Act Regulating the Receipt of Contributions, the Receipt of Deposits, and Interest Rates

Link to law: http://www.japaneselawtranslation.go.jp/law/detail_download/?ff=08&id=2022
Published: 2007

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Act Regulating the Receipt of Contributions, the Receipt of Deposits, and Interest Rates

(Restrictions on the Receipt of Contributions)

Article 1 A person may not receive a contribution while indicating or implying to many and unspecified persons that the entire amount of the contribution, or monies equivalent to an amount exceeding the contribution, will be refunded as a reimbursement at a later date.

(Prohibitions on the Receipt of Deposits)

Article 2 (1) A person other than one whose receipt of deposits in the course of trade is specially provided for in other Acts may not receive deposits in the course of trade.

(2) The terms "receive deposits" and "receipt of deposits" as set forth in the preceding paragraph means the receipt of monies from numerous, unspecified persons, as prescribed in the following items:

(i) the receipt of deposits, savings, or installment savings;

(ii) company bonds, borrowings, or any other thing under any other name with the same economic nature as what is prescribed in the preceding item.

(Prohibition of Use of a Position for Lending Purposes)

Article 3 An officer, employee, or any other person working for a financial institution (meaning a bank, trust company, insurance company, shinkin bank, federation of shinkin banks, labor bank, federation of labor banks, Norinchukin Bank, Shoko Chukin Bank, Ltd., Development Bank of Japan Inc., a credit cooperative, agricultural cooperative, fisheries cooperative, or other cooperative that accepts savings) may not use his/her position to lend money, mediate a loan, or guarantee obligations in order to promote his/her own interests or the interests of a third party other than the relevant financial institution.

(Restrictions on Fees for the Mediation of Money Loans etc)

Article 4 (1) A person who mediates money loans may not form a contract to receive a fee or accept a fee exceeding five percent of the amount of money lent in connection with his/her services (or, if the term of the loan is less than one year, the amount of money calculated by multiplying the amount of the loan by an annual rate of 5 percent, based on the number of days in the term).

(2) A person who mediates guarantees for money loans may not form a contract to receive a fee or accept a fee exceeding five percent of the amount of the guarantee charge (meaning the money that the primary debtor pays to the guarantor in exchange for the guarantee, the same applies hereinafter) connected with his/her services (or, if the term of the guarantee is less than one year, the amount of money calculated by multiplying the amount of the guarantee charge by an annual rate of 5 percent, based on the number of days in the term).

(3) Money that a person mediating a money loan receives in connection with the mediation, regardless of whether it is termed an honorarium or inspection fee or called by any other name, is deemed to be a fee, and the provisions of the preceding two paragraphs apply.

(Punishments for High Interest Rates)

Article 5 (1) If a person lending money has formed a contract to receive an annual interest (including an amount of liquidated damages for failure to perform an obligation, the same applies hereinafter) exceeding 109.5 percent (or 109.8 percent in a year that includes February 29, at a daily interest exceeding 0.3 percent), he or she is subject to imprisonment with work for not more than five years, a fine of not more than 10,000,000 yen, or both. The same applies for a person that has received or demanded interest in excess of this rate.

(2) If a person lending money as a business has formed a contract to receive an annual interest exceeding 20 percent, he or she is subject to imprisonment with work for not more than five years, a fine of not more than 10,000,000 yen, or both, notwithstanding the preceding paragraph. The same applies for a person that has received or demanded interest in excess of this rate in connection with the loan.

(3) If a person lending money as a business has formed a contract to receive an annual interest exceeding 109.5 percent (or 109.8 percent in a year that includes February 29, at a daily interest exceeding 0.3 percent), he or she is subject to imprisonment with work for not more than 10 years, a fine of not more than 30,000,000 yen, or both, notwithstanding the two preceding paragraphs. The same applies for a person that has received or demanded interest in excess of this rate in connection with the loan.

(Punishments for High Guarantee Rates)

Article 5-2 (1) If a person who guarantees money loans (limited to guarantees undertaken as a business; hereinafter the same applies in this Article and the following Article) (limited to loans that the person lending the money lends as a business; hereinafter the same applies in this Article and the following Article) has formed a contract to receive a guarantee charge that, combined with the annual interest on the loan being guaranteed, exceeds 20 percent of the amount of the loan, he or she is subject to imprisonment with work for not more than five years, a fine of not more than 10,000,000 yen, or both. The same applies for a person that has received or demanded a guarantee charge in excess of this rate.

(2) With regard to the application of the provisions set forth in the preceding paragraph to a case in which the interest on a loan being guaranteed is determined by an interest rate that could change after the time that the contract on the interest rate is formed (referred to as a "floating interest rate" in paragraph (2) of the next Article), the rate provided in each of the following items is deemed to be the interest rate of the loan for the case listed in the relevant item:

(i) if a specially provided maximum interest rate pursuant to the provisions of Article 8 (2) (i) ) of Interest Rate Restriction Act (Act No. 100 of 1954) (referred to as "specially provided maximum interest rate" in this Article and the next Article) has been stipulated at the agreement of the obligee and the guarantor of the loan at the time of the guarantee, and if the obligee or the guarantor has notified the primary debtor of this stipulation: the specially provided maximum interest rate;

(ii) in a case other than what is listed in the preceding item: 10 percent per annum.

(3) With regard to the application of the provisions of paragraph (1) of this Article to a case in which the guarantee under the same paragraph is a revolving guarantee (meaning a guarantee with a primary obligation comprising one or more unidentified obligations of a certain specified scope; hereinafter the same applies in this paragraph and paragraph (3) of the next Article) for which the maximum amount of principal (meaning the maximum amount of principal comprising the primary obligation whose performance the guarantor is liable for; hereinafter the same applies in this paragraph and paragraph (3) of the next Article) and the principal determination date (meaning the date on which the principal that constitutes the primary obligation is determined (limited to a fixed date); hereinafter the same applies in this paragraph and paragraph (3) of the next Article) are stipulated, and in which the primary debtor is an individual (limited to when the guarantor is a person specified by Cabinet Order as being supervised by an administrative organ with regard to business activities for guarantees) or a juridical person (excluding when the obligee is a person that is unable to provide loans as a business pursuant to the provisions of laws and regulations and excluding the cases prescribed in Article 8 (5) of the Interest Rate Restriction Act), the rate provided in each of the following items is deemed to be the interest rate of the loan for the case listed in the relevant item. In this case, interest is calculated by deeming the maximum amount of principal to be the amount of the loan and the principal determination date to be the date of repayment:

(i) if a specially provided maximum interest rate has been stipulated at the agreement of the obligee and the guarantor of the loan at the time of the revolving guarantee, and if the obligee or the guarantor has notified the primary debtor of this stipulation: the specially provided maximum interest rate;

(ii) in a case other than what is listed in the preceding item: 10 percent per annum.

(4) With regard to the application of the provisions set forth in the three preceding paragraphs to when another guarantor is also guaranteeing the money loan, the term "the interest on the loan being guaranteed" in paragraph (1) of this Article is deemed to be "the interest on the loan being guaranteed and the guarantee charge that the other guarantor has formed a contract for or received."

(Punishments for High Interest Rates When There Are Guarantee Charges)

Article 5-3 (1) If a person lending money has increased the interest on a loan after formation of a contract for the guarantee charge for the loan, and has formed a contract to receive annual interest (excluding annual interest exceeding 20 percent) that, combined with the guarantee charge, exceeds 20 percent, he or she is subject to imprisonment with work for not more than five years, a fine of not more than 10,000,000 yen, or both. The same applies for a person that has received or demanded interest in excess of this rate in connection with the loan.

(2) If a person lending money has provided a guaranteed loan whose interest is determined by a floating interest rate, and has formed a contract for interest (excluding annual interest exceeding 20 percent) that exceeds the rate provided in either of the following items for the case listed in the relevant items, he or she is subject to imprisonment with work for not more than five years, a fine of not more than 10,000,000 yen, or both. The same applies for a person that has received or demanded interest in excess of this rate in connection with the loan:

(i) if a specially provided maximum interest rate has been stipulated at the agreement of the obligee and the guarantor of the loan at the time of the guarantee, and if the obligee or the guarantor has notified the primary debtor of this stipulation: the specially provided maximum interest rate;

(ii) in a case other than what is listed in the preceding item: 10 percent per annum.

(3) If a person lending money has provided a loan with a revolving guarantee (limited to a revolving guarantee for which the maximum amount of principal and the principal determination date have been stipulated) and has formed a contract for interest (excluding annual interest exceeding 20 percent) that exceeds the rate provided in either of the following items for the case listed in the relevant items, he or she is subject to imprisonment with work for not more than five years, a fine of not more than 10,000,000 yen, or both. The same applies for a person that has received or demanded interest in excess of this rate in connection with the loan:

(i) if a specially provided maximum interest rate has been stipulated at the agreement of the obligee and the guarantor of the loan at the time of the revolving guarantee, and if the obligee or the guarantor has notified the primary debtor of this stipulation: the specially provided maximum interest rate;

(ii) in a case other than what is listed in the preceding item: 10 percent per annum.

(Method of Calculating Interest and Guarantee Charges)

Article 5-4 (1) With regard to the application of the provisions of the preceding three Articles, if the term of a loan or guarantee is less than 15 days, the interest or guarantee charge is calculated by deeming this term to be 15 days.

(2) With regard to the application of the provisions of the preceding three Articles, if interest is withheld from the money being lent, interest is calculated by deeming the amount the borrower has actually received to be the principal.

(3) With regard to the application of the provisions of the preceding three Articles, if the contract incorporates less than one year's worth of interest into the principal, interest is deemed to be the amount of money from among the incorporated principal and interest that exceeds the original principal.

(4) With regard to the application of the provisions of the preceding three Articles, except for the following types of money, money that the person loaning money receives in connection with the loan, whether it is termed an honorarium, fee, or inspection fee or called by any other name, is deemed to be interest. The same applies to money other than the principal that the person accepting or demanding payment with regard to monies lent receives in connection with that acceptance or demand.

(i) the following expenses for concluding a contract or for performing obligations:

(a) money that must be allocated for payment of taxes and other public charges;

(b) costs for compulsory execution, costs for auction procedures to exercise a security interest, or any other costs payable to a public agency for procedures carried out by such public agency;

(c) charges for using a mono-function automated teller machine or any other machine whereby the counterparty to the loan receives money or makes performance in connection with the loan (limited to charges that are within the scope of the amount provided by Cabinet Order).

(ii) reissuance fees for a card delivered for use in lending money and performance, and any other costs specified by Cabinet Order as being related to a service rendered by the person loaning money at the request of the counterparty to the loan.

(5) The provisions of the preceding paragraph apply mutatis mutandis to money a person guaranteeing a money loan receives in connection with the guarantee and to money a person accepting or demanding payment with regard to a loan receives in connection with the acceptance or demand. In this case, the terms "preceding three Articles" and "interest" in that paragraph are deemed to be replaced with "preceding two Articles" and "guarantee charge," respectively.

(Relationship to the Price Control Ordinance)

Article 6 Concerning the interest rate of money loans and guarantee charges, as well as fees for the mediation of money loans and guarantees, the provisions of Article 9-2 of the Price Control Ordinance (Imperial Ordinance No. 118 of 1946) do not apply.

(Cases Deemed to Be Loans of Money)

Article 7 With regard to the application of the provisions of Article 3 to Article 6, the delivery or receipt of money in connection with discounts on notes, mortgages by transfer, or any other similar contract is deemed to be a loan of money.

(Other Penal Provisions)

Article 8 (1) A person who has evaded the prohibitions prescribed in the provisions of Article 5 (1) or (2), Article 5-2(1) or Article 5-3, regardless of the name in which or the means by which he or she has done so, is subject to imprisonment with work for not more than five years, a fine of not more than 10,000,000 yen, or both.

(2) A person who has evaded the prohibition prescribed in the provisions of Article 5 (3), regardless of the name in which or the means by which he or she has done so, is subject to imprisonment with work for not more than 10 years, a fine of not more than 30,000,000 yen, or both.

(3) A person who falls under either of the following items is subject to imprisonment with work for not more than three years, a fine of not more than 3,000,000 yen, or both:

(i) a person who violates the provisions of Article 1, Article 2 (1), Article 3, or Article 4 (1) or (2);

(ii) a person who evades the prohibitions set forth in the preceding item, regardless of the name in which or the means by which the person has done so.

(4) The portions of the provisions set forth in the preceding paragraph involving Article 1 and Article 3 do not apply when there are applicable provisions in the Penal Code (Act No.45 of 1907).

Article 9 (1) If the representative of a juridical person (including an association or foundation without juridical personality that has rules concerning the representative or administrator, hereinafter the same applies in this paragraph and the following paragraph) or the agent, employee, or any other staff member of a juridical person or individual has committed a crime set forth in any of the following items with regard to the business of the juridical person or individual, in addition to the punishment to which the offender is subject, the juridical person is subject to the fine set forth in the relevant item and the individual is subject to the fine prescribed in the relevant Article.

(i) Article 5 (1) or (2), Article 5-2(1), Article 5-3 or Article 8 (1): a fine of not more than 30,000,000 yen;

(ii) Article 5 (3) or Article 8 (2): a fine of not more than 100,000,000 yen;

(iii) Article 8 (3) (except the part involving Article 3): the fine prescribed in that paragraph.

(2) The statute of limitations for a case in which a fine is imposed on a juridical person or an individual for an act of violation under Article 5 (1) to (3), Article 5-2 (1), Article 5-3, or Article 8 (1) or (2) pursuant to the provisions of the preceding paragraph is the statute of limitations for the crimes in those provisions.

(3) If an association or foundation that is not a juridical person is punished pursuant to the provisions of paragraph (1), the representative or administrator thereof represents the organization for the procedural act, and the legal provisions on criminal procedure for a case in which a juridical person stands as the accused apply mutatis mutandis.