Article 1.　The Japanese National Railways (hereinafter called the "JNR" ) is hereby established for the purpose of operation of the railways enterprise and all other incidental enterprises operated by the state under the Special Account of the Japanese Government Railway Undertakings and their development through efficient operation for the benefit of the public.

Article 2.　The JNR shall be a juridical person of public law. It shall not be considered to be a commercial company within the meaning of Article 35 of the Civil Code (Law No.89 of 1896) or of the provisions of the Commercial Code concerning commercial companies and association (Law No.48 of 1899).

Article 3.　The JNR shall execute the following business affairs for the attainment of the objectives mentioned in Article 1:

2　The JNR may manufacture, repair or purchase machines, tools and other materials relative to land transportation, carry out construction works, supervise business management or execute technical experiments and researches by the application of the general public in so far as such activities do not hamper the smooth operation of its business activities.

Article 4.　The JNR shall have its main office in Tokyo.

2　The JNR shall have its subordinate offices at necessary places.

Article 5.　The capital of the JNR shall be the amount of the assets of the Special Account of the Japanese Government Railways Undertakings as of 31 March 1949, all of which shall be invested by the Government in the Japanese National Railways as provided for by other law.

Article 6.　The JNR shall be exempt from income taxes and juridical person taxes.

2　To, Do, Fu, Ken, cities, towns, villages and other local entitles shall not levy local taxes on the JNR with exception of the mine product tax, admission tax, liquor consumption tax, gas and electricity tax, timber transaction tax, entertainment tax, surtax of above taxes and the entertainment tax share.

Article 7.　The JNR shall be registered in accordance with the provisions of Cabinet Order.

2　Any matter for registration as prescribed by the preceding paragraph shall not stand against any third party prior to its registration.

Article 8.　The provisions of Articles 44, 50 and 54 of the Civil Code (Law No.89 of 1896) shall apply mutatis mutandis to the JNR.

Article 9.　There shall be established a Board of Directors (hereinafter called the "Board" ) in the Japanese National Railways.

Article 10.　The board shall have the authority and responsibility to direct and control the business operations of the JNR for the attainment of the objectives stated in Article 1.

Article 11.　The Board shall be composed of five (5) members with the title of director and one ex-officio member.

2　The Board shall have a Chairman selected by mutual election from among the members.

3　The Board shall proviously appoint an acting Chairman from among the members, to fill the vacancy of the Chairman.

Article 12.　The members of the Board shall be appointed by the Cabinet, with the consent of both Houses of the Diet from among persons of the age of thirty-five or above, who have had wide experience and knowledge in transport, industrial, commercial, or financial matters.

2　If, in the case of the appointment of any director, the House of Councillors does not consent to the projected appointment to which the House of Representative consents, the consent of the House of Representatives shall, as in the case of Article 67, paragraph 2 of the Constitution of Japan, be the consent of both Houses of the Diet.

3　Any person who falls under the provisions of any of the following items shall not be eligible to be a director:

Article 13.　The term of office of the directors shall be five years. But a director who has filled the vacancy of another director shall remain in office during the remaining term of office of his predecessor.

2　Any member of the Board may be eligible for reappointment.

3　The term of office of the members first taking office after the establishment of the JNR shall expires, as designated by the Prime Minister at the time of nomination, one at the end of the first year, one at the end of the second year, one at the end of the third year and one at the end of the fourth year and one at the end of the fifth year, after the date of appointment.

Article 14.　The Cabinet may remove any of the directors with the consent of both Houses of the Diet, when it considers that the same director cannot perform his duties owing to physical or mental disabilities or when it considers that he has acted against his duties, or committed a misconduct deemed unfit for the Board.

2　The provisions of Article 12, paragraph 2, shall apply mutatis mutandis to the case prescribed in the preceding paragraph.

Article 15.　The membership of the Board shall be honorary. The members, however, shall receive travelling expense and other actual expenses occasioned by the performance of their duties.

Article 16.　The Board shall not open proceedings and pass a resolution, unless the chairman of the Board, or the person who acts in lieu of the Chairman as provided in Article 11, paragraph 3, and two or more member directors are present.

2　The matters to be discussed by the Board shall be decided by a majority of those present at a meeting but an ex-officio member mentioned in Article 11 shall not participate in the resolution of the Board.

3　The chairman shall have the decisive vote in case of a tie.

4　The Board may require any officer or employee of JNR to furnish necessary explanations at the meeting.

5　Any officer designated by the President may at any time attend a Board meeting and express opinions or make explanations.

Article 17.　The members of the Board of Directors shall be regarded as personnel engaged in public service in accordance with laws and ordinances.

2　The National Public Service Law (Law No.120 of 1947) shall not apply to the members of the Board of Directors.

Article 18.　The Officers of the JNR shall consist of the President, the Vice-President, and the managers.

Article 19.　The President shall represent the JNR and preside over the conduct of its business. He shall be responsible to the Board of which he shall be the exofficio member provided in Article 11.

2　The Vice-President may, as provided by the president, represent the JNR, shall assist the President and, in the event of the President being absent, shall act on behalf of the President, and, if the presidency is vacant, shall perform his duties.

3　The managers may, as provided by the President, represent the JNR and shall assist the President and the Vice-President, and in the event the President and the Vice-President are absent, shall act as their deputy, and perform the duties of the President and Vice-President when their posts are vacant.

Article 20.　The President shall be appointed by the Cabinet from among the persons recommended by the Board.

2　The recommendations as prescribed by the preceding paragraph shall be based upon the majority decision by not less than four members notwithstanding the provisions in Article 16.

3　The Vice-President shall be appointed by the President with the consent of tbe Board of Directors.

4　The managers shall be appointed by the President.

5　The terms of office of the President and the Vice-President shall be respectively four years.

6　The President and Vice-President may be eligible for reappointment.

Article 21.　Any person who falls under the provision of any items of Article 12, paragraph 3 shall be disqualified for Officer.

Article 22.　When the Cabinet considers that the President cannot perform his duties owing to physical or mental disabilities, or when it considers that he has been against his duties or engaged in conduct deemed unfiting to the Presidency, it may discharge him from office with the consent of the Board.

2　The provisions of Article 20, paragraph 2, shall apply mutatis mutandis to the consent prescribed in the preceding paragraph.

3　When the President considers that the Vice-President cannot perform his duties owing to physical or mental disabilities, or when he considers that the Vice-President has acted against his duties or engaged in conduct deemed unfitting to the Vice-Presidency, he may discharge him from office with the consent of the Board.

Article 23.　The officers shall not be the officers of any other associations incorporated for the purpose of money-making or engage themselves in any other enterprising business.

Article 24.　In any case where the interest of the President, Vice-President or any manager conflicts with that of the JNR, such officer shall not represent the JNR. In such case the members of the Board shall designate a representative from among the officers of the JNR not similarly disqualified.

Article 25.　The President, Vice-President or managers may appoint an attorney authorized to do all judicial or non-judicial acts regarding any part of the business of the JNR from among the personnel of the JNR.

Article 26.　Employees of JNR shall be as defined in paragraph 2, Article 2 of the Public Corporation Labor Relation Law (Law No.257 of 1948).

2　Any person who falls under the provision of any item from 1 to 4 inclusive of paragraph 3, Article 12, shall be disqualified for the personnel.

Article 27.　Appointment or dismissal of employees shall be made on the basis of the results of their examination, and the merit of their performance on duty, or other demonstrated abilities.

Article 28.　The salary and wages of employees shall be paid in proportion to the nature of their duties and their responsibilities.

2　The salary and wages of employees shall be fixed in consideration of their living cost, payment for national public servants, and workers in private enterprises and other factors.

Article 29.　Except in cases where any employee falls under the provisions of any of the following items, he may not be demoted or dismissed against his will:

Article 30.　Except in cases where any employee falls under the provision of any of the following items, he may not temporarily be retired from office against his will:

2　The term of temporary retirement as provided for in item 1 of the preceding paragraph shall be full one year. In case the said trouble ceases to exist during the term of temporary retirement the employee in question shall be reinstated without delay;and in case the term of temporary retirement expires during his retirement he shall be dismissed.

3　The term of temporary retirement as prescribed in paragraph 1, item 2, shall correspond to the period during which the said case is handled by the court concerned.

4　Any employee who has temporarily retired shall not be engaged in business, though he shall hold the status of an employee. Any employee who has temporarily retired shall receive one-third of his salary during the term of his temporary retirement.

Article 31.　In cases where any employee falls under the provisions of any of the following items, the President may, as disciplinary action, dismiss, suspend from office, reduce the pay of, or reprimand the said employee:

2　The term of suspension from office shall range from one month or more to not exceeding one year.

3　Any suspended employee shall not be engaged in his duties, though he shall hold the status of an employee. Any suspended employee shall receive one-third of his pay during the term of suspension.

4　In case of reduction in pay, less than one tenth of his pay shall be deducted for the term ranging from one month or more to not exceeding one year.

Article 32.　Any employee shall, in the execution of his duties, conform to laws and regulations, and operational regulations laid down by the JNR.

2　Any employee shall exert his utmost in the execution of his duties, except those who exclusively engaged in the business of the employees'union in accordance with the provision of Article 7 of the Public Corporation Labor Relation Law.

Article 33.　In cases where circumstances fall under any of the following items, the JNR shall, regardless of the provisions of Articles 32, 35 or 40 of the Labor Standard Law (Laws No.49 of 1947), be authorized to extend the duty hours of employees, or put employees on duties in off-duty hours or on holidays:

Article 34.　Officers and employees of the JNR shall be regarded as personnel engaged in public service in accordance with laws and ordinances.

2　The National Public Service Law shall not apply to officers and employees of the JNR.

Article 35.　The labor relation of the employees of the JNR shall be provided for by the Public Corporation Labor Relation Law.

Article 36.　The JNR shall, until such time as new legislation governing the establishment of rates and fares and the accounting of public corporations, in the interest of higher business efficiency of such enterprises may be enforced, be deemed an administrative agency of the State, and the provisions of the Finance Law (Law No.34 of 1947), the Special Accounts Law for Japanese Government Railways Undertakings (Law No.40 of 1947), the Accounts Law (Law No.35 of 1947), the National Property Law (Law No.73 of 1948) and other provisions of laws and ordinances heretofore applied to the accounting of the Government Railways Undertakings shall govern the JNR on accounting and financial matters other than those provided for by this Law and Cabinet Orders or Ministerial Ordinance enacted in accordance with this Law.

2　In the case where the JNR is deemed an administrative agency by virtue of the provisions of the preceding paragraph the President of the JNR shall be deemed the Chief of a Ministry or a Agency and the JNR shall be deemed a Ministry or an Agency, except when the JNR is deemed a department in the Ministry of Transportation by virtue of Cabinet Order.

Article 37.　The business year of the JNR shall be each year from April through March of the next year.

2　The JNR shall complete its settlement of accounts for each business year by July 31 of the following business year.

Article 38.　The JNR shall prepare a budget for each business year and submit it to the Minister of Finance through the Minister of Transportation.

2　The Minister of Finance shall, upon receipt of submittal of the budget pursuant to the provisions of the preceding paragraph, examine it, make the necessary adjustments and obtain the decision of the Cabinet thereon.

3　The Cabinet shall, upon deciding the budget pursuant to the provision of the preceding paragraph, submit it to the Diet together with the State budget.

4　The form, contents and appended documents of the budget shall be provided for by Cabinet Order. the procedure for preparation and submittal of the budget, shall be determined by the Minister of Finance after consultation with the Minister of Transportation.

Article 39.　Only when necessary and unavoidable due to circumstances arising after preparation of the budget, the JNR may prepare a supplementary budget according to the same procedure as for the preparation of the budget and submit it to the Minister of Finance through the Minister of Transportation.

2　The provisions of paragraph 2 to 4 inclusive of the preceding Article shall be applied mutatis mutandis to the supplementary budget pursuant to the provision of the preceding paragraph.

Article 40.　The JNR shall prepare an inventory statement, a balance sheet and a profit and loss statement each business year and submit them to the Minister of Transportation for approval within one month after the completion of the settlement of accounts:

2　When the approval of the Minister of Transportation has been received pursuant to the provision of the preceding paragraph, the JNR shall make public notification of the inventory statement, balance sheet, and profit and loss statement.

Article 41.　The JNR shall prepare the settlement of accounts for each business year in a form similar to that of the budget and submit it to the Minister of Finance through the Minister of Transportation.

2　The Minister of Finance shall, upon receipt of submittal of the settlement of accounts pursuant to the provision of the preceding paragraph, transmit it to the Cabinet.

Article 42.　The Cabinet shall, upon receipt of the transmittal of the settlement of accounts of the JNR pursuant to the provision of paragraph 2 of the preceding Article, transmit it to the Board of Audit.

2　The Cabinet shall submit the settlements of accounts of the JNR after audit of the Board of Audit to the Diet together with settlement of accounts of the national annual revenues and expenditures.

Article 43.　In case the JNR has shown a loss and it is deemed specially necessary, the Government may give a grant-in-aid within the amount of the said loss.

2　Whenever a profit shall accrue from the operations of the JNR, it shall be transferred to the General Account of the Government, unless otherwise provided for in the budget account.

Article 44.　The JNR way make long-term borrowings and temporary borrowing from the Government with the approval of the Minister of Transportation, but not from private banks or other private sources.

2　The maximum limit of long-term and temporary borrowings referred to in the provisions of the preceding paragraph shall be prescribed in the budget.

3　The temporary borrowings referred to in the provisions of paragraph 1 shall be redeemed within the business year concerned;provided, in case redemption is impossible due to the shortage in funds, that the JNR may, with approval of the Minister of Transportation, re-finance the said borrowings up to the amount which is not possible of redemption.

4　The temporary borrowings refinanced pursuant to the provision of the proviso to the preceding paragraph shall be redeemed within one (1) year.

Article 45.　The Government may loan funds to the JNR.

Article 46.　The JNR shall, in each business year, prepare a plant for redemptions of long term borrowings referred to in paragraph 1 of Article 44 and obtain the approval of the Minister of Finance therefor.

Article 47.　The regulations governing the disposition of money of the National Treasury shall be conformed to by the JNR in connection with money arising out of its business operation as provided for by Law or Cabinet Order.

2　Accounting personnel of the JNR may appropriate cash money under his custody to disbursements to be made by the JNR as provided for by Law or Cabinet Order.

Article 48.　The JNR shall keep the necessary books in order to show adequately the nature and contents of the business and state of work operations and accounting.

Article 49.　The JNR shall not transfer, exchange or pledge any working line or other substantially important property belonging to it without the approval of the Minister of Transportation.

2　The scope and nature of important property referred to in the preceding paragraph shall be prescribed by the Minister of Transportation after consultation with the Minister of Finance.

Article 50.　The Minister of Transportation shall get the concurrence of the Minister of Finance when he gives his approval to the inventory statement, balance sheet and profit and loss statement prescribed in paragraph 1 of Article 40, and to borrowings prescribed in paragraph 1 or 3 of Article 44.

Article 51.　The accounts of the JNR shall be audited by the Board of Audit.

Article 52.　The JNR shall be placed under the supervision of the Minister of Transportation.

Article 53.　The following items shall require the permission or authorization of the Minister of Transportation:

Article 54.　The Minister of Transportation may issue supervisory orders to the JNR, when he deems it specially necessary to do so for the promotion of public welfare.

2　The Minister of Transportation may call on the JNR to submit a report, if such action is deemed necessary for supervision.

Article 55.　The President, Vice-President, Director or any manager carrying out the duties of the President or acting for him shall be punished by a fine of not more than 100,000 yen for the following violations of this Law in proportion to the responsibility for his business:

Article 56.　In case a person who is currently a national public servant as prescribed in Article 19 of the Pensions Law (Law No.48 of 1923) at the time of enforcement of this Law and becomes without intermission an officer or employee of the JNR, he shall be regarded as a civilian official prescribed in Article 20 of the same Law in continuous service, drawing salary from the national treasury, and the provisions of the Pensions Law shall be applicable to him mutatis mutandis for the time being.

2　In case the Pensions Law is applied mutatis mutandis in accordance with the provisions of the preceding paragraph, the JNR shall be regarded as an administrative agency for matter pertaining to pensions and other benefits.

3　As regards funds for payment of pensions to be granted to persons described in paragraph 1 or their survising family, and pensions whose payment had become due prior to the enforcement of this Law, and of which the pensioners had been drawing their salaries or wages from the former Government Railways Enterprise Special Account (inclusive of the old Imperial Japanese Railways Account), the JNR shall be regarded as continuing in existence as the Government Railways Enterprise Special Account, and the provisions of the Law concerning Transfer to General Account of Share of Pension Instalment to be borne by Special Accounts (Law No.80 of 1931) shall be applicable mutatis mutandis.

4　In case the Pensions Law is applied mutatis mutandis in accordance with the provision of paragraph 1 the payment to be made by officers or employees of the JNR in accordance with the provision of Article 59, paragraph 1 of the Pensions Law as applied mutatis mutandis by virtue of the provisions of the same paragraph, shall be made to the JNR notwithstanding the provision of the same paragraph.

Article 57.　Officers and employees of the JNR shall be deemed to be employees who are in the employ of the Government and paid allowances by the National Treasury, for purposes of the application mutatis mutandis of the National Public Servants Mutual Aid Association Law (Law No.69, 1948);in this case, "Ministeries or Agencies" as referred to in the Law shall read "the JNR" , "Chiefs of Ministries or Agencies" as "the President of the JNR" , and "the National Treasury" as referred to in Article 69 (excepting cases where Par.1, Item 3 of the same Article is to be applied to mutatis mutandis) and in Article 92 shall read as "the JNR" and "the representative of the Government" as referred to in Article 73, paragraph 2 and Article 75, paragraph 2 shall read as "the representative of the JNR" .

2　The mutual aid association existing by virtue of the provisions of Article 2, paragraph 2, Item 8 of the National Public Servants Mutual Aid Association Law shall become, in accordance with the provisions of Article 2, paragraph 1 of the same Law as applied mutatis mutandis to by virtue of the provisions of the preceding paragraph, the Mutual Aid Association to be set up in the JNR and shall continue to exist without changing identity.

Artiele 58.　The National Treasury shall share such cost of the JNR Mutual Aid Association as is prescribed in Article 69, paragraph 1, Item 3 of the National Public Servants Mutual Aid Association Law for the mutual aid association established in JNR.

Article 59.　Officials and employees of the JNR shall be deemed to be employed by the Government for purposes of the applications of Article 12, paragraph 1 of the Health Insurance Law (Law No.70, 1922), Article 16-(2) of the Welfare Annuity Insurance Law (Law No.60, 1941) and Article 15 of the Seamen's Insurance Law (Law No.73, 1939).

Article 60.　Officers and employees of the JNR shall be deemed to be employees who are in the employ of the Government and paid allowances by the National Treasury for purposes of the application mutatis mutandis of the National Public Servants Accident Compensation Law, in this case "the Government" as referred to in the Law shall (with the exception of "The Government" mentioned in "The Government and mayors of cities, headmen of towns, or villages" of Art.42) read "The JNR" and "the account" and "The Account" as referred to in the Law shall read "The JNR" .

2　The enterprise of the JNR shall be deemed the enterprise directly undertaken by the Government for purposes of the application of Articte 3, paragraph 3 of the Workers Accident Compensation Insurance Law (Law No.50, 1947).

3　The cost of indemnification arising out of the provisions of paragraph 1 shall be borne by the JNR.

Article 61.　Officers and employees of the JNR shall be deemed to be employed by the Government for purposes of the application of the provisions of Article 7 of the Unemployment Insurance Law (Law No.146, 1947).

Article 62.　The National Treasury shall, in case the JNR is to pay insurance money in excess of the requirement set forth in the Unemployment Insurance Law to officers or employees of the JNR, share a part of the amount equal to that of the requirement in the provisions of the Unemployment Insurance Law at the ratio of share as prescribed under Article 28, paragraph 1, of the same Law.

Article 63.　As regards the application of the Road Transportation Law (Law No.191 of 1947), Electricity Enterprise Law (Law No.61 of 1931), Land Expropriation Law (Law No.29 of 1900), and other Laws and Regulations (except the Law concerning the Authority, etc. of Attorney-General in respect to the law suit relative to the interest of the State (Law No.194 of 1947), the JNR shall be deemed a State and the President a competent Minister unless otherwise provided for by this Law or other separate Law.