, at the time of the share exchange by the wholly owning parent company resulting from the share exchange.
(2)The provisions of Article 90, paragraphs (2) through (4) apply mutatis mutandis to the case set forth in the preceding paragraph.In this case, the term "the preceding paragraph" in paragraph (2) of the same Article is deemed to be replaced with "Article 96-6, paragraph (1)"; the term "the preceding two paragraphs" in Article 90, paragraph (3) is deemed to be replaced with "Article 96-6, paragraph (1) and the preceding paragraph"; and the term "the preceding three paragraphs" in Article 90, paragraph (4) is deemed to be replaced with "Article 96-6, paragraph (1) and the preceding two paragraphs"; any other necessary technical replacement of terms is specified by Cabinet Order.
(3)If a converting mutual company issuing shares pursuant to the provisions of Article 92 carries out a share exchange on entity conversion, the subscribers for shares who have made payments or delivered contributions in kind for their shares, as prescribed by the entity conversion plan, are to receive allocation of shares issued, or monies delivered, at the time of the share exchange by the wholly owning parent company resulting from the share exchange.
(Particulars of Share Exchange on Entity Conversion to Be Prescribed by Entity Conversion Plan)
Article 96-7In the case of a share exchange on entity conversion, the entity conversion plan and the contract for share exchange on entity conversion must prescribe the following particulars:
(i)the names, trade names, and addresses of the converting mutual company and the wholly owning parent company resulting from the share exchange;
(ii)the following particulars regarding any shares, etc. (meaning shares or monies; hereinafter the same applies in this Section) issued or granted by the wholly owning parent company resulting from the share exchange to the members of the converting mutual company (including the subscribers for the shares issued pursuant to the provisions of Article 92; hereinafter the same applies in this Article) in carrying out the share exchange on entity conversion:
(a)if the shares, etc. are the shares of the wholly owning parent company resulting from the share exchange, the number of those shares (or, in a company with class shares, the classes of shares and the numbers of shares by class) or the method of its calculation, and the particulars of the amount of stated capital and reserves of the wholly owning parent company resulting from the share exchange; or
(b)if the shares, etc. are monies, the amount of the monies or the method of its calculation;
(iii)in the case of the preceding item, the particulars of the allocation of the shares, etc. set forth in that item to the members of the converting mutual company (excluding the wholly owning parent company resulting from the share exchange);
(iv)the method of selling any additional fraction of shares to be issued as a result of the allocation of shares to the members of the converting mutual company and any other particulars specified by Cabinet Office Order regarding the sale;
(v)the method of purchasing any additional fraction of shares arising under the preceding item and any other particulars specified by Cabinet Office Order regarding the purchase; and
(vi)the day on which the entity conversion and share exchange on entity conversion take effect.
(Share Transfer on Entity Conversion)
Article 96-8(1)A converting mutual company may, at the time of entity conversion, carry out a share transfer on entity conversion (meaning a transfer whereby a converting mutual company or two or more converting mutual companies cause all of the shares of the converted stock company (including, in the case set forth in paragraph (1), item (ix) of the following Article, the stock company set forth in that item) to be acquired by a new stock company to be incorporated (hereinafter referred