The Long-term Credit Bank Law
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(Unofficial translation of the Law, including all amendments as at November 1999)
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Articles
The purpose of this Law is to establish a long-term credit bank system in order to smooth long-term finance, to ensure the proper supervision of long-term credit banks in view of the public nature of their business, and at the same time to contribute to streamline the financial system by means of splitting the banking business.
The term "long-term credit bank" as used in this Law shall mean any person which has been licensed by the Financial Reconstruction Commission pursuant to the provisions of Article 4, paragraph 1.
- 1. A long-term credit bank shall be a limited liability company (Kabushiki-Kaisha) with at least the amount of capital prescribed by the Cabinet Order.
- 2. The amount prescribed by Cabinet Order under the preceding paragraph shall not be less than ten billion (10,000,000,000) yen.
- 1. Any person which intends to engage as its principal business in the lending relating to finance capital expenditure or long-term working capital through the issuance of debentures instead of through taking of deposits shall obtain a licence from the Financial Reconstruction Commission.
- 2. The Financial Reconstruction Commission may grant the licence referred to in the preceding paragraph only when it finds, after taking into consideration the composition of staff of the applicant for the licence, projected income and expenditure of the business, economic and financial conditions and other matters, that the applicant is fully qualified to engage in the business of a long-term credit bank.
- 3. The Financial Reconstruction Commission, if it finds it necessary in the public interest, may attach conditions to the licence referred to in Article 4, paragraph 1 or change them to the extent necessary.
- 1. A long-term credit bank shall use the word "Ginko" (Bank) in its trade name.
- 2. The provisions of Article 6, paragraph 2 (Trade name) of the Bank Law (Law No. 59 of 1981) shall not apply to a long-term credit bank.
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- 1. A long-term credit bank may perform the following business:
- (i) Making of loans, discounting of bills, guaranteeing of obligations, or acceptance of bills with regard to financing capital expenditure or long-term working capital;
- (ii) Acquisition of national and local government bonds, corporate and other bonds, shares or investment securities by subscription and other methods (in the case of corporate and other bonds, (excluding those guaranteed by the government with regard to the redemption of principal thereof and the payment of interest thereon), shares, or investment securities, acquisition for the purpose of secondary offering is excluded);
- (iii) Acceptance of deposits or installment savings (limited to acceptance of those from the State, local governments, borrowers, companies for which the bank acts as trustee in the issuance of corporate bonds, and other customers);
- (iv) Exchange transactions;
- (v) Acting as trustee for the floatation of local government bonds and corporate and other bonds.
- 2. In addition to the business mentioned in respective items of the preceding paragraph, a long-term credit bank may, to the extent that it does not hinder performance of the business, make loans, secured by real estate, for long-term funding (of which the funding period is more than six (6) months or more; hereinafter the same), otherwise than to finance capital expenditure and long-term working capital, or make loans, discount bills, guarantee obligations or accept bills for short-term funding (of which the funding period of financing for which is six (6) months or less) up to an amount equal to the total of deposits taken and other monies of a similar nature.
- 3. A long-term credit bank may, in addition to the business conducted in accordance with the provisions of the preceding two paragraphs, engage in the following incidental business:
- (i) Buying and selling of securities (limited to those conducted by receiving a written order from a customer for its account), over-the-counter securities derivative transactions (excluding the securities forward transactions), securities index futures transactions, securities options transactions or foreign markets securities futures transactions (limited to those for an investment purposes or those as to which a written order is placed by a customer for its account);
- (ii) Lending of securities;
- (iii) Business provided in each item of Article 65, paragraph 2 of the Securities and Exchange Law (Law No. 25 of 1948) (Exceptions to the securities business conducted by the financial institutions) as regards securities or transaction provided therein (excluding the business falling within (2) and (1) of paragraph 1);
- (iv) Acquisition or transfer of monetary claims (including those prescribed by the Prime Minister's Office Ordinance and the Ministry of Finance Ordinance such as negotiable certificate of deposit);
- (v) Agency business of banks and other financing business (limited to those prescribed by the Prime Minister's Office Ordinance and the Ministry of Finance Ordinance);
- (vi) Receipt of money and handling of other business relating to money for the state, local governments, companies, etc.;
- (vii) Safekeeping of securities, precious metals and other goods;
- (viii) Money exchange;
- (ix) Financial futures transactions, etc.;
- (x) Acting as agency or intermediary in respect of financial futures transactions, etc.;
- (xi) Transactions in which the payment or receipt of cash amounts calculated upon by taking the difference between the index previously agreed upon by the parties by reference to interest rate, currency value, commodity price, etc. and the index at a certain time in the future, or the similar transactions which are prescribed in the Prime Minister's Office Ordinance and the Ministry of Finance Ordinance (referred to in the next item as the "Financial Derivative Transactions, etc.") (excluding those listed in items (iv) and (ix));
- (xii) Acting as intermediary, broker or agent in respect of the Financial Derivative Transactions, etc. (excluding those listed in item (x) and those prescribed by the Prime Minister's Office Ordinance and the Ministry of Finance Ordinance);
- 4. The words "over-the-counter securities derivative transaction", "securities index futures transaction", "securities options transaction", "foreign market securities futures transaction" and "securities forward transaction" in item (i) of the preceding paragraph respectively mean the over-the-counter securities derivative transaction, securities index futures transaction, securities option transaction, foreign market securities futures transaction or securities forward transaction which are provided in Article 2, paragraph 2, item (iii)-2 or paragraphs 14 to 17 (Definition) of the Securities and Exchange Law;
- 5. The words "financial futures transactions, etc." in paragraph 3, item (ix) or "acting as intermediary or broker in respect of financial futures transactions, etc." respectively mean the financial futures transaction, etc. and of financial futures transactions, etc. which are provided in Article 2, paragraph 8 or 9 (Definitions) of the Financial Futures and Exchange Law (Law No. 77 of 1988).
A long-term credit bank shall not carry on any business other than the business carried on in accordance with the provisions of the preceding Article and other laws such as the Secured Debenture Trust Law (Law No. 52 of 1905).
A long-term credit bank shall, in order to ensure the preservation and collection of its claims based on loans, etc. with regard to the long-term capital, in view of the special character of such claims, give special consideration to such measures as requiring sound collateral or payment of the loans on an installment basis.
A long-term credit bank may issue debentures within the limit of an amount equal to thirty (30) times the total of its capital and reserves (meaning those prescribed by Cabinet Order as reserves).
- 1. A long-term credit bank may, for the purpose of refinancing its outstanding debentures, temporarily issue debentures in excess of the limit prescribed in the preceding Article.
- 2. When debentures are issued pursuant to the provisions of the preceding paragraph, old debentures equal in the principal amount to that of newly issued debentures shall be redeemed within one (1) month after the ssuance of the new debentures.
- 1. Each time a long-term credit bank intends to issue debentures, prior notice shall be made given to the Financial Reconstruction Commission of the amount and terms.
- 2. The provisions of Article 297 (Commission of debenture management to a debenture management company) and Article 298 (Restriction on issuance of new debentures when the existing debentures are fully paid in) of the Commercial Code (Law No. 48 of 1899) shall not apply to the issuance of debentures by a long-term credit bank.
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- 1. Debentures issued by a long-term credit bank shall be in bearer form, provided however, that upon request of their subscribers or owners, they may be issued in registered form.
- 2. A long-term credit bank may, in issuing debentures, adopt the method of public sale. In this case, the period of public sale shall be fixed.
- 3. In the preceding paragraph, no subscription form needs to be produced for the debentures.
- 4. Debentures issued pursuant to the provisions of paragraph 2 shall have the following matters described thereon:
- (i) The trade name of the long-term credit bank;
- (ii) The total principal amount of debentures;
- (iii) The interest rate of the debentures;
- (iv) The method of redemption and the due date of the debentures;
- (v) The serial number of the debentures.
- 5. A long-term credit bank shall, in case it intends to issue debentures by way of public sale, give public notice of the following matters:
- (i) The period of public sale;
- (ii) The total principal amount of the debentures;
- (iii) In case of payment in installments, the amount of the installment payments and the time thereof;
- (iv) The issue price or minimum price of the debentures;
- (v) The matters specified in items (i) to (iv) inclusive of the preceding paragraph.
- 6. A long-term credit bank may issue debentures on a discount basis.
Prescription of debentures issued by a long-term credit bank shall be accomplished in fifteen (15) years as to the principal thereof and five (5) years as to the interest thereon.
The Law for Control of Imitation of Currency and Securities (Law No. 28 of 1895) shall apply mutatis mutandis to the imitation of debentures issued by a long-term credit bank.
- 1. A long-term credit bank shall not have any company as its subsidiary other than the companies listed below (hereinafter referred to in this Article as a "Potential Subsidiary":
- (i) A long-term credit bank;
- (ii) A bank (a bank provided in Article 2, paragraph 1 of the Banking Law (Definitions), the same shall apply hereinafter);
- (iii) A securities company provided in Article 2, paragraph 9 of the Securities and Exchange Law (Definitions), which solely engages in the securities business (meaning the operation of doing business provided in Article 2, paragraph 8, each item (Definitions); hereinafter the same) and those specified in each item (Business) of Article 34, paragraph 1, of such law or any other business prescribed by the Prime Minister's Office Ordinance and the Ministry of Finance Ordinance (hereinafter referred to as the "Securities Specialty Company";
- (iv) An insurance company provided in Article 2, paragraph 2 (Definitions) of the Insurance Business Law (Law No. 105 of 1995) (hereinafter referred to as the "Insurance Company");
- (v) Foreign company which engages in banking business (the banking business provided in Article 2, paragraph 2 (Definitions) of the Banking Law;
- (vi) Foreign company which engages in securities business (excluding a company which falls within those specified in the preceding item);
- (vii) Foreign company which engages in insurance business (the insurance business provided in Article 2, paragraph 1 (Definitions) of the Insurance Business Law; hereinafter the same)(excluding a company which falls within those specified in item (v));
- (viii) A company which solely engages in a subordinate business which engages in such business principally for the business of the relevant long-term credit bank or its subsidiaries (in case of the company which engages in a subordinate business principally for the business of a long-term credit bank's subsidiaries (hereinafter referred to as the "Specified Subordinate Company" in this item), limited to the company, the shares (limited to voting shares) or the equity (hereinafter collectively referred to as the "Shares, etc." of which is not held by the relevant long-term credit bank or its subsidiaries (excluding the relevant subsidiary) exceeding the base number of shares, etc. (meaning the base number of shares, etc. provided in Article16-3, paragraph 1, which is applied mutatis mutandis in Article 17. The same shall apply to item (x).);
- (ix) A company which specially engages in the Business Relating to Finance (in case of a company which engages in the Securities Specialty Business (excluding those which engage in the Insurance Specialty Business), limited to those, the Shares, etc. of which are not held by the relevant long-term credit bank's Securities Subsidiary, etc. in aggregate exceeding those held by the relevant long-term credit bank or its subsidiaries (excluding the securities subsidiary, etc.), in case of a company which engages in the Insurance Specialty Business (excluding those which engages in the Securities Specialty Business), limited to those, the Shares, etc. of which are not held by the relevant long-term credit bank's Securities Subsidiary, etc. in aggregate exceeding those held by the relevant long-term credit bank or its subsidiaries (excluding the Insurance Subsidiary, etc.), and in case of a company which engages in both the Securities Specialty Business and the Insurance Specialty Business, limited to those, the Shares, etc. of which are not held by the relevant long-term credit bank's Securities Subsidiary, etc. in aggregate exceeding those held by the relevant long-term credit bank or its subsidiaries (excluding the Securities Subsidiary, etc. and the Insurance Subsidiary, etc.), and by the relevant long-term credit bank's Insurance Subsidiary, etc. exceeding those held by the relevant long-term credit bank or its subsidiaries (excluding the Securities Subsidiary, etc. and the Insurance Subsidiary, etc.)
- (x) A company prescribed as the company which develops a new business category by the Prime Minister's Office Ordinance and the Ministry of Finance Ordinance (limited to those the Shares, etc. of which are held by the relevant long-term credit bank, or its subsidiaries as specified in the immediately preceding item and the otherwise than prescribed by the Prime Minister's Office Ordinance and the Ministry of Finance Ordinance, not holding, in aggregate, exceeding the base number of shares, etc.);
- (xi) A holding company the subsidiaries of which are limited to the companies provided in each of the preceding items and prescribed by the Prime Minister's Office Ordinance and the Ministry of Finance Ordinance (including a company which will become such holding company);
- 2. The "subsidiary" referred to in the preceding paragraph means another company of which more than 50/100 of the total number of shares (limited to the voting shares) issued or the total amount of capital (hereinafter referred to as the "Total number of shares issued, etc.") are held by a certain company. In such case, such other company of which more than 50/100 of the Total number of shares issued, etc. are held by the company and one or more of its subsidiaries, or one or more subsidiaries of the relevant company, shall be deemed to be a subsidiary of the relevant company.
- 3. In the preceding paragraph, the Shares, etc. held by the company shall not include the Shares, etc. held as the assets of the trust of monies or securities (limited to those shares in relation to which the trustee or the beneficiary may exercise its voting right or may instruct such company on exercise of voting right), and any other shares prescribed by the Prime Minister's Office Ordinance and the Ministry of Finance Ordinance, and shall include the shares as the trust assets in relation to which the relevant company as the trustee or the beneficiary may exercise its voting right or may instruct such company on exercise of voting right (excluding the shares prescribed by the Prime Minister's Office Ordinance and the Ministry of Finance Ordinance).
- 4. In paragraph 1, the words specified in each of the following items shall have the meaning ascribed thereto in each such item;
- (i) "Subordinate Business": the business prescribed by the Prime Minister's Office Ordinance and the Ministry of Finance Ordinance as the business which is subordinated to the business conducted by a long-term credit bank or the company specified in paragraph 1, items (ii) to (vii);
- (ii) "Business Relating to Finance": the business prescribed by the Prime Minister's Office Ordinance and the Ministry of Finance Ordinance as the business which is incidental or related to the banking business, the securities business or the insurance business;
- (iii) "Securities Specialty Business": the business prescribed by the Prime Minister's Office Ordinance and the Ministry of Finance Ordinance as the business which is incidental or related to the securities business;
- (iv) "Insurance Specialty Business": the business prescribed by the Prime Minister's Office Ordinance and the Ministry of Finance Ordinance as the business which is incidental or related to the insurance business;
- (v) "Securities Subsidiary, etc.": a long-term credit bank's subsidiary (meaning the subsidiary provided in item (i); hereinafter the same), which is listed below:
- (a) a Securities Specialty Company or a foreign company which engages in the securities business;
- (b) a holding company specified in paragraph 1 item (xi), the subsidiary of which is the company specified in a) above; or
- (c) a subsidiary of other Securities Specialty Company which is a subsidiary of the relevant long-term credit bank, prescribed by the Prime Minister's Office Ordinance and the Ministry of Finance Ordinance.
- (vi) "Insurance Subsidiary, etc.": a long-term credit bank's subsidiary, which is listed below:
- (a) an Insurance Company or a foreign company which engages in an insurance business;
- (b) a holding company specified in paragraph 1, item (xi), the subsidiary of which is the company specified in above a); or
- (c) a subsidiary of other Insurance Specialty Company which is a subsidiary of the relevant long-term credit bank, prescribed by the Prime Minister's Office Ordinance and the Ministry of Finance Ordinance.
- 5. The provision of paragraph 1 shall not apply if the company other than the Potential Subsidiary is a subsidiary of the relevant long-term credit bank due to the acquisition of shares, etc. upon enforcement of a security interest or any other event prescribed by the Prime Minister's Office Ordinance and the Ministry of Finance Ordinance. Provided, however, the relevant long-term credit bank shall take necessary steps in order that the relevant subsidiary ceases to be a subsidiary within a year from the date on which the relevant event has occurred.
- 6. A long-term credit bank shall obtain prior authorization from the Financial Reconstruction Commission in case it intends to turn the Potential Subsidiary specified in paragraph 1, items (i) to (ix) or (xi) (excluding the company which engages in a subordinate business (meaning the subordinate business specified in paragraph 4, item (i). The same shall apply to item (ix).); hereinafter referred to as a "Potential Subsidiary Bank, etc.") into its subsidiary, save where it obtains approval of the merger or the transfer of undertaking or business pursuant to the provisions of Article 30, paragraphs 1 to 3 of the Banking Law which is applicable mutatis mutandis to Article 17, or Article 6 paragraph 1 (Approval) of the Law for Consolidation and Conversion of Financial Institutions (Law No. 86 of 1968).
- 7. The provisions of the preceding paragraph shall not apply if the Potential Subsidiary Bank, etc. is a subsidiary of the relevant long-term credit bank due to the acquisition of shares, etc. upon enforcement of a security interest or any other event prescribed by the Prime Minister's Office Ordinance and the Ministry of Finance Ordinance. Provided, however, the relevant long-term credit bank shall take necessary steps in order that the relevant Potential Subsidiary Bank, etc. ceases to be a subsidiary within a year from the date on which the relevant event has occurred, except when it obtains an approval from the Financial Reconstruction Commission of such Potential Subsidiary Bank, etc. to continuing to be a subsidiary.
- 8. The provisions of Article 6 shall apply mutatis mutandis to the case in which a long-term credit bank intends to turn the company specified in each item of paragraph 1, which is its subsidiary, into a subsidiary which is applicable to the company specified in another item (limited to the Potential Subsidiary Bank, etc.).
- 9. In paragraph 1, item (viii) or paragraph 6, the rules in relation to whether or not a company engages in its business principally for the business conducted by a long-term credit bank or any of its subsidiaries, one of a long-term credit bank's subsidiaries or a long-term credit bank shall be determined by the Financial Reconstruction Commission and the Minister of Finance.
The notice which a long-term credit bank is required to give pursuant to the provisions of Article 412, paragraph 1 (Public notice and the peremptory notice of objection to the merger) of the Commercial Code where a resolution is passed for case a merger (limited to that which prescribed in Article 30, paragraph 1 (Authorization, etc., of merger and transfer of business) of the Banking Law which is applied mutatis mutandis to Article 17) need not be given to creditors of its debentures, depositors, installment savings depositors, or other creditors as prescribed by Cabinet Order.
In case a long-term credit bank succeeds, due to a take over of the whole or a part of a business, the rights and liabilities under contracts (limited to those which concern the banking business; hereinafter the same in this Article), and if any such contracts effect business which the long-term credit bank is not authorized to engage in, the long-term credit bank may continue the business related to the those contracts until the expiry of the period stipulated in such contracts, if there is any such provision, or for one (1) year following the date of succession, in the absence of such provision in the contract.
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- 1. If the license of the Financial Reconstruction Commission referred to in Article 4, paragraph 1 ceases to be valid due to the fact that a long-term credit bank falls within the provision of Article 41, paragraph 1 (Invalidity of license) of the Banking Law which is applied mutatis mutandis in Article 17, and if there remain the liabilities under the bonds, money deposits, installment savings or deposits with the company which was formerly the said long-term credit bank, the Financial Reconstruction Commission may, other than in the cases prescribed by Cabinet Order, order the said company to deposit the property with the official depository up to the whole amount of the said liabilities by the day, whichever comes earlier, of full repayment of liabilities of said company or the lapse of twenty (20) years from the day on which said license ceases to be valid, or make an order for disposing of the said liabilities, administering or managing the assets to protect the creditors of the bonds, or the depositors or installment savings depositors.
- 2. The provisions of the preceding paragraph shall apply mutatis mutandis to the case where a company, other than a long-term credit bank or a bank, has, due to merger, assumed liabilities under bonds, deposits, or installment savings deposits of a long-term credit bank.
- 3. The provisions of Article 24, paragraph 1 (Submission of reports or materials) as well as Article 25, paragraphs 1, 3, and 4 (On site inspection) of the Banking Law shall apply mutatis mutandis to companies which are subject to the provisions of the preceding two paragraphs.
- 1. Any company which intends to be a holding company (which means a holding company as provided in Article 9, paragraph (3) of the Act Concerning Prohibition of Private Monopolization and Maintenance of Fair Trade (Law No. 54 of 1947); hereinafter the same) which will hold a long-term credit bank as subsidiary by means of the following transactions or proceedings, or any person who intends to establish a holding company which will hold a long-term credit bank as subsidiary, shall obtain the prior authorization from the Financial Reconstruction Commission:
- (i) acquisition of shares of long-term credit bank by such company or any of its subsidiaries (excluding those made upon enforcement of security interest or upon other events provided in the Prime Minister's Office Ordinance and the Ministry of Finance Ordinance);
- (ii) obtaining the licence prescribed by Article 4, paragraph 1 by a subsidiary of such company;
- (iii) other transactions or proceedings prescribed by Cabinet Order.
- 2. Any company which became becomes a holding company ("Special Holding Company") which holds a long-term credit bank as subsidiary by such reason other than any of the transactions or proceedings mentioned in any item of the immediately preceding paragraph shall, within three (3) months after the expiration of the financial year in which the event occurred, file a notification stating that such company has become a holding company which holds a long-term credit bank and other matters required by the Prime Minister's Office Ordinance and the Ministry of Finance Ordinance with the Financial Reconstruction Commission.
- 3. A Specified Holding Company shall take any necessary action in order that it ceases to be a holding company which holds a long-term credit bank as a subsidiary before the date of expiration (in this paragraph, "last day of grace period") of one (1) year from the end of financial year in which the day of happening of the event stated in the immediately preceding paragraph occurred; save where such Specified Holding Company has obtained authorization from the Financial Reconstruction Commission that such company may continue to be a holding company which holds a long-term credit bank as subsidiary even after the last day of grace period.
- 4. If a Special Holding Company ceases to be a holding company which holds a long-term credit bank as subsidiary pursuant to the action prescribed by the immediately preceding paragraph, such special holding company shall file notification with the Financial Reconstruction Commission without delay. If it ceases to be a holding company which holds a long-term credit bank as subsidiary not pursuant to such action, the same shall apply.
Upon receipt of application for authorization pursuant to paragraph 1 or the proviso to paragraph 3 of the preceding Article, the Financial Reconstruction Commission shall examine whether the following conditions are met:
- 1. The projected income and expenditure of the applicant or its subsidiary (including the company which is intended to be a subsidiary; same in the next item) to be established upon such authorization (in this Article, "Applicant, etc.") and its subsidiaries are good.
- 2. In light of the assets, etc. held by the Applicant, etc. and its subsidiaries, their capital adequacies are appropriate.
- 3. In light of its personnel, the Applicant, etc. has knowledge and experience which enable the Applicant, etc. to properly and duly operate and administrate a long-term credit bank which is or will be the subsidiary, and have enough credit.
- 1. A long-term credit bank holding company (which shall mean the holding company which holds a long-term credit bank as subsidiary, and is established under the authorization mentioned in Article 16-2, paragraph 1 or under the authorization mentioned in proviso to Article 16-2, paragraph 3; hereinafter the same) may not hold a subsidiary other than a long-term credit bank and any of the following companies (in this Article, "Holding Company's Potential Subsidiary":
- (i) A bank;
- (ii) A securities specialty company;
- (iii) An insurance company;
- (iv) A foreign company which engages in banking business;
- (v) A foreign company which engages in securities business (excluding that mentioned in the preceding item);
- (vi) A foreign company which engages in insurance business (excluding that mentioned in item (iv))
- (vii) Such company which principally engages in any of the following business (in the case of the company which engages in the business mentioned in (a) below, limited to those which engage in such business for the purpose of the business performed by such long-term credit bank holding company or its subsidiaries):
- (a) Such businesses as provided in Prime Minister's Office Ordinance and Ministry of Finance Ordinance as business subordinate to the business performed by a long-term credit bank or any of the companies mentioned in the preceding items (in this Article "Subordinate Business"),
- (b) Business Relating to Finance mentioned in Article 13-2, paragraph 4, item ii (excluding, if such long-term credit bank holding company has no subsidiary of either a security house or foreign company which engages in securities business, Security Specialty Business mentioned in Article 13-2, paragraph 4, item iii, and if such long-term credit bank holding company has no subsidiary of either an Insurance Company or foreign company which engages in insurance business, Insurance Specialty Business mentioned in item iv of paragraph 4 of Article 13-2);
- (viii) Such company which shall be provided as developing a new business category in the Prime Minister's Office Ordinance and the Ministry of Finance Ordinance (such company shall only be thea company of which Shares, etc. of no more than the base number of shares provided in paragraph 1 of Article 52-8 of the Bank Law which is applied mutatis mutandis to the immediately following Article.) are held in aggregate by a long-term credit bank holding company or its subsidiaries which mentioned in the preceding item but excluding a company provided in the Prime Minister's Office Ordinance and the Ministry of Finance Ordinance);
- (ix) A holding company which has no subsidiary other than a long-term credit bank or any of the companies mentioned in the preceding items, which shall be provided in the Prime Minister's Office Ordinance and the Ministry of Finance Ordinance (including the company which is scheduled to be such holding company).
- 2. The provisions of the preceding paragraph shall not apply, if, by reason of acquisition of Shares, etc. upon enforcement of a security interest by a long-term credit bank holding company or its subsidiaries or other events provided in the Prime Minister's Office Ordinance and the Ministry of Finance Ordinance, the company other than the Holding Company's Potential Subsidiary becomes a subsidiary of such long-term credit bank holding company; provided, however, such long-term credit bank holding company shall take necessary steps in order that such company which becomes a subsidiary ceases to be a subsidiary before the expiration of one (1) year from the date of occurrence of such event.
- 3. A long-term credit bank holding company, which intends to make long-term credit bank or such company as mentioned in the immediately preceding paragraph, items (i) to (vii) or item (ix) from a Holding Company's Potential Subsidiary (excluding those solely conducting Subordinate Business or such business as provided in the Prime Minister's Office Ordinance and the Ministry of Finance Ordinance as subordinate or relating to banking business (in the case of the company performing Subordinate Business, limited to those which performs such business for the purpose of the business of the long-term credit bank who is the subsidiary of such long-term credit bank holding company)) (in this Article, "Long-Term Credit Bank, etc.") its subsidiary, shall obtain the prior authorization from the Financial Reconstruction Commission unless it obtains the authorization for merger or transfer of business under Article 52-19, paragraph 1 or 2 of the Bank Law which is applied mutatis mutandis in the immediately following Article
- 4. The provisions of the immediately preceding paragraph shall not apply, if, by reason of acquisition of Shares, etc. upon enforcement of a security interest by a long-term credit bank holding company or its subsidiaries or other events provided in Prime Minister's Office Ordinance and Ministry of Finance Ordinance, a long term credit bank, etc. becomes a subsidiary of such long-term credit bank holding company; provided, however, such long-term credit bank holding company shall take necessary steps so that such company which becomes a subsidiary ceases to be a subsidiary before the expiration of one (1) year from the date of happening of such event.
- 5. The provisions of paragraph 3 shall apply mutatis mutandis to the long-term credit bank holding company which intends to turn its subsidiary mentioned in any item of paragraph 1 to into another company (limited to the Long-Term Credit Bank, etc.) which is also mentioned in any of such items.
- 6. In the case provided in paragraph 1, item vii or iii, the standard whether the company is performing Subordinate Business mainly for the purpose of business of long-term credit bank holding company or its subsidiaries, or long-term credit bank who is a subsidiary of the long-term credit bank holding company, shall be provided by the Financial Reconstruction Committee and the Minister of Finance.
The provisions of the Banking Law shall apply mutati mutandis, to a long-term credit bank as regards they apply to a bank, to a holding company of long-term credit bank as they apply to a holding company of bank and to a holding company holding a long-term credit bank as its subsidiary as it does to a holding company which holds a bank as its subsidiary, other than the provisions of Articles 1 through 4 (Object, Definition, etc., Licence of business), Article 5, paragraphs 1 and 2 (Amount of capital), Article 6, paragraphs 1 and 2 (Trade Name), Articles 10 through 12 (Scope of business), Article 16-2 (Scope etc. of bank subsidiary), Article 31 (Approval, etc. of merger, or transfer or taking over of business, etc.), Article 33 (Peremptory notice of objection by creditor in case of merger), Article 37, paragraph 2 (Authorization of discontinuance of business and dissolution, etc.), Article 43 (Conversion, etc. of company in other business), Chapter VII (Branch of Foreign Bank), Article 52-2, and 52-3, paragraph 7 (Authorization etc. concerning bank holding company), Article 54 (Condition of authorization, etc.), Article 55 (Nullification of authorization), Article 56 item (iv) (Notification to Financial Reconstruction Commission), Articles 58 through 60 (Delegation to Prime Minister's Office/Ministry of Finance Ordinance, Delegation of power, Transitional measures), and Chapter IX (Penal Provisions) as well as Supplementary Provisions. In this case, the necessary technical changes of reading shall be prescribed by Cabinet Order.
A long-term credit bank is not bank as defined in the Banking Law. Provided that, the term "bank" as used in laws and ordinances other than the Banking Law and Cabinet Order thereunder shall, unless otherwise provided for, include a long-term credit bank.
- 1. The Financial Reconstruction Commission may attach the conditions to the authorization or approval (referred to as the "authorization, etc." in the next paragraph) under the provisions of this Law (including the provisions of the Banking Law which are applied mutatis mutandis in Article 17; the same in the next Article through Article 23), or change them.
- 2. The conditions provided in the preceding paragraph shall be the least necessary, in view of the purport of the authorization, etc. and ensuring execution of the matters relative to the authorization, etc.
- 1. If a long-term credit bank or a holding company of a long-term credit bank (including those authorized pursuant to Article 16-2, paragraph 1) does not execute the matters which are authorized as prescribed in this Law within six (6) months from the day on which it obtained the authorization, the said authorization shall become null and void. Provided that, this shall not apply when a previous approval of the Financial Reconstruction Commission is obtained in case there are inevitable reasons.
- 2. In addition to the above, the exceptional authorization set forth in Article 16-2 paragraph 1 or 3 shall become null and void if a holding company of a long-term credit bank relating to said authorization ceases to be a holding company which holds a long-term credit bank as its subsidiary.
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In addition to those prescribed by this Law, the procedure of applying for license, authorization or approval under the provisions of this Law, the procedure of submitting documents, or otherwise the matters necessary for enforcing this Law shall be prescribed by the Prime Minister's Office Ordinance and Ministry of Finance Ordinance.
- 1. The Financial Reconstruction Commission may delegate powers under the provisions of this Law (other than the power provided in Article 4-1 and any other powers concerning measures prescribed by the Regulations of the Financial Reconstruction Commission) to the Director General of the Financial Supervisory Agency.
- 2. The Financial Reconstruction Commission may, as prescribed by Cabinet Order, delegate a part of the powers under the provision of this Law (other than those delegated to the Director General of the Financial Supervisory Agency pursuant to the preceding Article) to the Director General of the Regional Financial Bureau or the Branch Director of the Regional Financial Bureau.
- 3. The Director General of the Financial Supervisory Agency may, as prescribed by Cabinet Order, delegate a part of the powers delegated pursuant to paragraph 1 to the Director General of the Regional Financial Bureau or the Branch Director of the Regional Financial Bureau.
- 4. In respect of the administration of the exercise of the powers delegated to the Director General of the Regional Financial Bureau or the Branch Director of the Regional Financial Bureau pursuant to the immediately preceding paragraph, the Director General of the Financial Supervisory Agency shall control and supervise them.
In the case of establishing, amending or abolishing a Cabinet Order issued under the provisions of this Law, the necessary transitional measures may be prescribed by that Cabinet Order within the limits reasonably considered necessary for the establishment, amendment or abolition (including the transitional measures concerning penal provisions).
Any person who has committed a violation set forth in the following three items shall be punished with penal servitude of two years or less, a fine of three million yen or less, or both:
- (i) If a person establishes or causes a company to become a holding company which holds a long-term credit bank as its subsidiary by way of the transactions or proceedings specified in any item of Article 16-2, paragraph 1 above without obtaining the authorization of the Financial Reconstruction Commission pursuant to the said paragraph;
- (ii) If a person violates the provision of Article 16-2 paragraph 3 above and continues to be the holding company which holds a long-term credit bank as its subsidiary after the last day of the grace period provided in said paragraph; or
- (iii) If a person violates the provision of Article 52-8, paragraph 2 of Banking Law which is applied mutati mutandis in Article 17 above and continues to be a holding company which holds a long-term credit bank as its subsidiary after the period designated by the Financial Reconstruction Commission in said paragraph.
Any person who has violated the conditions attached in accordance with the provision of Article 4, paragraph 3 or person who has violated the order suspending the whole or a part of the business under the provision of Article 26, paragraph 1, Article 27 or Article 52-18, paragraph 1 or 3 of the Banking Law which are applied mutatis mutandis in Article 17 (hereinafter referred to as the "Banking Law") shall be punished with penal servitude of two years or less, or a fine of three million yen or less.
Any person who comes under any of the following shall be punished with a fine of three million yen or less:
- (i) Any person who has violated an order under the provision of Article 16 paragraph 1 above (including the case to which that provision is applied mutatis mutandis in paragraph 2 of said Article);
- (ii) Any person who has violated the conditions attached in accordance with the provision of Article 19 paragraph 1 above (limited to the conditions relating to the authorization under the provision of Article 16-2, paragraph 1, or the exceptional authorization provided in paragraph 3 of the said Article);
- (iii)-1 Any person who has failed to submit the interim business report or business report, failed to state an important matter which should have been stated therein or submitted those documents with a false statement in respect of an important matter;
- (iii)-2 Any person who has failed to make a public notice under the provision of Article 20 or Article 52, paragraph 12 of the Banking Law, failed to state in the document to be made public notice an important matter which should have been stated therein or made a public notice by a false statement in respect of an important matter;
- (iii)-3 Any person who has violated the provisions of Article 21, paragraph 1 or 2 of the Banking Law, or Article 52-13, paragraph 1 thereof, failed to make the documents provided therein available for public inspection, failed to state in those documents an important matter which should have been stated therein, or made those documents available for public inspection by a false statement in respect of an important matter;
- (iv) Any person who has failed to submit the reports or materials under the provision of Article 24, paragraph 1 of the Banking Law (including the case which is applied mutatis mutandis in Article 16, paragraph 3 above), or the provision of Article 24, paragraph 2 or Article 52-15, paragraph 1 or 2 thereof, or submitted the false reports or materials;
- (v) Any person who has failed to answer an inquiry made by competent personnel or made a false answer under the provision of Article 25, paragraph 1 of the Banking Law (including the case which is applied mutatis mutandis in Article 16, pararagraph 3), or Article 25, paragraph 2 or Article 52-16, paragraph 1 or 2 thereof, or refused, obstructed or evaded the inspection under those provisions;
- (vi) Any person who has refused, obstructed or evaded the inspection under the provision of Article 45 of the Banking Law, or violated the order provided by said Article;
- (vii) Any person who has failed to answer an inquiry made by competent personnel or given a false answer under the provision of Article 25, paragraph 1 of the Banking Law applied mutatis mutandis in Article 46, paragraph 3 thereof, or refused, obstructed or evaded the inspection under the provision; or
- (viii) Any person who has violated the order under the provision of Article 52-8, paragraph 1 of the Banking Law (except the order of dismissal of directors or statutory auditors, or the order suspending the whole or a part of the business).
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If the representative of a juridical person or the agent, employee or other engaged of a juridical person or natural person has, relative to the business or property of the juridical or natural person, committed a violation set forth in the relevant item, the juridical person shall be punished with a fine specified in the following three items, and a natural person shall be punished with a fine specified in each of the following three items, in addition to the offender himself.
In the case of coming under any one of the following items, the director, statutory auditor, manager, agent (if the agent is a juridical person, the member executing its business, representative of the juridical person such as director), or liquidator of a long-term credit bank which has performed the act (including the company having been a long-term credit bank in the case where the license of the Financial Reconstruction Commission under Article 4, paragraph 1 became null and void due to the fact that said long-term credit bank came under any one of Article 41, items (i) through (iii) of the Banking Law), the director, statutory auditor, manager, or liquidator of a long-term credit bank holding company (including the company having been a long-term credit bank holding company in case where the said long-term credit bank holding company ceases to be a long-term credit bank holding company), or the director, statutory auditor, manager, the member executing its business, or liquidator of a specified holding company (including the company having been a specified holding company in the case where the said long-term credit bank holding company ceases to be a long-term credit bank holding company) shall be punished with a fine of one million yen or less:
- (i) If they engaged in other business in violation of the provision of Article 6-2, or Article 52-5, paragraph 1 of the Banking Law;
- (ii) If they failed to make a notification, public notice, or posting under the provisions of Article 10, paragraph 1 or Article 11, paragraph 5 hereof, or the provisions of Article 16, Article 34, paragraph 1, Article 36, paragraph 1, Article 38, or Article 53, paragraph 1 or 3 of the Banking Law, or made a false notification, public notice, or posting;
- (iii) If in violation of the order under the provision of Article 13-2, paragraph 1, a subsidiary is established from a company other than a Potential Subsidiary provided in the same Article (excluding domestic companies provided in Article 16-3, paragraph 1 of the Banking Law), or if in violation of the order under the provision of Article 16-4, paragraph 1, a subsidiary is established from a company other than a Holding Company's Potential Subsidiary provided in the same Article (excluding domestic companies provided in Article 52-8, paragraph 1 of the Banking Law);
- (iv) If established, without obtaining the authorization of the Financial Reconstruction Commission under the provisions of Article 13-2, paragraph 6, a subsidiary from a company other than a Potential Subsidiary provided in the same Article, or without obtaining the authorization of the Financial Reconstruction Commission under the provision of paragraph 6 of the same Article which is applied mutatis mutandis in paragraph 8 of the same Article, established a subsidiary (limited to subsidiaries provided under paragraph 6 of the same Article) which is mentioned in another item of the same paragraph, from a company provided in paragraph 1 of the same Article ;
- (v) If they failed to make a notification under the provision of Article 16-2, paragraph 2 or the provisions of paragraph 4, or made a false notification;
- (vi) If they established, without obtaining the authorization of the Financial Reconstruction Commission under the provision of Article 16-4, paragraph 3, a subsidiary from a long-term credit bank other than those provided in the same Article, or without obtaining the authorization of the Financial Reconstruction Commission under the provisions of paragraph 3 of the same Article which is applied mutatis mutandis in paragraph 5 of the same Article, established a subsidiary (limited to long-term credit banks provided under paragraph 3 of the same Article) which is mentioned in another item of the same paragraph, from a company provided in paragraph 1 of the same Article ;
- (vii) If they violated the conditions (including those concerning the authorization under the provisions of Article 13-2, paragraph 6 (including the case which is applied mutatis mutandis in paragraph 8 of the said Article) or Article 16-4, paragraph 3 (including the case which is applied mutatis mutandis in paragraph 5 of the said Article), Article 8, Article 30, paragraphs 1 through 3, Article 37, paragraph 1, or Article 52-19, paragraph 1 or 2 of the Banking Law) attached in accordance with the provisions of Article 19, paragraph 1;
- (viii) If they performed, without obtaining the authorization of the Financial Reconstruction Commission under the provision of Article 5, paragraph 3, Article 6, paragraph 3 or Article 8 of the Banking Law, any act prescribed in those provisions;
- (ix) If they engaged in the ordinary business of another company in violation of Article 7, paragraph 1 or Article 52-4, paragraph 1 of the Banking Law;
- (x) If they violated the order under the provision of Article 16-3, paragraph 1 or the supplementary provisions of paragraph 2 of the Banking Law, or Article 52-8, paragraph 1 or the supplementary provisions of paragraph 2 of the Banking Law;
- (xi) If they violated the conditions attached in accordance with the provisions of Article 16-3, paragraph 3 or 5, or Article 52-3, paragraph 3 or 5 of the Banking Law;
- (xii) If they failed to make the earned surplus reserve in violation of Article 18 of the Banking Law;
- (xiii) If they failed to submit amendments in violation of Article 26, paragraph 1 or Article 52-17, paragraph 1 of the Banking Law, or if they violated the order under the provisions of Article 26, paragraph 1 of the Banking Law (excluding the order to suspend the whole or a part of the business) or the order under the provisions of Article 29, or Article 52-17, paragraph 1 or paragraph 3 of the Banking Law;
- (xiv) If they effected transfer or taking over of the business or undertaking in violation of Article 34, paragraph 4 of the Banking law (including the case which is applied mutatis mutandis in Article 35, paragraph 3 of the Banking law).
Copyright 1999, The Industrial Bank of Japan, Limited
This translation was commissioned by IBJ in November 1999
