I hereby give My sanction to the Securities and Exchanges Law for which the concurrence of the Imperial Diet has been obtained and cause the same to be promulgated.
Signed:HIROHITO, Seal of the Emperor
This twenty-seventh day of the third month of the twenty-second year of Showa (March 27, 1947)
Countersigned: Prime Minister YOSHIDA Shigeru
Minister of Justice KIMURA Tokutaro
Minister of Finance ISHIBASHI Tanzan
Securities and Exchanges Law Contents
Chapter 1. General Provisions
Chapter 2. Filing of statement with respect to issue of stocks or debentures
Chapter 3. Securities dealers
Chapter 4. Securities Exchange
Section 1. Establishment and organization
Section 4. Transactions on the securities market
Section 5. Entrustment of transactions on the securities market
Chapter 5. Securities Transaction Commission
Chapter 6. Miscellaneous provisions
Chapter 7. Penal provisions
Chapter 1. General Provisions
Article 1. The objective of the present Law shall be to attain an equitable issuance, buying and selling and other transactions with respect to securities and the smooth circulation thereof for the purpose of contributing to the proper conduct of national economy and protecting the general investors.
Article 2. Securities referred to in the present Law shall be as follows:
3. Bonds issued by juridical persons established under special Laws,
5. Investment certificates issued by juridical persons established under special Laws,
7. Securities issued by foreign countries or foreign juridical persons, which have the same nature as of the securities mentioned in the foregoing items.
Article 3. Securities business referred to in the present Law shall mean any part of business to buy and sell securities, or to act as intermediary for buying and selling or to engage in flotation, underwriting or offering.
Article 4. Prospectus referred to in the present Law shall mean any explanatory statement or other documents which offer any stock or debenture for sale, and on which programs with respect to business or prospect on revenues and outlays are stated.
Article 5. Securities market referred to in the present Law shall mean a market where securities are bought and sold under a certain order.
Chapter 2. Filing of a statement with respect to issue of stocks or debentures
Article 6. On purporting to issue stocks or debentures (excluding those issued by juridical persons established under special laws;hereinafter the same except the case as prescribed by the provisions of Article 22), all of the promoters in the case of before the establishment of a company (establishment commissioners in case where a company is established by means of amalgamation), or all of the directors (partners with unlimited liability who perform the general business in the case of a joint-stock limited partnership) and duty proxies (this shall mean duty proxies of joint-stock company or joint-stock limited partnership under paragraph 2 of Article 258, paragraph 1 of Article 270 or paragraph 1 of Article 272 of the Commercial Code;hereinafter the same) in the case of after the establishment of a company, shall, as may be prescribed by an Ordinance, file with the Government a statement on the undermentioned particulars with respect to stocks or debentures concerned;provided that this shall not apply to the case where the Government specifically designates in respect to companies the total amount whose face value of stock or debentures to be issued does not exceed two hundred thousand yen (\200,000.00):
1. Objective of company, trade-name and matters pertaining to capital or subscription,
3. Business result of company for the latest three business years,
4. Matters pertaining to property of company,
5. Stock value of company at the end of the latest three years,
6. Plan on the use of funds raised as a result of the issue of stocks or debentures concerned,
7. Types, descriptions, quantity and value of stocks or debentures concerned,
8. Conditions for flotation or entrustment of flotation of stocks or debentures concerned,
9. Matters to be stated on the prospectus,
10. Other matters as may be prescribed by an Ordinance.
In case where a foreign company purports to flotate stocks or debentures in the districts where the present Law is in force, the representatives stipulated by paragraph 2 of Article 479 of the Commercial Code shall file the statement as prescribed by the preceding paragraph.
Should there be matters required to be amended in the statement as prescribed by paragraph 1, persons as prescribed by the foregoing two paragraphs shall file an amendment statement with the Government.
Article 7. Prospectus stating matters different from items mentioned under item 9 of paragraph 1 of the foregoing Article, shall be used, for issue of stocks or debentures.
Article 8. With regard to stocks or debentures required to be filed under the provisions of Article 6, flotation or entrustment of flotation of such stocks or debentures, allotment of such stocks as a result amalgamation or under-writing of such stocks by promoters shall not be made before the lapse of the period mentioned hereunder:
1. Fifteen (15) days from the receipt of the statement as prescribed by paragraph 1 of Article 6;
2. If an amendment statement as prescribed by paragraph 3 of Article 6 is filed within the period stipulated by the foregoing item, fifteen (15) days from the receipt thereof;
3. If an inquiry or disposal is made under Article 9, the period as may be separately designated by the Government.
Article 9. The Government shall, if it deems the statement filed under the provisions of Article 6 formally incomplete, order to have it supplemented, and if it deems false statements on material facts have been made, or important items have been omitted, shall make inquiry to the applicant, and if necessary, request him to file an amendment statement.
The disposal prescribed by the foregoing paragraph cannot be effected after the day when flotation, entrustment of flotation, allotment of stocks or underwriting of stocks or debentures were effectuated under the provisions of the foregoing Article.
Article 10. On the statement filed in accordance with the provisions of paragraph 1 or 3 of Article 6 or paragraph 1 of the foregoing Article, if false statements have been made of a material fact or important matters have been omitted, the applicants who filed such statement shall jointly be liable to compensation for loss against the persons who subscribed for such stocks or debentures or who acquired such stocks or debentures;provided that this shall not apply to the case where the applicants certified that they had not neglected attentions nor committed purposely.
The liability as prescribed by the foregoing paragraph shall be cancelled by prescription when three (3) years have elapsed since the day when flotation, entrustment of flotation, allotment of stocks, or underwriting of stocks or debentures become possible in accordance with the provisions of Article 8.
Article 11. The provisions of the foregoing Article shall apply mutatis mutandis to persons who, in violation of the provisions of Article 7, used a prospectus stating matters different from those items mentioned under item 9 of paragraph 1 of Article 6.
Article 12. Joint-stock companies or joint-stock limited partnerships shall, as may be prescribed by an Ordinance, prepare a report pertaining to conditions of business or property for every business year, and file the same with the Government within two (2) months after the lapse of every business year;provided that this shall not apply to the case where the Government specifically designates with respect to companies the total amount whose face value of stocks or debentures to be issued does not exceed two hundred thousand yen (\200,000).
The provisions of paragraph 1 of Article 9 shall apply mutatis mutandis to the case of the foregoing paragraph.
Article 13. Documents referred to in Article 6 or theforegoing Article shall, as may be prescribed by an Ordinance, be kept in the hands of the Government and the whole or a part thereof be offered for the perusal of general public.
Any one can, in accordance with an Ordinance, demand a copy or an extract of the documents referred to in the foregoing paragraph by paying a certain charge.
Article 14. In case where persons required to file documents in accordance with the provisions of Article 12 are dissolved, the directors thereof (partners with unlimited liability who perform the general business in the case of a joint-stock limited partnership) shall make a report of such fact to the Government without delay.
Chapter 3. Securities dealers
Article 15. Those who desire to carry out securities business shall, as may be prescribed by an Ordinance, obtain the license of the Government.
Persons who obtained the license referred to in the foregoing paragraph (hereinafter referred to as "securities dealers" ) shall, as may be prescribed by an Ordinance, pay the license fee.
Article 16, Persons whose amount of net assets does not reach the amount designated by the Government shall not obtain the license as prescribed by paragraph 1 of the foregoing Article.
Necessary matters pertaining to the computation of the amount of the net assets as prescribed by the foregoing paragraph shall be stipulated by an Ordinance.
Article 17. Persons coming under any of the following items cannot obtain the license prescribed by paragraph 1 of Article 15:
1. A bankrupt who is not reinstated;
2. Any one who was sentenced to imprisonment or others, and for whom five (5) years have not elapsed after the execution was completed or was exempted;
3. Any one whose license was cancelled in accordance with paragraph 2 of Article 18, paragraph 2 of Article 19 or Article 30, and for whom five (5) years have not elapsed after the day of the cancellation;
4. Minors or interdicts who have not the capacity equivalent to adults with respect to business and whose legal representative is coming under any of the foregoing items;
5. Juridical persons, any of whose directors or other officers executing the general business comes under any of items 1 to 3 inclusive.
Article 18. If the amount of net assets of a securities dealer happens to be smaller than the amount designated by the Government in accordance with paragraph 1 of Article 16, the Government shall immediately suspend his business.
In the case of the foregoing paragraph, if the net assets of the securities dealer fails to recover the amount designated by the Government under paragraph 1 of Article 16 within six (6) months, the Government shall cancel the license as prescribed by paragraph 1 of Article 15.
Article 19. Should a securities dealer come under any of item 1, 2, 4 or 5 of Article 17, his license shall become null and void.
Should the Government find a person who have obtained illegally the license as prescribed by paragraph 1 of Article 15, it can cancel his license.
Article 20. Securities dealers shall, as may be prescribed by an Ordinance, deposit a business guarantee fund.
The business guarantee fund referred to in the foregoing paragraph can, as may be prescribed by an Ordinance, be furnished with national bonds.
Those who made transactions with a securities dealer on his business shall, with respect to the business guarantee fund, possess a preferential right over any other creditors regarding the claim arising from the transactions.
Article 21. In the following cases, securities dealers shall file such fact with the Government:
1. If they desire to alter their trade-name,
2. If they desire to establish an office or agent,
3. If they desire to change the location of the head office or other offices,
4. If they desire to perform business other than securities business.
Matters filed pursuant to the provisions of the foregoing paragraph shall not be enforced before ten (10) days from the day when the Government has received such matters.
The Government can, if it deems unproper any matter filed pursuant to paragraph 1, suspend its enforcement.
Article 22. Notwithstanding the restrictions provided by any other Law, joint-stock companies who are securities dealers, and who are capitalized at the amount exceeding the amount designated by an Ordinance, can be entrusted with the flotation of debentures, and if there happen to be no company who is entrusted with the flotation of debentures, they can be a business successor.
Article 23. If securities dealers desire to offer securities or to handle flotation or offering of securities, they shall file such fact with the Government in accordance with an Ordinance.
The provisions of paragraphs 2 and 3 of Article 21 shall apply mutatis mutandis to the filing referred to in the foregoing paragraph.
Article 24. All securities dealers who made transactions of securities shall, as may be prescribed by an Ordinance, prepare a document relating to such transactions and deliver the same to the other party of the transaction concerned.
Article 25. Securities dealers shall, as may be prescribed by an Ordinance, prepare a document pertaining to the business and state necessary particulars thereon.
Article 26. As regards the business of securities, the business year shall be from April to September and from October to March of the following year.
Article 27. Securities dealers shall, as may be prescribed by an Ordinance, prepare a business report for every business year and file the same with the Government within two (2) months after the lapse of every business year.
The Government can, if it deems it necessary to do so, order securities dealers to publicize the business report referred to in the foregoing paragraph in the press, in accordance with an Ordinance.
Article 28. The Government can, if it deems it necessary to do so, order securities dealers to submit a report with respect to their business or property or have the conditions of business or property or books, documents or other articles audited by the competent officials.
Article 29. With the consideration of the conditions of business or property of securities dealers, if deemed necessary to do so in order to protect the interests of persons making transactions with such securities dealers, the Government can suspend or restrict the business or order to have the property deposited or make other necessary disposals.
Article 30. If securities dealers or directors thereof or other officers executing the general business commit an action coming under any of the following items, the Government can cancel the license as prescribed by paragraph 1 of Article 25 or order to suspend the business or dismiss the directors or other officers executing the general business:
1. If they receive money or securities by defrauding bona-fide persons with respect to the business, or receive illegally money or securities which are to be conferred to other persons;
2. If they effect buying, selling or other transactions or canvass for such transactions of securities by giving a false statement upon material facts with respect to such securities;
3. If they violate Laws or Ordinances or disposals to be made by any administrative office on the basis of Laws or Ordinances.
Article 31. With regard to a conflict on buying and selling or other transactions carried out by securities dealers, the Government shall, as may be prescribed by an Ordinance, mediate the conflict on the plea of the securities dealer who is one of the parties concerned or the person who is the other party, in order to settle the conflict.
In case where the securities dealer fails to fulfil the agreement based on the mediation mentioned in the foregoing paragraph, the Government can order the suspension of his business for not more than six (6) months.
Chapter 4. Securities Exchange
Section 1. Establishment and Organization
Article 32. Securities dealers can, as may be prescribed by an Ordinance, establish a securities market with the license of the Government.
Article 33. Only one securities exchange can be established in one district.
The district referred to in the foregoing paragraph shall be stipulated by an Ordinance.
Article 34. A securities exchange shall be an incorporated association.
A securities exchange shall be a membership system.
Article 35. The objective of a securities exchange shall be to open a securities market.
A securities exchange cannot engage in any other business not directly essential for the attainment of the objective as prescribed by the foregoing paragraph.
Article 36. The following particulars shall be provided for by the Articles of Association of a securities exchange:
3. Districts with respect to the securities exchange concerned,
5. Matters pertaining to funds and subscriptions,
6. Matters pertaining to members,
7. Matters pertaining to membership guarantee funds,
8. Matters pertaining to allotment of expenses,
9. Matters pertaining to officers,
10. Matters pertaining to meeting,
11. Matters pertaining to execution of business,
12. Matters pertaining to accountings,
13. Means of public notices.
Securities exchanges shall, if they desire to alter the Articles of Association thereof, file such fact with the Government.
The provisions of paragraphs 2 and 3 of Article 21 shall be applied mutatis mutandis to the filling mentioned in the foregoing paragraph.
Article 37. Securities markets to be opened by Securities exchanges (hereinafter referred to as "securities market" under the present Chapter) shall be the only one in the district relating to the securities exchange concerned.
Article 38. Should the license as prescribed by paragraph 1 of Article 32 be obtained, securities dealers who applied for such license shall, as may be prescribed by an Ordinance, effect registration on the establishment of a securities exchange.
A securities exchange shall come into existence as soon as the registration on the establishment is effected.
Article 39. A securities exchange shall effect registrations as may be prescribed by an Ordinance.
Matters required to be registered in accordance with the provisions of the foregoing paragraph shall not be set up against a third party or parties unless the registration thereon is completed.
Article 40. The provisions of Article 50 of the Civil Code shall apply mutatis mutandis to a securities exchange.
Section 2. Members
Article 41. Only securities dealers may be members of the securities exchange.
Article 42. Any person amount of whose net assets does not reach the amount designated by the Government cannot be a member.
If the amount of net assets of a member happens to be smaller than the amount designated by the Government, the Government shall immediately suspend his transactions on the securities market and at the same time notify the securities exchange of such fact.
In the case of the foregoing paragraph, if the amount of net assets of a member does not recover the amount designated by the Government within six (6) months, the Government shall immediately order the securities exchange to expel the member concerned.
Necessary matters pertaining to the computation of the amount of net assets as prescribed by the foregoing three paragraphs shall be stipulated by an Ordinance.
Article 43. The members shall invest money as may be prescribed by the Articles of Association.
Besides the allotment of expenses stipulated by the Articles of Association, the liability of the member shall be limited to the amount of his investment.
Article 44. The holdings of the members with respect exchanges can, on the approval of the securities to exchange, be transferred only in case where the members concerned are to withdraw.
Article 45. The members can, in accordance with the Articles of Association, withdraw from the securities exchange on the approval thereof.
Article 46. Besides the cases stipulated by the foregoing Article, the members shall be withdrawn owing to the following reasons:
1. Forfeiture of the qualification as a member,
Article 47. Should a member be withdrawn, the securities exchange shall, in accordance with the Articles of Association, repay his holdings.
Article 48. The members shall deposit a membership guarantee fund to the securities exchange in accordance with the Articles of Association.
The amount of the membership guarantee fund shall not be under the amount stipulated by the Government.
The membership guarantee fund can be furnished with securities as designated by the securities exchange in accordance with an Ordinance.
Any person who has entrusted the transactions on the securities market to a member shall, with respect to the membership guarantee fund of the member concerned, have a preferential right over any other creditors regarding the claims arising from such entrustment.
Article 49. A securities exchange can, as may be prescribed by an Ordinance, impose upon members a penalty of not less than one hundred thousand yen (\100,000) or suspend or restrict his transactions on the securities market or expel him from the member in order to maintain the order therein.
Article 50. Should a member by withdrawn, the securities exchange shall let the person, a general successor or any other member complete the transactions, made at the securities market in accordance with an Ordinance. In this case, the person or his successor shall be deemed as a member as far as and within the extent of the objective of completion of the transaction is concerned.
In case where the securities exchange let any other member complete the transactions, it shall be deemed that a trust contract be in existence between the person or his general successor and other members.
Section 3. Management
Article 51. There shall be the following officers in a securities exchange:
Officers shall be elected by members in accordance with the Article of Association,
Any one who comes under any of the items of Article 17 cannot be the officer.
Article 52. President shall represent the securities exchange and preside over the general business therein.
Directors shall, in accordance with the Articles of Associations, represent the securities exchange, assist the president and manage the affairs of the securities exchange, and act as a proxy if the president is absent, and carry out the duty of the president, if the seat of the president is vacant.
Auditors shall audit the affairs of the securities exchange.
Article 53. Should any `officer come under any of the items of Article 17, he shall lose his post.
Any officer cannot hold the post of the officer of any other exchange.
Should the Government find a person who has become an officer illegally, the Government shall order the securities exchange to release him from the post of the officer.
Article 54. In case where there is no person who carries out the duty of a director or auditor and if it deems it necessary to do so, the Government can appoint an acting director or acting auditor.
Article 55. A securities exchange cannot invest its business funds (including the funds deposited as a membership guarantee fund) except in the following manner:
1. Purchase of national bonds or local bonds,
2. Bank deposits or postal savings.
Article 56. The Provisions of Articles 44, 51, 54, 57, 60 to 66 inclusive of the Civil Code and the provisions of paragraph 1 of Article 35 of the Law concerning the precedures for Non-Contentious Case shall be applied mutatis mutandis to a securities exchange.
Section 4. Transactions on Securities Exchanges
Article 57. Only members of the securities exchange which opens the securities market can make transaction thereon.
Article 58. Securities exchanges shall obtain the approval of the Government on the types and term of transactions to be made on the securities market opened by the same exchange. The same shall apply to any alteration thereof.
Article 59. Securities exchanges shall, as may be prescribed by an Ordinance, set up Regulations.
On purporting to set up the Regulations referred to in the foregoing paragraph, the securities exchange shall file the same with the Government.
The provisions of paragraphs 2 and 3 of Article 21 shall be applied mutatis mutandis to the filing referred to in the foregoing paragraph.
Article 60. Securities exchanges shall, as may be prescribed by an Ordinance, file with the Government descriptions of securities to be listed on the exchange for each class of transactions. The same shall apply to cases where the description of securities to be withdrawn from listing on the exchange.
The provisions of paragraphs 2 and 3 of Article 21 shall be applied mutatis mutandis to the filing referred to in the foregoing paragraph.
Article 61. Should a member of the securities exchange cause damage to any other member due to nonfulfilment of the obligation on its transaction made on the securities market, the sufferer shall have a preferential right over any other creditors with respect to the membership guarantee fund.
The preferential right of persons who entrust transactions under paragraph 4 of Article 48 shall have a priority over the preferential right referred to in the foregoing paragraph.
Article 62. Securities exchanges shall make public the actual quotation and the volume of business on the securities market opened by the same exchange.
Article 63. The provisions of Article 50 shall be applied mutatis mutandis to the case where the transactions of a member on the securities market was suspended in accordance with the provisions of the present Law.
Section 5. Entrustment of Transactions on the Securities Exchange
Article 64. No place other than the head office, branches, other offices or agents can be the place where the members can be entrusted with transactions on the securities market.
If offices or agents other than the head office be made as the place where transactions on the securities market are to be entrusted, the members shall obtain the approval of the securities exchange which they belong to.
Should the approval as prescribed by the foregoing paragraph be granted, the securities exchange shall make a public notice of such fact without delay.
The members shall be liable to anything incurred from the transactions for truster with respect to the trust.
Article 65. No one can make it his business to act as intermediary or go between of trust or proxy of truster with respect to the transactions on the securities market;provided that this shall not apply to the case where securities dealers make it their business to act as intermediary of entrustment.
Article 66. Without actual selling, buying or delivery on the securities market, the members cannot settle the transactions which are entrusted to for the truster by means of the accounting same as or similar to that of actual selling, buying or delivery.
Should any member violate the provisions of the foregoing paragraph, the securities exchange shall impose upon him a penalty not exceeding ten thousand yen (\10,000.00), and simultaneously suspend his transactions on the securities market for not less than two (2) months or expel him.
Article 67. When the members are entrusted with transactions on the securities market, they shall, as may be prescribed by an Ordinance, collect a margin from trusters.
The amount of the margin referred to in the foregoing paragraph shall be over thirty (30) percent of the price of the securities to be bought or sold on the entrustment concerned or of the value of entrustment of securities to be entrusted, and shall not be under the amount computed in the manner prescribed by the Government.
Matters necessary for computation of the price as prescribed by the foregoing paragraph shall be stipulated by an Ordinance.
The margin as prescribed by paragraph 1 can, as may he prescribed by an Ordinance, be furnished with securities.
Article 68. When the members are entrusted with transactions on the securities market, they shall collect from trusters a commission determined by the securities exchange.
The securities exchange shall obtain the approval of the Government with respect to the commission as prescribed by the foregoing paragraph.
Article 69. Should the transactions on the securities market which are entrusted be effected, the members shall, as may be prescribed by an Ordinance, prepare a Transaction Report and deliver the same to the truster.
Section 6. Dissolution
Article 70. A securities exchange shall be dissolved due to the following causes:
1. Causes stipulated by the Articles of Association,
2. Resolution of the general meeting,
3. When the members of the exchange happens to be the only one,
5. Cancellation of the license of establishment.
Article 71. The remnant property shall be distributed equally among the members, unless otherwise stipulated by the Articles of Association or the resolution of the general meeting.
Article 72. The provisions of Articles 69, 70, 73 to 76 inclusive, 78 to 83 inclusive of the Civil Code, Articles 125,126,128,129,131,419 and 427 of the Commercial Code, and the provisions of paragraph 2 of Article 35, Article 26, Article 37-(2), paragraphs 2 and 3 of Article 135-(25), paragraph 1 of Article 136, Articles 137 and 138 of the Law concerning the procedure of Non-Contentious case shall apply mutatis mutandis to the dissolution of the securities exchange;provided that directors referred to in Article 70 and Article 74 of the Civil Code shall read the president and directors.
The provisions of Articles 44, 54, 57, 60 and 61 of the Civil Code shall apply mutatis mutandis to liquidators of the securities exchange.
Section 7. Supervision
Article 73. The Government may, if it deems it necessary to do so, order a securities exchange to submit a report on the business or property, or lot the competent officials inspect the state of business or property, books, documents or other articles.
Article 74. If actions conducted by a securities exchange contravene any Laws or Ordinances or any measures taken by an Administrative Office on the basis of Laws or Ordinance, the Government may make the following disposals:
1. To cancel the license on establishment of the securities exchange,
2. To suspend a part or whole of the business of the securities exchange,
3. To prohibit a part of the business of the securities exchange,
4. To release the officers.
Article 75. With regard to a conflict on the transactions on the securities market carried out by a member, the Government shall mediate the conflict on the plea of the member who is one of the party concerned, or of the person who is the other party in order to settle the conflict.
In case where the member fails to fulfil the agreement based on the mediation as prescribed by the preceding paragraph, the Government may order to suspend his transactions on the securities market for not more than six (6) months.
Article 76. Besides those provided for by the present Law, matters necessary for preventing vicious effect from occurrence with respect to transactions on the securities market shall be prescribed by an Ordinance.
Article 77. No business tax shall be imposed upon securities exchange.
Chapter 5. Securities Transaction Commission
Article 78. In order to attain a proper conduct of securities transaction, whereby, to protect the interests of investors, a Securities Transaction Commission (hereinafter referred to as "the Commission" ) shall be established in the Government.
The Commission shall carry out the following matters in order to achieve the objective as prescribed by the foregoing paragraph:
1. To deliberate upon the policy for enforcement of this Law,
2. To review all orders and other important disposals based on this Law and give an approval thereto,
3. To make investigations on matters relating to enforcement of this Law and, if deemed necessary, to summon interested persons or to request the submission of documents and books,
4. To make public the investigation relating to the securities,
5. To participate in the formation of budget necessary for enforcement of this Law and, if deemed necessary, submit a report thereon to the Diet.
Article 79. the Commission shall be composed of three Commissioners.
The Commissioners shall be elected from among persons of competence and education and appointed by the Cabinet.
The tenure of service of the Commissioners shall be three (3) years;provided that with regard to the tenure of service of persons who become the Commissioners initially after the enforcement of the present Law, it shall be three (3) years, four (4) years and five (5) years respectively and the tenure of service of a person or persons who are appointed supplementarily as Commissioners before the lapse of tenure of his predecessor shall be the rest of the tenure of the service of his predecessor.
Article 80. The Commissioners shall not be dismissed against their will during the tenure of service.
With regard to the duty of the Commissioners, the public Service Regulations shall be applied mutatis mutandis thereto.
Article 81. There shall be a Chairman in the Commission, who shall be elected by mutual vote from among the Commissioners.
Article 82. Beside those as prescribed by Article 78 to the forgoing Article inclusive, necessary matters pertaining to the Commission shall be determined by a separate Ordinance.
Chapter 6. Miscellaneous Provisions
Article 83. On purporting to order to make amendments to documents in accordance with the provisions of paragraph 1 of Article 9 (including the case where the same Article is applied to paragraph 2 of Article 12) or to make orders or disposals in accordance with the provisions of Article 18, paragraph 2 of Atricle 19, Articles 28, 29, paragraph 2 of Article 30, paragraph 3 of Article 51, Article 71, or paragraph 2 of Article 72, the Government shall, as may be prescribed by an Ordinance, give a hearing to the person who is the other party of the disposal;provided that this shall not apply to the case where the other party concerned fails to accept the hearing without a just cause.
Article 84. Joint-stock companies or joint stock limited partnerships shall, as may be prescribed by an Ordinance, file with the Government the fact if the directors (in the case of joint stock limited partnership, partners with unlimited liability) auditors or shareholders having stocks equivalent to ten (10) percent of the capital stock purchase or transfer stocks thereof.
The Government may, if it deems it necessary to do so, order joint stock limited partnerships to make a public notice with regard to purchase or transfer of stocks as prescribed by the foregoing paragraph in the manner determined by the Government.
Article 85. No person other than securities exchanges may open a securities market.
No one may make transactions on a securities market opened in violation of the provisions of the foregoing paragraph.
Chapter 7. Penal Provisions
Article 86. A person who comes under any of the following items shall be confined to imprisonment for not more than two (2) years or be fined not more than twenty thousand yen (\20,000.00):
1. One who, with the objective of attempting to fluctuate quotations on the securities market, circulates false rumours, uses deceptive schemes, or employs methods of a assault and battery or intimidation;
2. One who, in violation of the provisions of Article 32 and without obtaining a license, sets up a securities exchange;
3. One who, in violation of paragraph 1 of the foregoing Article, opens a securities market.
Article 87. A person who comes under any of the following items shall be confined to imprisonment for not more than one (1) year or be fined not more than ten thousand yen (\10,000.00):
1. One who, with regard to stocks or debentures on which statement as prescribed by paragraph 1 of Article 6 have not been filed, flotate or entrust flotation thereof or allot such stocks as a result of amalgamation or promoters who underwrite such stocks;
2. One who has made a false entries or omitted important matters in the statement as provided for in Article 6 or 9 and filed the same with the Government;
3. One who violates the provisions of Article 7;
4. One who, in violation of the provisions of Article 8 flotates or entrusts flotation thereof allots stocks as a result of amalgamation or underwrites stocks or debentures;
5. One who carries out a securities business without obtaining a license in violation of the provisions of paragraph 1 of Article 15;
6. One who carries out matters required to be filed in accordance with paragraph 1 of Article 21, paragraph 1 of Article 23, paragraph 2 of Article 36, paragraph 2 of Article 51 or paragraph 1 of Article 60 without filing;
7. One who violate the orders to suspend the enforcement under the provisions of paragraph 3 of Article 21 (including the case where the same Article is applied mutatis mutandis to paragraph 2 of Article 23, paragraph 3 of Article 36, paragraph 3 of Article 59 or paragraph 2 of Article 60);
8. One who violate the disposal as prescribed by paragraph 1 of Article 18 or paragraph 2 of Article 42;
9. One who makes a false public notice of the actual quotations on the securities exchange;
10. One who fabricates printed matters with false quotations on the securities market opened by the securities exchange or cause such printed matters to be distributed for the purpose of making a public notice or of distribution;
11. One who violates the provisions of paragraph 1 of Article 64;
12. One who, in violation of Article 65, makes it his business to act as intermediary or go-between of trust or as a proxy of a truster;
13. One who makes transactions in violation of the provisions of paragraph 2 of Article 85.
Article 88. One who makes such actions as purporting to give and take differences in prices passed upon the securities market quotations without resort to the market opened by the securities exchange shall be confined to imprisonment for not more than one (1) year or be fined not more than ten thousand yen (\10,000.00);provided that the above shall not disturb the application of Article 186 of the Criminal Code.
Article 89. Officers (including acting directors and acting auditors) and employees of the securities exchange who, with respect to their duties, receive, demand or promise bribee shall be confined to imprisonment for not more than three (3) years.
The bribes already received in the case of the foregoing paragraph shall be confiscated. If the whole or a part of the bribe is unable to be confiscated, the amount corresponding to it shall be forfeited.
Those who give or apply for or commit themselves to bribes such as stipulated in paragraph 1 shall be confined to imprisonment for not more than three (3) years or be fined not more than five thousand yen (\5,000.00).
Article 90. A person who falls under any of the following items shall be fined not more than ten thousand yen (\10,000.00):
1. One who fails to submit reports or fails to file in the required items or makes a false statement in regard to such as provided for by paragraph 1 of Article 12, paragraph 1 of Article 27 or paragraph 1 of Article 84;
2. One who fails to make report on matters required to be reported in accordance with the provisions of Article 28 or 73 or makes a false report;
3. One who violates orders of the Government issued in accordance with the provisions of paragraph 2 of Article 27 or paragraph 2 of Article 84;
4. One who carries out matters requiring approval without receiving approval as provided for by Article 58 or paragraph 2 of Article 68;
5. One who violates the provisions of paragraph 3 of Article 21 (including the case where the same Article is applied mutatis mutandis to paragraph 2 of Article 23, paragraph 3 of Article 35, paragraph 3 of Article 59 or paragraph 2 of Article 60);
6. One who fails to have in hand or makes false entries in such books as provided for by the provisions of Article 25;
7. One who violates the orders based on the provisions of Article 76;
8. One who evades, obstructs, or refuses the search inspection carried out under the provisions of Article 26 and Article 73.
Article 91. Directors, partners with unlimited liability who execute the general business of a joint-stock limited partnership, business proxies, managers, securities dealers (in the case of a securities dealer who is a company, directors, partners executing the general business, business proxies or managers) or the president, directors (acting directors included) or liquidators of the securities exchange, shall be subject to a penalty of not more than five thousand yen (\5,000.00) in the following cases:
1. If they fail to effect registration as stipulated by this Law or by orders issued on the basis of this Law;
2. If they fail to file a statement in violation of the provisions of Article 14;
3. If they violate the provisions of Article 55;
4. If they fail to have in hand the inventory or partners list as prescribed by Article 51 of the Civil Code which is applied mutatis mutandis to Article 56 or make a false entry therein;
5. If they fail to make a public notice or make a false public notice in violation of the provisions of paragraph 1 or 2 of Article 67 of the Civil Code or paragraph 1 of Article 81 of the said Code which are applied mutatis mutandis to paragraph 3 of Article 64 or Article 72;
6. If they fail to make a request of declaration on bankruptcy in violation of the provisions of paragraph 29 of Article 70 or paragraph 1 of Article 81 of the Civil Code which are applied mutatis mutandis to Article 72;
7. If they distribute the assets of the securities exchange in violation of the provisions of Article 131 of the Commercial Code which is applied mutatis mutandis to Article 72.
Article 92. When a representative of juridical person, an agent of a juridical person or a natural person, a servant or other employee is guilty of a violation of the provisions of item 2 and 3 of Article 86, Article 87 and items 1 to 7 inclusive of the foregoing Article in regard to the business or property of his juridical person or natural person, the said juridical person or natural person shall be subject to fine as prescribed by this Article in addition to the actual offender.
Supplementary Provisions:
Article 1. The date of enforcement of the present Law shall be prescribed by an Ordinance in respect to every separate provision.
Article 2. The Securities Dealers Business Regulation Act, the Securities Underwriting Business Act, and the Securities Discounting Sales Act shall hereby be abolished.
Article 3. The Securities Exchange Act shall partly be amended as follows:
In Article 1, next to "with the license," "according to this Law" shall be added;and next to "articles," "(excluding securities;hereinafter the same except the case as prescribed by Article 28)" shall be added.
In Article 2, paragraph 2 of Article 11-(4), paragraph 2 of Article 16-(2), Article 16-(3), paragraph 1 of Article 22 and Article 27 to Article 29, inclusive "Minister of Agriculture and Commerce" shall read "the competent Minister."
Article 4-(2) shall be deleted.
Paragraph 1 of Article 11 shall be deleted, and paragraph 4 of the same Article shall be amended as follows:
If there are persons who come under the foregoing two paragraphs among partners whith unlimited liability in the case of ordinary partnership, limited partnership or joint-stock limited partnership, and among directors in the case of joint-stock company or limited company, such company cannot be a member or broker.
In paragraph 1 of Article 11-(2), "paragraph 2 or 4" shall read "or paragraph 3" ;in paragraph 2 of the same Article, "Minister of Agriculture and Commerce" shall read "the competent Minister" and "paragraph 2 or 4" shall read "or paragraph 3" ;in paragraph 3 of the same Article, "paragraph 1, 3 or 4" shall read "paragraph 2 or 3" ;in paragraph 4 of the same Article, "Minister of Agriculture and Commerce" shall read "the competent Minister" and "paragraph 1, 3 or 4" shall read "paragraph 2 or 3."
In Article 18, "three months for securities" shall be deleted.
Article 4. As regards the application of penal provisions to the actions conducted prior to the enforcement of this Law, the former Securities Business Regulation Act, the former Securities Underwriting Business Act, the former Securities Discounting Sales Act shall still be effective.
Article 5. Persons who are cancelled of the license of a broker in accordance with the former Securities Business Regulation Act, the former Securities Underwriting Business Act, the Securities Discounting Sales Act, or the Securities Exchange of Japan Act shall be regarded as persons who are cancelled of the license of a securities dealer under this Law as far as the application of the provisions of Article 17 is concerned.
Article 6. Persons carrying on securities business under the former Securities Business Regulation Act, securities underwriting business under the former Securities Underwriting Business Act, and securities discounting sales business under the former Securities Discounting Sales Act, or banks, trust companies who perform securities business at the time of the enforcement of this Law shall be regarded as having obtained the license as prescribed by Article 15 for period of time within six (6) months from the effective date of the same Article.
Should persons mentioned in the foregoing paragraph apply, within the period of time prescribed by the foregoing paragraph, for the license as prescribed by paragraph 1 of Article 15, the same rule as of the foregoing paragraph shall be applied up to the date when the license is granted or withheld.
The provisions of paragraph 2 of Article 15, Article 16 and Article 18 shall not apply to persons who are regarded as having obtained the license prescribed by paragraph 1 of Article 15 under the foregoing two paragraphs.
With regard to the business guarantee, fund of persons who are regarded as having obtained the license as prescribed by paragraph 1 of Article 15 in accordance with the provisions of paragraph 1 or 2, the same rules as heretofore shall be applied irrespective of the provisions of paragraph 1 of Article 20.
Article 7. Any one whose right is infringed due to an illegal disposal carried out by the Government with respect to matters stipulated by this Law or orders to be issued under this Law can bring an action to the Administration Court for the time being.