CHAPTER I General Provisions

(Purpose) Article 1. The purpose of the Private School Promotion Association is to conduct necessary business for loaning funds needful to the operation of private schools, for giving aids to the private school education and rendering other helps to the private school education, and thereby to encourage the promotion of such education.

(Status of Juridical Person) Article 2. The Private School Promotion Association (hereinafter referred to as "the Promotion Association" ) shall be a juridical person.

(Definition) Article 3. In this Law, "private schools" shall mean the schools provided for in Article 2 paragraph 2 of the School Education Law (Law No.26 of 1947). 2 In this Law, "school juridical persons" shall mean the school juridical persons provided for in Article 3 of the Private School Law (Law No.270 of 1949).

(Office) Article 4. The Promotion Association shall have its principal office in Tokyo-to. 2 The Promotion Association may have its subordinate offices in necessary places.

(Capital) Article 5. The capital of the Promotion Association shall be the total of the amount of three hundred and ninety million (390,000,000) yen and the amount equivalent in value to the amount of obligatory right deemed to have been invested under the provision of paragraph 3. 2 The Government shall invest the amount of three hundred and ninety million (390,000,000) yen under the preceding paragraph in the Promotion Association. 3 The obligatory right of the loan which has been made by the Government toward establishers of private schools or toward To, Do, Fu or prefecture as rehabilitating expenditures of buildings of private schools (including those private schools under former laws and ordinances which were abolished in accordance with the provision of Article 94 of the School Education Law;hereinafter the same in this paragraph and in Article 27 paragraphs 1 and 2) damaged by war, earthquakes and other calamities and as operating expenditures of private schools, during the period of term from April 1, 1946 to the day previous to the date of the formation of the Promotion Association (hereinafter referred to as "the former obligatory right" ) and the right of mortgaging such obligatory right shall be handed over by the Government to the Promotion Association on the date the Promotion Association be formed, deeming the amount, which is equivalent to that of such obligatory right, to have been invested by the Government in the Promotion Association. 4 The Promotion Association may increase its capital, if need be, under the authorization of the Minister of Education. 5 In the case where the Promotion Association increases its capital under the provision of the preceding paragraph, the Government may invest more in the Promotion Association within the limit of the amount defined in the budget.

(Articles of Association) Article 6. The Promotion Association shall provide for the following matters in its Articles of Association: (1) Purpose; (2) Name; (3) Location of offices; (4) Matters concerning capital and assets; (5) Matters concerning the officers; (6) Matters concerning the board of councillors and the councillors; (7) Matters concerning business and its execution; (8) Matters concerning account. 2 Any revision in the Articles of Association shall not be effective unless the authorization thereof has been obtained from the Minister of Education.

(Registration) Article 7. The Promotion Association shall effect due registration in accordance with the provisions of Cabinet Order. 2 Any matter which is required to be registered in accordance with the provision of the preceding paragraph cannot be set up against a third party unless the registration thereof has been effected. 3 The registry office shall give a public notice of the registered matters without delay.

(Restriction of the Use of the Name) Article 8. None other than the Promotion Association shall use the name of the Private School Promotion Association or any other like names.

(Dissolution) Article 9. The dissolution of the Promotion Association and the disposition of its residual property in case of dissolution shall be provided for by law separately.

(Application Mutatis Mutandis of Provisions concerning Juridical Persons). Article 10. The provisions of Article 44 (Juridical Persons'Capacity for Torts), Article 50 (Permanent Residence of Juridical Persons) and Article 54 (Limitation on Representation of Directors) of the Civil Code (Law No.89 of 1896) shall apply mutatis mutandis to the Promotion Association.

CHAPTER II Officers and Employees

(Officers) Article 11. The Promotion Association shall have one president, one chief director, the directors of not less than three and not more than five in number and three inspectors, as its officers.

(Function of Officers) Article 12. The President shall represent the Promotion Association and preside over its business. 2 The Chief Director shall represent the Promotion Association, assist the President in managing the business of the Promotion Association, act for the President if he is unavoidably prevented from discharging his duties, and execute his functions when the office of President is vacant, in accordance with the provisions of the Articles of Association. 3 The directors shall represent the Promotion Association, assist the President and the Chief Director in managing the business of the Promotion Association, act for the President and the Chief Director if both of them are unavoidably prevented from discharging their duties and execute their functions when both of their offices are vacant, in accordance with the provisions of the Articles of Association. 4 The inspectors shall inspect the business of the Promotion Association.

(Appointment, Term of Office and Disqualification, of Officers) Article 13. The officers shall be appointed by the Minister of Education from among persons of learning and experience necessary for attaining the purpose of the Promotion Association. 2 The term of office of the officers shall be two years. The term of office of an officer filling a vacancy, however, shall be the remainder of his predecessor's. 3 Any officer may be reappointed. 4 The provision of Article 9 (Disqualifications of Principals and Teachers) of the School Education Law shall apply mutatis mutandis to the officers of the Promotion Association.

(Restriction of the Right of Representation) Article 14. With respect to the matters on which the interests of the Promotion Association and the President, the Chief Director or directors conflict with each other, those persons shall have no right of representation. In this case, the inspectors shall represent the Promotion Association.

(Prohibition of Holding Additional Posts) Article 15. No President, Chief Director nor directors shall be engaged in other occupations However, in the case where the Minister of Education has permitted it, recognizing that it does not interfere with the execution of his functions as officer, this shall not apply.

(Status of Officers and Employees) Article 16. The officers and employees of the Promotion Association shall be regarded as public officials engaged in public service in accordance with laws and orders in so far as the application of the Penal Code (Law No.45 of 1907) and other penal provisions is concerned.

CHAPTER III Board of Councillors

(Board of Councillors) Article 17. There shall be established the Board of Councillors in the Promotion Association. 2 The Board of Councillors shall consist of councillors of not less than ten and not more than twenty in number.

(Functions of the Board of Councillors) Article 18. The President shall hear the opinion of the Board of Councillors, in advance, with regard to the matters listed below: (1) Changes in the Articles of Association; (2) Budget, and borrowing money necessarily to be authorized by the Minister of Education in accordance with the provision of Article 35; (3) Determination and change of the statement of business methods in accordance with the provision of Article 24 paragraph 1; (4) Decrease in the capital in accordance with the provision of Article 33 paragraph 1; (5) Other important matters, as provided for in the Articles of Association, concerning the business of the Promotion Association.

Article 19. The Board of Councillors may express opinions to the President, answer his inquiries, or demand his reports concerning the business or the state of the property, of the Promotion Association or concerning the business management of its officers.

(Appointment, Term of Office and Disqualification, of Councillors) Article 20. The councillors shall be appointed by the Minister of Education from among persons of learning and experience necessary for attaining the purpose of the Promotion Association and persons related with private schools. 2 The provisions of Article 13 paragraphs 2 and 3 and the provision of Article 9 of the School Education Law (Disqualifications of Principals and Teachers) shall apply mutatis mutandis to the councillors.

(Meeting of the Board of Councillors) Article 21. The Board of Councillors shall be convened by the President. 2 The Board of Councillors shall have a chairman, who is to be elected by mutual vote of the councillors. 3 The President must convene a meeting of the Board of Councillors, when requested by one-third or more of the councillors stating the matters to be discussed at the meeting, within thirty days from the day when the request is made. 4 The Board of Councillors can not open its proceedings nor make decisions, unless a majority of the councillors are present. 5 The proceedings of the Board of Councillors shall be decided by a majority vote of the councillors present, and, in case of a tie, the decision shall be made by the Chairman. 6 In the case under the preceding paragraph, the Chairman shall not participate in the decision as a councillor.

CHAPTER IV Business

(Business) Article 22. The Promotion Association shall be engaged in the following business to attain the purpose under Article 1: (1) Loaning funds, to school juridical persons, necessary for the operation of private schools established thereby (including the fund necessary for facilities of such schools); (2) Giving aids to school juridical persons, with regard to works conducted by private schools established thereby, for the promotion of education; (3) Loaning fund or giving aid necessary for facilities, etc. concerning works for inservice training and for the benefit and welfare, of private school personnel, and concerning other works deemed necessary for the promotion of private school education to those who carry out such works; (4) Business incidental to the business mentioned in each of the preceding items. 2 In addition to the business mentioned in each item of the preceding paragraph, the Promotion Association may conduct such business as necessary for attaining the purpose under Article 1, after obtaining the authorization thereof from the Minister of Education. 3 The Promotion Association may give aids in accordance with the provision of paragraph 1 item (2) or item (3) only within the limit of the amount equivalent to the amount of profit upon settlement of profit and loss account for the preceding business year less the amount devoted to compensation for the loss carried over and the amount accumulated as the special reserve fund under the provision of Article 32 paragraph 1 and as the ordinary reserve fund under the provision of paragraph 2 of the same Article, in the business year concerned.

(Fundamental Principle of Executing Business) Article 23. The business of the Promotion Association must be executed with confidence in its fair and trustworthy operation in accordance with the purpose of the Promotion Association provided for in Article 1.

(Statement of Business Management) Article 24. The Promotion Association shall, at the commencement of its business, determine the statement of business methods and obtain the approval thereof from the Minister of Education. The same shall apply to the case of proposing change therein. 2 The statement of business methods under the preceding paragraph shall refer to the extent of loaning, the interest rate and the term of loans, the extent and aim of aid, and the standards concerning business by proxy under the provision of Article 28 paragraph 2.

(Examination relative to Loaning or Aiding) Article 25. The Promotion Association shall, in loaning or aiding in accordance with the provision of Article 22, examine into the conditions of school juridical persons or others which desire to get loan or aid whether or not the purpose of such loaning or aiding can be attained effectively.

(Restriction of Loaning or Aiding) Article 26. In the case where a school juridical person which is under an obligation towards the Promotion Association (including a school juridical person to which To, Do, Fu or prefecture has loaned funds of the former obligatory right which were loaned to To, Do, Fu or prefecture concerned) does not perform the repayment of the principal and interest of such obligation, the Promotion Association shall not make a new loan of funds nor give other aids for the school juridical person concerned, except the case where such non-performance is due to calamity or other special causes.

(Dealing with the Former Obligatory Right) Article 27. In the case where disaster or other special cause has made it very difficult for an establisher of a private school to pay the principal and interest of the former obligatory right, or of the obligatory right of a loan which To, Do, Fu or prefecture made with the funds of the former obligatory right, and when the Promotion Association or To, Do, Fu or prefecture proposes to change the condition of loan of the obligatory right concerned or the method of paying the principal and interest for delay, the authorization thereof must be obtained from the Minister of Education in the case of the Promotion Association, and the approval thereof from the Promotion Association in the case of To, Do, Fu or prefecture. 2 In the case where calamity or other special cause has made it impossible for an establisher of a private school to perform wholly or partially the obligation due to the former obligatory right or to the obligatory right of a loan which To, Do, Fu or prefecture made with the funds of the former obligatory right, and when the Promotion Association or To, Do, Fu or prefecture proposes to exempt wholly or partially the obligation concerned, the authorization thereof must be obtained from the Minister of Education in the case of the Promotion Association, and the approval thereof from the Promotion Association in the case of To, Do, Fu or prefecture. 3 In the case where the Promotion Association proposes to give the approval under the two preceding paragraphs, it shall obtain the authorization thereof, in advance, from the Minister of Education. 4 In the case where To, Do, Fu or prefecture has changed the condition or loan or the method of paying the principal and interest for delay in accordance with the provision of paragraph 1, or exempted the obligation wholly or partially in accordance with the provision of paragraph 2, the Promotion Association shall enact the same measure in regard to the part, of the former obligatory right toward To, Do, Fu or prefecture concerned, equivalent to the obligatory right of which such measure of changing the condition of loan or other measure has been done.

(Loaning Business by Proxy) Article 28. The Promotion Association may, after obtaining the authorization from the Minister of Education, cause a bank or other financial organs to act as a proxy concerning a part of the loaning business under Article 22 paragraph 1 item (1) or item (3). 2 When the Promotion Association intends to cause a bank or other financial organs to act as a proxy concerning a part of the loaning business in accordance with the preceding paragraph, the former shall give the latter the standards for the delegated business.

CHAPTER V Accounts

(Business Year) Article 29. The business year of the Promotion Association shall begin on April 1 every year and end on March 31 of the following year. 2 The Promotion Association must complete the settlement of its accounts for each business year not later than May 31 of the following business year.

(Plan of Enterprise and Budget) Article 30. The Promotion Association shall prepare the plan of enterprise and the budget of revenue and expenditure, for each business year, and obtain the authorization thereof from the Minister of Education prior to the beginning of the business year concerned. The same shall apply to the case of proposing any important change therein.

(Financial Statements) Article 31. The Promotion Association shall prepare the statement of assets, the balance sheet and the statement of profit and loss (hereinafter referred to as "the financial statements" in this Article and in Article 33 paragraph 2) for each business year, and submit them, annexing thereto the report of its settlement of accounts for the year concerned prepared according to the classification in the budget and also attaching thereto the statement of opinion of the inspectors, to the Minister of Education within two months after the completion of its settlement of accounts, and obtain his approval thereof. 2 The President shall report, to the Board of Councillors, of the financial statements and the report of the settlement of accounts under the preceding paragraph, with the opinion of the inspectors, within one month after the completion of its settlement of accounts. 3 The Promotion Association shall, when the approval under the provision of paragraph 1 has been obtained from the Minister of Education, give public notice of the financial statements under the same paragraph on the Official Gazette without delay and keep them in each office.

(Disposal of Profit) Article 32. In the case where there is profit upon settlement of profit and loss accounting, it shall be appropriated first to compensation of the loss brought forward, if any, and when there is still any remainder, the Promotion Association shall accumulate it as special reserve fund to appropriate it to the compensation of the loss due to the exemption of the obligation concerned with the former obligatory right until the said fund comes up to the amount equivalent to the total amount of the principals in arreas of the former obligatory right (meaning those still unredeemed principals of which the terms of redemption have expired by the end of the business year concerned;hereinafter the same in this Article). 2 When there is still any remainder of profits after the accumulation of the special reserve fund under the provision of the preceding paragraph, a part thereof shall be reserve by the Promotion Association as the ordinary reserve fund to appropriate it to the compensation of the loss other than that provided for in the same paragraph. 3 The special reserve fund under paragraph 1 shall not be disposed of unless it is appropriated to compensation for the loss due to the whole or partial exemption of the obligation concerned with the former obligatory right. However, in the case where the amount of the said fund has come to exceed the total amount of the principals in arrears of the former obligatory right, this shall not apply to the exceeding portion. 4 In the case where the amount of the special reserve fund under paragraph 1 has become deficient to cover the total amount of the principals in arrears of the former obligatory right, the amount not exceeding the amount equivalent to the deficiency concerned shall be transferred from the ordinary reserve fund under paragraph 2 to the special reserve fund. 5 The ordinary reserve fund under paragraph 2 shall not be disposed of, except the cases of transferring it to the special reserve fund in accordance with the provision of the preceding paragraph and of appropriating it to compensation of the loss other than the loss provided for in paragraph 1.

(Decrease in Capital) Article 33. In the case where the Promotion Association can not replenish enough the loss due to exemption of the obligation concerned with the former obligatory right even when the special reserve fund under paragraph 1 of the preceding Article has been appropriated thereto, it may decrease the amount of its capital equivalent to that of loss unreplenished, after obtaining the authorization thereof from the Minister of Education. 2 The Promotion Association must, when it has decreased its capital in accordance with the provision of the preceding paragraph, give public notice, to such effect and of the financial statements as of the day when the decrease in its capital were effected, on the Official Gazette without delay.

(Utilization of Dormant Money) Article 34. The Promotion Association shall not utilize temporarily dormant business money except the cases following the ways listed below: (1) Acquisition of government or local bonds; (2) Bank deposit or postal savings; (3) Conveyance of money in trust to a trust company or to a bank operating trust business.

(Borrowings) Article 35. The Promotion Association must, except the cases stipulated by the Minister of Education, obtain the authorization from him of its borrowing money.

CHAPTER VI Supervision

(Supervision) Article 36. The Promotion Association shall be supervised by the Minister of Education.

(Supervisory Order) Article 37. The Minister of Education may, when it is deemed necessary for the enforcement of this Law, give the Promotion Association such orders concerning its business as are necessary for supervision.

(Report and Examination) Article 38. The Minister of Education may, if it is deemed necessary, cause the Promotion Association to make reports concerning the state of its business and assets, or cause the officials under him to enter offices of the Promotion Association and to examine the state of business or books, documents and other necessary items. 2 In case the officials make spot examination in accordance with the provision of the preceding paragraph, they shall carry with them identification cards certifying their status and present them to the parties concerned. 3 The authority to make spot examination under the provision of paragraph 1 shall not be construed to have been recognized for crime detection.

(Discharge of Officer) Article 39. The Minister of Education may discharge an officer from his office, when he has come under either of the following cases: (1) Where he has violated this Law, supervisory orders of the Minister of Education according to this Law or the Articles of Association; (2) Where he cannot perform his duties on account of mental and/or physical disability, or otherwise where he is deemed improper as an officer besides the case mentioned in the preceding item.

CHAPTER VII Penal Provisions

(Penal Provisions) Article 40. In case any officer or employee of the Promotion Association has failed to make report in violation of the provision of Article 38 paragraph 1, made false report, or refused, obstructed, or evaded examination, he shall be punished with a fine not exceeding thirty thousand yen.

Article 41. Any officer of the Promotion Association shall be punished with a non-criminal fine not exceeding twenty thousand yen, in the following cases: (1) Where he has failed to obtain the permission, authorization (except the case of authorization under the provisions of Article 5 paragraph 4, Article 6 paragraph 2, Article 22 paragraph 2 or Article 33 paragraph 1) or approval from the Minister of Education, when such permission, authorization or approval is required by this Law; (2) Where he has neglected to make registration in violation of this Law or Cabinet Orders issued thereunder, or made false registration; (3) Where he has conducted business which is not provided for in this Law nor in the Articles of Association; (4) Where he has neglected to give public notice in violation of the provisions of Article 31 paragraph 3 or Article 33 paragraph 2, or given false public notice; (5) Where he has utilized dormant business money in violation of the provision of Article 34; (6) Where he has violated the supervisory order from the Minister of Education.

Article 42. Any person who has used the name of the Private School Promotion Association or any other like names in violation of the provision of Article 8 shall be punished with a noncriminal fine not exceeding five thousand yen.