THE PETROLEUM DISTRIBUTION PUBLIC CORPORATION LAW Chapter 1. General Provisions

Art.1. The Petroleum Distribution Public Corporation shall have for its object the performance of the business relative to appropriate and equitable distribution of all petroleum and petroleum products enumerated in the appended list regardless of quality, type or origin (hereinafter called petroleum and petroleum products) in accordance with quota program and rationing procedures set up or to be set up by the Director-General of the Economic Stabilization Board. The Petroleum Distribution Public Corporation shall be a juridical person.

Art.2. The main office of the Petroleum Distribution Public Corporation shall be established in Tokyo. The Petroleum Distribution Public Corporation may with the approval of the competent Minister establish branch offices where essential for the performance of business relative to distribution.

Art.3. The authorized fixed capital of the petroleum Distribution Public Corporation shall be \60,000,000 to be subscribed exclusively by the Government. Working capital of the Petroleum Distribution Public Corporation shall be obtained by loan when necessary from the Reconstruction Finance Corporation.

Art.4. The Petroleum Distribution Public Corporation shall stipulate the following matters in its Articles of Incorporation: 1. Object 2. Firm name 3. Location of office 4. Matters relative to capital 5. Matters relative to officers 6. Matters relative to business and its execution 7. Matters relative to accounting 8. Matters relative to public notice The Articles of Incorporation may be revised with the approval of the competent Minister and the Director-General of the Economic Stabilization Board.

Art.5. The Petroleum Distribution Public Corporation shall register as prescribed by Imperial Ordinances. The matter required to be registered as prescribed in the preceding paragraph shall not be valid against a third person unless they are registered.

Art.6. Income tax and corporation tax shall not be levied on the Petroleum Distribution Public Corporation. The prefecture, city, town, village and those corresponding to them shall not levy local taxes on the enterprise of the Petroleum Distribution Public Corporation. This shall not apply to the case where the Ministers of Home Affairs and Finance have approved under a special circumstances.

Art.7. The Petroleum Distribution Public Corporation shall be dissolved by the nullification of the Temporary Supply Demand Adjustment Law or by the order of the Director-General of the Economic Stabilization Board. In addition to the matters referred to in the preceding paragraph, those necessary for dissolution of the Petroleum Distribution Public Corporation shall be prescribed by Imperial Ordinances.

Art.8. Any person other than the Petroleum Distribution Public Corporation shall not use the title of Petroleum Distribution Public Corporation or similar title in his firm name.

Art.9. The provisions of Articles 44, 50, 54 and 57 of the Civil Code and Art.35, paragraph 1, of the Non-litigant Case Procedural Law shall apply correspondingly to the Petroleum Distribution Public Corporation.

Chapter 2. Officers and Personnels

Art.10. Petroleum Distribution Public Corporation shall have as its officers one president, one vicepresident, two or more directors and one or more auditors. The President shall represent the Petroleum Distribution Public Corporation and supervise its business in accordance with the provisions of Art.15. The Vice-president shall as prescribed in the Articles of Incorporation represent the Petroleum Distribution Public Corporation, assist the President in conducting business, act for him in case he cannot take his duty, and perform his function in case his post becomes vacant. The Directors shall as prescribed in the Articles of Incorporation represent the Petroleum Distribution Public Corporation, assist the President and the Vice-president in control of its affairs, act for them in case they cannot take their duties, and perform their functions in case their positions become vacant. The Auditors shall inspect the business of the Petroleum Distribution Public Corporation.

Art.11. The President, Vice-president, Directors and Auditors shall be appointed by the competent Minister.

Art.12. The President, Vice-president and Directors may in accordance with the provisions of the Articles of Incorporation delegate power to personnels of the Petroleum Distribution Public Corporation who shall have authority to perform all juridical and non-juridical matters in regard to the affairs of the main or subordinate offices.

Art.13. The officers and personnels of the Petroleum Distribution Public Corporation shall not be permitted to be stockholders, or employees or to have any beneficial interest in any company or enterprise engaged in the production, refining, storage, blending, purchase, sale and transport of petroleum and petroleum products.

Art.14. The officers and personnels of the Petroleum Distribution Public Corporation shall be government officials and personnels. The ranking of the President shall be the same with that of Vice-Minister or equivalent to it. Officials other than the President shall be of 1st class officials. Other personnels shall be of 1st, 2nd, or 3rd class officials. The competent Minister shall fix the number of the above staff. The officers and personnels of the Petroleum Distribution Public Corporation shall be governed by all Laws and Ordinances relating to the government personnels, provided that the cases that the competent Minister stipulates the special exception concerning the amount of salaries, service rule and any other necessary matters with the approval of the Director-General of the Economic Stabilization Board may be exempted.

Chapter 3. Business

Art.15. The Petroleum Distribution Public Corporation shall perform the following business under the supervision of the competent Minister in accordance with quota program, rationing procedures and directions relating thereto set up and issued by the Director-General of the Economic Stabilization Board: 1. Sole purchase and sale of petroleum and petroleum products at prices established by the Price Board. 2. Storage and blending of petroleum and petroltum products. 3. Distribution of petroleum and petroleum products and matters incidental to distribution. 4. Necessary arrangements for adequate transportation of petroleum and petroleum products in accordance with laws and regulations governing the allocation and use of transportation facilities. 5. Appointment of authorized dealers. The appointment of item 5 of the preceding paragraph shall be made with the approval of the competent Minister within terms and conditions set forth by the Director-General of the Economic Stabilization Board.

Art.16. The Petroleum Distribution Public Corporation at the commencement of its functioning shall establish its method of doing business and submit the same to the Director-General of the Economic Stabilization Board for his approval. This shall also apply to the case where a change is to be made thereto. The Director-General of the Economic Stabilization Board shall consult with the competent Minister and the Minister of Finance, in case he gives approval of the preceding paragraph. In this case, the final responsibility for approval shall lie on the Director-General of the Economic Stabilization Board.

Art.17. The Petroleum Distribution Public Corporation shall, at the beginning of the first term and the second term of each business year, establish a business program and a financial program for every six months and submit the same to the Director-General of the Economic Stabilization Board for his approval. This shall also apply to the case where a change is to be made thereto. The Director-General of the Economic Stabilization Board shall inquire to the competent Minister and the Minister of Finance, in case he gives approval of the preceding paragraph. In this case, the final responsibility for approval shall lie on the Director-General of the Economic Stabilization Board.

Chapter 4. Accounting

Art.18. The business year of the Petroleum Distribution Public Corporation shall be from April each year to March of the following year, and divided into the first term and the second term.

Art.19. The Petroleum Distribution Public Corporation shall prepare a statement of assets, a balance sheet, and a statement of profit and loss for each term of the preceding Article and submit them to the Director-General of the Economic Stabilization Board for his approval within two months after the conclusion of the business year. The Director-General of the Economic Stabilization Board shall inquire to the competent Minister and the Minister of Finance, in case he gives approval of the preceding paragraph. In this case, the final responsibility for approval shall lie on the Director-General of the Economic Stabilization Board. The Petroleum Distribution Public Corporation shall, when it has obtained the approval of the Director-General of the Economic Stabilization Board prescribed in paragraph 1 make a public notice of the statement of assets, balance sheet and the statement of profit and loss and keep them together with the Articles of Incorporation in each office. The statement of assets, balance sheet and statement of profit and loss of the preceding paragraph shall be audited and approved by the Board of Audit. The Petroleum Distribution Public Corporation shall, when it has obtained the approval of Director-General of the Economic Stabilization Board, pay the surplus fund to the National Treasury, as determined by stipulations of ordinance. All books, documents and records of the Petroleum Distribution Public Corporation shall be clearly written and available for inspection by the Board of Audit, the Economic Stabilization Board and the competent Ministry. The Board of Audit shall make the continual and accurate audit of them as prescribed in the preceding paragraph.

Chapter 5. Supervision and Fostering

Art.20. The Director-General of the Economic Stabilization Board will direct and supervise the Petroleum Distribution Public Corporation in regard to quota program and rationing procedures. The Director-General of the Economic Stabilization Board may when deemed necessary to secure appropriate distribution of petroleum and petroleum products issue for supervision a necessary order to the Petroleum Distribution Public Corporation. The competent Minister may when deemed necessary to secure appropriate distribution of petroleum and petroleum products issue for supervision a necessary order to the Petroleum Distribution Public Corporation within the quota program and rationing procedures set up or to be set up by the Director-General of the Economic Stabilization Board. The competent Minister or the Director-General of the Economic Stabilization Board may when deemed necessary have the Petroleum Distribution Public Corporation submit a report or have an official concerned inspect a necessary place to examine the state of business, books, documents or any other necessary matters. In case the official concerned is sent for inspection and examination in accordance with the provisions of the preceding paragraph, he shall carry an identification certificate to prove his post as prescribed by orders.

Art.21. The Petroleum Distribution Public Corporation shall prepare rules on remuneration for its officers and personnels when deemed necessary to pay special payment to them, and submit them to the Director-General of the Economic Stabilization Board for his approval. This shall apply where a change is to be made thereto. The Director-General of the Economic Stabilization Board shall inquire to the competent Minister and the Minister of Finance when he gives approval provided for by the preceding paragraph. In this case, the final responsibility for approval shall lie on the Director-General of the Economic Stabilization Board.

Art.22. The competent Minister may remove an officer of the Petroleum Distribution Public Corporation in case he violates laws and ordinances, Articles of Incorporation or orders issued on the basis of this Law. The Director-General of the Economic Stabilization Board may remove an officer of the Petroleum Distribution Public Corporation if he considers that he is not suitable or properly carrying out his duties in connection with the objects and business of the Petroleum Distribution Public Corporation.

Art.23. The competent Minister may when deemed necessary for the operation of the Petroleum Distribution Public Corporation order the liquidator of the Petroleum Distribution Company to lease any or all facilities owned by the Company to the Petroleum Distribution Public Corporation. The competent Minister may when deemed necessary for the operation of the Petroleum Distribution Public Corporation order owners, exclusive holders or persons having custody including the Minister of Finance, of facilities required by the Petroleum Distribution Public Corporation to lease them to the Petroleum Distribution Public Corporation. A fair and adequate rental for the use of such facilities prescribed in the preceding two paragraphs shall be determined by the Director-General of the Economic Stabilization Board based on policies established by him. When the rental is determined in accordance with the provisions of the preceding paragraph, the Petroleum Distribution Public Corporation shall lease the facilities referred to in paragraph 1 or 2 for period of time not exceeding its period of duration, prescribed in Art.7, paragraph 1, with approval of the Director-General of the Economic Stabilization Board. The competent Minister may when deemed necessary for the operation of the Petroleum Distribution Public Corporation order the liquidator of the Petroleum Distribution Company to hand over to the Petroleum Distribution Public Corporation any or all materials owned by or in possession of the Petroleum Distribution Company. In case the order of the preceding paragraph is issued, the Petroleum Distribution Public Corporation shall pay fair compensations to the parties concerned within one month of the materials, referred to in the preceding paragraph, being taken over by the Petroleum Distribution Public Corporation. The competent Minister shall not issue the order of paragraph 5, unless necessary rules are made for compensation of the preceding paragraph with the approval of the Director-General of the Economic Stabilization Board. The competent Minister may when deemed necessary for the operation of the Petroleum Distribution Public Corporation, in accordance with policies established by the Director-General of the Economic Stabilization Board and with the approval of the Minister of Transportation, order owners, exclusive holders or persons having custody including the Minister of Transportation, of transportation facilities to make them available for use by the Petroleum Distribution Public Corporation. In case of the preceding paragraph, the Petroleum Distribution Public Corporation shall pay fair compensation to the parties concerned. The competent Minister shall not issue the order of paragraph 8, unless necessary rules are made for compensation of the preceding paragraph with the approval of the Director-General of the Economic Stabilization Board. The competent Minister shall be responsible for having the Petroleum Distribution Public Corporation arrange for taking care of and, where deemed necessary, for insurance of all facilities leased by it. The competent Minister may order the Petroleum Distribution Public Corporation or other parties concerned including any Minister, to make prompt arrangements for execution of the preceding paragraphs.

Chapter 6. Penalties

Art.24. Those who violate the provisions prescribed in pars.1, 2, 5 or 8 of the preceding Article shall be liable to penal servitude not exceeding 5 years or a fine not exceeding \50,000.

Art.25. Officers or employees of the Petroleum Distribution Public Corporation who commit an act contrary to one of the following items shall be liable to penal servitude not exceeding 5 years or a fine not exceeding \50,000: 1. Those who perform business which is not prescribed in Art.15, par.1. 2. Those who violate an order relative to supervision of the Director-General of the Economic Stabilization Board or the competent Minister, prescribed in Art.20, par.2 or 3.

Art.26. All persons who fail to report as required under this Law or submit falsified report of refuse, interfere or evade inspections shall be liable to penal servitude not exceeding one year or a fine not exceeding \10,000.

Art.27. Persons who commit acts prescribed in the preceding three Articles may be liable to both penal servitude and a fine, in case deemed necessary from the circumstances. In case a representative of a juridical person or an agent, employees or any other person except the Petroleum Distribution Public Corporation engaged by a juridical person or a person commits the violation mentioned in Art.24 with regard to the business of the respective juridical person or the person, the respective juridical person or the person shall be liable to a fine of Art.24, besides punishing the offender.

Art.28. Those who used the name of the Petroleum Distribution Public Corporation or a similar name in violation of the provisions of Art.8 shall be liable to a fine not exceeding \10,000.

Supplementary Provisions:

Art.29. The date of the enforcement of this Law shall be set forth by an Imperial Ordinance.

Art.30. This Law shall become null and void as of April 1, 1948, or at the time of the dissolution of the Economic Stabilization Board, whichever at the earlier date. The Petroleum Distribution Public Corporation shall be dissolved at the time prescribed in the preceding paragraph. In so far as the application of penal regulations for commitments done up to that time and liquidation of the Petroleum Distribution Public Corporation are concerned, however, this Law shall hold good even after that date.

Art.31. When the Petroleum Distribution Public Corporation is established, the Petroleum Distribution Company shall be dissolved. The liquidation of the Petroleum Distribution Company is to be finished by the 1st of April 1948.

Art.32. The government shall appoint an organizing committee to take charge of works relative to the establishment of the Petroleum Distribution Public Corporation.

Art.33. The organizing committee shall prepare Articles of Incorporation and obtain the approval of the competent Minister and the Director-General of the Economic Stabilization Board to the same. The organizing committee shall, when the approval referred to in the preceding paragraph has been given, demand payment of the authorized fixed capital without delay.

Art.34. The organizing committee, when payment of the authorized fixed capital has been made, shall transfer its work to the President of the Petroleum Distribution Public Corporation without delay. When the President has taken over the work referred to in the preceding paragraph, all of the President, Vice-president, Directors and Auditors shall effect the registration of the establishment without delay. The Petroleum Distribution Public Corporation shall come into being upon the registration of the establishment.

Art.35. The provisions of Art.8 shall not apply for 6 months from the date of the enforcement of this Law to those other than the Petroleum Distribution Public Corporation who use the name of Petroleum Distribution Public Corporation or similar names at the time this Law is put into effect.

Art.36. A part of the Registration Tax Law shall be amended as follows: In Art.19, item 7, the "Public Corporation stipulated by laws" shall be added before "Silk Yarn Joint Association" and "Laws relative to Public Corporation" before "Silk Yarn Enterprise Law."

Art.37. A part of the Stamp Tax Law shall be amended as follows: Article 5, item 6-6 shall be amended as follows: 6-6, Certifying documents and books of Public. Corporation stipulated by laws.

Appendix 1. Gasoline 2. Kerosene 3. Gas Oil 4. Diesel and Fuel Oil 5. Lubricating Oil and Grease 6. Petroleum by-products 1) Asphalt 2) Petroleum Pitch 3) Paraffin Wax