Law Concerning the Regulation, etc. of an Investment Advisory Business Relating to Securities(Law No.74 of May 27, 1986)
Enforcement
November 25, 1986 (Ordinance No.332 of 1986)
Amendment
Law No.75 of 1988, Law No.87 of 1992, Law No.89 of 1993, Law No.91 of 1995, Law Nos.102 and117 of 1997, Law Nos.107 and 131 of 1998, Law Nos.151 and 160 of 1999, Law Nos.96, 97, and
126 of 2000, Law Nos.129 and 138 of 2001, Law Nos.45 and 65 of 2002, Law No.54 of 2003, Law
Nos.76, 88, 97, 124, 147 and 154 of 2004
Table of Contents
Chapter I. General Provisions (Article 1-Article 3)
Chapter II. Registration (Article 4 – Article 10)
Chapter III. Business (Article 11 – Article 23)
Chapter IV. Businesses Related to Discretionary Investment Agreement (Article 24 – Article 33)
Chapter V. Supervision (Article 34 – Article 41)
Chapter VI. Securities Investment Advisers Association (Article 42 – Article 48)
Chapter VII. Miscellaneous (Article 49 – Article 53)
Chapter VIII. Penal Rules (Article 54 – Article 61)

Chapter I. General Provisions(Objectives)
Article 1.

The purpose of this Law is to ensure the appropriate operation of business conducted byparties engaged in the Investment Advisory Business related to Securities, and to protect investors
by enforcing the registration system of such parties and in implementing necessary regulations
against their business.

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(Definitions)
Article 2.

In this Law, an “Investment Advisory Agreement” shall mean an agreement wherein aparty promises to provide advice related to the Value of Securities, etc. or the investment decision
based on analysis of the Value of Securities, etc. (the investment decision shall mean decisions
concerning the type, issuer, quantity and price of the Securities to be invested in, and the separation,
method and timing of the purchase or sale thereof (with respect to the Securities Index, etc., Futures
Transactions, etc., Securities Options Transactions, etc., Over-the-Counter Securities Index, etc.,
Forward Transactions, Over-the-Counter Securities Options Transactions and Over-the-Counter
Securities Index, etc., Swap Transactions, decisions concerning the details and timing of thetransaction.). The same applies hereinafter.) in oral, written (excluding publications aimed to be soldto the general public such as newspapers, magazines, books, etc., which are readily available for thegeneral public to purchase.) or other forms, and that the other party promises to pay for consideration
therefor.
2. In this Law, “Investment Advisory Business” shall mean the business of providing advice toclients pursuant to the Investment Advisory Agreement.
3. In this Law, “Investment Adviser” shall mean a party who engages in the Investment Advisory
Business and is properly registered under Article 4.
4. In this Law, “Discretionary Investment Agreement” shall mean the following agreements:(1) An agreement where an Investment Adviser is entrusted by its client with the making of all orpart of the investment decision based on the analysis of the Value of Securities, etc., and is assigned
the necessary authority to execute investment based on such investment decision on behalf of theclient.
(2) An agreement where an Investment Adviser is entrusted by its client with the making of all orpart of the investment decision based on the analysis of the Value of Securities, etc., and is assigned
the necessary authority to execute investment based on such investment decision on behalf of theclient, and is also authorized to reassign all or part of such investment decision making and/or
assigned authority to a third party as prescribed in the Ordinance.
5. In this Law, “Securities” shall mean securities prescribed in the Securities Exchange Law (Law
No. 25 of 1948), Article 2, Paragraphs 1 and 2 (including government bond securities as prescribedin the same Law, Article 108-2, Paragraph 3, or normal bonds deemed as foreign government bonds
as prescribed in the same Law, Article 65, Paragraph 2, Item 3.).

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6. In this Law, “Securities Index, etc., Futures Transactions, etc.” shall mean securities index, etc.,
futures transactions (referring to the securities index, etc., futures transactions prescribed in the
Securities Exchange Law, Article 2, Paragraph 21. The same applies hereinafter in this Article.) or
foreign market securities futures transactions (referring to foreign market securities futurestransactions prescribed in the same Law, Article 2, Paragraph 23. The same applies hereinafter inthis Article.) which are similar to the securities index, etc., futures transactions.
7. In this Law, “Securities Options Transactions, etc.” shall mean securities options transactions(referring to the securities options transactions prescribed in the Securities Exchange Law, Article 2,
Paragraph 22. The same applies hereinafter in this Article.) or foreign market securities futurestransactions which are similar to the securities options transactions.
8. In this Law, “Over-the-Counter Securities Index, etc., Forward Transactions” shall mean
over-the-counter securities index, etc., forward transactions prescribed in the Securities Exchange
Law, Article 2, Paragraph 25.
9. In this Law, “Over-the-Counter Securities Options Transactions” shall mean over-the-countersecurities options transactions prescribed in the Securities Exchange Law, Article 2, Paragraph 26.
10. In this Law, “Over-the-Counter Securities Index, etc., Swap Transactions” shall mean
over-the-counter securities index, etc., swap transactions prescribed in the Securities Exchange Law,
Article 2, Paragraph 27.
11. In this law, “Securities, etc.” shall mean Securities, securities indexes (referring to the securities
indexes prescribed in the Securities Exchange Law, Article 2, Paragraph 21, and indexes similar tosuch indexes that are related to foreign market securities futures transactions which are similar tosecurities index, etc., futures transactions.), over-the-counter securities indexes or options prescribedin the same Article, Paragraph 25 (referring to options prescribed in the same Article, Paragraph 1,
Item 10-2, and rights that are similar to such options and are related to foreign market securities
futures transactions similar to securities options transactions. The same applies hereinafter in theimmediately following Paragraph.).
12. In this Law, “Value of Securities, etc.” shall mean the value of Securities, the amount ofconsideration for options, or the movement of contracted indexes, contracted numeric values, actualindexes, actual numeric values (referring to the contracted indexes, contracted numeric values, actualindexes or actual numeric values prescribed in the Securities Exchange Law, Article 2, Paragraph 21,
and similar numeric values related to foreign market securities futures transactions which are similar
to securities index, etc., futures transactions.), over-the-counter contracted indexes, over-the-counter3

contracted numeric values, over-the-counter actual indexes or over-the-counter actual numericvalues (referring to the over-the-counter contracted indexes, over-the-counter contracted numericvalues, over-the-counter actual indexes and over-the-counter actual numeric values prescribed under
the same Article, Paragraph 25.).
13. In this Law, “Securities Transactions” shall mean acts listed in the Securities Exchange Law,
Article 2, Paragraph 8, Items 1 through 3-2.
(Prohibition of Discretionary Investment, etc.)
Article 3.

No person shall engage in the business of conducting investment for others with

entrustment of all or part of investment decision making based on the analysis of the Value ofSecurities, etc. (referred to as “Discretionary Investment” hereinafter in this Article.), unlesspursuant to a Discretionary Investment Agreement or specifically prescribed in other laws. The
foregoing shall not apply to cases wherein a legal entity, established in accordance with a foreignlaw, and engaged in the business of Discretionary Investment in a foreign country, engages in thebusiness of Discretionary Investment (limited to transactions in which the counterparties are
Approved Investment Advisers (referring to the Investment Advisers who received the approval
under Article 24, Paragraph 1, hereinafter the same.) or other parties prescribed under theOrdinance.).
Chapter II. Registration(Registration)
Article 4.

A party seeking to engage in the Investment Advisory Business must be registered with

the Prime Minister. The foregoing shall not apply to a legal entity established in accordance withlaws and regulations of a foreign country and engaged in the Investment Advisory Business or anindividual residing in a foreign country who engages in the Investment Advisory Business, if such
entity or individual engages in the Investment Advisory Business only with the Approved
Investment Advisers or other parties prescribed under the Ordinance as counterparties.
(Application for Registration)
Article 5.

A party seeking to obtain the registration prescribed under the immediately preceding

Article must submit to the Prime Minister a completed registration application form stating all thematters set forth below:(1) Trade name, name and address.

4(2) In case of a legal entity, its paid-in-capital (including total investment amount), the names andaddresses of its officers and (if any) the names and addresses of employees prescribed in the
Ordinance.
(3) In case of an individual, the names and addresses of employees prescribed in the Ordinance (ifany).
(4) The names and addresses of places of businesses.
(5) Method of business.
(6) If engaged in other businesses, the type of those businesses.
(7) Other matters prescribed in the Cabinet Order.
2. A covenant certifying that the applicant falls under neither of the categories prescribed in each
Item of Article 7, Paragraph 1 and other documents prescribed in the Cabinet Order must be attachedto the registration application form prescribed in the immediately preceding Paragraph.
(Enforcement of Registration)
Article 6.

The Prime Minister, if an application under Article 4 is made, must register thefollowing matters to the Investment Advisers registry, except in cases where the Prime Ministerdenies the registration pursuant to the provisions of Paragraph 1 of the immediately following
Article：(1) Matters listed in each Item of Paragraph 1 of the immediately preceding article.
(2) Registration date and registration number.
2. When the registration prescribed in the immediately preceding Paragraph is completed, the Prime
Minister must notify the applicant thereof without delay.
3. The Prime Minister must make the Investment Advisers registry available for public inspection.
(Denial of Registration)
Article 7.

The Prime Minister must deny the registration, if the applicant falls under any of thefollowing Items, or if there was a false statement or an omission of a material fact in the registration
application form or in any of the attached documents thereto:5(1) A party who is incompetent or quasi-incompetent, or is treated in a similar manner under thelaws of the foreign country where the party resides.
(2) A minor who does not possess the same level of legal capacity as an adult in relation to thebusiness.
(3) A party who went bankrupt and has not yet been rehabilitated, or is treated in a similar manner
under the laws of the foreign country where the party resides.
(4) A party whose registration under Article. 4 was revoked pursuant to the provision under Article
38, Paragraph 1 or whose approval in the Law Concerning Investment Trust and Investment
Company (Law No. 198 of 1951) under Article 6 was revoked pursuant to the provisions under
Article 41, Paragraph 1, Article 42, Paragraph 1, Item 1 (e) or Article. 43, and five (5) years have notlapsed since such revocation (in case such party whose registration or approval was revoked is alegal entity, including parties who were officers of such legal entity within thirty (30) days prior tosuch revocation, and five (5) years have not lapsed from such revocation.), or a party whose
registration or approval of the same type received in a foreign country (including permissions related
to such registration or approval and other administrative measures, referred to as “Registration, etc.”
in this Item and Article 27, Paragraph 2, Item 4 (a).) was revoked pursuant to the provisions of theforeign laws and regulations equivalent to this Law or the Law Concerning Investment Trust andInvestment Company and five (5) years have not lapsed since such revocation (in case such party
whose Registration, etc., was revoked was a legal entity, including parties who were officers of such
legal entity within thirty (30) days prior to such revocation, and five (5) years have not passed fromsuch revocation.).
(5) A party who received a sentence of imprisonment or more severe sentences (including sentencesfrom equivalent laws of a foreign country), and five (5) years have not lapsed since serving thesentence or the cessation of the application of such sentence.
(6) A party who violated this Law, Securities Exchange Law, Law Concerning Foreign Security
Firms (Law No. 5 of 1971) or the Law Concerning Investment Trust and Investment Company, or
the laws and regulations of a foreign country which are equivalent to these laws, or committed the
any crime under the Criminal Code (Law No. 45 of 1907), Article 204, Article 206, Article 208,
Article 208-3, Article 222 or Article 247 or the Laws Regarding Penalties for Acts of Violence, etc.
(Law No.60 of 1926), and received a fine (including penalties imposed by the equivalent laws of aforeign country), and five (5) years have not passed since the payment of the fine or the cessation of
application of such penalty.

6(7) A party who committed extraordinarily inappropriate acts in relation to the Investment Advisory
Business, businesses related to Discretionary Investment Agreement, Investment Trust Management
Business (investment trust management business as prescribed in the Law Concerning Investment
Trust and Investment Company,

Article 2, Paragraph 16. The same applies hereinafter.), or

Investment Company Asset Management Business (investment company asset management businessas prescribed under the same Article, Paragraph 17. The same applies hereinafter.) within five (5)years prior to the date of application.
(8) A legal entity whose officer or employee prescribed in the Ordinance (referred to as “Officer,
etc.” in Article 27, Paragraph 2, Item 2.) falls under any of Item 1 or Items 3 through 7.
(9) An individual whose employee prescribed in the Ordinance includes a party who falls under anyof Item 1 or Items 3 through 7.
2. If the registration is denied pursuant to the provisions of the immediately preceding Paragraph, thePrime Minister must notify the applicant thereof without delay with the reasons for the denial
indicated.
(Reporting of Changes)
Article 8.

If any change occurs in relation to matters listed in any Items of Article 5, an Investment

Adviser must report such changes to the Prime Minister within two (2) weeks from the date of suchchange.
2. Upon receipt of the report of the immediately preceding Paragraph, the Prime Minister mustregister the reported change on the Investment Advisers registry.
(Reporting of Closure of Business, etc.)
Article 9.

When an Investment Advisor falls under any of the following Items, the party prescribedin each Item must report such fact to the Prime Minister within thirty (30) days from the date thereof(in case of Item 1, from the date the party came to know of such fact.):(1) When the Investment Advisor dies: The successor.
(2) When the legal entity is dissolved due to a merger: A party who was the representative officer ofsuch legal entity.
(3) When the legal entity is dissolved due to an adjudication to commence bankruptcy proceedings:
The trustee in bankruptcy.

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(4) When the legal entity is dissolved due to a cause other than a merger or adjudication tocommence bankruptcy proceedings:

The liquidator.

(5) When the Investment Advisory Business is closed: The individual who was the Investment
Advisor or the officer who represents the legal entity which was formerly the Investment Adviser.
2. When the Investment Adviser falls under any of the Items of the immediately preceding Paragraph,
the registration for such Investment Adviser shall become ineffective.
3. When an Investment Adviser dies, the successor may continue to engage in the Investment
Advisory Business for sixty (60) days (where the registration is denied pursuant to the provisions ofArticle 7, Paragraph 1 within such period or where an order for closure of the Investment Advisory
Business is given pursuant to the provisions of Article 38, Paragraph 1 which shall be applied
pursuant to the provisions of the immediately following Paragraph, until the date of such denial or
the date of such closure of business is ordered.) after the death of the decedent. If the successor
applies for a registration under Article 4 within such period, the same shall apply, even after the
expiration of such period, until a registration is granted or denial of registration is imposed.
4. In a case where the successor may continue to engage in the Investment Advisory Businesspursuant to the provisions of the immediately preceding Paragraph, the successor shall be deemed an
Investment Advisor and Article 11, Article 12, Article 13, Paragraphs 1 and 2, Articles 14 through22, Articles 34 through 37 and Article 38, Paragraph 1 (excluding Item 2) (including the penal rules
related to these provisions) shall be applied. In such a case, “revoke the registration under Article 4”in the same Article, Paragraph 1 shall be read as “order the closure of the Investment Advisory
Business.”
5. When applying Article 7, Paragraph 1, in case the closure of the Investment Advisory Business isordered pursuant to the provisions under Article 38, Paragraph 1 which is applied pursuant to theimmediately preceding Paragraph, the successor who is ordered to close the business shall bedeemed a party whose registration under Article 4 is revoked pursuant to the provisions under
Article 38, Paragraph 1 and the date of the order of closure of business shall be deemed the date on
which the registration under Article 4 is revoked pursuant to the provisions of under Article 38,
Paragraph 1.
(Business Guarantee Fund)
Article 10. An Investment Adviser must deposit a Business Guarantee Fund to a deposit officenear its principal place of business.

82. The amount of the Business Guarantee Fund provided in the immediately preceding Paragraphshall be the amount determined in the Ordinance, taking into consideration the status of theInvestment Adviser’s business and the protection of investors which shall be determined separately
for the principal place of business and for each of the other places of business.
3. If the Investment Adviser executes an agreement stipulating that the required Business Guarantee
Fund shall be deposited for such Investment Adviser in response to the order by the Prime Ministerand notifies the Prime Minister thereof, it may, subject to the Ordinance, elect not to deposit all orpart of the Business Guarantee Fund of Paragraph 1 for such amount agreed upon to be deposited in
the agreement (hereinafter, referred to as “Agreed Amount” in this Article.) as long as the agreement
is still in effect.
4. When it deems necessary for the protection of the investors, the Prime Minister may order theparty who executed the agreement provided in the immediately preceding Paragraph with theInvestment Adviser or such Investment Adviser to deposit all or part of the Agreed Amount.
5. An Investment Adviser may not commence the Investment Advisory Business (in case therequired amount of the business guarantee fund increases due to establishment of a new place ofbusiness after the commencement of the Investment Advisory Business.) at such of business, until
after the business guarantee fund under Paragraph 1 (including the execution of the agreement
provided in Paragraph 3.) is deposited and the fact is reported to the Prime Minister.
6. A party who executed an Investment Advisory Agreement or a Discretionary Investment
Agreement with an Investment Adviser shall have the right for repayment on obligations arisingfrom such agreements from the business guarantee fund ahead of other creditors.
7. Matters necessary for the exercise of the right provided in the immediately preceding Paragraphshall be prescribed in the Ordinance.
8. When the amount of the Business Guarantee Fund (including the Agreed Amount. The same
applies to Paragraph 10.) becomes less than the amount prescribed in the Ordinance as provided in
Paragraph 2 due to an exercise of the rights under Paragraph 6 or other reasons, the Investment
Adviser must deposit the shortfall amount (including the execution of the agreement provided in
Paragraph 3. The same applies to Article 56, Item 1.) within three (3) weeks from the date set forthin the Cabinet Order and notify the Prime Minister thereof without delay.
9. The Business Guarantee Fund to be deposited pursuant to Paragraph 1 or the immediately
preceding Paragraph may be made in the form of government bonds, municipal bonds or other9Securities prescribed in the Cabinet Order (including corporate bonds, etc., eligible for book-entry
transfer prescribed in the Law Concerning Book-Entry Transfer of Corporate Bonds, etc. (Law No.
75 of 2001), Article 129, Paragraph 1.).
Note: The amendment provisions for this Paragraph prescribed in the Law No.88 of 2004 shallbecome effective from the date prescribed in the Ordinance on or before June 8, 2009. The
amendment shall not be incorporated in the text and shall be attached below:

9. The Business Guarantee Fund to be deposited pursuant to Paragraph 1 or the immediately
preceding Paragraph may be made in the form of government bonds, municipal bonds or other
Securities prescribed in the Cabinet Order (including bonds eligible for book-entry transfer
prescribed in the Law Concerning Book-Entry Transfer of Corporate Bonds, Stocks, etc. (Law No.
75 of 2001), Article 300, Paragraph 1.)
10. When an Investment Advisor falls under any of the Items of the immediately preceding Article,
Paragraph 1, the registration is revoked pursuant to Article 38, Paragraph 1 or 2, or the amount of theBusiness Guarantee Fund exceeds the amount prescribed in the Ordinance under Paragraph 2 due toclosure of the Investment Advisory Business in certain places of business or other reasons, theBusiness Guarantee Fund deposited pursuant to the provision of Paragraph 1, 4 or 8 may berecovered in all or in part as prescribed in the Ordinance.
11. In addition to the provisions of the preceding Paragraphs, all necessary matters relating to theBusiness Guarantee Fund shall be prescribed in the Cabinet Orders and the Ministerial Decree of theJustice Ministry.
Chapter III. Business(Posting of Sign)
Article 11. An Investment Advisor must post a sign in the form prescribed in the Cabinet Order ona prominent space for public view for each place of business.
2. A party who is not an Investment Advisor must not post a sign provided in the immediately
preceding Paragraph or any similar sign thereto.
(Prohibition of Name-Lending)
Article 12. An Investment Advisor may not cause another party to conduct the Investment
Advisory Business using the name of such Investment Advisor.

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(Regulation of Advertisements, etc.)
Article 13. When an Investment Advisor makes an advertisement concerning the content of theInvestment Advisory Business it performs, the Investment Adviser must present items related to theprovisions of Articles 18 and 19 as prescribed in the Cabinet Order.
2. When an Investment Adviser makes an advertisement concerning the content of the Investment
Advisory Business it performs, it must not make any representations which substantially differ fromthe fact or is substantially misleading, with regard to its past performance of giving advice related to
the Value of Securities, etc., or investment decisions based on the analysis of the Value of Securities,
etc., and other items prescribed in the Cabinet Order.
3. An Investment Adviser must not make any representations which will mislead the public, that thereceipt of the Registration under Article 4 is an endorsement of the Prime Minister on the Investment
Adviser or a guarantee on the content of its advice.
(Delivery of Documents Prior to Execution of Agreements)
Article 14. An Investment Adviser seeking to execute an Investment Advisory Agreement mustdeliver to the client, documents clarifying all the following matters as prescribed in the Cabinet
Order:(1) Trade name, name and address of the Investment Adviser.
(2) Matters related to compensation.
(3) Matters related to the provisions of Articles 18 through 20.
(4) Matters prescribed in the Cabinet Order, in addition to those provided in the preceding Items.
2. An Investment Adviser may, in substitution of the delivery of the documents prescribed in theimmediately preceding Paragraph, in accordance with the Ordinance, provide such information to be
included in the documents in a method using electronic information processing system or othermethods utilizing information technology prescribed in the Cabinet Order, with the approval fromthe client. In which case, such Investment Adviser is deemed to have delivered such documents.
(Delivery of Documents upon Execution of Agreements)
Article 15. An Investment Adviser having executed an Investment Advisory Agreement mustdeliver to the client, documents clarifying all the following matters, as prescribed in the Cabinet
Order, without delay:

11(1) Trade name, name and address of the Investment Adviser.
(2) Date of the agreement.
(3) Content and method of advice.
(4) Amount of compensation and timing of payment.
(5) Matters related to termination of the agreement (including matters related to the provisions ofArticle 17, Paragraphs 1 through 4.).
(6) Where a clause concerning the estimated amount of damages (including penalties for breach ofcontract.) is included, a detail description thereof.
(7) Matters prescribed in the Cabinet Order, in addition to those provided in the preceding Items.
2. The provisions of the immediately preceding Article, Paragraph 2 shall be applied mutatis
mutandis to the delivery of documents, pursuant to the provisions of the immediately preceding
Paragraph.
3. The provision of information to be included in documents prescribed in Paragraph 1 by methods(excluding methods prescribed in the Cabinet Order) prescribed in the first half of the immediately
preceding Article, Paragraph 2 as applied mutatis mutandis to the immediately preceding Paragraphin lieu of delivery of such documents, shall be deemed to be attained by such client as of the time
when it is recorded in a file within the computer used by the client.
(Delivery of Documents to Clients with Agreements)
Article 16. An Investment Adviser must deliver documents clarifying all the following mattersmore than once per six (6) months to the client who has executed an Investment Advisory
Agreement with the Investment Adviser, as prescribed in the Cabinet Order:(1) The purchase or sale of Securities, Securities Index etc., Futures Transactions etc., Securities
Options Transactions, etc., Over-the-Counter Securities Index, etc., Forward Transactions,Over-the-Counter Securities Options Transactions or Over-the-Counter Securities Index, etc., Swap
Transactions by such Investment Adviser for its own account involving transaction of the same issue
which was the subject of the advice to such client.
(2) In the case of the immediately preceding Item, if such transaction exists, whether it was purchaseor sale (with respect to Securities Index, etc., Futures Transactions, etc., Securities Options
12Transactions, etc., Over-the-Counter Securities Index, etc., Forward Transactions, Over-the-Counter
Securities Options Transactions or Over-the-Counter Securities Index, etc., Swap Transactions, suchmatters equivalent to separation of purchase and sale as prescribed in the Cabinet Order.).
(3) Matters prescribed in the Cabinet Order, in addition to those provided in the preceding two (2)Items.
2. The provisions of Article 14, Paragraph 2 shall be applied mutatis mutandis to the delivery of
documents to be made pursuant to the provisions of the immediately preceding Paragraph.
(Cancellation in Writing)
Article 17. A client who executed an Investment Advisory Agreement with an Investment Adviser
may cancel such agreement in writing within a ten (10) day period from the date of receipt of the
document provided in Article 15, Paragraph 1.
2. The cancellation provided in the immediately preceding Paragraph shall become effective at thetime when the document indicating the cancellation of such agreement is sent out.
3. When a cancellation pursuant to the provisions of Paragraph 1 is made, the Investment Adviser
may not request payment of damages or penalties caused by the cancellation of such agreement
exceeding the amount prescribed in the Cabinet Order as compensation corresponding to the term
prior to the cancellation.
4. When a cancellation pursuant to the provisions of Paragraph 1 is made and the compensation
related to such agreement has been paid in advance, the Investment Advisor must return the amountprescribed in the Cabinet Order as the compensation corresponding to the term subsequent to thecancellation.
5. A special agreement contrary to the provisions of the preceding Paragraphs which are
disadvantageous to the client shall be void.
(Prohibition of Securities Transactions)
Article 18. An Investment Advisor may not engage in the Securities Transactions with a client as
the counterparty or for such client, in relation to its Investment Advisory Business.
(Prohibition of Acceptance of Deposit of Money or Securities, etc.)
Article 19. An Investment Adviser may not accept deposits of money or Securities from a client, or
cause to deposit the money or Securities of a client with a party which is prescribed by the13Ordinance as a party which has a close relationship with such Investment Adviser, regardless ofpretext, in relation to its Investment Advisory Business.
(Prohibition of Loan, Brokerage of Loan, etc. of Money or Securities)
Article 20. An Investment Adviser may not lend money or Securities to a client, or to act as a
dealer, broker or agent for lending of money or Securities to a client by a third party.
(Duty of Loyalty)
Article 21. An Investment Adviser must conduct the Investment Advisory Business for its clientwith due faith in accordance with the purpose of the laws and regulations and the Investment
Advisory Agreement.
(Prohibited Acts)
Article 22. An Investment Adviser may not engage in any of the following acts in relation to its
Investment Advisory Business:(1) To use fraudulent means, violence or intimidation in relation to the execution or cancellation of
an Investment Advisory Agreement.
(2) To promise to a client to bear all or part of the loss, while solicitation.
(3) To promise to a client to provide special benefits, while solicitation.
(4) To offer or cause a third party to offer financial benefits to a client or a third party in order tocompensate for part or all of the loss incurred by the client through a transaction made under theadvice of the Investment Advisor, or to add to the profit of the client arising from a transaction madeunder the advice (excluding compensation of all or part of a loss incurred due to a cause attributable
to the Investment Adviser).
(5) To provide advice to clients who executed Investment Advisory Agreements (if such Investment
Adviser is an Approved Investment Advisor, clients who executed Investment Advisory Agreements
or Discretionary Investment Agreements.) to execute a transaction among such clients for the benefitof a certain client which would hinder the interest of a specific client or to execute other transactionsprescribed by the Ordinance.
(6) To provide advice concerning specific Securities, etc., without justifiable basis, with the purposeof promoting its own or a third party’s (other than its client) interest by using the variation in the14price, index, numerical value or amount of consideration based on a transaction by a client madeunder its advice.
(7) To provide advice to execute a transaction with a condition which differs from those of ordinarytransactions and which would hinder the interest of the client (excluding those falling under acts
listed in Item 5.).
(8) In addition to those listed in the preceding Items, acts prescribed in the Cabinet Order as lacking
in protection of investors, which impairs the fairness of transactions or which may cause loss ofcredibility on the Investment Advisory Business.
2. An Investment Adviser (limited to legal entities. The same applies hereinafter in this Paragraph.)may not engage in any of the following acts:(1) To provide advice to execute a transaction which would hinder the interest of a client who has
executed an Investment Advisory Agreement with the Investment Advisor, for the purpose ofpromoting the benefit of a beneficiary for an Investment Trust Property (investment trust property asprescribed in the Law Concerning Investment Trust and Investment Company, Article 14, Paragraph
1. The same applies hereinafter.) or the Investment Company (investment company as prescribed in
the Law Concerning Investment Trust and Investment Company, Article. 2, Paragraph 19. The same
applies hereinafter.) that manages the assets, for which an Investment Trust Manager (an investment
trust manager as prescribed in the same Law, Article 2, Paragraph 18. The same applies to Article
30-3.) which is an Interested Party of such Investment Adviser (a party holding majority of the total
shareholders’ voting rights of such Investment Adviser (excluding the voting rights related to thetypes of stocks prescribed in the Commercial Code (Law No.48 of 1899), Article 211-2, Paragraph 4,
but including the voting rights related to stocks deemed to have voting rights pursuant to the same
Article, Paragraph 5. The same applies to Article. 30-3, Paragraph 2.) or other parties prescribed by
the Ordinance as having close relations with such Investment Adviser. The same applies hereinafterin this Paragraph.) provides instruction for management.
(2) To provide advice to execute a transaction which is deemed unnecessary as to the frequency or
the amount, in light of the policy on transactions based on investment decisions, transaction amountor the market condition, for the purpose of promoting the interest of Securities Firms, etc. (Securities
Firm (securities firm as prescribed in the Securities Exchange Law, Article 2, Paragraph 9, including
foreign securities firms as prescribed in the Law Concerning Foreign Securities Firms, Article 2,
Item 2. The same applies hereinafter.), Securities Broker (securities brokers as prescribed in the
Securities Exchange Law, Article 2, Paragraph 12. The same applies hereinafter) or Permitted15

Foreign Securities Firms (permitted foreign securities firms as prescribed in the Law Concerning
Foreign Securities Firms, Article. 2, Item 2-2. The same applies hereinafter.). The same applies
hereinafter.), or Registered Financial Institution (registered financial institution as prescribed in the
Securities Exchange Law, Article 65-2, Paragraph 3. The same applies to Article 30-3, Paragraph 2,
Item 2.) which are Interested Parties of the Investment Adviser.
(3) To provide advice, for the purpose of creating an artificial market which does not reflect actual
market conditions, in order to affect the conditions of Primary Offering of Securities (primaryoffering of Securities as prescribed in the Securities Exchange Law, Article 2, Paragraph 3. The
same applies hereinafter) or Secondary Offering of Securities (secondary offering of Securities asprescribed in the same Law, Article 2, Paragraph 4. The same applies hereinafter.) for which a
Securities Firm which is an Interested Party of the Investment Adviser is the Lead Underwriting
Manager (a company which, upon execution of the agreement related to the basic underwriting(basic underwriting of Securities as prescribed in the same Law, Article 29, Paragraph 3.) (referred
to as “Basic Underwriting Agreement” hereinafter in this Item.), may consult the Issuer (issuer asprescribed in the same Law, Article 2, Paragraph 5. The same applies hereinafter) or owner of the
Securities related to the Basic Underwriting Agreement to determine the terms of such Basic
Underwriting Agreement (referred to as “Lead Manager” hereinafter in this Item.), and the amountof its underwriting within the total issue price (referred to as “Underwriting Amount” hereinafter inthis Item.) is not less than the Underwriting Amount of the other Lead Managers, or the amountreceived as the commission, compensation or other consideration is not less than the other Lead
Managers. The same applies hereinafter.) for the Underwriting of the Securities (underwriting of
Securities as prescribed in the same Law, Article 2, Paragraph 8, Item 4. The same applies
hereinafter.).
(4) To provide advice to execute a transaction which would hinder the interest of a client who
executed an Investment Advisory Agreement with the Investment Adviser for the purpose ofpromoting the benefit of a beneficiary of a trust property managed by a financial institution engaged
in the Trust Business (trust business as prescribed in the Law Concerning the Concurrent
Undertaking, etc. of Trust Business by Financial Institutions (Law No. 43 of 1943), Article 1,
Paragraph 1 operated by a financial institution which has received the approval under the same
Paragraph. The same applies hereinafter.) which is an Interested Party of the Investment Adviser.
(5) In addition to those listed in the preceding Items, acts prescribed in the Cabinet Order as lacking
in protection of investors, which impairs the fairness of transactions or which may cause loss ofcredibility on the Investment Advisory Business.

16

(Scope of Business)
Article 23. An Investment Adviser seeking to engage in the Investment Trust Management
Business, Investment Company Asset Management Business, Securities Business (securities
business as prescribed in the Securities Exchange Law, Article 2, Paragraph 8. The same applies
hereinafter.) or Trust Business must notify the Office of the Prime Minister thereof, pursuant to theprovisions of the Cabinet Order.
(Special Provisions for Operation of Securities Business by Investment Advisers)
Article 23-2

In application of the provisions of Article 16, Paragraph 1 to a case of an Investment

Adviser engaging in the Securities Business (excluding where such Investment Adviser is a
Securities Broker.), “as prescribed in the Cabinet Order.” in the same Paragraph shall read “asprescribed in the Cabinet Order. The foregoing shall not apply in cases where an authorization by thePrime Minister is received, that the non-delivery of such documents to the client would not cause ahindrance to public interest or to the protection of investors.” and “advice to such client” in the same
Paragraph, Item 1 shall be read as “advice to such client (limited to those prescribed in the
Ordinance.).”2. In case the Investment Adviser engages in the Securities Business (excluding where such
Investment Adviser is a Securities Broker or a Permitted Foreign Securities Firm.), the provisions ofArticle 18 shall not apply to its Investment Advisory Business.
3. In application of the provisions of Article 18 where the Investment Adviser is a Securities Broker,“Securities Transactions” in the same Article shall be read as “Securities Transactions (excluding
acts with its client being the counterparty listed in each Item of the Securities Exchange Law, Article
2, Paragraph 11).”
4. In application of the provisions of Article 18 where the Investment Adviser is a Permitted Foreign
Securities Firm, “Securities Transactions” in the same Article shall be read as “Securities
Transactions (excluding transactions through an exchange prescribed in the Law Concerning Foreign
Securities Firms, Article 13-2, Paragraph 1.)”
5. In case the Investment Adviser engages in the Securities Business (excluding where such
Investment Adviser is a Securities Broker or a Permitted Foreign Securities Firm.), the provisions ofArticle 19 shall not apply to its Investment Advisory Business.
6. In application of the provisions of Article 20 where the Investment Adviser engages in the
Securities Business (excluding cases where such Investment Adviser is a Securities Broker or a
Permitted Foreign Securities Firm.), “lending of money or Securities to a client” in the same Article
17

shall be read as “lending of money or Securities to a client (excluding lending to a client of a third
party Securities Firm occurring while using margin transactions prescribed in the Securities
Exchange Law, Article 156-24, Paragraph 1 and other acts prescribed by the Ordinance.)”, and “by athird party” shall be read as “by a third party. The foregoing shall not apply to the lending by such
Investment Adviser to a client of such Investment Adviser in relation to a margin transaction
prescribed in the same Paragraph and other acts prescribed by the Ordinance”.
7. In application of the provisions of Article 20 where the Investment Adviser is a Securities Broker,“ a dealer” in the same Article shall be read as “a dealer (excluding a dealer for the loan to a client of
the Securities Firm occurring while using the margin transaction prescribed in the Securities
Exchange Law, Article 156-24, Paragraph 1 and other acts prescribed by the Ordinance.)”
8. In addition to the preceding Items, matters related to the application of the provisions of this Law
in case an Investment Adviser engages in the Securities Business shall be prescribed in the
Ordinance.
(Special Provisions for Operation of Trust Business by Investment Advisers)
Article 23-3

In application of the provisions of Article 16, Paragraph 1 to a case where an

Investment Adviser engages in the Trust Business, “as prescribed in the Cabinet Order.” in the same
Paragraph shall be read as “as prescribed in the Cabinet Order. The foregoing shall not apply tocases where an authorization by the Prime Minister is received, that non-delivery of such documents
to the client would not cause a hindrance to the public interest or to the protection of investors.” and“advice to such client” in the same Paragraph, Item 1 shall be read as “advice to such client (limited
to those prescribed in the Ordinance.).”2. Where the Investment Adviser engages in the Trust Business, the provisions of Articles 18 and 19
shall not apply to its Investment Advisory Business.
3. In application of the provisions of Article 20 to a case where an Investment Adviser engages in
the Trust Business, “lend money or Securities to a client, or to act as a dealer” shall be read as “actas a dealer” and “by a third party.” shall be read as “by a third party. The foregoing shall not apply to
the Investment Adviser’s acts as a dealer for lending money to a client of a third party bank or otherfinancial institutions prescribed by the Ordinance and other acts prescribed in the Ordinance.”
4. In addition to the preceding three Items, matters related to the application of the provisions of this
Law in case an Investment Adviser engages in the Trust Business shall be prescribed in the
Ordinance.

18

(Prohibited Acts for Investment Advisers Engaging in Investment Trust Management Business, etc.)
Article 23-4

An Investment Adviser may not engage in any of the following acts against a client

who executed an Investment Advisory Agreement if it engages in the Investment Trust Management
Business or Investment Company Asset Management Business:(1) To provide advice to execute a transaction which would hinder the interest of a client who
executed an Investment Advisory Agreement, for the purpose of promoting the benefit of abeneficiary of a specific Investment Trust Property for which it provides instruction for management
as part of its Investment Trust Management Business, or the benefit of a specific Investment
Company for which it manages assets as part of its Investment Company Asset Management
Business.
(2) In addition to those listed in the immediately preceding Item, acts prescribed in the Cabinet
Order as lacking in the protection of investors, which impairs the fairness of transactions or which
may cause loss of credibility on the Investment Advisory Business.
Article 23-5

An Investment Adviser may not engage in any of the following acts against a client

who executed an Investment Advisory Agreement if it engages in the Securities Business:(1) To provide advice for the purpose of promoting the benefit of a specific client who executed an
Investment Advisory Agreement based on non-public information concerning an Issuer of Securities
or a client related to the Securities Business (non-public material information concerning theoperation, business or asset of such Issuer acquired through the Securities Business which is deemed
to affect the transaction of the client who executed an Investment Advisory Agreement, or thepurchase or sale of Securities and trends in the orders related to other transactions and other special
information related to a client of the Securities Business which an officer (including a domestic
representative. (a domestic representative as prescribed in the Law Concerning Foreign Securities
Firms, Article 2, Item 9.)) or an employee prescribed in the Ordinance or an individual who is a
Securities Broker concurrently undertaking the Investment Advisory Business obtained in the courseof their duties. The same applies to Article 31-5, Item 1.).
(2) To provide advice to execute a transaction which is deemed unnecessary as to the frequency or
the amount, in light of the policy on transactions based on investment decisions, transaction amountor the market condition, for the purpose of promoting the interest from the Securities Business.
(3) To provide advice for the purpose of creating an artificial market which does not reflect theactual condition, in order to affect the conditions of the Primary Offering or Secondary Offering of
Securities for which it is the Lead Underwriting Manager of the underwriting.
19

(4) In addition to those listed in the preceding three (3) Items, acts prescribed in the Cabinet Order aslacking in the protection of investors, which impairs the fairness of transactions or which may cause
loss of credibility on the Investment Advisory Business.
Article 23-6

An Investment Adviser may not engage in any of the following acts against a client

who executed an Investment Advisory Agreement if it engages in the Trust Business:(1) To provide advice to execute a transaction which would hinder the interest of a client who
executed an Investment Advisory Agreement for the purpose of promoting the benefit of abeneficiary of a specific trust property which it manages as part of its Trust Business.
(2) To provide advice for the purpose of promoting the benefit of a specific client who executed an
Investment Advisory Agreement based on non-public information concerning an Issuer of Securities
or a client related to the Securities Business (businesses of a financial institution engaged in the TrustBusiness to conduct acts prescribed in each Item of the Securities Exchange Law, Article 65,
Paragraph 2 which relate to Securities or transactions listed in the same Items. The same applies
hereinafter. ) (non-public material information concerning the operation, business or asset of such
Issuer acquired through the Securities Business which is deemed to affect the transaction of theclient who executed an Investment Advisory Agreement, or the purchase or sale of Securities andtrends in the orders related to other transactions and other special information related to a client of
the Securities Business which an officer or an employee prescribed in the Ordinance of the financial
institution engaged in the Trust Business which is concurrently undertaking the Investment Advisory
Business obtained in the course of their duties. The same applies to Article 31-6, Item 2.).
(3) To provide advice to execute a transaction which is deemed unnecessary as to the frequency or
the amount, in light of the policy on transactions based on investment decisions, transaction amountor the market condition, for the purpose of promoting the interest from the Securities Business.
(4) To provide advice for the purpose of creating an artificial market which does not reflect theactual condition, in order to affect the conditions of the Primary Offering or Secondary Offering of
Securities for which it is the Lead Underwriting Manager of the underwriting.
(5) In addition to those listed in the preceding Items, acts prescribed in the Cabinet Order as lacking
in the protection of investors, which impairs the fairness of transactions or which may cause loss ofcredibility on the Investment Advisory Business.
Chapter IV. Businesses Related to Discretionary Investment Agreement

20

(Approvals)
Article 24.

If an Investment Adviser seeks to engage in a business related to a Discretionary

Investment Agreement, it must disclose the content and the methods of the business intended, andobtain an approval from the Prime Minister.
2. A party seeking to obtain the approval of the immediately preceding Paragraph must be a stock
corporation (including a legal entity established under the laws and regulations of a foreign country
which is the same type as the stock corporation and has a domestic place of business. Referred to as“Stock Corporations, etc.,” in Article 27, Paragraph 2.).
3. Upon granting of approval provided in Paragraph 1 to an Investment Adviser, the Prime Ministermust append a note regarding such fact to the registration of such Investment Adviser.
(Conditions for Approval)
Article 25. The Prime Minister may attach conditions to the approval, provided in the immediately
preceding Article, Paragraph 1.
2. The conditions provided in the immediately preceding Paragraph must be to the minimum extent
necessary for the protection of the investors.
(Application for Approval)
Article 26. A party seeking to obtain an approval prescribed in Article. 24, Paragraph 1 must
submit an application form including all of the following matters to the Prime Minister:(1) Trade name and address.
(2) Amount of paid-in-capital.
(3) Names of directors and statutory auditors (directors and executive officers in case the party is acompany with committees (Referred to as “Company with Committees” in Article 30.) prescribed in
the Law for Special Provisions for the Commercial Code Concerning Audits, etc. of Stock
Corporation (Law No. 22 of 1974), Article 1-2, Paragraph 3.).
(4) The names and addresses of places of business.
2. Articles of incorporation, certificate of commercial registration of the applicant, the document
containing items prescribed by the Cabinet Order concerning the content and method of business,21and other documents prescribed in the Cabinet Order, must be attached to the application form
prescribed in the immediately preceding Paragraph.
3. In the case of the immediately preceding Paragraph, if the articles of incorporation are preparedwith Electronic Record (records prepared in electronic format, magnetic format or other formats
which cannot be recognized through human perception, which are utilized for information
processing by a computer. The same applies hereinafter in this Paragraph.), an Electronic Record(limited to a format of record prescribed by the Cabinet Order) may be attached in lieu of adocument.
(Standards of Approval)
Article 27.

In granting the approval under Article 24, Paragraph 1, the Prime Minister must

examine whether or not the following standards are satisfied:(1) The applicant has sufficient asset base for the sound performance of the intended business, andthe outlook of the income and expenditures of such business of the applicant is favorable.
(2) The applicant is a party who possesses the knowledge and experience to conduct the intended
business in a fair and appropriate manner in light of its human resources structure, and to maintains
sufficient social credibility.
2. The Prime Minister must grant the approval under Article 24, Paragraph 1, if it acknowledges thatthe application satisfies the standards of the immediately preceding Paragraph after the examination
thereunder, unless the applicant falls under any of the following Items:(1) A Stock Corporation, etc., whose approval under Article 24, Paragraph 1 was revoked pursuant
to the provisions of Article 39, Paragraph 1 or whose approval of the same kind received in a foreigncountry (including any permission or other administrative actions similar thereto) is revokedpursuant to the provisions of the foreign laws and regulations equivalent to this Law, and five (5)years have not lapsed since the date of such revocation.
(2) A Stock Corporation, etc., whose Officer, etc., includes a person who was an Officer, etc., within
thirty (30) days prior to the revocation prescribed in the immediately preceding Paragraph, and five(5) years have not passed since the date of such revocation.
(3) A Stock Corporation, etc., which has an individual Principal Shareholder (if the applicant is a
Subsidiary of a Holding Company (a holding company as prescribed in the Act Concerning
Prohibition of Private Monopolization and Maintenance of Fair Trade (Law No. 54 of 1947), Article22

9, Paragraph 5, Item 1. The same applies hereinafter to this Item, Article 29-5 and Article 36,
Paragraph 2.), including the Principal Shareholder of such Holding Company. The same applies tothe immediately following Item.) who falls under any of the following:(a) A party who was an Officer, etc., within thirty (30) days prior to the revocation prescribed in
Item 1 and five (5) years have not passed since the date of such revocation.
(b) A party who is incompetent or quasi-incompetent, or treated in a similar manner under thelaws of a foreign country, and whose legal representative falls under any of the categories provided
in Article 7, Paragraph 1, Items 1 through 6 or (a).
(c) A party who falls under any of Article 7, Paragraph 1, Items 2 through 6.
(4) A Stock Corporation, etc. which has a corporate Principal Shareholder that falls under any of thefollowing:(a) A party whose registration under Article 4 was revoked pursuant to the provisions of Article
38, Paragraph 1, whose approval under Article 24, Paragraph 1 was revoked pursuant to theprovisions of Article 39, Paragraph 1 or whose approval under Article 6 of the Law Concerning
Investment Trust and Investment Company was revoked pursuant to Article 41, Paragraph 1, Article
42, Paragraph 1, Item 1, (e) or Article 43 of the same Law, or whose approval of the same kindreceived in a foreign country was revoked pursuant to the provisions of the foreign laws andregulations equivalent to this Law or the Law Concerning Investment Trust and Investment
Company, and five (5) years have not passed since the date of such revocation.
(b) A party who violated the provisions of this Law, Securities Exchange Law, Law Concerning
Foreign Securities Firms or Law Concerning Investment Trust and Investment Company, or theequivalent laws and regulations of a foreign country and received a fine (including penalties underequivalent laws and regulations of a foreign country), and five (5) years have not passed since thepayment of the fine or the cessation of the application of such fine.
(c) A party whose representative of the legal entity includes a party who falls under any of
Article 7, Paragraph 1, Items 1 through 6 or the immediately preceding Item (a).
3. “Principal Shareholder” prescribed in Items 3 and 4 of the immediately preceding Paragraph shallmean a party who holds no less than twenty percent (20%) (if matters prescribed in the Cabinet
Order as those expected to materially affect decisions related to financial and operational policy of acorporation exist, fifteen percent (15%).) of total shareholders’ voting rights or total investors’

23voting rights (in a stock corporation or a limited liability company, excluding the voting rights
related to the type of shares or equities prescribed in the Commercial Code, Article 211-2, Paragraph4, but including voting rights related to shares and equities deemed to have voting rights pursuant to
the provisions of the same Article, Paragraph 5. The same applies hereinafter to this Paragraph andArticle 29-2, Paragraph 1.) (excluding those prescribed in the Cabinet Order taking into
consideration the form of ownership and other conditions, referred to as “Target Voting Rights”
hereinafter in this Article and Article 29-2, Paragraph 1.).
Note: The amendment provisions for this Paragraph prescribed in the Law No.88 of 2004 shallbecome effective from the date prescribed in the Ordinance on or before June 8, 2009. The
amendment shall not be incorporated in the text and shall be attached below.

3. “Principal Shareholder” prescribed in Items 3 and 4 of the immediately preceding Paragraph shallmean a party who holds no less than twenty percent (20) (if matters prescribed in the Cabinet Orderas those expected to materially affect decisions related to financial and operational policy of acorporation exist, fifteen percent (15%).) of total shareholders’ voting rights or total investors’
voting rights (in a stock corporation or a limited liability company, excluding the voting rights
related to the type of shares or equities prescribed in the Commercial Code, Article 211-2, Paragraph4, but including voting rights related to shares and equities deemed to have voting rights pursuant to
the provisions of the same Article, Paragraph 5. The same applies hereinafter to this Paragraph andArticle 29-2, Paragraph 1.) (including voting rights related to stocks or equities which are not
perfected vis-à-vis the Issuer pursuant to the provisions of the Law Concerning Book-Entry Transfer
of Corporate Bonds, Stocks, etc., Article 155, Paragraph 1 or Article 156, Paragraph 1 (including
cases where these provisions are applied mutatis mutandis to the same law, Article 252, Paragraph 1,
Article 261, Paragraph 1, Article 268, Paragraph 1 and Article 298, Item 2.), but excluding thoseprescribed in the Cabinet Order taking into consideration the form of ownership and other conditions,referred to as “Target Voting Rights” hereinafter in this Article and Article 29-2, Paragraph 1.).
4. “Subsidiary” as prescribed in Paragraph 2, Item 3 shall mean a company the majority of the voting
rights of the total shareholders or total equity holders of which is held by other company (excluding
voting rights related to the type of shares or equities prescribed in the Commercial Code, Article.
211-2, Paragraph 4, but including the voting rights related to shares or equities which are deemed tohave voting rights pursuant to the provisions of the same Article, Paragraph 5. The same applies
hereinafter.). In this case, the majority of the voting rights of total shareholders or total equity
holders of a company is held by other company and one or more of such other company’s
Subsidiaries, or one or more of the Subsidiaries of such other company shall also be deemed a
Subsidiary of such other company.
24

5. In application of Paragraph 3 to cases prescribed in the following Items, the voting rights
prescribed in each of the Items are deemed to be held:(1) Where the right to exercise the Target Voting Right of a company or the right to instruct theexercise of the Target Voting Right is held in accordance with the provisions of a monetary trust
agreement or other contracts or law and regulations: such Target Voting Right(2) Where a party who has ownership relationship regarding the shares, kinship or other special
relationship prescribed in the Ordinance holds the Target Voting Rights of the company: such Target
Voting Rights held by such party with a special relationship
6. Matters necessary for the application of the provisions of Paragraph 3 and the immediately
preceding Paragraph shall be prescribed by the Ordinance.
(Approval for Change of Content and Method of Business)
Article 28. An Approved Investment Adviser must obtain an approval from the Prime Minister if itseeks to change the content or method of business related to Discretionary Investment Agreement.
(Reporting of Closure of Business Related to Discretionary Investment Agreement)
Article 29. An Approved Investment Adviser which has become to fall under any of the following
Items must report such fact to the Prime Minister within two (2) weeks from the date thereof:(1) When it closes, suspends or resumes the business related to Discretionary Investment Agreement.
(2) When it closes, suspends or resumes the business related to the report under Article 23.
(3) When it closes, suspends or resumes the business related to the authorization under the proviso of
Article 31, Paragraph 1.
(4) When it closes, suspends or resumes the business related to the approval under Article 31,
Paragraph 2.
(5) When there is a change in the content of the report under Article 31, Paragraph 3, or when it
closes, suspends or resumes the business related to such report.
(6) Other cases where other matters prescribed in the Cabinet Order concerning the business related
to Discretionary Investment Agreement becomes applicable.

25

2. If an Approved Investment Adviser closes the business related to Discretionary Investment
Agreement, such approval shall become void.
(Reporting of Principal Shareholders)
Article 29-2

A party who has become a Principal Shareholder of an Approved Investment Adviser(a Principal Shareholder as prescribed in Article 27, Paragraph 3. The same applies to Article 29-4,
and Article 36, Paragraph 2.) must submit a Target Voting Right ownership report specifying theholding ratio of the Target Voting Rights (a ratio calculated by dividing the number of such Target
Voting Rights owned by such party by the sum of total shareholders’ or total investors’ voting rights
of such Approved Investment Adviser.), the purpose of holding and other matters prescribed in the
Cabinet Order to the Prime Minister without delay.
2. A covenant certifying that the reporter falls under neither of the categories prescribed in Article 27,
Paragraph 2, Items 3 and 4, and other documents prescribed in the Cabinet Order, must be attachedto the Target Voting Right ownership report as provided in the immediately preceding Paragraph.
(Order for Action Against Principal Shareholders)
Article 29-3

When a Principal Shareholder of an Approved Investment Adviser falls under any of

Article 27, Paragraph 2, Item 3, (a) through (c), or Item 4, (a) through (c), the Prime Minister mayorder such Principal Shareholder to take measures to cease from being a Principal Shareholder ofsuch Approved Investment Adviser and other necessary measures within a period which shall be no
more than three (3) months.
(Reporting of Disqualification as Principal Shareholder)
Article 29-4

A Principal Shareholder of an Approved Investment Adviser who no longer qualifies

as a Principal Shareholder of such Approved Investment Adviser must report such disqualification to
the Prime Minister without delay.
(Application of Provisions related to Principal Shareholders)
Article 29-5

The provisions of the previous three (3) Articles shall be applied to shareholders andinvestors of a Holding Company who owns an Approved Investment Adviser as a Subsidiary (aSubsidiary as prescribed in Article 27, Paragraph 4. The same applies to Article 36, Paragraph 2.).
(Limitations on Concurrent Undertaking by Directors)
Article 30. A director who engages in the ordinary course of business of an Approved Investment
Adviser (an executive officer in case of a Company with Committees, a representative prescribed in
the Commercial Code, Article. 479, Paragraph 1 and officers assigned to a domestic place ofbusiness (excluding statutory auditors and other parties who hold similar positions.) in case of a legal
26

entity established in accordance with laws and regulations of a foreign country.) may not engage inthe ordinary course of business of other companies or operate another business unless otherwise
approved by the Prime Minister.
(Duty of Loyalty)
Article 30-2

An Approved Investment Adviser (including a party receiving reassignment pursuant

to an agreement prescribed in Article 2, Paragraph 4, Item 2, provided in the Ordinance as prescribedin the same Item. The same applies in the immediately following Article.) must conduct the business
related to Discretionary Investment Agreement for the client with due faith, pursuant to the purposeof the laws and regulations and the Discretionary Investment Agreement.
(Prohibited Acts)
Article 30-3

An Approved Investment Adviser may not engage in any of the following acts inrelation to its business related to the Discretionary Investment Agreement:(1) To use fraudulent means, violence or intimidation in relation to the execution or cancellation of aDiscretionary Investment Agreement.
(2) To promise to a client to bear all or part of the loss, while solicitation.
(3) To promise to a client to provide special benefits, while solicitation.
(4) To offer or cause a third party to offer financial benefits to a client or a third party in order tocompensate for part or all of the loss incurred by the client through an investment conducted by such
Approved Investment Adviser or to add to the profit of the client arising from an investment
conducted by such Approved Investment Adviser (excluding compensation of all or part of a loss
incurred due to a cause attributable to the Approved Investment Adviser).
(5) To make an investment based on an investment decision by executing a transaction among theclients who executed Investment Advisory Agreements or Discretionary Investment Agreements topromote the benefit of a certain client by hindering the interest of a specific client or to execute othertransactions prescribed by the Ordinance.
(6) To make an investment in specific Securities, etc., without justifiable basis, with the purpose ofpromoting its own or a third party’s (other than its client) interest by using the variation in the price,index, numerical value or amount of consideration based on an investment conducted by theApproved Investment Adviser.

27

(7) To make an investment based on an investment decision to execute a transaction with a condition
which differs from the conditions of ordinary transactions and which would hinder the interest of its
client (excluding those falling under acts listed in Item 5.).
(8) In addition to those listed in the preceding Items, acts prescribed in the Cabinet Order as lacking
in the protection of investors, which impairs the fairness of transactions or which may cause loss ofcredibility on the business related to Discretionary Investment Agreements.
2. Approved Investment Advisers may not engage in any of the following acts:(1) To make an investment based on an investment decision to execute a transaction which would
hinder the interest of a client who executed a Discretionary Investment Agreement with such
Approved Investment Adviser, for the purpose of promoting the benefit of a beneficiary of an
Investment Trust Property or the Investment Company who manages the assets, for which an
Investment Trust Manager which is an Interested Party of the Approved Investment Adviser (a party
holding the majority of the total shareholders’ voting rights of such Approved Investment Adviser, orother parties prescribed in the Ordinance as having a close relationship with such Approved
Investment Adviser. The same applies hereinafter in this Paragraph.) provides instruction for
management.
(2) To make an investment to execute a transaction which is deemed unnecessary as to the frequency
or the amount, in light of the policy on transactions based on investment decisions, transaction
amount or the market condition, for the purpose of promoting the interest of the Securities Firm, etc.,
or the Registered Financial Institution which is an Interested Party of the Approved Investment
Adviser.
(3) To make an investment based on an investment decision for the purpose of creating an artificial
market which does not reflect the actual condition in order to affect the conditions of the Primary
Offering or Secondary Offering of Securities for which a Securities Firm which is an Interested
Party of the Approved Investment Adviser is the Lead Underwriting Manager for the Underwritingof the Securities.
(4) To make an investment based on the investment decision to execute a transaction which would
hinder the interest of a client who executed a Discretionary Investment Agreement with such
Approved Investment Adviser, for the purpose of promoting the benefit of the beneficiary of a trust
property which is managed by a financial institution engaged in the Trust Business which is an
Interested Party of the Approved Investment Adviser.

28

(5) In addition to those listed in the preceding Items, acts prescribed in the Cabinet Order as lacking
in the protection of investors, which impairs the fairness of transactions or which may cause loss ofcredibility on the business related to Discretionary Investment Agreements.
(Reassignment of Investment Decisions, etc, Entrusted by Clients)
Article 30-4

An Approved Investment Adviser may not deem all of the Discretionary Investment

Agreements executed to be the agreement prescribed in Article 2, Paragraph 4, Item 2 and reassign,with respect to all such agreements, the investment decision making entrusted and authorities
assigned by the client prescribed in the same Item to the parties prescribed in the same Item asprovided in the Ordinance.
(Limitations, etc., on Concurrent Undertakings)
Article 31. An Approved Investment Adviser may not engage in any businesses other than theInvestment Advisory Business, business related to Discretionary Agreements, Investment TrustManagement Business, Investment Company Asset Management Business, Securities Business andTrust Business. The foregoing shall not apply to businesses deemed not a hindrance to public interest
or to the protection of investors in relation to the undertaking of the Investment Advisory Businessand business related to Discretionary Investment Agreement by such Approved Investment Adviser,
if authorized by the Prime Minister.
2. Where an Approved Investment Adviser seeks to engage in the Securities Business or TrustBusiness pursuant to the provisions of the immediately preceding Paragraph, notwithstanding theprovisions of Article 23, an approval of the Prime Minister must be obtained.
3. Where an Approved Investment Adviser engages in the Securities Business (excluding where such
Approved Investment Adviser is a Securities Broker or Permitted Foreign Securities Firms.) or TrustBusiness with the approval of the immediately preceding Paragraph, it may engage in businesses
other than the businesses prescribed in the text of Paragraph 1 without the authorization under theproviso of Paragraph 1 by notifying the Prime Minister thereof.
(Special Provisions for Operation of Securities Business by Approved Investment Advisers)
Article 31-2

In application of the provisions of Article 16, Paragraph 1, as applied mutatis

mutandis by Article 33, to a case where an Approved Investment Adviser engaging in the Securities
Business (excluding where such Approved Investment Adviser is a Securities Broker.), “asprescribed in the Cabinet Order.” in the same Paragraph shall be read as “as prescribed in the
Cabinet Order. The foregoing shall not apply to a case where an authorization by the Prime Minister
is received that non-delivery of such documents to the client would not cause a hindrance to public

29interest or to the protection of investors.” and “advice to such client” in the same Paragraph, Item 1
shall be read as “advice to such client (limited to those prescribed in the Ordinance.).”2. In case the Approved Investment Adviser engages in the Securities Business (excluding wheresuch Investment Adviser is a Securities Broker or a Permitted Foreign Securities Firm.), theprovisions of Article 18, as applied mutatis mutandis by Article 33, shall not be applicable.
3. In application of the provisions of Article 18, applied mutatis mutandis by Article 33, where theApproved Investment Adviser is a Securities Broker, “Securities Transactions” in the same Article
shall be read as “Securities Transactions (excluding acts with its client being the counterparty listed
in each Item of the Securities Exchange Law, Article 2, Paragraph 11).”
4. In application of the provisions of Article 18, applied mutatis mutandis by Article 33, where theApproved Investment Adviser is a Permitted Foreign Securities Firm, “Securities Transactions” inthe same Article shall be read as “Securities Transactions (excluding transactions through an
exchange prescribed in the Law Concerning Foreign Securities Firms, Article 13-2, Paragraph 1.)”.
5. In case the Approved Investment Adviser engages in the Securities Business (excluding wheresuch Approved Investment Adviser is a Securities Broker or a Permitted Foreign Securities Firm.),
the provisions of Article 19, as applied mutatis mutandis by Article 33, shall not be applicable.
6. In application of the provisions of Article 20, as applied mutatis mutandis by Article 33, where theApproved Investment Adviser engages in the Securities Business (excluding where such Approved
Investment Adviser is a Securities Broker or a Permitted Foreign Securities Firm.), “lending to aclient of a Securities Firm occurring while using margin transactions prescribed in the Securities
Exchange Law, Article 156-24, Paragraph 1” shall be read as “lending to a client of a third party
Securities Firm occurring while using margin transactions prescribed in the Securities Exchange
Law, Article 156-24, Paragraph 1 and other acts prescribed in the Ordinance,” and “by a third party”
shall be read as “by a third party. The foregoing shall not apply to the lending by such Approved
Investment Adviser to a client of such Approved Investment Adviser in relation to a margintransaction prescribed in the same Paragraph and other acts prescribed by the Ordinance”.
7. In application of the provisions of Article 20, as applied mutatis mutandis by Article 33, where theApproved Investment Adviser is a Securities Broker, “act as a dealer, broker or agent for lending(excluding lending to a client of a Securities Firm occurring while using margin transactionsprescribed in the Securities Exchange Law, Article 156-24, Paragraph 1.)” in the same Article shallbe read as “act as a dealer (excluding acting as a dealer for lending to a client of a Securities Firm
occurring while using margin transactions prescribed in the Securities Exchange Law, Article30

156-24, Paragraph 1 or other acts prescribed in the Ordinance.), broker or agent for lending(excluding lending to a client of a Securities Firm occurring while using margin transactionsprescribed in the same Paragraph.)”8. In addition to the preceding Items, matters related to the application of the provisions of this Law
in case an Approved Investment Adviser engages in the Securities Business (limited to those related
to its business related to Discretionary Investment Agreement.) shall be prescribed in the Ordinance.
(Special Provisions for Operations of Trust Business by Approved Investment Advisers)
Article 31-3

In application of the provisions of Article 16, Paragraph 1, as applied mutatis

mutandis by Article 33, to a case where an Approved Investment Adviser engages in the TrustBusiness, “as prescribed in the Cabinet Order.” in the same Paragraph shall be read as “as prescribedin the Cabinet Order. The foregoing shall not apply cases where an authorization by the Prime
Minister is received, that the non-delivery of such documents to the client would not cause ahindrance to the public interest or to the protection of investors.” and “advice to such client” in thesame Paragraph, Item 1 shall be read as “advice to such client (limited to those prescribed in the
Ordinance.).”2. Where an Approved Investment Adviser engages in the Trust Business, the provisions of Articles
18 and 19, as applied mutatis mutandis by Article 33, shall not be applicable.
3. In application of the provisions of Article 20, as applied mutatis mutandis by Article 33, to a casewhere an Approved Investment Adviser engages in Trust Business, “lend money or Securities to aclient, or to act as a dealer” shall be read as “act as a dealer” and “by a third party.” shall be read as“by a third party. The foregoing shall not apply to the Approved Investment Adviser’s acts as a
dealer for lending money to a client of a third party bank or other financial institutions as prescribedby the Ordinance and other acts prescribed in the Ordinance.”
4. Where an Approved Investment Adviser engages in the Trust Business, the provisions of Article
27, Paragraph 2 (excluding Items 1 and 2.), Articles 29-2 through 29-5 and Article 36, Paragraph 2
shall not be applicable.
5. In addition to the preceding Items, matters related to the application of the provisions of this Law
in case an Approved Investment Adviser engages in the Trust Business (limited to those related to its
business related to Discretionary Investment Agreement.) shall be prescribed in the Ordinance.
(Prohibited Acts for Approved Investment Advisers Engaging in Investment Trust Management
Business, etc.)31Article 31-4

An Approved Investment Adviser may not engage in the following acts against aclient who executed a Discretionary Investment Agreement, if it engages in the Investment TrustManagement Business or Investment Company Asset Management Business:(1) To make an investment based on an investment decision to execute a transaction which would
hinder the interest of a client who executed a Discretionary Investment Agreement, for the purposeof promoting the benefit of a beneficiary of a specific Investment Trust Property for which it
provides instruction for management as part of its Investment Trust Management Business or the
benefit of a specific Investment Company for which it manages the assets as part of its Investment
Company Asset Management Business.
(2) In addition to those listed in the immediately preceding Item, acts prescribed in the Cabinet
Order as lacking in the protection of investors, which impairs the fairness of transactions or which
may cause a loss of credibility on the business related to Discretionary Investment Agreements.
Article 31-5

An Approved Investment Adviser may not engage in the following acts against aclient who executed a Discretionary Investment Agreement, if it engages in the Securities Businesswith the approval under Article 31, Paragraph 2:(1) To make an investment based on an investment decision with the purpose of promoting thebenefit of a specific client who executed a Discretionary Investment Agreement based on non-public
information concerning an Issuer of Securities or a client related to the Securities Business.
(2) To execute a transaction which is deemed unnecessary as to the frequency or the amount, in lightof the policy on transactions based on investment decisions, transaction amount or the market
condition, for the purpose of promoting the interest from the Securities Business.
(3) To make an investment based on an investment decision for the purpose of creating an artificial
market which does not reflect the actual condition in order to affect the conditions of the Primary
Offering or Secondary Offering of Securities for which it is the Lead Underwriting Manager of theunderwriting.
(4) In addition to those listed in the preceding three (3) Items, acts prescribed in the Cabinet Order aslacking in the protection of the investors, which impairs the fairness of transactions or which may
cause a loss of credibility on the business related to Discretionary Investment Agreements.

32Article 31-6

An Approved Investment Adviser may not engage in the following acts against aclient who executed a Discretionary Investment Agreement if it engages in the Trust Business withthe approval under Article 31, Paragraph 2:(1) To make an investment based on the investment decision to execute a transaction which would
hinder the interest of a client who executed a Discretionary Investment Agreement for the purpose ofpromoting the benefit of a beneficiary of a specific trust property which it manages as part of its
Trust Business.
(2) To make an investment based on an investment decision with the purpose of promoting thebenefit of a specific client who executed a Discretionary Investment Agreement based on non-public
information concerning an Issuer of Securities or a client related to the Securities Business.
(3) To execute a transaction which is deemed unnecessary as to the frequency or the amount, in lightof the policy on transactions based on investment decisions, transaction amount or the market
condition, for the purpose of promoting the interest from the Securities Business.
(4) To make an investment based on an investment decision for the purpose of creating an artificial
market which does not reflect the actual condition in order to affect the conditions of the Primary
Offering or Secondary Offering of Securities for which it is the Lead Underwriting Manager of theunderwriting.
(5) In addition to those listed in the preceding Items, acts prescribed in the Cabinet Order as lacking
in the protection of investors, which impairs the fairness of transactions or which may cause a loss ofcredibility on the business related to Discretionary Investment Agreements.
(Delivery of Reports)
Article 32. An Approved Investment Adviser must deliver reports explaining the status of theassets of a client related to the Discretionary Investment Agreement, more than once per six (6)months to the client who executed a Discretionary Investment Agreement, as prescribed in the
Cabinet Order.
2. The provisions of Article 14, Paragraph 2, shall be applied mutatis mutandis to the delivery ofreports to be made pursuant to the provisions of the immediately preceding Paragraph.
(Mutatis Mutandis Application of Provisions)
Article 33. The provisions of Article 12, Article 13 (excluding Paragraph 1.), Article 14 (excluding
Paragraph 1, Item 3.), Article 15, Paragraphs 1 and 2, Article 16, and Articles 18 through 20 shall be

33

applied mutatis mutandis in cases where an Investment Adviser engages in the business related toDiscretionary Investment Agreement as an Approved Investment Adviser. In which case, “the advice
related to the Valuation of Securities, etc., or investment decisions based on the analysis of the Valueof Securities, etc.,” in Article 13, Paragraph 2, shall be read as “an investment made by entrustment
from a client who has executed a Discretionary Investment Agreement,” “registration under Article
4” and “advice” in the same Article, Paragraph 3 shall be read as “approval under Article 24,
Paragraph 1” and “investment decision,” “Investment Advisory Agreement” in Article 14, Paragraph1 shall be read as “Discretionary Investment Agreement,” “Investment Advisory Agreement” inArticle 15, Paragraph 1 shall be read as “Discretionary Investment Agreement,” “Content andmethod of advice” in the same Paragraph, Item 3 shall be read as “Matters related to the scope of
entrustment of investment decision and making of investments (if all or part of the authority forinvestment decision making and making of investments are reassigned to a party provided in the
Ordinance as prescribed in Article 2, Paragraph 4, Item 2, including the name of such party
prescribed by the Ordinance and the scope of such reassignment. ),” “the agreement (including
matters related to the provisions of Article 17, Paragraphs 1 through 4.)” shall be read as “theagreement,” “Investment Advisory Agreement” and “six months” in Article 16, Paragraph 1 shall beread as “Discretionary Investment Agreement” and “three months,” “the advice to such client” in thesame Paragraph, Item 1 shall be read as “the investment made by entrustment from such client,”“with a client as the counterpart or for such client” in Article 18 shall be read as “with a client as thecounterpart,” “regardless of pretext” in Article 19 shall be read as “regardless of pretext, except
where it is necessary for the settlement of the Securities Transaction performed for the client,”“lending” in Article 20 shall be read as “lending (excluding lending to a client of a Securities Firm
occurring while using margin transactions prescribed in the Securities Exchange Law, Article 156-24,
Paragraph 1.).”
Chapter V. Supervision(Books and Records regarding Business)
Article 34. An Investment Adviser must, as prescribed in the Cabinet Order, prepare and keep
books and records related to the advice concerning investment decisions based on the Value ofSecurities, etc. or analysis of the Values of Securities, etc., and other businesses.
(Submission of Business Report and Making It Available for Public Inspection)
Article 35. An Investment Adviser must prepare a business report every fiscal year in the format
prescribed in the Cabinet Order and submit the same to the Prime Minister within three (3) months at
the end of each fiscal year.

34

2. The Prime Minister must, as prescribed in the Cabinet Order, make statements in the business
report provided in the immediately preceding Paragraph which are deemed necessary for theprotection of investors, and be available for public inspection, except for those which may harm theconfidentiality of the clients or which may cause undue disadvantage to the business undertakings ofsuch Investment Adviser.
(On-site inspection, etc.)
Article 36. The Prime Minister may, to the extent necessary for the enforcement of this Law, orderan Investment Adviser or a party who transacts business with such Investment Adviser to submit
reports or materials which provide information concerning its business or assets, or order its officials
to enter the places of business of such Investment Adviser and inspect the status of its business orassets or books and records and other properties, or ask questions from its related parties.
2. The Prime Minister may, to the extent necessary for the enforcement of this Law, order the
Principal Shareholder of an Approved Investment Adviser or the Principal Shareholder of a Holding
Company which holds an Approved Investment Adviser as a Subsidiary to make reports or takemeasures prescribed in Articles 29-2 through 29-4, order them to submit reports or materials which
provide information concerning the business or assets of such Approved Investment Adviser, ororder its officials to enter the places of business of such Principal Shareholder and inspect the
documents and other properties (limited to necessary inspections with respect to the reports or
measures under Articles 29-2 through 29-4 or the business or assets of such Approved Investment
Adviser.) or ask questions from its related parties.
3. An official conducting an on-site inspection stipulated under the preceding two Paragraphs mustcarry an identification document and present it to relevant parties upon their request.
4. The authority to an on-site inspection stipulated in Paragraphs 1 and 2 must not be construed to bean approval for a criminal investigation.
(Business Improvement Order)
Article 37.

If the Prime Minister deems that there exists a hindrance to the interest of investors

concerning the operation of business of an Investment Adviser or, in case such Investment Adviser is
an Approved Investment Adviser, the party provided in the Ordinance as prescribed in Article 2,
Paragraph 4, Item 2 who received the reassignment by such Investment Adviser pursuant to theagreement prescribed in the same Item (including when it is applied pursuant to the Law Concerning
Investment Trust and Investment Company, Article 223-3, Paragraph 4. The same applies
hereinafter in this Article.), it may, to the extent necessary to protect the investors, order such

35

Investment Adviser to change the method of business, deposit assets or to take other measuresnecessary to improve the operation of the business.
(Revocation of Registration, etc.)
Article 38. When an Investment Adviser falls under any of the following Items, the Prime Ministermay revoke the registration under Article 4 or order a suspension of all or part of the Investment
Advisory Business for a period certain which shall be no more than six (6) months:(1) When it falls under any of Article 7, Paragraph 1, Items 1 through 3, Item 4 (limited to portions
related to the provisions of the laws and regulations of a foreign country equivalent to this Law or
the Law Concerning Investment Trust and Investment Company.), Item 5, Item 6, Item 8 (excluding
the portions related to the same Paragraph, Item 7.), or Item 9 (excluding the portions related to thesame Paragraph, Item 7.).
(2) When it receives the registration under Article 4 by fraudulent means.
(3) When it violates, in relation to its Investment Advisory Business, this Law or an order based on
this Law, or a sanction based on these.
2. If the location of the place of business of an Investment Adviser cannot be determined, or thewhereabouts of an Investment Adviser (in case of a legal entity, the whereabouts of an officer
representing such legal entity.) cannot be confirmed, the Prime Minister may, as prescribed in the
Cabinet Order, make a public notice regarding such fact, and may revoke the registration of such
Investment Adviser if there is a failure of the Investment Adviser to report within thirty (30)_days
after such public notice.
3. The provisions of the Administrative Procedure Law (Law No. 88 of 1993), Chapter 3 shall not beapplicable to the sanctions prescribed in the immediately preceding Paragraph.
(Revocation of Approval, etc.)
Article 39. When an Approved Investment Adviser or the party provided in the Ordinance asprescribed in Article 2, Paragraph 4, Item 2 who received the reassignment by such Approved
Investment Adviser pursuant to the agreement prescribed in the same Item (including where it isapplied pursuant to the Law Concerning Investment Trust and Investment Company, Article 223-3,
Paragraph 4. The same applies hereinafter in this Article.) falls under any of the following Items, thePrime Minister may revoke the approval for such Approved Investment Adviser or suspend all orpart of the business related to Discretionary Investment Agreement for a period certain which shallbe no more than six (6) months:

36

(1) When Article 27, Paragraph 2, Item 1 or 2 becomes applicable.
(2) When it violates, in relation to its business related to Discretionary Investment Agreement, thisLaw or an order based on this Law (including the Law Concerning Investment Trust and Investment
Company, Books 2 through 4. The same applies hereinafter in this Paragraph.) or a sanction basedon these.
(3) When it violates a condition attached to the approval prescribed in Article 25, Paragraph 1.
2. When the registration of an Approved Investment Adviser becomes ineffective pursuant to theprovisions of Article 9, Paragraph 2, or the registration of such Approved Investment Adviser isrevoked pursuant to the provisions of Paragraph 1 or 2 of the immediately preceding Article, suchapproval becomes ineffective.
(Deletion of Registration, etc.)
Article 40. Where the registration becomes ineffective pursuant to the provisions of Article 9,
Paragraph 2, or the registration is revoked pursuant to the provisions of Article 38, Paragraph 1 or 2,
the Office of the Prime Minster must delete such registration.
2. Where the approval becomes in effective pursuant to the provisions of Article 29, Paragraph 2 orthe immediately preceding Article, Paragraph 2, or the approval is revoked pursuant to theprovisions of the same Article, Paragraph 1, the Prime Minister must delete the appended note
concerning the approval prescribed in Article 24, Paragraph 3.
(Publication of Supervisory Sanctions)
Article 41. Where a sanction pursuant to the provisions of Article 38, Paragraph 1 or 2, or Article
39, Paragraph 1 is imposed, the Prime Minister must, as prescribed in the Cabinet Order, make apublic notice regarding such fact.
Chapter VI. Securities Investment Advisers Association(Securities Investment Advisers Association)
Article 42.

Investment Advisers, for the purpose of promoting the protection of investors and thesound development of the Investment Advisory Business, may establish a legal entity as prescribedin the Civil Code (Law No. 89 of 1896), Article 34 under the name of Securities Investment
Advisers Association, with Investment Advisers as its members.

37

2. Securities Investment Advisers Association (referred to as “Association” hereinafter in this
Chapter.) must make the membership list available for public inspection.
(Limitation on Use of Name)
Article 43. A party who is not the Association may not refer to itself as the Securities Investment
Advisers Association.
2. A party who does not have the membership of the Association may not refer to itself as a
Securities Investment Advisers Association member, while engaging in the Investment Advisory
Business.
(Solution of Complaints)
Article 44. Where clients, etc., apply for a solution of a claim concerning a business conducted bya member, the Association must provide counsel and necessary advice to the applicant, conduct aninvestigation related to the facts of the complaint, and notify the content of such complaint to suchmember and request a prompt processing of the issue.
2. Where it deems necessary for the solution of the complaint related to the application of theimmediately preceding Paragraph, the Association may request from such member, a written orverbal explanation, or a submission of relevant materials.
3. Where a request pursuant to the provisions of the immediately preceding Paragraph is made by the
Association, a member may not reject without justifiable reason.
4. The Association must disseminate the application of Paragraph 1, the facts related to suchcomplaint and the outcome of the solution to its members.
(Cooperation with the Prime Minister)
Article 45.

For the purpose of facilitation of enforcement of this Law, the Prime Minister may, asprescribed in the Cabinet Order, make the Association cooperate concerning the submission of thematerials and reports under the provisions of this Law and other necessary matters.
(On-site Inspection, etc.)
Article 46. The Prime Minister may, to the extent necessary for the enforcement of the provisionsof this Chapter, order the Association to submit reports or materials which provide information
concerning its business or assets, or order its officials to enter the places of business of the
Association and inspect the status of its business or assets or books and records and other properties,
or to ask questions to the related parties.

38

2. The provisions of Article 36, Paragraphs 3 and 4, shall be applied mutatis mutandis to the on-site
inspection made pursuant to the immediately preceding Paragraph.
(Supervisory Orders)
Article 47. The Prime Minister may, to the extent necessary for the enforcement of this Chapter,
provide orders necessary for supervision on the Association.
(National Federation of Securities Investment Advisers Association)
Article 48. The Associations may establish a legal entity, as prescribed in the Civil Code, Article
34, by the name of National Federation of Securities Investment Advisers Association for the
purpose of communication, coordination and instruction related to the operation of the Associations,organized nationally with the various Associations as its members.
2. Only one National Federation of Securities Investment Advisers Association may be establishednationally.
3. A party who is not the National Federation of Securities Investment Advisers Association may notrefer to itself as the National Federation of Securities Investment Advisers Association.
4. The provisions of the preceding three (3) Articles shall be applied mutatis mutandis to the
National Federation of Securities Investment Advisers Association.
Chapter VII. Miscellaneous(Special Provisions, etc., for Foreign Legal Entities, etc.)
Article 49. Where an Investment Adviser is a legal entity established in accordance with the laws
and regulations of a foreign country or an individual whose residence is in a foreign country engages
in the Investment Advisory Business or business related to Discretionary Agreement with a domesticclient as the counterparty, a special provision concerning the deadline for submission of the business
reports prescribed under Article 35, Paragraph 1 for such legal entity or individual, the technicalchange in reading in application of the provisions of this Law, and other necessary mattersconcerning the application of the provisions of this Law to such legal entity or individual shall beprescribed in the Ordinance.
(Report for Establishment of Representative Office, etc., for Party Engaged in Investment Advisory
Business in Foreign Country)
Article 50. A party engaged in the Investment Advisory Business in a foreign country (excluding
Investment Advisers. The same applies hereinafter.) seeking to establish a domestic representatives

39

office or other facilities in order to collect and provide information concerning markets for Securities,
etc. or to do other businesses related to Securities, etc., prescribed in the Cabinet Order (including
where it seeks to conduct such business at an office or other facilities established for other purposes.)must report the content of such business, the location of the facilities where such business isconducted and other matters prescribed in the Cabinet Order to the Prime Minister in advance.
2. When it is deems it necessary for protection of the investors, the Prime Minister may order thesubmission of report or material related to the businesses listed in the immediately preceding
Paragraph conducted at the facilities provided in the same Paragraph against a party engaged in theInvestment Advisory Business in a foreign country.
3. When a party engaged in the Investment Advisory Business in a foreign country closes a facility it
had established which is provided in Paragraph 1, terminates the business provided in the same
Paragraph conducted at such facility or changes the matters reported pursuant to the provisions of
the same Paragraph, it must report such fact to the Prime Minister within thirty (30) days from suchdate.
(Submission of Material, etc. to the Minister of Finance)
Article 51. When it deems it necessary for the planning of systems related to the Investment
Advisory Business in relation to the system for administration of collapse of financial institutions
and management of financial crisis within its jurisdiction, the Minister of Finance may request thePrime Minister for the submission and the explanation of necessary materials.
2. When it deems it especially necessary for the planning of systems related to the Investment
Advisory Business in relation to the system for administration of collapse of financial institutions
and management of financial crisis within its jurisdiction, the Minister of Finance may, to the extent
necessary, request Investment Advisers, Securities Investment Advisers Association or National
Federation of Securities Investment Advisers Association for the submission and the explanation ofnecessary materials and other needed cooperation.
(Delegation, etc., of Authority)
Article 51-2

The Prime Minister shall delegate the authorities under this Law (excluding thoseprescribed in the Ordinances.) to the Commissioner of Financial Services Agency.
2. The Commissioner of Financial Services Agency shall delegate those authorities prescribed in
Article 36, Paragraph 1 (limited to the provisions prescribed in the Ordinance as provisions related toensuring the fairness of the purchase or sale of Securities, Securities Index etc., Futures Transactionsetc., Securities Options Transactions, etc., Over-the-Counter Securities Index, etc., Forward40

Transactions, Over-the-Counter Securities Options Transactions or Over-the-Counter Securities
Index, etc., Swap Transactions.) included in the authorities delegated pursuant to the provisions of
the immediately preceding Paragraph to the Securities and Exchange Surveillance Commission(“SESC” hereinafter.) Provided, however, that the exercise of authority to order the submission ofreports or materials by the Commissioner of the Financial Services Agency shall not be hampered.
3. The Commissioner of the Financial Services Agency may, as prescribed in the Ordinance,delegate those authorities prescribed in Article 36, Paragraphs 1 and 2 and Article 46, Paragraph 1(including where it is applied mutatis mutandis by Article 48, Paragraph 4.) included in theauthorities delegated pursuant to the provisions of Paragraph 1 (excluding those delegated to the
SESC pursuant to the provisions of the immediately preceding Paragraph.) to the SESC.
4. When the SESC exercises the authority delegated pursuant to the provisions of the immediately
preceding Paragraph, the result thereof shall be promptly reported to the Commissioner of the
Financial Services Agency.
5. The Commissioner of the Financial Services Agency may, as prescribed in the Ordinance,delegate part of the authorities delegated pursuant to the provisions of Paragraph 1 (excluding thosedelegated to the SESC pursuant to the provisions of Paragraphs 2 and 3.) to Director-Generals of the
Local Finance Bureaus or the Director-Generals of Local Finance Branch Bureaus.
6. SESC may, as prescribed in the Ordinance, delegate part of the authorities delegated pursuant to
the provisions of Paragraphs 2 and 3 to the Director-Generals of the Local Finance Bureaus or the
Director-Generals of Local Finance Branch Bureaus.
7. With regards to the administration related to the authorities delegated to the Director-Generals of
the Local Finance Bureaus or the Director-Generals of Local Finance Branch Bureaus pursuant to
the immediately preceding Paragraph, SESC shall direct and supervise the Director-Generals of the
Local Finance Bureaus or the Director-Generals of Local Finance Branch Bureaus.
(Complaint against Orders by SESC)
Article 51-3

A complaint pursuant to the Administrative Tribunals Law (Law No. 160 of 1962)

concerning an order of SESC to submit reports or materials pursuant to the immediately preceding
Article, Paragraph 2 or 3 (including orders by the Director-Generals of the Local Finance Bureaus or
the Director-Generals of Local Finance Branch Bureaus pursuant to the same Article, Paragraph 6.)
may only be made against the SESC.

41

(Delegation to Cabinet Orders)
Article 52.

In addition to the provisions of this Law, matters necessary for the enforcement of thisLaw shall be prescribed in the Cabinet Order.
(Provisional Measures)
Article 53. When an order is enacted, amended or abolished pursuant to the provisions of this Law,
necessary provisional measures (including provisional measures related to penal rules.) may beestablished by such order to the extent necessary for such enactment, amendment or abolition.
Chapter VIII. Penal Rules
Article 54. A party who falls under any of the following Items may be sentenced to imprisonment of
no more than three (3) years and/or imposed with a fine of no more than three million yen(\3,000,000):(1) A party who was entrusted by others with all or part of investment decision making based on theanalysis of the Value of Securities, etc., and engaged in the business of conducting investment forothers based on such decision in violation of the provisions of Article 3.
(2) A party who engaged in the Investment Advisory Business without obtaining registration under
Article 4.
(3) A party who obtained registration under Article 4 by fraudulent means.
(4) A party who caused others to engage in the Investment Advisory Business or business related toDiscretionary Investment Agreement in violation of Article 12 (including where it is applied mutatis
mutandis by Article 33.).
(5) A party who engaged in acts listed in Article 22, Paragraph 1, Items 1 through 4 or Item 6, or
Article 30-3, Paragraph 1, Items 1 through 4 or Item 6, in violation of these provisions.
(6) A party who engaged in the business related to Discretionary Investment Agreement without
approval, in violation of the provisions of Article 24, Paragraph 1.
Article 54-2

A party who falls under any of the following Items may be sentenced to imprisonmentof no more than two (2) years and/or a fine of no more than three million yen (\3,000,000):(1) A party who violated conditions attached pursuant to the provisions of Article 25, Paragraph 1.

42

(2) A party who continues to engaged in the Investment Advisory Business or business related toDiscretionary Investment Agreement in violation of an order to suspend such business pursuant to
the provisions of Article 38, Paragraph 1 or Article 39, Paragraph 1.
Article 54-3

A party who falls under any of the following Items may be sentenced to imprisonmentof no more than one (1) year and/or a fine of no more than three million yen (\3,000,000):(1) A party who submitted the registration application form prescribed in Article 5, Paragraph 1 or
the documents prescribed in the same Article, Paragraph 2, with a false statement.
(2) A party who submitted the approval application form prescribed in Article 26, Paragraph 1 or
documents or electronic records to be attached to the approval application form of the same Article,
Paragraph 1 pursuant to the provisions of the same Article, Paragraph 2 or 3, with a false statement.
(3) A party who did not prepare or maintain the books and records pursuant to the provisions ofArticle 34, or who prepared falsified books and records.
(4) A party who did not submit the business report pursuant to the provisions of Article 35,
Paragraph 1 or submitted the business report with a false statement.
(5) A party who did not submit the reports or materials pursuant to the provisions of Article 36,
Paragraph 1 or 2 or Article 46, Paragraph 1 (including where it is applied mutatis mutandis by
Article 48, Paragraph 4.) or submitted falsified reports or materials, or refused, hampered or evaded
the inspections pursuant to these provisions, or did not provide a reply or provided a false reply toquestions made pursuant to these provisions.
Article 55. A party who falls under any of the following Items may be sentenced to imprisonment
for no more than one (1) year and/or a fine of no more than one million yen (\1,000,000):(1) A party who commenced the Investment Advisory Business in violation of the provisions ofArticle 10, Paragraph 5.
(2) A party who engaged in the Securities Transactions in violation of the provisions of Article 18(including where it is applied mutatis mutandis by Article 33).
(3) A party who accepted deposits of money or Securities from a client, or who caused to makedeposits of money or Securities of a client, in violation of the provisions of Article 19 (including
where it is applied mutatis mutandis by Article 33).

43

(4) A party who lent money or Securities to a client, or acted as a dealer, broker or agent for lendingof money or Securities to a client by a third party, in violation of the provisions of Article 20(including where it is applied mutatis mutandis by Article 33.).
(5) A party who changed the content or method of the business related to Discretionary Investment
Agreement without obtaining prior approval under Article 28.
(6) A party who violated an order made pursuant to Article 29-3 (including where it is appliedmutatis mutandis by Article 29-5).
(7) A party who engaged in businesses other than the Investment Advisory Business, business
related to Discretionary Investment Agreement, Investment Trust Management Business, Investment
Company Asset Management Business, Securities Business or Trust Business without authorization,in violation of Article 31, Paragraph 1.
Article 56. A party who falls under any of the following Items may be sentenced to imprisonment
for no more than six (6) months and/or a fine of no more than five-hundred-thousand yen(\500,000):(1) A party who failed to make a deposit in violation of Article 10, Paragraph 8.
(2) A party who failed to present the items prescribed in Article 13, Paragraph 1 in violation of theprovisions of the same Paragraph (including where it is applied mutatis mutandis by Article 33.).
(3) A party who made a presentation substantially different from the facts or substantially misleadingin violation of the provisions of Article 13, Paragraph 2 (including where it is applied mutatis
mutandis by Article 33.).
(4) A party who made misleading presentations in violation of the provisions of Article 13,
Paragraph 3 (including where it is applied mutatis mutandis by Article 33.).
(5) A party who failed to deliver documents, or delivered documents which did not include mattersprescribed in the provisions of Article 14, Paragraph 1, Article 15, Paragraph 1, or Article 16,
Paragraph 1 (including where they are applied mutatis mutandis by Article 33.) or which included afalse statement, in violation of these provisions.

44

(6) A party who failed to submit reports or attached documents prescribed in Article 29-2 (including
where it is applied mutatis mutandis by Article 29-5.) or submitted false reports or attacheddocuments.
(7) A party who engaged in the Securities Business or Trust Business without obtaining approval in
violation of the provisions of Article 31, Paragraph 2.
(8) A party who failed to deliver reports, or delivered reports without including matters prescribed in
Article 32, Paragraph 1 or reports with a false statement, in violation of the same Paragraph.
Article 57. A party who falls under any of the following Items may be sentenced to a fine of no
more than three-hundred-thousand yen (\300,000):(1) A party who failed to submit the report prescribed in Article 8, Paragraph 1 or Article 29,
Paragraph 1, or filed a false report.
(2) A party who violated the provisions of Article 11, Paragraph 1.
(3) A party who posted a sign as prescribed in Article 11, Paragraph 1 or a similar sign in violationof the provisions of the same Article, Paragraph 2.
(4) A party who engaged in the Investment Trust Management Business, Investment Company AssetManagement Business, Securities Business or Trust Business without reporting, in violation of theprovisions of Article 23.
(5) A party who failed to file a report under Article 29-4 (including where it is applied mutatuis
mutandis by Article 29-5), or filed a false report.
(6) A party who engaged in the ordinary course of business of other companies or operated business,in violation of the provisions of Article 30.
(7) A party who engaged in businesses other than the Investment Advisory Business, business
related to Discretionary Investment Agreement, Investment Trust Management Business, Investment
Company Asset Management Business, Securities Business or Trust Business without reporting, inviolation of Article 31, Paragraph 3.
(8) A party who violated the orders made pursuant to the provisions of Article 37.

45

(9) A party who referred to itself as a Securities Investment Advisers Association member inviolation of Article 43, Paragraph 2.
Article 58. When a representative of a legal entity or an agent, employee or other workers of alegal entity or a person violates the provisions of Article 54 through the immediately preceding
Article concerning the business of such legal entity or person, not only a penalty may be imposed on
the actor, but also such legal entity or individual may be imposed a fine prescribed in accordance tothe abovementioned Articles.
Article 59. A party who falls under any of the following Items may be subject to an administrative
fine of no more than five-hundred-thousand yen (\500,000):(1) A party who refused to provide the list of membership prescribed in Article 42, Paragraph 2 forpublic inspection without any justifiable reason.
(2) A party who violated an order given pursuant to the provisions of Article 47 (including where it
is applied mutatis mutandis by Article 48, Paragraph 4.).
Article 60. A party who failed to make a deposit in violation of an order given pursuant to theprovisions of Article 10, Paragraph 4 may be subject to an administrative fine of no more than
three-hundred-thousand yen (\300,000).
Article 61. A party who falls under any of the following Items may be subject to an administrative
fine of no more than one-hundred-thousand yen (\100,000):(1) A party who failed to submit a report pursuant to the provisions of Article 9, Paragraph 1 orsubmitted a false report.
(2) A party who referred to itself as a Securities Investment Advisers Association or the National
Federation of Securities Investment Advisers Association in violation of the provisions of Article 43,
Paragraph 1 or Article 48, Paragraph 3.
(3) A party who failed to submit a report pursuant to the provisions of Article 50, Paragraph 1 or 3,
or submitted a false report.
(4) A party who failed to submit a report or materials provided in Article 50, Paragraph 2, or
submitted a false report or materials.

46

Excerpts of Supplementary Provisions(Effective Date)
Article 1.

This law shall become effective as of the date prescribed in the Ordinance within six (6)months from the date of the proclamation (November 25, 1986, Ordinance No.332 of 1986).
(Provisional Measures)
Article 2.

A party who is engaged in the Investment Advisory Business at the time of enforcementof this Law (excluding banks engaged in the Trust Business with an approval from the Minister ofFinance pursuant to the Law Concerning the Concurrent Undertaking, etc. of Trust Business byOrdinary Banks (Law No. 43 of 1943) and a management companies that obtained license of the
Minister of Finance pursuant to the Securities Investment Trust Law.) may, notwithstanding theprovisions of Article 4, continue to engage in the Investment Advisory Business for six (6) months(if a registration was denied pursuant to the provisions of Article 7, Paragraph 1 or the closure of theInvestment Advisory Business was ordered pursuant to the provisions of Article 38, Paragraph 1 asapplied pursuant to the provisions of the immediately following Paragraph, until the date of suchdenial or the date of such closure of business is ordered.) from the effective date of this Law. If suchparty submits an application form for the registration within such period, the same shall apply, evenafter the lapse of such period, until the registration is granted or denial of the registration is imposed.
2. In case a party continues its engagement in the Investment Advisory Business pursuant to theprovisions of the immediately preceding Paragraph, such party shall be deemed an Investment
Advisor, and Article 13, Paragraphs 1 and 2, Articles 14 through 23, Articles 34 through 37, andArticle 38, Paragraph 1 (excluding Item 2) and Paragraph 3 (including penal rules related to theseprovisions) shall be applied. In such a case, “revoke the registration under Article 4” in the same
Article, Paragraph 1 shall be read as “order the closure of the Investment Advisory Business.”
3. In application of Article 7, Paragraph 1, in case the closure of the Investment Advisory Business isordered pursuant to the provisions of Article 38, Paragraph 1, by application of the provisions of theimmediately preceding Paragraph, such party who is ordered to close the business shall be deemed aparty whose registration under Article 4 is revoked pursuant to the provisions of Article 38,
Paragraph 1, and such date of the order of closure of business shall be deemed effective on the dateof revocation of the registration under Article 4 pursuant to the provisions of Article 38, Paragraph 1.
Article 3.

A bank engaged in the Trust Business with an approval of the Minister of Financepursuant to the Law Concerning the Concurrent Undertaking, etc. of Trust Business by Ordinary47

Banks and management companies with license of the Minister of Finance pursuant to the Securities
Investment Trust Law, which are engaged in the Investment Advisory Business at the time ofenforcement of this Law, may, notwithstanding the provisions of Article 4, continue to engage in theInvestment Advisory Business for the time being (if an order for closure of the Investment Advisory
Business is given pursuant to the provisions of Article 38, Paragraph 1, as applied by the provisionsof the immediately following Paragraph, until the date of such order.).
2. In case a party continues its engagement in the Investment Advisory Business pursuant to theprovisions of the immediately preceding Paragraph, such bank engaged in the Trust Business andmanagement company shall be deemed Investment Advisers, and the provisions of Article 11,
Article 12, Article 13, Paragraph 2, Article14 (excluding Paragraph 1, Item 3.), Article 15, Article 17,
Article 21, Article 22, Articles 34 through 37, Article 38, Paragraph 1 (excluding Item 2.), andArticle 42, Paragraph 1 shall be applied to such bank engaged in the Trust Business (including penal
rules related to these provisions.), and Article 11, Article 12, Article 13, Paragraphs 1 and 2, Articles
14 through 22, Article 34 through 37, Article 38, Paragraph 1 (excluding Item 2.) and Article 42,
Paragraph 1 shall be applied to such management company (including penal rules related to theseprovisions.). In such a case, “revoke the registration under Article 4” in Article 38, Paragraph 1 shallbe read as “order the closure of the Investment Advisory Business.”
3. In application of Article 7, Paragraph 1, in case the closure of the Investment Advisory Business isordered pursuant to the provisions of Article 38, Paragraph 1, by application of the provisions of theimmediately preceding Paragraph, such bank engaged in the Trust Business or managementcompany ordered to close the business shall be deemed a party whose registration under Article 4 isrevoked pursuant to the provisions of Article 38, Paragraph 1, and such date of the order of closureof business shall be deemed the date of revocation of the registration under Article 4 pursuant to theprovisions of Article 38, Paragraph 1.
Article 4. A party who has a facility prescribed in Article 50, Paragraph 1 as of the date ofenforcement of this Law must report the content of the business, location of the facility and othermatters prescribed in the Ministerial Order of the Ministry of Finance concerning such facility
prescribed in the same Paragraph within three (3) months from the enforcement of this Law to the
Minister of Finance. In this case, such report shall be deemed a report submitted pursuant to thesame Paragraph.
Excerpts of Supplementary Provisions (Law No.75 of May 31, 1988)

48

(Effective Date)
Article 1.

This Law shall become effective as of the date prescribed in the Ordinance within six (6)months from the date of the proclamation (August 23, 1988, Ordinance No.241 of 1988). (rest isomitted)(Provisional Measures Related to Partial Amendment of the Law Concerning Regulation, etc. of
Investment Advisory Business Relating to Securities)
Article 22. An Investment Adviser which determined the details and methods of its business andhas an approval of the Minister of Finance pursuant to the provisions of the Law Concerning
Regulation, etc. of Investment Advisory Business Relating to Securities (referred to as “Former
Investment Adviser Law” hereinafter in this Article.), Article 24, Paragraph 1 prior to theamendment prescribed in the immediately preceding Article at the time of enforcement of this Law
shall be deemed, at the time of enforcement of this Law, to have determined the details and methodsof a business which is the same as the said details and methods of the business and received an
approval of the Minister of Finance under the Law Concerning Regulation, etc. of Investment
Advisory Business Relating to Securities (referred to as “New Investment Adviser Law” hereinafterin this Article.), Article 24, Paragraph 1 amended pursuant to the provisions of the immediately
preceding Article. In such case, the conditions under the Former Investment Adviser Law, Article 25,
Paragraph 1 related to the approval under the Former Investment Adviser Law, Article 24, Paragraph1 shall be deemed to be the conditions under the New Investment Adviser Law, Article 25,
Paragraph 1 related to the approval under the New Investment Adviser Law, Article 24, Paragraph 1.
Excerpts of Supplementary Provisions (Law No. 107 of June 15, 1998)(Effective Date)
Article 1.

This Law shall become effective on December 1, 1998. Provided, however, that theprovisions listed in each of the following Items shall become effective as of each date prescribed ineach Item:(1) (omitted) Supplementary Provision, (omitted) Article 147, (omitted) and Articles 188 through190: July 1, 1998(1)-2 through (6) (omitted)(Provisional Measures in relation to Partial Amendment of the Securities Investment Trust Law)
Article 92.

(Refer to the Supplementary Provisions for Amendment of the Law Concerning

Securities Investment Trust and Securities Investment Company)

49

(Provisional Measures Related to Partial Amendment of the Law Concerning Regulation, etc. of
Investment Advisory Business Relating to Securities)
Article 99. A party who is, at the time of the enforcement of this Law, engaged in the business of amanagement company as prescribed in the former Investment Trust Law, Article 2, Paragraph 4,with the approval under the proviso of Article 31 of Law Concerning Regulation, etc. of Investment
Advisory Business Relating to Securities prior to the amendment pursuant to the provisions ofArticle 8 (referred to as “Former Investment Adviser Law” in the immediately following Article.)shall be, as of the enforcement date, deemed to have reported its engagement in the securities
Investment Trust Management Business pursuant to the provisions of the (amended) new Investment
Adviser Law, Article 23, Paragraph 1.
Article 100. The provisions of the new Investment Adviser Law, Article 32 shall be applied to thereports prescribed in the same Article prepared on or after the enforcement date, whereas the reports
prescribed in the former Investment Adviser Law, Article 32 prepared prior to the enforcement dateshall continue to be subject to the previous law.
(Delegation of Authority)
Article 147. The Prime Minister shall delegate the authorities under the provisions of these
Supplemental Provisions (excluding those stipulated in the Ordinances.) to the Commissioner ofFinancial Services Agency.
2. The authorizations delegated to the Commissioner of the Financial Service Agency pursuant to theprovisions of the immediately preceding Paragraph (omitted) may be delegated in part to the
Director-Generals of the Local Finance Bureaus or the Director-Generals of Local Finance Branch
Bureaus (omitted) as prescribed in the Ordinance.
(Effectiveness of Sanctions, etc.)
Article 188. Sanctions, procedures and other acts made pursuant to the laws (including orders
pursuant to such. The same applies hereinafter.) prior to enforcement of this Law (for provisions
listed in the each Item of the Supplementary Provisions, Article 1, such provisions.) for which anequivalent provision exists in the amended laws, shall be deemed to have been made under theequivalent provisions of the amended laws, unless otherwise provided in these Supplementary
Provisions.
(Provisional Measures Concerning Application of Penalties)
Article 189. For acts committed prior to enforcement of this Law (for provisions listed in the each
Item of the Supplementary Provisions, Article 1, such provisions.), and acts committed subsequent50

to enforcement of this Law to which the previous laws shall apply or which shall be deemed tocontinue its effectiveness pursuant to these Supplementary Provisions, penalties shall continue to be
subject to the previous laws.
(Delegations of Other Provisional Measures to Ordinances)
Article 190. Provisional measures necessary for the enforcement of this Law shall be, in addition to
the provisions of Articles 2 through 146, (omitted) and the immediately preceding Article of the
Supplementary Provisions, prescribed in the Ordinances.
(Reviews)
Article 191. (omitted)
2. If it is deemed necessary subsequent to a review to be performed within five (5) years after theenforcement of this Law (omitted) regarding various financial systems after the amendment by thisLaw, taking into consideration the status of enforcement of the provisions after the amendments bythis Law and the changes in social and economic affairs surrounding the financial system, thegovernment shall implement required measures based on the result of such review.
Excerpts from Supplementary Provisions (Law No.96 of May 31, 2000)(Effective Date)
Article 1.

This law shall become effective on December 1, 2000 (omitted). (rest is omitted)(Delegations of Other Provisional Measures to Ordinances)
Article 51.

(omitted) Provisional measures necessary concerning the enforcement of this Law(omitted) shall be prescribed in the Ordinances.
Excerpts from Supplementary Provisions (Law No.97 of May 31, 2000)(Effective Date)
Article 1.

This Law shall become effective as of the date prescribed in the Ordinance within six (6)months from the date of the proclamation (November 30, 2000, Ordinance No.478 of 2000)(omitted).
(rest is omitted)(Effectiveness of Sanctions, etc.)
Article 64.

Sanctions, procedures and other acts made pursuant to the laws prior to the enforcementof (omitted) this Law (including orders pursuant to such. The same applies hereinafter in this
Article.) for which an equivalent provision exists in the amended laws, shall be deemed to have been51

made under the equivalent provisions of the amended laws, unless otherwise provided in these
Supplementary Provisions.
(Provisional Measures Concerning Application of Penalties)
Article 65. Application of penalties against acts committed prior to the enforcement of (omitted)
this Law, or acts committed after the enforcement of this Law which continue to be subject to theprevious laws pursuant to the provisions of these Supplementary Provisions, shall continue to be
subject to the previous laws.
(Delegations of Other Provisional Measures to Ordinances)
Article 67.

Provisional measures necessary for the enforcement of this Law shall be, in addition to

the provisions of these Supplementary Provisions, determined by the Ordinances.
Excerpts of Supplementary Provisions (Law No.126 of November 27, 2000)(Effective Date)
Article 1.

This Law shall become effective as of the date provided in the Ordinance within five (5)months from the date of the proclamation (April 1, 2001, Ordinance No.3 of 2001). (rest is omitted)(Provisional Measures Concerning Application of Penalties)
Article 2.

Application of penalties against acts committed prior to the enforcement of this Law

shall continue to be subject to the previous laws.
Excerpts of Supplementary Provisions (Law No.129 of November 28, 2001)(Effective Date)
1. This Law shall become effective as of April 1, 2002. (rest is omitted)(Provisional Measures Concerning Application of Penalties)
2. Application of penalties against acts committed prior to the enforcement of this Law (omitted)
shall continue to be subject to previous laws.
Excerpts of Supplementary Provisions (Law No.65 of June 12, 2002)(Effective Date)
Article 1.

This Law shall become effective as of January 6, 2003.

52

(Provisional Measures Concerning Application of Penalties)
Article 83. Application of penalties against acts (omitted) committed prior to the enforcement of
this Law (omitted) shall continue to be subject to previous laws.
(Delegations of Other Provisional Measures to Ordinances)
Article 84.

Provisional measures necessary for the enforcement of this Law shall be, in addition to

the provisions of these Supplementary Provisions, determined by the Ordinances.
Excerpts of Supplementary Provisions (Law No. 54 of May 30, 2003)(Effective Date)
Article 1.

This Law shall become effective as of April 1, 2004. Provided, however, that theprovision listed in each of the following Items shall become effective as of each date prescribed insuch Item:(1) (omitted) Amendment provisions for the Law Concerning Regulation, etc. of Investment
Advisory Business Relating to Securities, Article 17, Paragraph 1 in Article 4 (omitted): The date ofproclamation of this Law(2), (3) (omitted)(Provisional Measures Related to Partial Amendment of the Law Concerning Regulation, etc. of
Investment Advisory Business Relating to Securities)
Article 6.

A party who is, at the date of enforcement of this Law, a Principal Shareholder(Principal Shareholder as prescribed in Article 27, Paragraph 3 of the Law Concerning Regulation,etc. of Investment Advisory Business Relating to Securities, as amended pursuant to the provisionsof Article 4 (referred to as “New Investment Adviser Law” hereinafter.) of an Approved Investment
Adviser (Approved Investment Adviser as prescribed in Article 3 of the New Investment Adviser
Law. The same applies hereinafter in this Article.) or a Principal Shareholder of a holding company(holding company as prescribed in Act Concerning Prohibition of Private Monopolization and
Maintenance of Fair Trade, Article 9, Paragraph 5, Item 1.)(collectively, referred to as “Principal
Shareholder of Approved Investment Adviser, etc.” hereinafter in this Article.) which holds an
Approved Investment Adviser as a Subsidiary (Subsidiary as prescribed in the New Investment
Adviser Law, Article 27, Paragraph 4.) shall be deemed to have become a Principal Shareholder ofsuch Approved Investment Adviser, etc., as of the enforcement date.
Article 7.

A party who is, at the time of enforcement of this Law, engaged in the Securities

Business (Securities Business as prescribed in the New Investment Adviser Law, Article 23.) with an53

approval under the provisions of Article 31, Paragraph 2 of the Law Concerning Regulation, etc. of
Investment Advisory Business Relating to Securities prior to amendment by Article 4 (referred to as“Former Investment Adviser Law” hereinafter.) (excluding Securities Brokers (Securities Broker asprescribed in the New Investment Adviser Law, Article 22, Paragraph 2, Item 2.) or Permitted
Foreign Securities Firms (Permitted Foreign Securities Firm as prescribed in the New Investment
Adviser Law, Article 22, Paragraph 2, Item 2.) .) with an approval under the proviso of Article 31,
Paragraph 1 of the Former Investment Adviser Law, shall be deemed to have, as of the effective date,reported its engagement in such approved business pursuant to the provisions of the New Investment
Adviser Law, Article 31, Paragraph 3.
(Provisional Measures Concerning Application of Penalties)
Article 38. Application of penalties against acts committed prior to the enforcement of this Law
shall continue to be subject to previous laws.
(Delegations of Other Provisional Measures to Ordinances)
Article 39.

Provisional measures necessary for the enforcement of this Law shall be, in addition to

the provisions of this Law, determined by the Ordinances.
(Reviews)
Article 40.

If the government deems it necessary subsequent to a review to be performed five (5)years after the enforcement of this Law regarding various financial systems after the amendments bythis Law, taking into consideration the status of the enforcement of the provisions amended by thisLaw and changes in social and economic affairs, etc., it shall implement required measures based on
the result of such review.
Excerpts of Supplementary Provisions (Law No.76 of June 2, 2004)(Effective Date)
Article 1.

This Law shall become effective as of the date of enforcement (January 1, 2005) of the

Bankruptcy Law (Law No.75 of 2004 (omitted)). (rest is omitted)(Provisional Measures Concerning Application of Penalties, etc.)
Article 12. Application of penalties against acts committed prior to the enforcement date (omitted)
shall continue to be subject to the previous laws. (rest is omitted)
2. through 4. (omitted)

54

5. Application of the provisions of the Law Concerning Regulation, etc. of Investment Advisory
Business Relating to Securities (omitted) prior to amendment by this Law (omitted) concerning theobligation for filing, notification or reporting related to adjudication of bankruptcy, determination of
the commencement of rehabilitation proceedings, determination of the commencement of corporate
reorganization proceedings or decision of approval of foreign bankruptcy administration procedureand penal rules related to these provisions shall continue to be subject to the previous laws.
(Delegation of Authorities to Ordinances)
Article 14.

Provisional measures necessary for the enforcement of this Law shall be, in addition to

the provisions of Article 2 through the immediately preceding Article of the Supplementary
Provisions, prescribed in the Ordinances.
Excerpts of Supplementary Provisions (Law No.88 of June 9, 2004)(Effective Date)
Article 1.

This Law shall become effective as of the date provided in the Ordinance (omitted)

within five (5) years from the date of the proclamation. (rest is omitted)(Delegations of Other Provisional Measures to Ordinances)
Article 136 . (omitted) Provisional measures necessary for the enforcement of this Law shall be, in
addition to the provisions of these Supplementary Provisions, determined by the Ordinances.
Excerpts of Supplementary Provisions (Law No.97 of June 9, 2004)(Effective Date)
Article 1.

This Law shall become effective as of April 1, 2005 (omitted). Provided, however, thatthe provisions of each of the following Items shall become effective as of each date prescribed insuch Item:(1) (omitted) Amendment provisions for the Law Concerning Regulation, etc. of Investment
Advisory Business Relating to Securities (referred to as “Investment Adviser Law” hereinafter inthis Article.), Article 29-3 in Article 6 (omitted): The date of proclamation of this Law(2) (omitted) Amendment provisions of Investment Adviser Law, Article 29-2, Paragraph 1 in
Article 6 (omitted): One (1) month after the date of proclamation of this law (July 9, 2004)(3) (omitted) Amendment provisions of Investment Adviser Law, Article 2, Paragraph 5 in Article 6(omitted): December 1, 200455

(4) (omitted) Title of Investment Adviser Law, Article 51-2, amendment provisions for the same
Article, Paragraph 2, amendment provision to add Paragraph 5 to the same Article, and theamendment provision to add an article after the same Article (omitted): July 1, 2005
(5) (omitted)(Provisional Measures Concerning Application of Penalties)
Article 22. Application of penalties against acts committed prior to enforcement of this Law (forprovisions of each Item of Supplementary Provisions Article 1, such provision. The same applies
hereinafter in this Paragraph.)(omitted) shall continue to be subject to previous laws.
(Delegations of Other Provisional Measures to Ordinances)
Article 23.

Provisional measures necessary for the enforcement of this Law shall be, in addition to

the provisions of these Supplementary Provisions, determined by the Ordinances.
(Reviews)
Article 24.

If the government deems it necessary subsequent to a review to be performed five (5)years after the enforcement of this Law regarding various financial systems after the amendments bythis Law, taking into consideration the status of enforcement of the provisions amended by this Law
and changes in social and economic affairs, etc., it shall implement required measures based on the
result of such review.
Excerpts of Supplementary Provisions (Law No.124 of June 18, 2004)(Effective Date)
Article 1.

This Law shall become effective as of the date of enforcement (March 7, 2005) of the

new Real Property Registration Law (Law No.123 of 2004). (rest is omitted)
Excerpts of Supplementary Provisions (Law No.147 of December 1, 2004)(Effective Date)
Article 1.

This Law shall become effective as of the date prescribed in the Ordinance within six (6)months from the date of the proclamation.
Excerpts of Supplementary Provisions (Law No.154 of December 3, 2004)(Effective Date)
Article 1.

This law shall become effective as of the date prescribed in the Ordinance within six (6)56months from the date of the proclamation (December 30, 2004, Ordinance No.426 of 2004)(omitted). (rest is omitted).
(Effectiveness of Sanctions, etc.)
Article 121. Penalties, procedures and other acts made pursuant to the laws prior to enforcement of
this Law (including orders pursuant to such. The same applies hereinafter in this Article.) for which
an equivalent provision exists in the amended laws, shall be deemed to have been imposed under theequivalent provisions of the amended laws, unless otherwise provided in these Supplementary
Provisions.
(Delegations of Other Provisional Measures to Ordinances)
Article 123. Provisional measures necessary for the enforcement of this Law shall be, in addition
to the provisions of these Supplementary Provisions, determined by the Ordinances.

Attached Provisions and Related Laws and Regulations
Enforcement Ordinance of the Law Concerning Regulation, etc. of Investment Advisory Business
Relating to Securities (Ordinance No.333 of October 28, 1986)
Enforcement Rules of the Law Concerning Regulation, etc. of Investment Advisory Business
Relating to Securities (Ministerial Ordinance of the Ministry of Finance No.54 of October 31, 1986)
Investment Advisers’ Business Guarantee Fund Rule (Ministerial Ordinance of the Judicial Ministry
and the Ministry of Finance No.1 of October 31, 1986)
Cabinet Order Prescribing the Format of Personal Identifications, etc., to be Carried by Officials of
Financial Services Agency, etc., at Inspections (Ministerial Ordinance of Ministry of Finance No.69,
July 20, 1992)

57