Limited Partnership Act for Investment

(Act No. 90 of June 3, 1998)

Chapter I General Provisions

(Purpose)

Article 1 This Act is for the purpose of promoting the smooth provision of capital

to Enterprises and to promote their sound growth and development by

establishing a system of limited partnership agreements for conducting

investment in Enterprises which agreements provide for separate categories of

general partners having unlimited liability and limited partners having limited

liability, and thereby contributing to the economic vitality of our country.

(Definitions)

Article 2 (1) "Enterprise" under this Act shall mean a juridical person (excluding

foreign juridical persons) or an individual carrying on business.

(2) "Investment LPS" means a partnership that is formed from general partners

and limited partners pursuant to a limited partnership agreement for

investment as set forth in paragraph 1 of the following Article.

(Limited Partnership Agreement for Investment)

Article 3 (1) A limited partnership agreement for investment (hereinafter a

"Partnership Agreement") shall take effect upon agreement by the parties to

invest capital and jointly to carry out any or all of the following business

activities:

(i) Acquisition and holding of shares issued by business corporations

(Kabushiki Kaisha) upon their establishment and acquisition and holding of

equity shares issued by a limited liability company (yugen kaisha) or

company partnership (kigyo kumiai) upon their establishment;

(ii) Acquisition and holding of shares, Share Options (meaning share options

prescribed in Article 280-19 (1) of the Commercial Code (Act no. 48 of 1899),

with the same to apply hereinafter in this paragraph), or Bond with Share

Options, Etc. (meaning bond with share options as set forth in Article 341-2

(1) of the Commercial Code and other bond instruments prescribed by

Cabinet Order as being equivalent to bond with share options, with the same

to apply hereinafter in this paragraph) issued by joint stock companies and

acquisition and holding of equity shares of a limited liability company or a

company partnership;

(iii) Acquisition and holding of those securities prescribed in Article 2 (1) of the

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Securities and Exchange Act (Act no. 25 of 1948) (excluding shares, Share

Options and Bond with Share Options, Etc., but including rights that are to

be represented by securities listed in items (i) to (v-iii) and (vii) to (x) of said

provision (excluding Bond with Share Options, Etc.) and are deemed to be

securities by the provisions set forth in Article 2 (2) of said Act) and which

are bonds (excluding Bond with Share Options, Etc.) or other fund raising

securities stipulated as such by Cabinet Order as contributing to the

procuring of capital by an Enterprise (such bonds and other securities

hereinafter, "Designated Securities")- but in the case of "Specified

Designated Securities" (meaning such Designated Securities issued by an

Enterprise other than (x) a business corporation of which issued shares,

Share Options, and Bond with Share Options, Etc. are held by an Investment

LPS (excluding (ix) below, hereinafter a "Partnership") or (y) a limited

liability company or a company partnership of which equity shares are held

by a Partnership, (such business corporation, limited liability company or

corporate partnership hereinafter referred to as "Specified Company, Etc.")

pursuant to preceding items (i) and (ii)), limited to cases of acquisition or

holding where one of the general partners has promised that, if the period of

holding by the Partnership of said Designated Securities that are Specified

Designated Securities exceeds the period prescribed by Cabinet Order, the

general partner will purchase said Specified Designated Securities, on the

day of expiry of such period.

(iv) Acquisition and holding of monetary claims against an Enterprise (in the

case of monetary claims against an Enterprise other than a Specified

Company, Etc. (hereinafter in this item referred to as "Specified Monetary

Claims"), limited to cases of acquisition and holding where one or more

general partners has promised that, if the period of holding of said monetary

claims which are Specified Monetary Claims exceeds the period prescribed by

Cabinet Order, the general partner will purchase said Specified Monetary

Claims on the day of expiry of such period);

(v) New loans to an Enterprise;

(vi) Acquisition and holding of industrial property or copyrights (including

granting a license to use the rights relating thereto) owned by an Enterprise;

(vii) Acquisition and holding of equity investment in a Silent Partnership

(tokutei kumiai) Agreement (meaning a silent partnership agreement under

Article 535 of the Commercial Code, and likewise hereinafter) of which a

party is a Specified SME, Etc. (refers to Small and Medium Enterprises

(meaning persons listed in each item of Article 2 (1) of the Small and

Medium Sized Enterprises Basic Act (Act No. 154 of 1963) and other persons

to whom the provision of capital has been prescribed by Cabinet Order as

being especially important, and likewise hereinafter) but is not an

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Investment Manager (toshi eigyosha) (a person carrying on the investment

business, and likewise in (ix) below), or trust beneficial rights (limited to

rights to receive distributions of earnings or profit arising from business

carried on by a Specified SME, Etc.);

(viii) Provision of management-related advice or technical guidance to an

Enterprise of which the Partnership owns shares, equity interest, Share

Options, Bond with Share Options, Etc., Designated Securities, monetary

claims, industrial property, copyrights or trust beneficial rights pursuant to

any of the preceding items;

(ix) Investment in Investment Partnership, Etc. (meaning an Investment LPS,

or a partnership formed by a partnership agreement as prescribed in Article

667 (1) of the Civil Code (Act No. 89 of 1896) by virtue of promises to carry on

the investment business, or similar organizations located in a foreign country,

with the same to apply hereafter) and investment based on Anonymous

Partnership Agreements having an Investment Manager as a party

(hereinafter collectively referred to in this item as "Capital Investment, Etc.

in Investment Partnership") where the ratio of the amount of said Capital

Investment, Etc. in Investment Partnership in any one Investment

Partnership, Etc. or Investment Manager to the total amount of capital

contribution by all the partners in the Investment LPS (if the partners'

capital investment, commitment (the maximum amount that each partner

has promised to invest, and likewise hereafter in this item) is stipulated in

the Partnership Agreement, the total of such amounts) does not exceed the

ratio prescribed by Cabinet Order (excluding Capital Investment, Etc. in

Investment Partnership described in (a) and (b) below (referred to as

"Specified Capital Investment, Etc. in Investment Partnership" in item (xi) -b,

below)):

(a) Capital investment in an Investment Partnership, Etc. of which a general

partner of the Investment LPS (if there are more than one general

partners, any one of them, with the same applying in (b)) executes the

business or in other Investment Partnership, Etc. prescribed by Cabinet

Order as being one which is in the position (relationship) of having

effective control over the execution of the business of the Investment LPS.

(b) Capital investment based on a Silent Partnership Agreement having as a

party a general partner of the Investment LPS or other person as may be

prescribed by Cabinet Order.

(x) Business activities ancillary to the business described in the preceding

items as prescribed by Cabinet Order;

(xi) The business activities listed below that are carried out to the extent that,

as prescribed by Cabinet Order, there is no hindrance to the conduct of the

business activities set forth in any of the preceding items:

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(a) Acquisition and holding of shares, Share Options, Bond with Share

Options, Etc., Designated Securities issued by a foreign juridical person, or,

equity shares in a foreign juridical person, or instruments similar to the

same.

(b) Specified Capital Investment, Etc. in Investment Partnership; and

(xii) Investment of surplus cash to be made in accordance with the manner

determined by Cabinet Order in order to accomplish the purposes of the

Partnership Agreement.

(2) The written contract of the Partnership Agreement (hereinafter the

"Partnership Contract") shall stipulate the matters listed below and be signed

by or bear the name and seal of each of the partners:

(i) The businesses of the Partnership;

(ii) The name of the Partnership;

(iii) The location of the office of the Partnership;

(iv) The names and addresses of the partners and the classification of general

partner or limited partner for each of the partners;

(v) The amount of one unit of investment;

(vi) The date on which the Partnership Agreement takes effect; and

(vii) The duration of the existence of the Partnership.

(3) Notices or announcements to be made to a Partnership may be addressed to

the location of an office of the Partnership or to the address of a general

partner.

(4) The total number of partners shall not exceed the number to be prescribed by

Cabinet Order.

(Registration)

Article 4 (1) A matter for which registration is required pursuant to the

provisions of this Act may not be asserted against a third party without

knowledge until after the registration of such matter has been completed.

(2) A person who through intention or negligence has made a false registration

on a matter for which registration is required pursuant to the provisions of this

Act may not assert the falsity of said matter against a third party acting in

good faith.

(Name)

Article 5 (1) A Partnership shall include in its name the phrase "Investment

LPS."

(2) An entity which is not a Partnership may not include in its name the phrase

"Investment LPS."

(3) The provisions of Articles 19 through 21 (Trade Name) of the Commercial

Code shall apply mutatis mutandis with respect to the name of a Partnership.

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(4) In the event that a limited partner consents to its family, personal or

business name being included in the name of the Partnership, the limited

partner shall have the same responsibilities as the general partners for any

liabilities of the Partnership that are incurred upon or after such use of the

limited partner's name in the name of the Partnership.

Chapter II Rights and Obligations of the Partners

(Investment by Partners)

Article 6 (1) Each of the partners shall own at least one unit of investment.

(2) A partner's investment in the Partnership may be made only in the form of

cash or other properties.

(3) The cash value of one unit of investment shall be uniform.

(Qualifications of Partners of Specified Partnerships, Etc.)

Article 6-2 (1) Persons qualified to be limited liability partners of a Specified

Partnership (meaning a Partnership other than a Partnership of which the

Partnership Agreement includes a commitment to engage wholly or partly in

the business of acquiring and holding unlisted shares (refers to shares that are

neither listed on a share exchange prescribed in Article 2 (16) of the Securities

and Exchange Act nor registered on the registry of OTC traded securities

prescribed in Article 75 (1) of said act) issued by a business corporation that

corresponds to a Specified SME, Etc.) or other business prescribed by Cabinet

Order (referred to hereinafter as "the Business of acquiring shares, etc. of

unlisted small or medium sized enterprises") shall be qualified institutional

investors as defined in Article 2 (3) - 1 of said Act or other persons prescribed

by Cabinet Order.

(2) Where a partnership other than a Specified Partnership becomes a Specified

Partnership by reason of amendment of its partnership agreement, any limited

liability partner of such partnership who was not qualified to be such a partner

under paragraph 1 shall thereupon lose its qualification as a partner.

(Manner of Management of the Partnership Etc.)

Article 7 (1) The general partners shall manage the operations of a Partnership.

(2) In the case that there are two or more general partners, the management of

the Partnership's businesses shall be determined by a majority of the general

partners.

(3) Each general partner may execute routine business of the Partnership in its

sole discretion notwithstanding the provisions of the preceding paragraph;

provided, however, that the foregoing shall not apply where any general

partner objects to such act of the general partner before its completion.

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(4) In the event that the general partners carry out acts other than the business

activities listed in Article 3 (1), the partners may not ratify such act. The same

shall apply in the event that any persons other than the general partners

conduct a business other than those listed in the same paragraph.

(5) In the event that the general partners of a Partnership (excluding Specified

Partnerships, and the same shall apply hereafter in this paragraph) conduct

business activities other than the Business of acquiring shares, etc. of unlisted

small or medium sized enterprises, the partners may not ratify such act. The

same shall apply in the event that any persons other than the general partners

conduct such business.

(Maintenance and Inspection, Etc. of Financial Statements, Etc.)

Article 8 (1) The general partners shall prepare within three months after the

end of each business year and maintain at the principal office for a period of

five years thereafter the balance sheet, profit and loss statement and business

report, along with their detailed attachments (referred to as "Financial

Statements, Etc." in paragraph 3) for the business year concerned.

(2) Further to paragraph 1, the general partners shall also maintain the

Partnership Contract and the audit report (with respect to the business report

and its detailed attachments only the portion relating to accounting with the

same to apply in the succeeding paragraph) prepared by either a certified

public accountant (including a foreign certified public accountant) or an

accounting firm.

(3) A partner or a creditor of the Partnership may inspect or request a copy of the

Financial Statements, Etc. and the Partnership Contract and audit report

described in the preceding paragraph at anytime during normal business hours.

(Responsibility of Partners)

Article 9 (1) In the case where there are two or more general partners each of

the general partners shall be jointly and severally liable for the obligations of

the Partnership

(2) A limited partner shall be liable for the Partnership's obligations only to the

extent of its capital investment.

(3) Notwithstanding the preceding paragraph, in the case that a limited partner

has misled a third party into believing that it is a partner having the authority

to execute the business of the Partnership, the limited partner shall have the

same responsibilities as the general partners vis-a-vis such third party who

entered into a transaction with the Partnership on the basis of such

misunderstanding.

(Restrictions on Distribution of Partnership Assets)

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Article 10 (1) The assets of a Partnership may not be distributed in an amount

exceeding the amount of the Partnership's net asset value as shown on the

balance sheet.

(2) If a limited partner receives a distribution in violation of the preceding

paragraph the limited partner shall be liable for the obligations of the

Partnership to the extent of the amount so received; provided, however, that

the foregoing shall not apply after five years have elapsed since the limited

partner received the distribution.

Chapter III Withdrawal by Partners

(Voluntary Withdrawal)

Article 11 No partner may withdraw from a Partnership except in unavoidable

circumstances.

(Involuntary Withdrawal)

Article 12 In addition to the cases covered by the preceding Article, a partner

shall withdraw from the Partnership in the following cases:

(i) Loss of qualification to be a partner;

(ii) Death;

(iii) Bankruptcy;

(iv) Order for commencement of guardianship; and

(v) Expulsion.

Chapter IV Dissolution and Liquidation of a Partnership

(Events of Dissolution)

Article 13 A Partnership shall be dissolved if any of the following occur;

provided, however, that with respect to the event listed in item (2) below the

foregoing shall not apply if new general partners or limited partners are

admitted by unanimous agreement of the remaining partners within two weeks

from the occurrence of such event and if the registration of dissolution has not

yet been made:

(i) Achievement of its business purposes or if such achievement becomes

impossible;

(ii) Withdrawal by a general partner or by all of the limited partners;

(iii) The expiration of the duration of the Partnership; or

(iv) If any event other than those listed in the preceding three items is

stipulated to be an event of dissolution in the Partnership Agreement, the

occurrence of such event.

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(Liquidators)

Article 14 In the event that a Partnership is dissolved, the general partners

shall become the liquidators; provided, however, that the foregoing shall not

apply if other persons are elected as liquidators by a majority of all partners.

(Liquidators' Manner of Execution of Business)

Article 15 Paragraphs 2 and 3 of Article 7 shall apply mutatis mutandis when

there are two liquidators or more.

Chapter V Mutatis Mutandis Application of the Civil Code

(Mutatis Mutandis Application of the Civil Code)

Article 16 Articles 668 (joint ownership of partnership assets), 669

(responsibility of persons delaying in making cash contribution), 671 though

674 (mutatis mutandis application of provisions for entrustment, resignation or

removal of an executor of business, partners' right of inspection of the state of

business and assets and proportion in respect of distribution of profits and

losses to partners), 676 (restriction on disposal of equity interest by partners

and prohibition of split of partnership assets), 677 (prohibition of set-off by

debtors to the partnership), 680 (expulsion), 681 (return of equity interest to

withdrawing partners), 683 (request for dissolution by partners), 684 (non-

retroactiveness of effect of termination), 687 (resignation or removal of partner

liquidators) and 688 (authority of liquidators and method of distribution of

remaining assets) of the Civil Code (Act No. 89 of 1896) shall apply mutatis

mutandis with respect to a Partnership.

Chapter VI Registration

(Registration of a Partnership Agreement taking effect)

Article 17 When a Partnership Agreement takes effect, the following matters

shall be registered within two weeks at the location of the principal office and

within three weeks at the secondary offices:

(i) The matters listed in Article 3 paragraph 2 items (1) (2) (6) and (7);

(ii) The names and addresses of the general partners;

(iii) The total number of partners;

(iv) The offices of the Partnership; and

(v) If any event other than those listed in Article 13 items (1) through (3) is

stipulated as a event of dissolution in the Partnership Agreement such event.

(Registration of Establishment of a Secondary Office)

Article 18 (1) In the event that a secondary office is established after the

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registration of the Partnership Agreement taking effect, such establishment of

a secondary office shall be registered at the district of the principal office

within two weeks and the matters listed in the preceding Article shall be

registered at the district of such secondary office within three weeks and the

establishment of such secondary office shall be registered at the districts of

other secondary offices within the same period.

(2) If a secondary office is established in the jurisdictional district of the

registration office that is in charge of the district of the principal office, or any

secondary office, it is sufficient to register the fact that such new secondary

office has been established.

(Registration of Office Move)

Article 19 (1) If a Partnership relocates its principal office, the relocation shall

be registered within two weeks at the district in which the former office was

located and the matters listed in Article 17 shall be registered at the district in

which the new office is located. If a Partnership relocates a secondary office ,

the relocation shall be registered within three weeks at the district in which

the former office was located and the matters listed in the same Article shall be

registered within four weeks at the district in which the new office is located.

(2) If the principal office or a secondary office is only being relocated within the

jurisdictional district of the same registration office, it is sufficient to register

such relocation.

(Registration of Changes)

Article 20 If a change in any of the matters listed in Article 17 occurs, such

change shall be registered within two weeks at the district of the principal

office and within three weeks at the districts of the secondary offices.

(Registration of Suspension of Business Execution by General Partner)

Article 21 If a provisional disposition is ordered suspending the execution of the

business by a general partner or designating a person to execute business on

its behalf or that such provisional disposition is changed or canceled, said fact

shall be registered at the districts of the principal office and the secondary

offices.

(Registration of Dissolution)

Article 22 If a Partnership is dissolved, the dissolution shall be registered within

two weeks at the district of the principal office and within three weeks at the

districts of the secondary offices.

(Registration of Liquidators)

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Article 23 (1) If the general partners become the liquidators, the names and

addresses of the liquidators shall be registered within two weeks from the date

of dissolution at the district of the principal office and within three weeks at

the districts of the secondary offices.

(2) If a liquidator is elected, the name and address of the liquidator shall be

registered within two weeks at the district of the principal office and within

three weeks at the districts of the secondary offices.

(3) Article 20 shall apply mutatis mutandis with respect to the registration set

forth in the preceding two paragraphs and Article 21 shall apply mutatis

mutandis with respect to liquidators.

(Registration of Completion of Liquidation)

Article 24 Upon completion of the liquidation of a Partnership, the completion of

the liquidation of the Partnership shall be registered within two weeks from

the date of completion of the liquidation at the district of the principal office

and within three weeks at the districts of the secondary offices.

(Competent Registration Office and Registry)

Article 25 (1) The Legal Affairs Bureau or local Legal Affairs Bureau or a branch

or sub-office thereof in the district where the office of a Partnership is located

shall be the competent registration office with respect to the registration of the

Partnership Agreement.

(2) A Registry of Limited Partnership Agreements for Investment shall be

maintained in each registration office.

(Application for Registration)

Article 26 (1) The registrations pursuant to the provisions of Articles 17 through

20 shall be made upon application by a general partner and those pursuant to

the provisions of Articles 22 through 24 shall be made upon application by a

liquidator.

(2) In the event that the general partner or liquidator who applies for

registration pursuant to the preceding paragraph is a juridical person, a

certificate evidencing the authority to represent such juridical person shall be

attached to the application.

(Attachment to Registration of Partnership Agreement Taking Effect)

Article 27 The Partnership Contract shall be attached to the application for

registration of the occurring of effect of the Partnership Agreement.

(Attachment to Registration of Changes)

Article 28 In an application for registration of an establishment or relocation of

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office or registration of any change in the matters listed in Article 17, a written

document evidencing the establishment or relocation of the office or the change

in the registered matters shall be attached to the application.

(Attachment to Registration of Dissolution)

Article 29 In an application for registration of dissolution, a written document

evidencing the occurrence of an event of dissolution shall be attached to the

application.

(Attachment to Registration of Liquidators)

Article 30 In an application for registration of a liquidator who has been elected

by a majority of all partners, a written document evidencing the agreement by

a majority of all partners and a written document evidencing the acceptance of

office by such person, shall be attached to the application.

(Attachment to Registration of Change in the Registration of Liquidators)

Article 31 (1) In an application for registration of change in the registration by

reason of resignation of a liquidator, a written document evidencing such

resignation shall be attached to the application.

(2) In an application for registration of change in the name or address of a

liquidator, a written document evidencing such change in the registered

matters shall be attached to the application.

(Attachment to Registration of Completion of Liquidation)

Article 32 In an application for registration of completion of liquidation, a

written document executed by all partners evidencing that the disposal of the

Partnership's assets has been completed shall be attached to the application.

(Mutatis Mutandis Application of the Commercial Registration Act, Etc.)

Article 33 Articles 2 through 5 (Register Office and Registrar), 7 through 18, 19-

2 through 23, 24 (excluding item (xvi)), 26 (General Rules for Registry, etc. and

Registration Procedure), 27 (Prohibition on Use of Similar Trade Names), 56

through 59, 61(1) (Registration of Incorporated General Partnership (gomei

gaisha)) and 107 through 127 (Revision or Cancellation of Registration, Special

Rules on Registration by Electronic Information Processing Organization and

Miscellaneous Provisions) of the Commercial Registration Act (Act No. 125 of

1963) and Articles 56 (Entrustment of Registration of Provisional Dispositions

Concerning Suspension of Business Execution by a Representative of a

Juridical person, etc.) of the Civil Preservation Act (Act No 91 of 1989) shall

apply mutatis mutandis with respect to the registration of a Partnership. In

application of the foregoing provisions of the Commercial Registration Act, the

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phrase "Article 64 (1) of the Commercial Code" in Article 56 (3) of the

Commercial Registration Act shall be replaced with "Article 17 of the Limited

Partnership Act for Investment (Act No 90 of 1998)" and the phrases "a

representative of the juridical person or other executives of the juridical

person" and "the head office or principal office and branches or secondary

offices of the juridical person" in Article 56 of the Civil Preservation Act shall

respectively be replaced with "a general partner or a liquidator of the

Investment LPS" and "the principal office and secondary offices of the

Investment LPS".

Chapter VII Penalties

Article 34 In the following cases general partners or liquidators shall be

punished by a fine of no more than 1,000,000 yen:

(i) If they fail to perform the registrations required by this Act; or

(ii) If they fail to maintain the required documents, fail to record the required

information in these documents or record false information or refuse to allow

inspection or copying of these documents without reasonable justification, in

violation of the provisions of Article 8.

Article 35 Any person who uses a registered name of a Partnership or a similar

name for the purpose of unfair competition shall be punished by a fine of no

more than 200,000 yen. The forgoing shall also apply to persons who violate

Article 21 (1) of the Commercial Code as applied under Article 5 (3) of this Act.

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