Document:

Ex-4.A Statement of Business Procedures

 

Exhibit 4A

(SUMMARY TRANSLATION)*

STATEMENT OF BUSINESS PROCEDURES

OF

JAPAN FINANCE CORPORATION FOR MUNICIPAL ENTERPRISES

(June 1, 1957)

(Amended as of April 1, 2001)

CHAPTER 1. GENERAL PROVISIONS

Article 1

     1. The object of Japan Finance Corporation for Municipal Enterprises
(hereinafter referred to as the “Corporation”) shall be, for contributing to
the sound operation of Municipal Enterprises, to finance local governments
requiring stable funds of particularly low interest for Local Loans for their
Municipal Enterprises, in order to thereby develop Municipal Enterprises of
local governments and to contribute to the improvement of the welfare of local
residents.

     2. The object of the Corporation shall be, in addition to the provisions of the
preceding paragraph, supplementing the financing provided by ordinary financial
institutions, to finance local toll-road public corporations requiring
long-term funds, for the purpose of promoting the construction of local
principal roads implemented by local toll-road public corporations.

     3. The object of the Corporation shall be, in addition to the provisions of the
preceding two paragraphs, supplementing the financing provided by ordinary
financial institutions, to finance local land-development public corporations
requiring long-term funds, for the purpose of promoting the acquisition of land
implemented by local land-development public corporations.

Article 2

     1. The Corporation, with a view to attaining the object specified in Paragraph
1 of the previous article, shall provide funds or subscribe for bonds issued as
Local Loans for local governments which operate Municipal Enterprises.

     2. The Corporation, with a view to attaining the object specified in Paragraph
2 of the previous article, shall provide funds for local toll-road public
corporations.

     3. The Corporation, with a view to attaining the object specified in Paragraph
3 of the previous article, shall provide funds for local land-development
public corporations.

 

 

 

	*	 	Information regarding the effective dates of various provisions as well as
transitional provisions no longer effective have been omitted from
“Supplementary Provisions”.

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Article 3

     The Corporation, in the operation of its business, shall be attentive so
that its business will be in conformity with the policy concerning the
development of Municipal Enterprises, etc. of the Government, while being
continuously attentive to the administrative authorities concerned.

CHAPTER 2. PROVIDING OF FUNDS

Article 4

     1.        The funds (excluding the funds specified in Article 5 hereof) shall be
provided pursuant to each of the following items:

	 	(1)	 	Person to be provided with the funds

	 	(a)	 	local governments which have been approved to issue
Local Loans for their Municipal Enterprises or are certain to
obtain the approval

	 	(b)	 	local toll-road public corporations which construct
local highways

	 	(c)	 	local land-development public corporations which
operate business similar to Municipal Enterprises

	 	(2)	 	Business to be provided with the funds

	 	(a)	 	local governments:

	 		 	projects specified in the attached list

	 	(b)	 	local toll-road public corporations:

	 	 	 	projects concerning toll-roads (which shall be limited to
development or reconstruction projects of toll-roads provided
for in Article 21, Paragraph 1 of the Local Toll-Road Public
Corporations Law (Law No. 82 of 1970) and further provided for
as the business regarding which funds are to be provided by the
Corporation in Article 8-3, Paragraph 1 of the Road Construction
Project Special Measures Law (Law No. 7 of 1956))

	 	(c)	 	local land-development public corporations:

	 	 	 	harbor improvement projects (which shall be limited to
reclamation projects) and construction projects for regional
development of littoral and inland industrial areas,
distribution business areas and lots to be used for offices,
shops, etc.

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	 	(3)	 	Use of the funds

	 	The funds shall be used for facilities, for refund of Local Loans for
facilities and for payment of interest on Local Loans for facilities.

	 	(4)	 	Limitation on the amount of the funds

	 	(a)	 	The amount of funds to be provided for local
governments shall be limited to the amount equivalent to the
amount of Local Loans which have been approved or are certain to
be approved and will not be underwritten by Governmental funds.

	 	(b)	 	The amount of funds to be provided for local
toll-road public corporations shall be limited to the amount
equivalent to the funds which will be necessary for construction
of local highways and will not be financed by general financial
institutions or the Government.

	 	(c)	 	The amount of funds to be provided for local
land-development public corporations shall be limited to the
amount equivalent to the funds which will be necessary for
business corresponding to Municipal Enterprises and will not be
financed by general financial institutions.

	 	(5)	 	Method of providing with funds

	 	The funds shall be provided with through lending securities and
subscribing for bonds.

	 	(6)	 	Interest rate

	 	The interest rate for funds shall be, taking expenses necessary for
raising funds and other matters into consideration, as prescribed
separately upon obtaining approval from the competent ministers.

	 	(7)	 	Maturity

	 	The maturity of the funds shall be within twenty-eight (28) years
from the following day of the provision of the funds as prescribed
separately.

	 	(8)	 	Period of deferment

	 	The period of deferment shall expire within five (5) years from the
following day of the provision of the funds as prescribed separately.

	 	(9)	 	Method of redemption

	 	The funds shall be redeemed in installments or in a lump sum;
provided, however, that the funds raised by the subscription of bonds
shall be redeemed pursuant to the method of redemption of the bonds.

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	 	(10)	 	Guarantee of borrowing

	 	With respect to the funds provided to local toll-road public
corporations and local land-development public corporations
(hereinafter referred to as the “Public Corporations”), the
Corporation shall have local governments which have established the
above Public Corporations guarantee the repayment of the borrowing.

     2.        The Corporation may, notwithstanding the provisions of the foregoing
paragraph, approve the assumption by other local governments of the debts
regarding the funds provided to the local governments specified in Item (1) (a)
of the same paragraph.

Article 5

     The provision of funds of short-term borrowing (which mean the funds to be
repaid in the same fiscal year) shall be made, within the limit that it shall
not affect the provision of funds in the foregoing article, as provided for in
each of the following items:

	 	(1)	 	Person to be provided with funds

	 	 	local governments with the necessity of the funds as short-term debts
concerning Municipal Enterprises

	 	(2)	 	Use of funds

	 	 	The funds shall be used for facilities and financial operations;
provided, however, that the funds to be used for facilities shall, as
a principle, be provided only for important long-term projects whose
execution or continuation may be threatened without the funds.

	 	(3)	 	Limitation on the amount of funds

	 	 	The funds to be provided for facilities shall not exceed the amount
equivalent to the amount in which Local Loans are deemed certain to
be licensed in the relevant year, while the funds to be provided for
the financial operation shall be the amount which is necessary for
the adjustment of a temporary shortage of cash appertaining to
revenue and expenditure of local governments.

	 	(4)	 	Maturity

	 	 	The funds shall be repaid within the period not exceeding three (3)
months which is necessary for adjustment of the temporary shortage of
cash appertaining to revenue and expenditure of local governments.

	 	(5)	 	Refinancing

	 	 	Notwithstanding the provision of the immediately preceding paragraph,
the funds may be refinanced for a period not exceeding three (3)
months, if such refinancing is inevitable.

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	 	(6)	 	Method of repayment

	 	 	The repayment shall be made in a lump sum.

	 	(7)	 	Others

	 	 	Items (2), (5) and (6) of the foregoing Article shall be applied
mutatis mutandis in addition to each item of this article.

CHAPTER 3.    ENTRUSTMENT OF BUSINESS

Article 6

     The Corporation may entrust a part of the business of investigation
concerning the provision of funds to prefectures.

Article 7

     The Corporation may entrust the business concerning provision of funds,
collection of principal and interest and other business in connection with
provision and collection of funds to financial institutions (hereinafter
referred to as the “Trustee”), except for the decision for providing funds.

Article 8

     The business shall be entrusted pursuant to each of the following items:

	 	(1)	 	The Corporation, in case of entrustment of business, shall make
a contract of business entrustment and pay the commission as
prescribed separately.

	 	(2)	 	The Trustee, after receiving the funds necessary for the
entrusted business, shall pay the interest to the Corporation as
prescribed separately.

	 	(3)	 	The expenses in connection with such entrusted business
incurred by the Trustee or the prefectures which have been entrusted
with part of the investigation business concerning the provision of
funds shall, as a principle, be paid by such Trustee or prefectures.

	 	(4)	 	The Trustee shall keep a separate account regarding the
entrusted business, and shall report with respect thereto.

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Supplementary Provisions (Excerpts)

	1.	 	The Corporation for the time being will do the business of providing
funds necessary for afforestation, improvement, construction and
reconstruction of pastures entrusted by the Agriculture, Forestry and
Fishery Finance Corporation.

	2.	 	The Corporation may, in addition to the business provided for in Article
2 hereof and the immediately preceding paragraph, provide funds for local
loans (which shall mean local loans other than those relative to Municipal
Enterprises; hereinafter the same in this paragraph) for the following
types of projects, which are approved as especially necessary for the
smooth completion of construction projects implemented by local
governments in view of the actual situation of local finance, or subscribe
for the bonds issued as such local loans:

	 	(1)	 	Local road construction projects;

	 	 	which shall mean the construction projects of prefectural or
municipal roads (excluding those projects for which expenses are
wholly or partially borne by the Government), for which expenses are
considered necessary to be financed especially through local loans
for the purpose of their smooth completion;

	 	(2)	 	Watercourse improvement projects;

	 	 	which shall mean the projects of construction works of watercourse
administration facilities (which shall mean the watercourse
administration facilities specified in Article 3, Paragraph 2 of the
River Law (Law No. 167 of 1964)) or sand control facilities (which
shall mean the sand control facilities specified in Article 1 of the
Sand Control Law (Law No. 29 of 1897 )) or any other land
conservation, or the construction projects of urban sewers (which
shall mean the urban sewers specified in Article 2, Item (5) of the
Sewerage Law (Law No. 79 of 1958)) (excluding those projects for
which expenses are wholly or partially borne by the Government), for
which expenses are considered necessary to be financed especially
through local loans for the purpose of their smooth completion.

	 	(3)	 	High school construction projects;

	 	 	which shall mean the construction projects of worn-out or dangerous
facilities or construction projects caused by the removal of high
schools facilities (which shall mean high schools, the upper half
course of junior high schools and high school classes of schools for
the blind, the deaf or the handicapped specified in the School
Education Law (Law No. 26 of 1947)), for which expenses are
considered necessary to be financed especially through local loans
for the purpose of their smooth completion.

	3.	 	The provisions of Article 4 hereof shall apply mutatis mutandis to the
cases specified in Paragraph 2 above. In such cases, “Local Loans for
their Municipal Enterprises” referred to in Item 1-(a), Paragraph 1 of the
said article and “projects specified in the attached list” referred to in
Item 2-(a), Paragraph 1 of the said article shall be read respectively as
“local loans relating to each item, Paragraph 2 of the Supplementary
Provisions” and “projects specified in each item, Paragraph 2 of the
Supplementary Provisions”.

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Attached List

	1.	 	Water supply projects

	2.	 	Industrial water supply projects

	3.	 	Transportation projects

	4.	 	Electricity supply projects

	5.	 	Gas supply projects

	6.	 	Harbor improvement projects (which shall be limited to reclamation
projects and projects to lease cargo-handling machines, barracks,
warehouses, timber-yards, and pilot boats.)

	7.	 	Hospital projects

	8.	 	Nursing care service projects

	9.	 	Market projects

	10.	 	Slaughterhouse projects

	11.	 	Recreation facilities projects

	12.	 	Toll-road projects

	13.	 	Parking projects

	14.	 	Among land construction projects for regional development, construction
projects of littoral industrial areas and other littoral areas, inland
industrial areas, distribution business areas, lots to be used for
offices, shops, etc. and housing areas (including land for facilities in
connection with the above), and land construction projects for housing
concerned with land division adjustment projects

	15.	 	Public and regional sewerage projects

	16.	 	Urban area revival projects

	17.	 	Public housing projects

	18.	 	Industrial waste disposal projects

-7-Ex-4.B Japan Finance Corp Law No. 83

 

Exhibit 4B

(TRANSLATION)

JAPAN FINANCE CORPORATION FOR

MUNICIPAL ENTERPRISES LAW

(Law No. 83 of April 27, 1957)

CONTENTS

	 	 	 
	CHAPTER I	 	
GENERAL PROVISIONS (Articles 1-8)
	 
	CHAPTER II	 	
OFFICERS AND EMPLOYEES (Articles 9-18)
	 
	CHAPTER III	 	
BUSINESS (Articles 19-22)
	 
	CHAPTER IV	 	
JAPAN FINANCE CORPORATION FOR MUNICIPAL
ENTERPRISES BONDS,
ETC. (Articles 23-27)
	 
	CHAPTER V	 	
ACCOUNTS (Articles 28-34)
	 
	CHAPTER VI	 	
SUPERVISION (Articles 35-37)
	 
	CHAPTER VII	 	
AUXILIARY PROVISIONS (Articles 38, 39)
	 
	CHAPTER VIII	 	
PENAL PROVISIONS (Articles 40, 41)

AMENDMENTS

	 	 	 	 	 	 	 	 
	 	April 1, 1958	 	
Law No. 49
	 	July 20, 1973
	 	Law No. 59
	 
	 	March 17, 1959	 	
Law No. 19
	 	May 15, 1976
	 	Law No. 20
	 
	 	March 31,1960	 	
Law No. 45
	 	May 1, 1978
	 	Law No. 38
	 
	 	June 30, 1960	 	
Law No. 113
	 	May 31, 1985
	 	Law No. 44
	 
	 	March 30, 1961	 	
Law No. 17
	 	June 28, 1989
	 	Law No. 48
	 
	 	March 28, 1962	 	
Law No. 34
	 	June 14, 1993
	 	Law No. 63
	 
	 	May 16, 1962	 	
Law No. 140
	 	June 12, 1998
	 	Law No. 101
	 
	 	March 28, 1964	 	
Law No. 16
	 	July 16, 1999
	 	Law No. 87
	 
	 	March 31, 1965	 	
Law No. 20
	 	December 22, 1999
	 	Law No. 160
	 
	 	June 30, 1967	 	
Law No. 45
	 	May 31, 2000
	 	Law No. 99
	 
	 	April 30, 1970	 	
Law No. 34
	 	March 30, 2001
	 	Law No. 9
	 
	 	June 15, 1972	 	
Law No. 65
	 	May 31, 2002
	 	Law No. 56
	 
	 	June 15, 1972	 	
Law No. 66	 	 	 	 

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CHAPTER I GENERAL PROVISIONS

Article 1   (Objects)

1.   The object of Japan Finance Corporation for Municipal Enterprises shall be,
for contributing to the sound operation of Municipal Enterprises, to finance
local governments requiring stable funds of particularly low interest for Local
Loans for their Municipal Enterprises, in order to thereby develop Municipal
Enterprises of local governments and to contribute to the improvement of the
welfare of local residents.

2.   The object of Japan Finance Corporation for Municipal Enterprises shall be,
in addition to the provisions of the preceding paragraph, supplementing the
financing provided by ordinary financial institutions, to finance local
toll-road public corporations requiring long-term funds, for the purpose of
promoting the construction of local principal roads implemented by local
toll-road public corporations.

3.   The object of Japan Finance Corporation for Municipal Enterprises shall be,
in addition to the provisions of the preceding two paragraphs, supplementing
the financing provided by ordinary financial institutions, to finance local
land-development public corporations requiring long-term funds, for the purpose
of promoting the acquisition of land implemented by local land-development
public corporations.

Article 2   (Definition of Terms)

     The following terms as used in this Law shall have the following meanings:

	 	(1)	 	“Municipal Enterprises” shall mean, among the activities of
local governments, those for which expenses are covered mainly by
earnings derived from their operations and which are provided for in
the Cabinet Order.

	 	(2)	 	“Local Loans” shall mean local loans for Municipal Enterprises,
which have been consented to at the consultation provided for in
Article 5-3, Paragraph 1 of the Local Finance Law (Law No. 109 of
1948) or approved in accordance with the provisions of Article 5-4,
Paragraph 1 or 3 of the same Law and for which Government funds are
not provided.

Article 3   (Legal Personality)

     Japan Finance Corporation for Municipal Enterprises (hereinafter referred
to as the “Corporation”) shall be a juridical person.

Article 4   (Business Office)

     The Corporation shall have its office in Tokyo.

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Article 5   (Capital)

1.   The capital of the Corporation shall be 2.4 billion (2,400,000,000) yen, all
of which shall be provided by the Government from the Industrial Investment
Special Account.

2.   The Government may, when deemed necessary, make an additional capital
contribution to the Corporation within the limit of the amount appropriated in
the budget.

3.   When a capital contribution specified in the immediately preceding paragraph
is made by the Government, the Corporation shall increase its capital by the
amount of this contribution.

Article 6   (Registration)

1.   The Corporation shall register as provided for in the Cabinet Order.

2.   The particulars to be registered in accordance with the provisions of the
immediately preceding paragraph cannot be claimed against a third party before
registration.

Article 7   (Limitation on Use of Name)

     No one other than the Corporation may use the name “Japan Finance
Corporation for Municipal Enterprises” or any other similar name.

Article 8   (Application of the Civil Code)

     The provisions of Articles 44 (Juridical Person’s Capacity for Torts) and
50 (Domicile of Juridical Person) of the Civil Code (Law No. 89 of 1896) shall
apply mutatis mutandis to the Corporation.

CHAPTER II OFFICERS AND EMPLOYEES

Article 9   (Officers)

     The Corporation shall have as its officers a Governor, up to four (4)
Executive Directors and an Auditor.

Article 10   (Functions and Powers of Officers)

1.   The Governor shall represent the Corporation and preside over its business.

2.   The Executive Directors shall represent the Corporation as provided for by
the Governor, assist the Governor in managing the business of the Corporation,
act on behalf of the Governor in case the Governor is prevented from
discharging his/her functions and perform the functions of the Governor in case
his/her position is vacant.

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3.   The Auditor shall audit the business of the Corporation.

4.   The Auditor may, when deemed necessary, submit his/her opinions, based on
the result of audit, to the Governor or the competent ministers.

Article 11   (Appointment of Officers)

1.   The Governor and Auditor shall be appointed by the competent ministers.

2.   The Executive Directors shall be appointed by the Governor with the approval
of the competent ministers.

Article 12   (Term of Office of Officers)

1.   The term of office of the officers shall be four (4) years.

2.   The officers may be reappointed.

3.   In case the position of an officer has become vacant, an officer shall be
appointed without delay to fill the vacancy. The term of office of the officer
appointed to fill the vacancy shall be the remainder of that of his/her
predecessor.

Article 13   (Ineligibility of Officers)

     No one who is an employee (excluding a part-time employee) of the
Government or a local government may be an officer.

Article 14   (Prohibition of Officers’ Holding Concurrent Offices)

     No officer may be an officer of an association whose object it is to carry
on an economic enterprise or him/herself engage in an economic enterprise.

Article 15   (Limitation on Power of Representation)

     The Governor or Executive Directors shall have no power of representation
in respect of matters in which the interest of the Corporation and their own
interest conflict with each other. In such cases, the Auditor shall represent
the Corporation.

Article 16   (Appointment of Employees)

     The employees of the Corporation shall be appointed by the Governor.

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Article 17   (Character of Officers and Employees as Public Service Personnel)

     The officers and employees of the Corporation shall be, in respect of the
application of the provisions of the Penal Code (Law No. 45 of 1907) or any
other penal provisions, regarded as personnel engaged in public service in
accordance with laws and orders.

Article 18   (Standards for Retirement Allowances)

     The Corporation shall obtain the approval of the competent ministers prior
to preparing the standards for retirement allowances for its officers and
employees. The same shall apply to the alteration thereof.

CHAPTER III    BUSINESS

Article 19   (Scope of Business)

1.   In order to attain the object specified in Article 1, Paragraph 1 hereof,
the Corporation shall conduct the following business:

	 	(1)	 	To provide funds for Local Loans or to subscribe for bonds
issued as Local Loans;

	 	(2)	 	To provide funds for short-term loans of Municipal Enterprises;
or

	 	(3)	 	Business incidental to the business specified in the preceding
two items.

2.   The Corporation may, in the case specified in Item (1) of the immediately
preceding paragraph, provide funds prior to the consent specified in Article
5-3, Paragraph 1 of the Local Finance Law or the approval specified in Article
5-4, Paragraph 1 or 3 of the same Law only when there is a special need and
when the consent or approval is considered certain within the limit of the
amount of the Local Loans subject to the consent or approval.

3.   In order to attain the object specified in Article 1, Paragraph 2 hereof,
the Corporation shall provide funds required for the construction of local
principal roads implemented by local toll-road public corporations, and conduct
other business incidental thereto.

4.   In order to attain the object specified in Article 1, Paragraph 3 hereof,
the Corporation shall provide funds required for the projects which, though
implemented by local land-development public corporations, are equal in
substance to Municipal Enterprises and which are provided for in the Cabinet
Order, and conduct other business incidental thereto.

Article 20   (Statement of Business Procedures)

1.   The Corporation shall, upon the commencement of its business, prepare a
Statement of Business Procedures and obtain the approval for the Statement from
the competent ministers. The same shall apply to the alteration thereof.

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2.   The particulars to be stated in the Statement of Business Procedures
specified in the immediately preceding paragraph shall be provided for in the
Cabinet Order.

Article 21   (Entrustment of Business)

1.   The Corporation may, in case of a special need, entrust local governments
with a part of its investigation business on loans.

2.   The Corporation may, with the approval of the competent ministers, entrust
financial institutions with the business of making loans or collecting
principal and interest payments or any other business concerning loans and
collection, except, however, the decision to make loans.

Article 22   (Business Plan and Financial Program)

     The Corporation shall prepare a business plan and a financial program on a
quarterly basis and set the maximum amount for the short-term borrowing as
provided for in Article 30, Paragraph 1 hereof during the relevant quarter, and
obtain the approval therefor from the competent ministers. The same shall
apply to the alteration thereof.

CHAPTER IV    JAPAN FINANCE CORPORATION FOR

MUNICIPAL ENTERPRISES BONDS, ETC.

Article 23   (Issuance of Bonds)

1.   The Corporation may issue Japan Finance Corporation for Municipal
Enterprises Bonds (hereinafter referred to in this chapter and Article 30 as
the “JFM Bonds”) upon the approval of the competent ministers.

2.   Except for those provided for in the immediately preceding paragraph, the
Corporation may issue the JFM Bonds pursuant to the Cabinet Order if it is
necessary in order to deliver to those who have lost the JFM Bonds.

Article 24   (General Mortgage)

1.   A holder of the JFM Bonds (except those JFM Bonds, the claims of which are
secured by the loan credit entrusted pursuant to Article 26, Paragraph 2
hereof) shall have the right to receive repayment of his/her claim with respect
to the property of the Corporation in preference to other creditors.

2.   The preferential right specified in the immediately preceding paragraph
shall rank next to after the general preferential rights under the Civil Code.

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Article 25   (Entrustment of Issuance Business)

1.   The Corporation may, entrust Japanese or foreign banks, trust companies or
securities firms with the whole or a part of the business concerning the
issuance of the JFM Bonds.

2.   The provisions of Articles 309 to 311 (Rights and Duties of Bond Management
Companies) of the Commercial Code (Law No. 48 of 1899) shall apply mutatis
mutandis to the banks, trust companies or securities firms entrusted with the
business concerning the issuance of the JFM Bonds in accordance with the
provision of the immediately preceding paragraph.

Article 26   (Government Guarantee)

1.   Notwithstanding the provisions of Article 3 of the Law Concerning
Restriction on Government Financial Aid to Juridical Persons (Law No. 24 of
1946), the Government may guarantee the obligations under the JFM Bonds issued
pursuant to the provision of Article 23, Paragraph 1 hereof (except for the
obligations on which the Government may enter into a guarantee agreement
pursuant to the provision of Article 2 of the Law Concerning Special Measures
with respect to Acceptance of Foreign Capital from International Bank for
Reconstruction and Development, etc. (Law No. 51 of 1953; in the following
paragraph referred to us “Law Concerning Acceptance of Foreign Capital”); the
same shall apply to Paragraph 3 hereof.) within the limit of the amount
appropriated with the budget.

2.   Of the amount appropriated with the budget provided for in the immediately
preceding paragraph, the amount with respect to the obligations under the JFM
Bonds denominated in Japanese currency and issued in a foreign country may be
appropriated as added up with the amount appropriated with the budget provided
for in Article 2, paragraph 2 of the Law Concerning Acceptance of Foreign
Capital, when it is difficult to separate those amounts from one another.

3.   In addition to the provision of Paragraph 1 hereof the Government may
guarantee the obligations under the JFM Bonds issued by the Corporation
pursuant to Article 23, Paragraph 2 hereof.

Article 26-2   (Trust of Loan Credit to Secure the JFM Bonds)

     For the purpose of securing the obligations under the JFM Bonds (except
for those guaranteed by the Government pursuant to the immediately preceding
Article), the Corporation may, upon an approval of the competent ministers,
entrust a part of its loan credit to a trust company or any other financial
institution approved under Article 1, Paragraph 1 of the Law Concerning Finance
Institutions’ Concurrent Management of Trust Business, etc. (Law No. 43 of
1943) (in Paragraph 1, Item 1 of the immediately following article referred to
as the “Trust Companies, etc.”).

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Article 26-3   (Trust, etc. of the Loan Credit for Fund Procurement)

1.   In order to apply to resources of the fund necessary for its businesses, the
Corporation may, with the approval of the competent ministers:

	 	(1)	 	entrust a part of its loan credit to its Trust Companies, etc.
and assign all or a part or all of the beneficiary interest therein;

	 	(2)	 	assign a part of its loan credit to a special purpose company
provided for in Article 2, Paragraph 3 of the Law Concerning
Securitization of Assets (Law No. 105 of 1998), and/or

	 	(3)	 	conduct actions pertaining to the actions specified in the
above two Items.

2.   Unless the aggregate amount of the fund procured by the assignment of the
beneficiary interest provided for in Item 1 of the immediately preceding
paragraph and the loan credit provided for in Item 2 of the immediately
preceding paragraph is within the limit of the amount appropriated by the Diet
every business year, the Corporation may not assign such beneficiary interest
or such loan credit pursuant to the provisions of Items 1 and 2 of the
immediately preceding Paragraph.

Article 26-4   (Delegation, etc. of Business from the Trustee for the Trust)

1.   If the Corporation trusts or assigns its loan credit in accordance with the
provisions of the immediately preceding two articles, it shall be delegated all
of the collection of the principal and the interest of such loan credit and
other business pertaining thereto from the trustee or the assignee.

2.   The Corporation may entrust a part of the business that the Corporation has
been delegated pursuant to the immediately preceding article to a financial
institution approved by the competent ministers as provided for in Article 21,
Paragraph 2 hereof.

Article 27   (Mandate to Cabinet Order)

     In addition to the matters provided for in Article 23 thorough the
immediately preceding article, matters that are necessary for application of
those articles shall be provided for in the Cabinet Order.

CHAPTER V    ACCOUNTS

Article 28   (Budget and Settlement of Accounts)

     The Law Concerning the Budget and Settlement of Accounts of Public
Corporations (Law No. 99 of 1951) shall apply to the budget and settlement of
accounts of the Corporation.

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Article 28-2   (Fund)

1.   The Corporation shall have a Fund for the Improvement of Operations of
Municipal Enterprises (hereinafter referred to as the “Fund”) in order to
contribute to the reduction of interest on Local Loans (which shall mean
interest on funds provided in accordance with the
provisions of Article 19, Paragraph 1, Item (1) hereof or Paragraph 2 of the
same article; the same shall apply to Article 28-4).

2.   The Corporation shall, when it receives the Contributions specified in
Article 32-2 of the Local Finance Law, add them to the Fund.

Article 28-3   (Separation of Accounts)

     Accounts of the Fund shall be kept separate from the general accounts as
provided for in the Cabinet Order.

Article 28-4   (Administration of the Fund)

1.   The monies in the Fund shall be used for loans to local governments.

2.   Earnings from the loans specified in the immediately preceding paragraph or
any other employment of the Fund shall be, as provided for in the Cabinet
Order, used as compensation for the costs caused by the reduction of interest
on Local Loans. If there remains a surplus after the reduction of the amount
used as compensation for the costs caused by the reduction of interest on Local
Loans from the earnings, such surplus shall be added to the Fund.

3.   The Fund shall not be disbursed. However, this shall not apply to the case
where, if the earning amount specified in the immediately preceding paragraph
is short of the necessary amount for compensation for the costs caused by the
reduction of interest on Local Loans, the Fund is used to cover such shortage
within the limit of the total of the amount added in accordance with the
provisions of the immediately preceding paragraph and the amount contributed in
the same business year as the shortage is incurred.

Article 29   (Payment into National Treasury)

1.   The Corporation shall pay any profits which remain after the settlement of
profits and loss in each business year to the National Treasury by May 31 of
the following business year.

2.   The payment into the National Treasury specified in the immediately
preceding paragraph shall be the revenue of the Government in the preceding
fiscal year in which the date specified in the immediately preceding paragraph
falls.

3.   The methods of computation of profits specified in Paragraph 1 hereof, the
procedures of the payment into the National Treasury specified in the same
paragraph and the accounts to which the payment belongs shall be provided for
in the Cabinet Order.

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Article 30   (Short-term Borrowing)

1.   The Corporation may make a short-term borrowing form financial institutions
specified by the Ordinances of competent ministries, within the limit of the
amount equivalent to the limit amount designated in the budget for issuance of
the JFM Bonds, less the aggregate amount of
the JFM Bonds already issued (if such amount exceeds the maximum amount of the
short-term borrowing provided for in Article 22 hereof, such maximum amount),
if such short-term borrowings are necessary for management of fund-raising.

2.   The short-term borrowings specified in the immediately preceding paragraph
shall be repaid within the business year in which such short-term borrowing is
made.

3.   The Corporation shall not borrow funds except in the case specified in
Paragraph 1 above.

Article 31   (Investment of Surplus Funds)

1.   The Corporation shall not invest any surplus funds incurred from its
business operations except by way of:

	 	(1)	 	Purchase of government bonds, local government bonds,
government-guaranteed bonds (which shall mean the bonds of which the
redemption of principal and interest payment is guaranteed by the
Government) or bonds issued by banks, the Norinchukin Bank, the
Shokochukin Bank or the Federation of Credit Associations which
covers all Japan;

	 	(2)	 	Deposit with the Trust Fund Bureau;

	 	(3)	 	Deposit with Banks; or

	 	(4)	 	Methods provided for in Ordinances of competent ministries as
such shall correspond to the preceding three items.

2.   Investment of surplus funds by the methods provided for in the immediately
preceding paragraph shall be done safely and efficiently.

Article 32   (Delivery of Funds)

     The Corporation may, when deemed necessary for its business, deliver the
necessary funds in respect of loans to the financial institutions entrusted
with business in accordance with the provisions of Article 21, Paragraph 2
hereof (hereinafter referred to as the “Trustee”).

Article 33   (Accounts Books)

     The Corporation shall, as provided for by the competent ministers, keep
the necessary books to present properly the nature and content of the business
and the condition of the business operations and accounts.

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Article 34   (Audit by the Board of Audit)

     The Board of Audit may, when deemed necessary, audit the accounts of the
Trustee in relation to the business entrusted.

CHAPTER VI    SUPERVISION

Article 35   (Supervision)

1.   The competent ministers shall supervise the Corporation.

2.   The competent ministers may, when deemed necessary for the enforcement of
this Law,
give the Corporation such orders concerning its business as are necessary for
supervision.

Article 36   (Removal of Officers)

1.   The competent ministers shall remove any officer of the Corporation who
comes under one of the items of Article 13 hereof.

2.   The competent ministers may remove any officer of the Corporation who:

	 	(1)	 	Has violated this Law or orders issued in accordance with the
provisions of this Law;

	 	(2)	 	Has been convicted in a criminal case;

	 	(3)	 	Has been adjudged bankrupt; or

	 	(4)	 	Is mentally or physically incompetent to perform his/her
duties.

Article 37   (Report and Inspection)

1.   The competent ministers may, when deemed necessary for the enforcement of
this Law, have the Corporation or the Trustee submit a report or have their
officials enter the office of the Corporation or that of the Trustee and
inspect its condition of business or its registers, documents or other
necessary materials, limited, however, in case of the Trustee, to the scope of
its entrusted business.

2.   The official who makes the on-the-spot inspection in accordance with the
provisions of the immediately preceding paragraph shall carry a certificate of
identification and present the same to the party concerned.

3.   The on-the-spot inspection specified in Paragraph 1 above shall not be
interpreted to be made for the purpose of a criminal investigation.

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Article 37-2.   (Delegation of Authority)

1.   The competent ministers may, as may be provided for by the Cabinet Order,
delegate a part of the authority to make on-the-spot inspections provided for
in Paragraph 1 of the immediately preceding article to the Prime Minister.

2.   When the Prime Minister has made an on-the-spot inspection in accordance
with the provision of Paragraph 1 of the immediately preceding article based on
the delegation provided for in the immediately preceding paragraph, the Prime
Minister shall promptly report to the competent ministers on the result
thereof.

3.   The Prime Minister shall delegate the authority delegated to him/her in
accordance with the provision of Paragraph 1 above and the authority under the
provision of the immediately preceding paragraph to the Commissioner of the
Financial Services Agency.

4.   The Commissioner of the Financial Services Agency may, as may be provided
for by the Cabinet Order, delegate all or a part of the authority delegated to
him/her in accordance with the provision of the immediately preceding paragraph
to the Director General of a local finance bureau or a local finance branch
bureau.

CHAPTER VII    AUXILIARY PROVISIONS

Article 38   (Competent Ministers, etc.)

The competent ministers as used in this Law shall be the Minister of
Public Management, Home Affairs, Posts and Telecommunications and the Minister
of Finance, and the Ordinances of competent ministries shall be those of the
Ministry of Public Management, Home Affairs, Posts and Telecommunications
Ordinances and those of Ministry of Finance Ordinances.

Article 39   (Pension)

1.   In the event that a public servant specified in Article 19 of the Pension
Law (Law No. 48 of 1923) (hereinafter referred to in this article as a “public
servant”) or a person who is regarded as a public servant specified in the same
article of the same Law (hereinafter referred to in this article as a “person
regarded as a public servant”) successively takes office as an employee of the
Corporation, the phrase “who is successively in office as a public servant or a
person regarded as a public servant” in Article 10, Paragraph 1 of the
Supplementary Provisions of the Law for the Partial Amendment of the Pension
Law (Law No. 77 of 1947; hereinafter referred to as “Law No. 77”) shall be, in
applying the provisions of Article 10 of the Supplementary Provisions of Law
No. 77, read as “who is successively in office as a public servant or a person
regarded as a public servant or an employee of the Corporation”.

2.   In the event that the provisions of Article 10 of the Supplementary
Provisions of Law No. 77 are applied mutatis mutandis to the provisions of any
other laws, the provisions of

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Paragraph 1 of the said article read as provided
for in the immediately preceding paragraph shall apply mutatis mutandis.

3.   In the event that a person who is actually in office as a public servant or
a person regarded as a public servant at the establishment of the Corporation,
successively takes office as an employee of the Corporation and further
successively becomes a public servant or a person regarded as a public servant
(including the case where one who is actually in office as a public servant or
a person regarded as a public servant at the establishment of the Corporation
is successively in office as a public servant or a person regarded as a public
servant and further successively takes office as an employee of the Corporation
and furthermore successively becomes a public servant or a person regarded as a
public servant), the term of his/her office as an employee of the Corporation
shall be, in computing the ordinary pension to be paid to such a public servant
or a person regarded as a public servant, added to the term of his/her office
as a public servant or a person regarded as a public servant.

4.   The provisions of Paragraph 1 above (including the cases where the
provisions of Article 10, Paragraph 1 of the Supplementary Provisions of Law
No. 77 read as provided for in Paragraph 1 above apply mutatis mutandis in
accordance with the provisions of other laws) and the immediately preceding
paragraph shall not apply to the person whose term of office as a public
servant or a person regarded as a public servant before his/her taking office
as an employee of the Corporation reaches the shortest necessary term for the
ordinary pension.

5.   In applying or applying mutatis mutandis of the provisions of Article 64-2
of the Pension Law to a person to whom the provisions of Paragraph 3 above
apply, his/her being employed as an employee of the Corporation shall be
regarded as his/her rehiring.

6.   The Corporation shall, as provided for in the Cabinet Order, pay into the
National Treasury or local governments the amount to be paid as a pension to
the person who was an employee of the Corporation to whom the provisions of
Paragraph 1 above (including the cases where the provisions of Article 10,
Paragraph 1 of the Supplementary Provisions of Law No. 77 read as provided for
in Paragraph 1 above apply mutatis mutandis in accordance with the provisions
of other laws) and Paragraph 3 above should apply, or his/her bereaved family.

CHAPTER XIII    PENAL PROVISIONS

Article 40   (Penal Provisions)

     An officer of the Corporation who comes under one of the following items
shall be liable to a non-penal fine not exceeding 30,000 yen:

	 	(1)	 	When he/she has failed to obtain the approval of the competent
ministers as required by this Law;

	 	(2)	 	When he/she has neglected to register in violation of the
Cabinet Order specified in Article 6, Paragraph 1 hereof;

	 	(3)	 	When he/she has conducted any business other than those
specified in Article 19 hereof and Paragraph 9 of the Supplementary
Provisions below;

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	 	(4)	 	When he/she has employed surplus funds in violation of the
provisions of Article 31 hereof; or

	 	(5)	 	When he/she has disobeyed the orders of the competent ministers
specified in Article 35, Paragraph 2 hereof.

Article 41

     Anyone who uses the name “Japan Finance Corporation for Municipal
Enterprises” or any other similar name in violation of the provisions of
Article 7 hereof shall be liable to a non-penal fine not exceeding 10,000 yen.

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