Article 1.　The purpose of this Law is to facilitate the smooth accommodation of long-term fund which is badly needed now for the rehabilitation of Japanese economy by permitting banks to issue debentures as well as by authorizing them to issue preferred stocks which are to be subscribed by U. S. Aid Counterpart Fund.

Article 2.　"Banks" in this Law shall mean the Hypothec Bank of Japan, Hokkaido Colonial Bank, Industrial Bank of Japan, and such banks as are chartered under the Banking Law (Law No.21 of 1927).

2　"Self capital" in this Law shall mean capital, surplus and reserve (inclusive of surplus, fund or reserve, whatever title it may be, which is distributed out of net profit and is attributable for stockholders'account.)

Article 3.　Banks are authorized to issue debentures to the extent of the balance between the amount twenty times self capital, and total amount of deposits plus outstanding amount of debentures (shall hereinafter"in this Law be known as bank debentures to be issued by banks).

2　Total amount of deposits as referred to in the preceding paragraph shall be taken, in its calculation, on daily average of past twelve full months backward from the end of the month preceding the month when the debentures are to be issued pursuant to the same paragraph.

3　Outstanding amount of debentures as referred to in paragraph 1 shall be taken, in its calculation, on outstanding amount as of the end of the month preceding the month when the debentures are to be issued.

4　So far as the limit on debenture issuance by the Hypothec Bank of Japan, Hokkaido Colonial Bank and Industrial Bank of Japan is concerned, Article 34 paragraph 1 of the Hypothec Bank of Japan Law (Law No.82 of 1896), Article 12 paragraph 1 of the Hokkaido Colonial Bank Law (Law No.76 of 1899), Article 12 and Article 12-(2) of the Industrial Bank of Japan Law (Law No.70 of 1900), and paragraph 1 of the Law for Measures in consequence of the Abolition of Emergeney Funds Adjustment Law (Law No.21 of 1948) shall not apply.

Article 4.　Banks may, without regard to the provision of paragraph 1 of the preceding Article, issue temporarily the debentures for the purpose of conversion or refunding of already issued debentures.

2　When banks have issued debentures pursuant to the preceding paragraph, they shall redeem old debentures equal in amount to par value of newly issued debentures within one month by means of drawing.

3　No bank shall issue debentures for purposes of refunding or conversion which would extend maturity of debentures being refunded or converted when the total of deposits and debentures as prescribed in paragraph 1 of the preceding Article exceeds twenty times self capital.

Article 5.　Each time banks intend to issue debentures under the provision of Article 3 paragraph 1 or paragraph 1 of the preceding Article, they shall report to the competent Minister in regard to the amount and conditions.

2　In case banks issue debentures under the provision of Article 3 paragraph 1 or paragraph 1 of the preceding Article, the provisions of Article 296 (Special resolution for the issuance of debentures) and Article 298 (Restriction on issuance of debentures when a part of outstanding debentures are still unpaid) of the Commercial code (Law No.48 of 1899) shall not apply.

Article 6.　Banks shall not make debentures secured.

2　Banks shall in the event of liquidation or bankruptcy, treat depositors and debenture-holders on an equal basis with regard to the payment of obligations.

Article 7.　In case banks express in an application certificate of debentures that, although the amount of debentures actually subscribed to be less than the amount proposed in an application certificate, the procedure shall be deemed complete, the amount actually subscribed to shall be the amount of debentures.

2　Debentures which banks shall issue shall be uninscribed;provided, that, upon request of subscribers or owners, they may be inscribed.

3　Banks may issue debentures in the form of public sale. In this case, it shall fix the deadline where the period of sale shall expire.

4　In the case of preceding paragraph, it is not necessary for banks to form an application certificate of debentures.

5　Debentures issued pursuant to paragraph 8 shall record thereon the following matters:

6　The period of Article 305 paragraph 1 of the Commercial Code (Registration of debentures) shall be calculated as from the date the period of public sale shall expire.

7　Banks shall, when they intend to issue debentures by means of public sale, make public notice of the following matters:

8　Banks are authorized to issue debentures by means of discount.

9　In case banks shall redeem a part of its debentures, they may pay premium on it, in this case the method of payment and the amount of premium shall be approved in advance by the Minister of Finance.

10　For the debentures to be issued by banks, only the total amount thereof (in case the total amount of debentures are to be issued several times in parts, amount to be issued each time;hereinafter the same) shall be registered.

11　As to the debentures which banks shall issue, the registration on alteration shall not be required;provided, that when total amount is redeemed, the registration to that effect shall be required and the amount not yet redeemed as of the end of March each year shall be registered within four weeks in the place where the principal office is located and within five weeks in the places where branch offices are located.

12　To the application for registration as referred to in par.10 shall be attached such documents as are enumerated hereunder:

Article 8.　Statute limitations on debentures which banks have issued shall be accomplished in fifteen years as to the principal and five years as to the interest.

Article 9.　With regard to the imitation of debentures which banks shall issue, the Law for Control over the Imitation of Currency and Securities (Law No.26 of 1895) shall apply mutatis mutandis thereto.

Article 10.　Banks shall, when, as of the end of each business term, their outstanding deposits and debentures exceed twenty times their self capital, accumulate as surplus out of net profit as determined for tax purposes an amount equal to 10% of their capital on yearly basis or 25% of net profit after corporation tax due for said business term, whichever is less.

2　Banks may, after setting aside surplus as required under the preceding paragraph, pay dividends out of remaining net profit.

3　The provisions of Art.3 pars.2 and 3 shall apply to the calculation of the outstanding deposits and debentures as provided for in paragraph 1. In this case, "the month when debentures are to be issued" shall read "the end of each business term."

Article 11.　In order to provide a base for issuance of debentures, banks are authorized to issue preferred stocks to be subscribed by the U. S. Aid Counterpart Fund. Preferred stocks subscribed by the U. S. Aid Counterpart Fund shall be subject to all pertinent provisions of the Law.

2　Preferred stocks as referred to in the preceding paragraph shall, have priority over other stocks in respect to the payment of dividends or the distribution of residual assets and such stocks shall have no voting right and shall be redeemed out of net profit or from sale of ordinary stocks.

3　The provisions of Art.242 par.2 (Restriction on amount of stocks having no voting right) of Commercial Code shall not apply to the case where the preferred stocks as provided for in par.1 (shall hereinafter in the Law call preferred stocks).

4　Banks which issue preferred stocks shall, without regard to other laws and ordinances, incorporate in their articles of association that they issue preferred stocks in accordance with this Law and the number of preferred stocks.

5　When banks intend to issue preferred stocks pursuant to par.1, it shall file an amortization programme which includes the programs of amortization of preferred stocks and of dividends on preferred stocks with the competent Minister without delay.

6　Preferred stocks shall be redeemed in accordance with amortization agreements;provided, that amortization payment shall never be less than 10% of net profit of each business term.

7　When banks intend to change their amortization programme, they shall get the prior approval of the competent Minister.

Article 12.　The Government shall accept preferred stocks with the U. S. Aid Counterpart Fund.

2　Except the case of the preceding paragraph, nobody shall accept or purchase preferred stocks of banks.

3　The provisions of Article 1 (treatment of stocks or investment owned by the Government) of the Law for Restriction on Financial Aid by the Government to Corporations (Law No.24 of 1946) shall not apply to the preferred stocks owned by the Government under this Law.

Article 13.　Banks which have issued preferred stocks shall, in such order as is enumerated hereunder, amortize preferred stocks and pay dividends thereon out of the net profit made each business term.

2　Banks which have issued preferred stocks may, in case there still remains net profit after items (1) and (2) above, declare dividends on stocks other than preferred stocks (hereinafter referred to as "ordinary stocks" ) and amortize preferred stocks more.

3　Preferred stocks shall be amortized in par value.

4　Banks shall when they have amortized preferred stocks out of net profit, accumulate surplus amount to the par value of preferred stocks which have been amortized and reduce the capital by the same amount.

5　Banks are authorized to amortize and reduce the preferred stocks from new sale of capital. In this case, prior approval of the competent Minister shall be required.

6　The provisions of Articles 376 to 380 inclusive (Reduction of Capital) shall not apply to the preceding two paragraphs.

7　If, in the case of paragraph 1 item (2), the dividends on preferred stocks are paid with the ratio less than preferred stocks dividends ratio, banks shall, even after the business term on which preferred stocks are entirely redeemed, pay a part of net profit made each business term by such method as is prescribed by Cabinet Order to the former holders of preferred stocks until the amount in short is covered in full.

8　Should banks dissolve before paying in full the amount in short as prescribed in the preceding paragraph, the amount of shortage shall have priority over other stocks in respect to the distribution of residual assets, if any.

9　The preferred stockholders shall be paid residual assets of banks in par. of preferred stocks, having preference over other stocks.

Article 14.　Banks which have issued preferred stocks shall, in case the total amount of deposits plus the total amount of debentures issued exceeds twenty times their self capital, amortize preferred stocks and pay dividends thereon, in such order as is enumerated hereunder, out of the net profit made each business year, irrespective of the provisions of paragraphs 1 and 2 of the preceding Article.

2　The provisions of paragraph 2 of the preceding Article shall apply mutatis mutandis to the case where there still remains net profit, after deducting the amount as prescribed in each item of the preceding paragraph.

3　The provisions of Article 3 paragraphs 2 and 3 shall apply mutatis mutandis to the calculation of total amount of deposits and debentures referred to in paragraph 1. In this case, "the month when the debentures are to be issued pursuant to the same paragraph" shall read "the end of each business term."

4　The provisions of paragraphs 7 and 8 of the preceding Article shall apply mutatis mutandis to the case of paragraph 1 item (2) where dividends are paid with the ratio less than the preferred stocks dividends ratio.

Article 15.　In view of the surplus requirements under the provision of Article 10 paragraph 1, and Article 13 paragraph 4 or the latter part of Article 14 paragraph 1 item (1) of this Law, banks shall be exempted from accumulation of such surplus as is required by other laws;provided, that when the amount of surplus as required by this Law is less than the amount of surplus as required by other laws, the shortage shall be accumulated in accordance with other laws.

2　Surplus as accumulated pursuant to Article 10 paragraph 1 and Article 13 paragraph 4 and the latter part of Article 14 paragraph 1 item (1) shall not be used except covering impaired capital when other surplus and reserve cannot cover it in full.

3　The provisions of Article 10 shall not apply to such banks as are issuing preferred stocks.

Article 16.　The Central Cooperative Bank for Agriculture and Forestry and the Central Bank for Commercial and Industrial Associations are authorized to issue debentures to the extent of the balance between the amount twenty times their self capital, and the total amount of deposits plus outstanding debentures.

2　In the case of the preceding paragraph, Article 17 paragraph 1 of the Law for the Central Cooperative Bank for Agriculture and Forestry (Law No.42 of 1923), Article 31 of the Law for the Central Bank for Commercial and Industrial Associations (Law No.14 of 1936) and paragraph 3 of the Law for Measures in consequence of the Abolition of Emergency Funds Adjustment Law shall not apply as to the extent of debentures to be issued by those two Banks.

3　The provisions of Article 3 paragraphs 2 and 3, Article 4, Article 5 paragraph 1, Article 6, Article 7 (exclusive of paragraphs 6, 10 and 12), Article 8 and Article 9 shall apply mutatis mutandis to the debentures to be issued by those two banks, the provisions of Article 10 shall apply mutatis mutandis to those two Banks, and the provisions of Article 7 paragraph 10 and 12 shall apply mutatis mutandis to debentures to be issued by the Central Bank for Commercial and Industrial Associations. In this case, "net profit" in Article 10 shall read "Joyokin" and "stocks" shall read "Shusshi."

Article 17.　The Central Cooperative Bank for Agriculture and Forestry and the Central Bank for Commercial and Industrial Associations shall be authorized to issue preferred stocks only in the case where the Government accepts them with the U. S. Aid Counterpart Fund, in order to provide a base for issuance of debentures.

2　The provisions of Article 11 paragraphs 2, 4 to 7 inclusive, Article 12, Article 13 paragraphs 1 to 5 inclusive and 7 to 9 inclusive, Article 14 and Article 15 shall apply mutatis mutandis to the preceding paragraph. In this case, "stocks" shall read "Shusshi," "preferred stocks" "Yusen shusshi," "ordinary stocks" Futsuu Shusshi "and" net proft "Joyokin."

3　In the case of the preceding two paragraphs, the Central Cooperative Bank for Agriculture and Forestry and Central Bank for Industrial and Commercial Associations may, irrespective of the provisions of the Law for the Central Cooperative Bank for Agriculture and Forestry and the Law for the Central Bank for Commercial and Industrial Associations, amortize or reduce their shusshis pursuant to this Law. In this case, Articles 40 and 41 (Procedures governing reduction of shusshi) of the Law for Industrial Association (Law No.34 of 1900) which apply in Article 7 of the Law for the Central Cooperative Bank for Agriculture and Forestry shall not apply to that Bank.

Article 18.　When some provisions of this Law are in contradiction with such provisions in the Hypothec Bank of Japan Law, the Hokkaido Colonial Bank Law, the Industrial Bank of Japan Law, the Law for the Central Cooperative Bank for Agriculture and Forestry, and the Law for Central Bank for Commercial and Industrial Associations and regulations implementing such laws as governing debentures to be issued by those Banks, this Law shall supersede other laws and regulations.