Article 1The purpose of this Act is to protect customers by providing for the matters which financial instrument providers, etc. must explain at the time of the sale, etc. of financial instruments, the liability on financial instrument providers, etc. for damages incurred by the relevant customers due to the failure of a financial instrument provider, etc. to explain the relevant matters at the time of the sale, etc. of financial instruments, and the measures to ensure the appropriateness of solicitations in relation to sales, etc. of financial instruments by financial instrument providers, etc., thereby contributing to the sound development of the national economy.

Article 2(1)The phrase "sale of financial instruments" as used in this Act means the following acts:

(2)The phrase "sale, etc. of financial instruments" as used in this Act means the sale of financial instruments, or an agency or intermediary service therefor (including one conducted on behalf of a customer).

(3)The term "financial instruments provider, etc." as used in this Act means a person carrying out sales, etc. of financial instruments on a regular basis.

(4)The term "customer" as used in this Act means the counterparty to the sale of financial instruments.

Article 3(1)If a financial instruments provider, etc. intends to carry out sales, etc. of financial instruments on a regular basis, the relevant financial instruments provider, etc. must explain the following matters (hereinafter referred to as "important matters") to customers at or before the time that the sale of financial instruments is carried out:

(2)The explanation prescribed in the preceding paragraph must be provided in a manner and to the extent necessary for the customer to understand it, in light of the knowledge, experience and status of property of the customer, and the purpose for the conclusion of the contract pertaining to the relevant sale of financial instruments.

(3)The phrase "risk of incurring a loss of principal" as used in paragraph (1), items (i), (iii) and (v) means a risk that the total amount of money to be paid by a customer as a result of the relevant sale of financial instruments (if there is any property other than money or any right specified by Cabinet Order which is to be transferred by the relevant customer as a result of the relevant sales of financial instruments (hereinafter referred to as a "monetary equivalent" in this paragraph and Article 6, paragraph (2)), the amount is obtained by adding the total market value of the relevant monetary equivalent (if there is no market value, the estimated disposal value) to the relevant total amount of money to be paid) would exceed the total amount of money to be received by the relevant customer (if there is any person that receives any money, any property other than money, or any right, as designated by the relevant customer, as a result of the relevant sale of financial instruments, it includes the relevant person; hereinafter referred to as the "customer, etc." in this paragraph) as a result of the relevant sale of financial instruments (if there is any property other than money or any right to be acquired by the relevant customer, etc. as a result of the relevant sale of financial instruments, the amount is obtained by adding the total amount of the market value of the relevant property (if there is no market value, the estimated disposal value) other than money or right to the relevant total amount of money to be received).

(4)The phrase "risk of incurring a loss exceeding the initial principal" as used in paragraph (1), items (ii), (iv), and (vi) means the following:

(5)The phrase "structure of transactions pertaining to the sales of financial instruments" as used in item (i), (c), item (ii), (c), item (iii), (c), item (iv), (c), item (v), (c) and item (vi), (c) of paragraph (1) means the following:

(6)If two or more financial instruments providers, etc. must explain the important matters for a single sale of a financial instrument to a customer pursuant to the provisions of paragraph (1), and one of the financial instruments providers, etc. has explained the relevant important matters, notwithstanding the provisions of that paragraph, the other financial instruments provider, etc. is not required to explain the relevant important matters; provided, however, that this does not apply when the relevant other financial instruments provider, etc. is a person specified by Cabinet Order.

(7)The provisions of paragraph (1) do not apply to the following cases:

Article 4If a financial instruments provider, etc. intends to carry out sales, etc. of financial instruments on a regular basis, the relevant financial instruments provider, etc. must not engage in the act of providing a customer with conclusive evaluations on uncertain matters or with information that misleads the customer into believing the certainty of the uncertain matters with regard to the matters related to the relevant sales of financial instruments (hereinafter referred to as the "provision of conclusive evaluations, etc.") at or before the time that the sale of financial instruments is carried out.

Article 5If a financial instruments provider, etc. must explain important matters to the customer pursuant to the provisions of Article 3, and fails to give an explanation on the relevant important matters or provides a conclusive evaluation, etc. in violation of the preceding Article, the relevant financial instruments provider, etc. is liable for the damages suffered by the relevant customer as a result thereof.

Article 6(1)If the customer claims compensation for damages pursuant to the provisions of the preceding Article, the amount of loss of principal is be presumed to be the amount of loss incurred by the relevant customer due to the failure of the financial instruments provider, etc. to explain important matters or to the provision of conclusive evaluation, etc. by the relevant financial instruments provider, etc.

(2)The term "amount of loss of principal" as used in the preceding paragraph is the amount that remains after deducting the amount obtained by adding the total of the amount of money received and the amount of money to be received by a customer (if there is a person that has come to acquire any money, any property other than money or any right, as designated by the relevant customer, as a result of the relevant sale of financial instruments, it includes the relevant person; hereinafter referred to as the "customer, etc." in this paragraph) as a result of the sale of financial instruments (if there is any property other than money or any right which has been acquired or any property other than money or any right to be acquired by the relevant customer, etc. as a result of the relevant sale of financial instruments, the amount obtained by adding, to the total of the amount of money acquired and to be acquired, the total amount of the market value of the property other than money or right (if there is no market value, the estimated disposal value)) to the total disposal value of the property other than money or rights which has been acquired by the relevant customer, etc. as a result of the relevant sale of financial instruments and which the relevant customer, etc. has sold or otherwise disposed of, from the total of the amount of money paid and the amount to be paid by the customer as a result of the sale of financial instruments (if there is a monetary equivalent which has been transferred or a monetary equivalent which is to be transferred by the relevant customer as a result of the relevant sales of financial instruments, the amount obtained by adding, to the relevant total of the amount of money paid and to be paid, the total amount of the market value of these monetary equivalents (if there is no market value, the estimated disposal value)).

Article 7Beyond what is provided for in this Act, the liability for damages of the financial instruments provider, etc. due to the failure to explain important matters or due to the provision of conclusive evaluation, etc. is governed by the Civil Code (Act No. 89 of 1896).

Article 8When making a solicitation in relation to sales, etc. of financial instruments that are conducted on a regular basis, a financial instruments provider, etc. must endeavor to ensure the appropriateness thereof.

Article 9(1)If a financial instruments provider, etc. intends to make a solicitation in relation to sales, etc. of financial instruments that are conducted on a regular basis, the relevant financial instruments provider, etc. must, in advance, establish a policy for the relevant solicitation (hereinafter referred to as the "solicitation policy"); provided, however, that this does not apply to cases where the financial instruments provider, etc. is a national government, local government, or any other person specified by Cabinet Order as one for which it is found to be unlikely that the solicitations will lack the propriety or a financial instruments provider, etc. that has only the specified customers as its customers.

(2)The following matters are to be provided for by the solicitation policy:

(3)If a financial instruments provider, etc. establishes a solicitation policy pursuant to the provisions of paragraph (1), the relevant provider must promptly, pursuant to a method specified by Cabinet Order, make the policy public. The same applies when the relevant provider changes it.

Article 10A financial instruments provider, etc. that fails to establish a solicitation policy in violation of paragraph (1) of the preceding Article or that fails to make it public in violation of paragraph (3) of the same Article, is punished by a civil fine of not more than 500 thousand yen.