Real Estate Specified Joint Enterprise Act


Published: 2013

Subscribe to a Global-Regulation Premium Membership Today!

Key Benefits:

Subscribe Now for only USD$20 per month, or Get a Day Pass for only USD$4.99.
Real Estate Specified Joint Enterprise Act (Tentative translation)

Contents

Chapter I General Provisions (Article 1 and Article 2)

Chapter II Permission (Article 3 – Article 13)

Chapter III Operations (Article 14 – Article 31)

Chapter IV Supervision (Article 32 – Article 40)

Chapter IV-II Special enterprise operators (Article 40-2)

Chapter V Real Estate Specified Joint Enterprise Association (Article 41 – Article 43)

Chapter VI Miscellaneous Provisions (Article 44 – Article 51)

Chapter VII Penal Provisions (Article 52 – Article 59)

Chapter I General Provisions

(Purpose)

Article 1

The purpose of this Act is, by enforcing a permission system in regard to those who operate the real estate specified joint enterprise, clarifying the responsibilities involved in the conduct of operations, and mandating the taking of measures necessary for preventing the losses that business partners could sustain, to ensure the proper conduct of operations and to seek to protect the profits and interests the of business partners as well as to contribute to the sound development of real estate specified joint enterprises.

(Definitions)

Article 2

(1)

The term "real estate" as used in this Act means the building lots set forth in Article 2, item (i) of the Building Lots and Buildings Transaction Business Act (Act No. 176 of 1952) or buildings.

(2)

The term "real estate transaction" as used in this Act means the buying or selling, exchange, or lease of real estate.

(3)

The term "real estate specified joint enterprise contract" as used in this Act means the following contracts (including reservation agreements), excluding those that are specified by Cabinet Order as the contracts in which the protection of those who receive the distribution of proceeds or profits is ensured by taking into consideration the conditions in which the contracts are entered into (including reservation agreements) as well as the relationship between the parties.

(i)

A contract stipulating that contributions shall be made by each party, that a joint enterprise shall be established with the contributions, that the execution of operations shall be entrusted to one or more parties in order to conduct real estate transactions, and that the proceeds generated from the said real estate transactions shall be distributed.

(ii)

A contract stipulating that one party shall contribute to the real estate transactions conducted by the other party, that the other party shall conduct real estate transactions involving the contributed assets, and that the profits generated from said real estate transactions shall be distributed.

(iii)

A contract stipulating that one party shall lease co-owned property or entrust its lease while the other party shall conduct real estate transactions involving said real estate and distribute the proceedings generated from said real estate transactions.

(iv)

A contract based on the laws and regulations of a foreign country and which is comparable to the contract set forth in the preceding three items.

(v)

In addition to the contract set forth in each of the preceding items, any contracts stipulating that the proceedings or profits generated from real estate transactions shall be distributed (including contracts based on the laws and regulations of a foreign country) and which are specified by Cabinet Order as the contracts required to ensure fairness in the business pertaining to said real estate transactions as well as the protection of those who receive the distribution of the proceeds or profits generated from said real estate transactions.

(4)

The term "real estate specified joint enterprise" as used in this Act means the following acts carried out in the course of business:

(i)

An act of entering into a real estate specified joint enterprise contract and distributing the proceeds or profits generated from real estate transactions conducted based on the said contract (applicable only to an enterprise conducted by a person who is entrusted with the execution of operations or another comparable person in the case where a real estate specified joint enterprise contract set forth in item (i) of the preceding paragraph or a real estate specified joint enterprise contract set forth in item (iv) of the same paragraph, that is prescribed by Cabinet Order as being comparable or similar to the type of real estate specified joint enterprise contract set forth in item (i) of the preceding paragraph, is utilized.).

(ii)

An act of operating as agent or broker in the entering into of a real estate specified joint enterprise contract (excluding the act set forth in item (iv)).

(iii)

An act of conducting operations entrusted by a special enterprise operator pertaining to real estate transactions that are carried out based on the real estate specified joint enterprise contract to which the said special enterprise operator is a party.

(iv)

An act of operating as agent or broker in the entering into of a real estate specified joint enterprise contract to which the special enterprise operator is a party.

(5)

The term "real estate specified joint enterprise operator" as used in this Act means a person who operates the real estate specified joint enterprise by permission as provided for in paragraph (1) of the next Article.

(6)

The term "special enterprise" as used in this Act means the enterprise that carries out the act set forth in item (i) of paragraph (4) in the course of business that meets any of the following requirements:

(i)

The enterprise shall be conducted by a corporation with the aim of exclusively engaging in the said act (excluding real estate specified joint enterprise operators and foreign corporations that do not have offices in Japan).

(ii)

The enterprise shall entrust a real estate specified joint enterprise operator with operations pertaining to the real estate transactions conducted based on the real estate specified joint enterprise contract (applicable only to a person conducting the business pertaining to the act set forth in item (iii) of paragraph (4) (hereinafter referred to as the "business referred to in item (iii)").

(iii)

The enterprise shall entrust a real estate specified joint enterprise operator with the operations of solicitation for the entering into of a real estate specified joint enterprise contract (applicable only to a person conducting the business pertaining to the act set forth in item (iv) of paragraph (4) (hereinafter referred to as the "business referred to in item (iv)").

(iv)

The enterprise shall have a bank, trust company, or other person who is specified by the ordinance of competent Ministry as the one who has professional knowledge and experience pertaining to investment in real estate or a stock company with at least the amount of capital specified by the ordinance of competent Ministry (collectively referred to as "special investor" in Article 46-2) as the counterparty or business partner.

(v)

The enterprise shall meet any other requirements specified by the ordinance of the competent Ministry as necessary to protect the profits and interests of the business partners.

(7)

The term "special enterprise operator" as used in this Act means the person who has submitted notification pursuant to the provisions of Article 40-2, paragraph (2).

(8)

The term "business partner" as used in this Act means a party to the real estate specified joint enterprise contract other than those who operate the real estate specified joint enterprise based on the said real estate specified joint enterprise contract.

Chapter II Permission

(Permission for the Real Estate Specified Joint Enterprise)

Article 3

(1)

A person intending to operate the real estate specified joint enterprise must receive the permission of the competent Minister (in the case of a person intending to conduct the real estate specified joint enterprise by establishing offices (meaning a head office, branch, or other types of offices specified by Cabinet Order; the same applies hereinafter) in the area of a prefecture, the permission of the Prefectural Governor having jurisdiction over the location of said offices (excluding a person intending to conduct the business referred to in item (iii) or item (iv))).

(2)

A person intending to receive the permission of the competent Minister as provided for in the preceding paragraph, must pay the registration and license tax pursuant to the provisions of the Act on the Registration and License Tax (Act No. 35 of 1967).

(Conditions for Permission)

Article 4

(1)

The competent Minister or Prefectural Governors is empowered to specify conditions for the permission specified in paragraph (1) of the preceding Article and to change these conditions.

(2)

The conditions provided for in the preceding paragraph shall be limited to the minimum necessary to ensure the proper operation of the real estate specified joint enterprise and shall not impose undue obligations upon the person who is receiving the permission.

(Application for Permission)

Article 5

(1)

A person intending to receive the permission provided for in Article 3, paragraph (1) must submit an application for permission stating the following matters to the competent Minister or Prefectural Governor (excluding the matters set forth in item (vi) in the case of those persons other than the persons intending to conduct the business referred to in item (iv)).

(i)

The trade name or business name and address.

(ii)

The names of officers and the names of employees when there are employees who are specified by Cabinet Order.

(iii)

The business names and locations of the offices and the name of person assigned to each office pursuant to the provision of Article 17, paragraph (1).

(iv)

The amount of capital or contribution.

(v)

Matters related to the license provided for in Article 3, paragraph (1) of the Building Lots and Buildings Transaction Business Act.

(vi)

Matters related to the registration provided for in Article 29 of the Financial Instruments and Exchange Act (Act No. 25 of 1948) (applicable only to the registration pertaining to Type II Financial Instruments Business provided for in Article 28, paragraph (2) of the same Act; the same shall apply to item (viii) of the next Article and Article 46, paragraph (1)).

(vii)

The types of operations (meaning the types specified in each item of Article 2, paragraph (4); the same applies hereinafter).

(viii)

When other business is conducted, the type of said business.

(ix)

Other matters specified by the ordinance of the competent Ministry.

(2)

The following documents must be attached to the application for permission provided for in the preceding paragraph (excluding the document specified in item (iv), provided that a person does not intend to conduct the business pertaining the act set forth in Article 2, paragraph (4), item (i) (hereinafter referred to as the "business referred to in item (i)" or the "business referred to in item (iii)")):

(i)

The articles of incorporation or a document in lieu thereof.

(ii)

The certificate of registered matters or a document in lieu thereof.

(iii)

A document providing evidence that the offices meet the requirements provided for in Article 17, paragraph (1).

(iv)

The general conditions of the real estate specified joint enterprise contract.

(v)

A document stating any other matters specified in the ordinance of the competent Ministry.

(Grounds for Disqualification)

Article 6

A person who falls under any of the following items cannot receive the permission provided for in Article 3, paragraph (1):

(i)

A person who is not a corporation (including a foreign corporation that does not have an office in Japan).

(ii)

A corporation that has not received the license provided for in Article 3, paragraph (1) of the Building Lots and Buildings Transaction Business Act.

(iii)

A corporation whose permission under Article 3, paragraph (1) was rescinded pursuant to the provisions of Article 36 and a period of five years has not yet elapsed from the date of rescission; or a corporation whose permission of a similar kind received in a foreign country was rescinded pursuant to the provisions of the laws and provisions of the said foreign country, and the laws and provisions are comparable to this Act (including registration and administrative disposition similar to that associated with the said permission. The same applies in item (vi) (h)) and a period of five years has not yet elapsed from the date of rescission.

(iv)

A corporation that submitted a notification pursuant to the provisions of Article 11, paragraph (1), item (iv) that is applicable from the day on which the notice was issued pursuant to Article 15 of the Administrative Procedure Act (Act No. 88 of 1993) and pertains to the disposition to rescind the permission under Article 3, paragraph (1), on the ground that said corporation falls under any one of the items of Article 36 until the day on which said disposition took effect or the day on which the decision not to implement the disposition was announced and a period of five years has not yet elapsed from the date of said notification.

(v)

A corporation that became subject to the imposition of a fine (including comparable punishment provided for in laws and regulations of a foreign country) pursuant to the provisions of this Act, Building Lots and Buildings Transaction Business Act or the Act Regulating the Receipt of Contributions, the Receipt of Deposits, and Interest Rates (Act No. 195 of 1954), or any comparable provisions of laws and regulations of a foreign country and a period of five years has not yet elapsed from the day on which the execution of the punishment was completed or the execution of punishment was suspended.

(vi)

A corporation that has officers (meaning members, directors or executive officers, or other comparable persons including consultants, advisors, and those who are found to possess a controlling power that is equal to or greater than that of members, directors, or executive officers, or other comparable persons who execute operations for the corporation regardless of their job titles; the same shall apply hereunder in this item as well as in item (iii) of the next Article and Article 35, paragraph (1), item (iv ) or persons out of the employees specified by Cabinet Order who fall under any of the following sub-items):

(a)

An adult ward or person under curatorship or a person treated in a similar manner under the laws and regulations of a foreign country.

(b)

A bankrupt person whose rights are not restored or a person treated in a similar manner under the laws and regulations of a foreign country.

(c)

A person who was sentenced to imprisonment without work or more severe punishment (including any comparable punishment under the laws and regulations of a foreign country) and a period of five years has not yet elapsed from the day on which the execution of the punishment was completed or the execution of punishment was suspended.

(d)

A person who became subject to the imposition of a fine (or any comparable punishment under the laws and regulations of a foreign country) for committing an act in violation of the laws set forth in the preceding item or the provisions of the Act on Prevention of Unjust Acts by Organized Crime Group Members (Act No. 77 of 1991) (excluding the provisions of Article 32-3, paragraph (7) and Article 32-11, paragraph (1) of the same Act) or comparable provisions of the laws and regulations of a foreign country, or for otherwise committing a crime punishable under Article 204, Article 206, Article 208, Article 208-2, Article 222, or Article 247 of the Penal Code (Act No. 45 of 1907) or the Act on Punishment of Physical Violence and Others (Act No. 60 of 1926) and a period of five years has not yet elapsed from the day on which the execution of the punishment was completed or the execution of punishment was suspended.

(e)

A person who ceased to be an organized crime group member as provided for in Article 2, item (vi) of the Act on Prevention of Unjust Acts by Organized Crime Group Members or for whom a period of five years has not yet elapsed from the day on which they ceased to be an organized crime group member as provided for in same item (referred to as an "organized crime group member, etc" in the next item).

(f)

In a case where the permission of the real estate specified joint enterprise operator specified in Article 3, paragraph (1) was rescinded pursuant to the provisions of Article 36, a person who was an officer of the said real estate specified joint enterprise operator within a period of 60 days prior to the day on which the notice concerning the disposition of rescission was issued pursuant to the provisions of Article 15 of the Administrative Procedure Act and a period of five years has not yet elapsed from the date of said rescission.

(g)

In the case where a real estate specified joint enterprise operator that submitted a notification pursuant to the provisions of Article 11, paragraph (1), item (iv) that is applicable from the day on which the notice was issued pursuant to Article 15 of the Administrative Procedure Act and which pertains to the disposition to rescind the permission under Article 3, paragraph (1) on the ground that said corporation falls under any item of Article 36 until the day on which said disposition took effect or the day on which the decision to not implement the disposition was announced, a person who was an officer of said real estate specified joint enterprise operator within a period of 60 days prior to the day on which said notice was issued and a period of five years has not yet elapsed from the date of said notification.

(h)

A person granted with a similar permission that was received in a foreign country pursuant to the provisions of the laws and regulations of the said foreign country that are comparable to this Act, and the permission was rescinded and a period of five years has not yet elapsed from the date of said rescission (including a person who was an officer of the relevant corporation within a period of 60 days prior to the day on which the permission was rescinded and a period of five years has not yet elapsed from the date of said rescission).

(vii)

A corporation with business activities controlled by organized crime group members.

(viii)

A corporation that has not received the registration under Article 29 of the Financial Instruments and Exchange Act in the case where said corporation intends to conduct the business referred to in item (iv).

(Standards for Permission)

Article 7

The competent Minister or Prefectural Governors shall not grant the permission under Article 3, paragraph (1) unless it is found that the person who has applied for permission pursuant to the provisions of Article 5 meets the following standards (excluding the provisions of item (v) in the case of a person intending to conduct the business referred to in item (i) or in item (iii):)

(i)

The amount of capital or contribution is equal to or greater than the amount specified by Cabinet Order for each type of operation as is necessary and appropriate for the protection of the business partners.

(ii)

The amount obtained by deducting the total amount of liabilities from the total amount of assets is equal to or greater than 90 percent of the amount of capital or contribution.

(iii)

The applicant, its officer, or the employee specified by Cabinet Order has not engaged in an illegal or markedly inappropriate act related to the real estate specified joint enterprise, within a period of five years prior to the said application for permission.

(iv)

The offices meet the requirements specified in Article 17, paragraph (1).

(v)

The contents of the real estate specified joint enterprise contract comply with the standards specified by Cabinet Order.

(vi)

The applicant has adequate asset foundation and personnel structure to properly conduct the real estate specified joint enterprise.

(Permission for Change)

Article 8

(1)

When a real estate specified joint enterprise operator intends to continuously conduct a real estate specified joint enterprise that falls under any of the following items after the operator has received the permission under Article 3, paragraph (1) (excluding cases where the operator intends to change the type of operations), the real estate specified joint enterprise operator must file the application for permission stating the matters set forth in paragraph (1), item (iii) and item (ix) of the same Article, the provisions of Article 5 notwithstanding, with the Prefectural Governor having jurisdiction over the location where the operator owns or will set up the offices as specified in each item when the enterprise falls under item (i) or item (ii) and file the application for permission stating the matters set forth in item (iii) and item (ix) of paragraph (1) of the same Article with the competent Minister as specified in the ordinance of the competent Ministry when the enterprise falls under item (iii):

(i)

When a person who has received permission from the competent Minister will own offices in only one prefecture (applicable only to a person other than those conducting the business referred to item (iii) or item (iv).

(ii)

When a person who has received permission from a Prefectural Governor is going to discontinue offices in the said prefecture and establish offices in another prefecture.

(iii)

When a person who has received permission from a Prefectural Governor is going to own offices in two or more prefectures.

(2)

When an application is filed pursuant to the provisions of the preceding paragraph, the competent Minister or Prefectural Governor must grant the permission under Article 3, paragraph (1) when it is found that the applicant meets the standards set forth in item (iii), item (iv), and item (vi) of the preceding Article, the provisions of the same Article notwithstanding.

(Validity of Previous Permission in the Case of Change of Permission)

Article 8-2

When a person, who received the permission from the competent Minister or Prefectural Governor under Article 3, paragraph (1), intends to change the type of operations or the location of offices while continuing to conduct the real estate specified joint enterprise, and has newly received permission from the competent Minister or Prefectural Governor under Article 3, paragraph (1) pursuant to the provisions of the same paragraph or paragraph (2) of the preceding Article, the previous permission of the competent Minister or Prefectural Governor pertaining to the person shall cease to be effective.

(Approval for Change)

Article 9

(1)

When a real estate specified joint enterprise operator intends to change the type of operations (excluding cases where a person, who received the permission from the competent Minister or Prefectural Governor, Article 3, paragraph (1), is required to receive permission from a new competent Minister or Prefectural Governor under the same paragraph pursuant to the provisions of the same paragraph) or otherwise add or change the general conditions of the real estate specified joint enterprise contract set forth in Article 5, paragraph (2), item (iv) (excluding the addition or change of the matters stated in the general conditions of the real estate specified joint enterprise contract that are the minor matters specified in the ordinance of the competent Ministry; the same shall apply in Article 46, paragraph (4) and Article 53, paragraph (2)), the real estate specified joint enterprise operator must obtain approval from the competent Minister or Prefectural Governor by whom the permission under Article 3, paragraph (1) was granted as specified in the ordinance of the competent Ministry.

(2)

The provisions of the preceding paragraph shall apply similarly when the real estate specified joint enterprise operator intends to establish additional offices (excluding the cases set forth in each item of Article 8, paragraph (1)).

(Notification of Change)

Article 10

When there has been a change in the matters set forth in each item of Article 5, paragraph (1) (excluding item (v) through item (vii) (in the case of the change of the location of an office specified in item (iii) of the same paragraph, the change that falls under each item of Article 8, paragraph (1) and paragraph (2) of the preceding Article shall be excluded)), the real estate specified joint enterprise operator must submit a notification to that effect within a period of 30 days as specified in the ordinance of the competent Ministry to the competent Minister or Prefectural Governor from whom the permission under Article 3, paragraph (1) was granted.

(Notification of Discontinuance of Business)

Article 11

(1)

When a real estate specified joint enterprise operator falls under any of the following items, the person specified in each said item must submit a notification to that effect within a period of 30 days as specified in the ordinance of the competent Ministry to the competent Minister or Prefectural Governor from whom the permission under Article 3, paragraph (1) was granted:

(i)

In the case of the extinction of a corporation by merger, the person who was the officer representing the extinct corporation.

(ii)

In the case of dissolution due to a decision to commence bankruptcy proceedings, the bankruptcy trustee.

(iii)

In the case of dissolution due to reasons other than merger and the decision to commence bankruptcy procedures, the liquidator.

(iv)

In the case of discontinuance of the real estate specified joint enterprise (including the case where a foreign corporation has ceased to own offices in Japan), the officer who represents the corporation that was a real estate specified joint enterprise operator.

(2)

When a real estate specified joint enterprise operator falls under any item of the preceding paragraph, the permission granted to the said real estate specified joint enterprise operator under Article 3, paragraph (1) shall cease to be effective.

(Lists of Real Estate Specified Joint Enterprise Operators)

Article 12

The competent Minister and Prefectural Governor shall maintain the following the lists of real estate specified joint enterprise operators: in the case of the competent Minister, the list stating the matters set forth in Article 5, paragraph (1), item (i) through item (viii) concerning the real estate specified joint enterprise operators that have received the permission under Article 3, paragraph (1); in the case of the Prefectural Governor, the list recording these matters concerning the real estate specified joint enterprise operators that have received the permission under Article 3, paragraph (1) as well as the real estate specified joint enterprise operators that have received permission from the competent Minister under the same paragraph and that own main offices in said Prefecture.

(Inspection of the List of Real Estate Specified Joint Enterprise Operators)

Article 13

The competent Minister or Prefectural Governor shall make available for public inspection, as specified in the ordinance of the competent Ministry, the documents provided for in Article 5, paragraph (2), item (i) through item (iv), a list of real estate specified joint enterprise operators and other documents pursuant to the provisions of the ordinance of competent Ministry

Chapter III Operations

(Principle of the Execution of Operations)

Article 14

(1)

The real estate specified joint enterprise operator shall conduct operations sincerely and in good faith.

(2)

The real estate specified joint enterprise operator shall endeavor to ensure proper and reasonable use of real estate and make sure that speculative transactions are restrained when conducting operations.

(Prohibition on Lending Name)

Article 15

The real estate specified joint enterprise operator shall not allow other persons to operate the real estate specified joint enterprise under its own name.

(Display of Signs)

Article 16

(1)

The real estate specified joint enterprise operator must display the signs in the form specified in the ordinance of the competent Ministry, at each office and in places that can be easily seen by the public.

(2)

Those other than the real estate specified joint enterprise operator shall not display the signs specified in the preceding paragraph or similar signs.

(Operations Manager)

Article 17

(1)

The real estate specified joint enterprise operator must assign to each office a person who is the employee registered pursuant to the provisions of Article 18 of the Building Lots and Buildings Transaction Business Act to provide advice, guidance as well as supervision and management necessary for conducting the following activities in addition to the matters provided for in Article 24, paragraph (2); Article 25, paragraph (2); and Article 28, paragraph (3) as well as in satisfaction of other requirements specified in the ordinance of the competent Ministry:

(i)

Solicitation for the entering into of real estate specified joint enterprise contracts.

(ii)

Explanation regarding the contents of real estate specified joint enterprise contracts.

(iii)

Operations provided for in Article 28, paragraph (1)

(2)

The real estate specified joint enterprise operator shall maintain a list stating the name of the person (hereinafter referred to as the "operations manager") assigned to each office pursuant to the provisions of the preceding paragraph and other matters specified in the ordinance of the competent Ministry and provide the list for inspection at the request of the business partners (including persons intending to conclude the real estate specified joint enterprise contract) (hereinafter referred to as the "list of operations managers").

(3)

The real estate specified joint enterprise operator shall not open an office in conflict with the provisions of paragraph (1) and must take all necessary measures within two weeks to conform to the provisions of the same paragraph when an existing office has come to conflict with the provisions of the same paragraph.

(Regulation of Advertisement)

Article 18

(1)

The real estate specified joint enterprise operator shall not place an advertisement concerning the real estate specified joint enterprise with regard to building lots or buildings under construction before the completion of the work related to the development of building lots or buildings, except in cases where the permissions required with regard to said work under Article 29, paragraph (1) or paragraph (2) of the City Planning Act (Act No. 100 of 1968), confirmation pursuant to the provisions of Article 6, paragraph (1) of the Building Standards Act (Act No. 201 of 1950), and other dispositions specified by Cabinet Order such as other permissions based on laws and regulations have been issued.

(2)

When placing an advertisement concerning the real estate specified joint enterprise, there shall be a clear indication as to whether the real estate specified joint enterprise operator becomes the party to the real estate specified joint enterprise contract, its agent, or broker for the contract to be entered into as well as the type of the real estate specified joint enterprise contract as set forth in each item of Article 2, paragraph (3).

(3)

When placing an advertisement concerning operations, the real estate specified joint enterprise operator shall not give an indication that is extremely different from the facts or extremely misleading with respect to expected profits from real estate transactions and any other matters specified in the ordinance of the competent Ministry.

(Restrictions on the Time Periods of Conducting Business)

Article 19

The real estate specified joint enterprise operator shall not conduct the real estate specified joint enterprise with regard to building lots or buildings under construction before the completion of the work related to the development of building lots or buildings, except in cases where permissions required with regard to the said work under Article 29, paragraph (1) or paragraph (2) of the City Planning Act, confirmation pursuant to the provisions of Article 6, paragraph (1) of the Building Standards Act, and other dispositions specified by Cabinet Order such as other permissions based on laws and regulations have been issued.

(Prohibition of Unjust Solicitation)

Article 20

(1)

When making solicitation for the entering into of a real estate specified joint enterprise contract, the real estate specified joint enterprise operator shall not intentionally refrain from informing the other party of the facts concerning the matters related to said real estate specified joint enterprise contract that may affect the judgment of the other party with regard to an important manner and the said operator shall not provide false information.

(2)

The real estate specified joint enterprise operator shall not provide false information to the business partners concerning the matters related to said real estate specified joint enterprise contract, such that the information may affect the judgment of the business partners with regard to an important matter, in order to prevent the cancellation of the real estate specified joint enterprise contract (including withdrawal from the partnership; the same applies hereinafter).

Article 21

(1)

The real estate specified joint enterprise operator, etc., its agent, employee, or other hired person (hereinafter referred to as the "real estate specified joint enterprise operator, etc.," in this Article) shall not provide conclusive evaluations that would cause the other party to misunderstand as if the profitability was guaranteed when making solicitation for the entering into of a real estate specified joint enterprise contract.

(2)

When making solicitation for the entering into of a real estate specified joint enterprise contact, the real estate specified joint enterprise operator, etc. shall not continue to make solicitation for the entering into of a real estate specified joint enterprise contract if the other party has indicated unwillingness to enter into said real estate specified joint enterprise contract (including unwillingness to receive said solicitation continuously).

(3)

The real estate specified joint enterprise operator, etc., shall not intimidate and cause nuisance to the business partners in order to prevent the cancellation of a real estate specified joint enterprise contract.

(4)

In addition to the provisions of the preceding three paragraphs, the real estate specified joint enterprise operator, etc., shall not perform the acts specified in the ordinance of the competent Ministry as acts soliciting the entering into of a real estate specified joint enterprise contract or preventing the cancellation thereof and as acts that fail to protect the interests of the other party or business partners.

(The Application of Mutatis Mutandis of the Financial Instruments and Exchange Act)

Article 21-2

The provisions of Article 39 (excluding paragraph (3) proviso and paragraph (5)) and Article 40 of the Financial Instruments and Exchange Act shall apply mutatis mutandis to the entering into of a real estate specified joint enterprise contract (excluding the contract entered into by a special enterprise operator with the objective of pecuniary contribution (including similar contracts specified in the ordinance of the competent Ministry)), the representation or brokerage thereof. In this case, the term "Financial Instruments Business Operators, etc" in each item of Article 39, paragraph (1), each item of paragraph (2) and paragraph (3) as well as in Article 40 of the same Act shall be deemed to be replaced with "real estate specified joint enterprise operator"; the phrase "sales and purchase or other transactions of Securities (excluding sales and purchase on condition of repurchase for which the repurchase price is set in advance and other transactions specified by Cabinet Order) or Derivative Transactions (hereinafter collectively referred to as "Sales and Purchase or Other Transaction of Securities, etc." in this Article)" in Article 39, paragraph (1), item (i) of the same Act the term "Sales and Purchase or Other Transaction of Securities, etc." in item (ii) and item (iii) of the same paragraph and also in each item of paragraph (2) of the same Article; and the term the "Act of Financial Instruments Transaction" in Article 40, item (i) of the same Act shall be deemed to be replaced with the "conclusion of the real estate specified joint enterprise contract"; the phrase "Securities or Derivative Transactions (hereinafter collectively referred to as "Securities, etc." in this Article)" in Article 39, paragraph (1), item (i) of the Act, the term "securities, etc." in item (ii) and item (iii) of the same paragraph as well as the term "Contract for Financial Instruments Transaction" in Article 40, item (i) of the same Act shall be deemed to be replaced with "real estate specified joint enterprise contract; the term "customer" in each item of paragraph (1) and paragraph (3) of Article 39 as well as in Article 40, item (ii) of the same Act, the phrase the "customer of a Financial Instruments Business Operator, etc." in Article 39, paragraph (2) of the same Act as well as the term "investor" in Article 40, item (ii) of the same Act shall be deemed to be replaced with "business partner"; the phrase "conduct trade in securities or derivatives transactions" in Article 39, paragraph (1), item (i) of the same Act shall be deemed to be replaced with "conclude the real estate specified joint enterprise contract"; the term "Cabinet Office ordinance" in paragraph (3) of the same Article and in Article 40, item (ii) of the same Act shall be deemed to be replaced with "ordinance of the competent Ministry"; the phrase "in this Section and the next Section hereunder" in Article 29, paragraph (3) of the same Act shall be deemed to be replace with the "next paragraph"; and the terms "customer" and "investor" in Article 40, item (i) of the same Act shall be deemed to be replaced with the "counterparty or the business partner."

(Prohibition of Money Lending and Brokerage Thereof)

Article 22

At the time of making solicitation for the conclusion of the real estate specified joint enterprise contract, the real estate specified joint enterprise operator shall not lend money or securities to the other party in connection with the real estate specified joint enterprise to be carried out; nor shall the said operator act as a broker, intermediary, or agent for a third part in respect of lending money or securities to the counterparty.

(Conclusion of the Contract Based on the General Conditions)

Article 23

(1)

The real estate specified joint enterprise operator shall enter into real estate specified joint enterprise contract based on the general conditions of the real estate specified joint enterprise contract pertaining to the permission under Article 3, paragraph (1) or approval under Article 9, paragraph (1).

(2)

The real estate specified joint enterprise operator shall act as agent in the entering into of the real estate specified joint enterprise contract based on the general conditions of the real estate specified joint enterprise contract pertaining to the permission under Article 3, paragraph (1) or approval under Article 9, paragraph (1) granted to the real estate specified joint enterprise operator to whom the operations pertaining to real estate transactions are entrusted by the said real estate specified joint enterprise operator or the special enterprise operator represented in the conclusion of the contract.

(Delivery of Documents Prior to the Execution of the Real Estate Specified Joint Enterprise Contract)

Article 24

(1)

The real estate specified joint enterprise operator must provide the applicant with the documents specified in the ordinance of the competent Ministry; documents that concern the contents and performance of the real estate specified joint enterprise contract together with explanation prior to the execution of the real estate specified joint enterprise contract.

(2)

When preparing the documents to be provided pursuant to the provisions of the preceding paragraph, the real estate specified joint enterprise operator shall cause the operations manager to sign his/her name and affix his/her seal on the said documents.

(Delivery of Documents at the Time of the Execution of the Real Estate Specified Joint Enterprise Contract)

Article 25

(1)

When the real estate specified joint enterprise contract is executed, the real estate specified joint enterprise operator must provide the party to the said real estate specified joint enterprise contract with documents stating the following matters:

(i)

The type of the contract set forth in each item of Article 2, paragraph (3) of the real estate specified joint enterprise contract.

(ii)

Indications necessary to identify the real estatethat becomes the object of the real estate transaction pertaining to the real estate specified joint enterprise contract, and the contents of the real estate transaction.

(iii)

Matters related to the distribution of proceeds or profits to the business partners.

(iv)

Matters related to the management of assets pertaining to the real estate specified joint enterprise contract.

(v)

Matters related to the term of the contract.

(vi)

Matters related to liquidation at the time of terminating the contract.

(vii)

If there is a stipulation concerning the cancellation of the contract, the content thereof.

(viii)

Other matters specified in the ordinance of the competent Ministry.

(2)

When preparing the documents to be provided pursuant to the provisions of the preceding paragraph, the real estate specified joint enterprise operator shall cause the operations manager to sign his/her name and affix his/her seal on the said documents.

(Cancellation by Means of Documents)

Article 26

(1)

A business partner may cancel the real estate specified joint enterprise contract within a period of eight days from the day on which the business partner receives the documents specified in paragraph (1) of the preceding Article.

(2)

The cancellation provided for in the preceding paragraph shall be effective at the time the document to that effect is issued.

(3)

In the case of cancellation pursuant to the provisions of the paragraph (1) the real estate specified joint enterprise operator cannot demand payment of compensation for any damage or penalty that results from the cancellation.

(4)

Special provisions in conflict with the preceding three paragraphs that cause detriment to the business partners shall be invalid.

(Prohibition of Transactions Conducted for One's Own Account)

Article 26-2

The real estate specified joint enterprise operator shall not commit the following acts; however, this shall not apply to the cases specified in the ordinance of the competent Ministry as being cases where there is no need for concern about a lack of protection for the interest of the business partners:

(i)

To conduct real estate transactions between a real estate specified joint enterprise operator and a special enterprise operator that entrusted said real estate specified joint enterprise operator with operations (hereinafter referred to as the "entrusting special enterprise operator."

(ii)

To act as an agent or broker in real estate transactions between the entrusting special enterprise operators.

(Prohibition of Re-entrustment of Operations Entrusted by the Special Enterprise Operator)

Article 26-3

The real estate specified joint enterprise operator (applicable only to a person conducting the business referred to in item (iii)) shall not re-entrust other person with all of the operations entrusted by the entrusting special enterprise operator.

(Management of Assets by Segregation)

Article 27

The real estate specified joint enterprise operator must manage any assets pertaining to a real estate specified joint enterprise contract by segregating the said assets from the assets pertaining to other real estate specified joint enterprise contracts as specified in the ordinance of the competent Ministry.

(Delivery of the Asset Management Report)

Article 28

(1)

At the request of the business partners, the real estate specified joint enterprise operator must provide an explanation on the status of the management of the assets pertaining to the real estate specified joint enterprise contract.

(2)

The real estate specified joint enterprise operator must regularly deliver the business partners with a report on the status of the management of the assets pertaining to the real estate specified joint enterprise contract as specified in the ordinance of the competent Ministry.

(3)

When preparing the documents to be delivered pursuant to the provisions of the preceding paragraph, the real estate specified joint enterprise operator shall have the operations manager to sign his/her name and affix his/her seal on said documents.

(Inspection of Documents)

Article 29

The real estate specified joint enterprise operator (applicable only to the person conducting the business referred to in item (i) or item (iii)) must maintain at each office the documents about the status of operations and assets (in the case of a person conducting the business referred to in item (iii), the status of operations and assets of the entrusting special enterprise operator), as specified in the ordinance of the competent Ministry; and the said operator must provide said documents for inspection at the request of the business partners.

(List of Business Partners)

Article 30

(1)

When the real estate specified joint enterprise operator (applicable only to the person conducting the business referred to in item (i)) or the entrusting special enterprise operator concludes the real estate specified joint enterprise contract, the real estate specified joint enterprise operator (applicable only to the person conducting the business referred to in item (i) or item (iii)) must prepare a list of the business partners pertaining to the real estate specified joint enterprise contract (hereinafter referred to as the "list of business partners") and preserve it as specified in the ordinance of the competent Ministry.

(2)

The real estate specified joint enterprise operator (applicable only to a person conducting the business referred to in item (i) or item (iii)) must provide the list of business partners for inspection at the request of the business partners recorded on the list.

(Confidentiality Obligations)

Article 31

(1)

The real estate specified joint enterprise operator shall not divulge to others the secrets it has come to know through its operations, without justifiable grounds. The same shall apply after it has ceased to operate the real estate specified joint enterprise.

(2)

The agent, employee, or other hired person of the real estate specified joint enterprise operator shall not divulge to others the secrets he/she has come to know by assisting in the operations of the real estate specified joint enterprise without justifiable grounds. The same shall apply after such a person has ceased to be the agent, employee, or other hired person of the real estate specified joint enterprise operator.

Chapter IV Supervision

(Record Books and Documents Concerning Operations)

Article 32

The real estate specified joint enterprise operator must prepare record books and documents concerning the operations (including record books and documents concerning the operations of the entrusting special enterprise operator in the case of a person conducting the business referred to in item (iii)) and preserve these records and documents as specified in the ordinance of the competent Ministry.

(Submission of the Business Report)

Article 33

The real estate specified joint enterprise operator must prepare the business report for each business year in the form specified in the ordinance of the competent Ministry and submit the report within three months after the close of each business year to the competent Minister or Prefectural Governor from whom the operator received the permission provided for in Article 3, paragraph (1).

(Instructions)

Article 34

(1)

When a real estate specified joint enterprise operator that received the permission under Article 3, paragraph (1) falls under any of the following items or has violated the provisions of this Act, the competent Minister or Prefectural Governor may issue any necessary instructions to the said real estate specified joint enterprise operator:

(i)

When the real estate specified joint enterprise operator has caused damage to the business partners in connection with operations or when there is serious concern about such damage

(ii)

When the real estate specified joint enterprise operator has, in connection with operations, committed an act that is detrimental to fairness or when there is serious concern about such an act potentially being detrimental to fairness.

(iii)

When the real estate specified joint enterprise operator has violated other laws and regulations in connection with operations and has been found to be inappropriate as a real estate specified joint enterprise operator.

(2)

When a real estate specified joint enterprise operator conducting operations in a prefecture after receiving the permission under Article 3, paragraph (1) from the competent Minister or Prefectural Governor, falls under any item in the preceding paragraph or has violated the provisions of this Act in connection with the operations conducted in said Prefecture, the Prefectural Governor may issue the necessary instructions to the said real estate specified joint enterprise operator.

(3)

When a Prefectural Governor has imposed a disposition pursuant to the provisions of the preceding paragraph, he/she shall report it without delay to the competent Minister if the real estate specified joint enterprise operator received the permission under Article 3, paragraph (1) from the competent Minister, or to the relevant Prefectural Governor if said real estate specified joint enterprise operator received the permission under the same paragraph from other Prefectural Governor.

(Order to Suspend Business)

Article 35

(1)

When a real estate specified joint enterprise operator that received the permission under Article 3, paragraph (1) falls under any of the following items, the competent Minister or Prefectural Governor may issue an order to the said real estate specified joint enterprise operator to suspend its operations in whole or in part for a period not longer than one year:

(i)

When the real estate specified joint enterprise operator falls under any item in paragraph (1) of the preceding Article.

(ii)

When the real estate specified joint enterprise operator has violated the provisions of Article 8, paragraph (1); Article 9; Article 10; Article 15; Article 16, paragraph (1): Article 17; Article 18, paragraph (2) or paragraph (3); Article 19 through Article 21; Article 22 through Article 25; Article 26-2 through Article 30; Article 31, paragraph (1); Article 32 or the second half of paragraph (1) of Article 37 (including cases where these provisions are applied mutatis mutandis to paragraph (3) of the same Article); Article 39, paragraph (1); or Article 40 of the Financial Instruments and Exchange Act applied mutatis mutandis to Article 21-2 (hereinafter referred to as the "Financial Instruments and Exchange Act as applied mutatis mutandis")

(iii)

When the real estate specified joint enterprise operator does not follow the instructions issued pursuant to the provisions of paragraph (1) or paragraph (2) of the preceding Article.

(iv)

When the real estate specified joint enterprise operator has violated the disposition imposed by the competent Minister or Prefectural Governor based on the provisions of this Act.

(v)

When the real estate specified joint enterprise operator has committed an unlawful or seriously unjust act in connection with the real estate specified joint enterprise.

(vi)

When there has been a person among officers or the employees specified by Cabinet Order who committed an unlawful or seriously unjust act in connection with the real estate specified joint enterprise within a period of five years prior to the suspension of operations.

(2)

When a real estate specified joint enterprise operator conducting operations in a prefecture after receiving the permission under Article 3, paragraph (1) from the competent Minister or Prefectural Governor, falls under any of item (i) through item (v) in the preceding paragraph, the Prefectural Governor may issue an order to said real estate specified joint enterprise operator to suspend its operations in whole or in part for a period not longer than one year.

(3)

The provisions of paragraph (3) of the preceding Article shall be applied mutatis mutandis to the case of the preceding paragraph.

(Rescission of Permission)

Article 36

When a real estate specified joint enterprise operator that received the permission under Article 3, paragraph (1) falls under any of the following items, the competent Minister or Prefectural Governor can rescind the permission granted to the said real estate specified joint enterprise operator under the same paragraph:

(i)

When the real estate specified joint enterprise operator has come to fall under the scope of Article 6, any of item (ii), item (iii) (applicable only to the section of the provisions of the laws and regulations of a foreign country that is comparable to this Act) or item (v) through item (viii).

(ii)

When the real estate specified joint enterprise operator no longer meets the standards set forth in Article 7, item (i) or item (ii).

(iii)

When the real estate specified joint enterprise operator has received permission under Article 3, paragraph (1) by wrongful means.

(iv)

When the real estate specified joint enterprise operator has violated the conditions set pursuant to the provisions of Article 4, paragraph (1).

(v)

When the real estate specified joint enterprise operator falls under any item of paragraph (1) of the preceding Article in an especially serious situation or has violated the order to suspend operations pursuant to the provisions of paragraph (1) or paragraph (2) of the same Article.

(Order to Discharge the Operations Manager)

Article 37

(1)

When the operations manager, who is appointed by a real estate specified joint enterprise operator that received the permission under Article 3, paragraph (1), has committed an unlawful or seriously unjust act in connection with the real estate specified joint enterprise, the competent Minister or Prefectural Governor may order the said real estate specified joint enterprise operator to discharge the operations manager.

In this case, the said real estate specified joint enterprise operator shall not appoint the person discharged by said order as the operations manager during a period that is not longer than one year, or a period as determined by the competent Minister or Prefectural Governor.

(2)

The Prefectural Governor, when the operations manager, who is appointed by a real estate specified joint enterprise operator that received the permission under Article 3, paragraph (1) from the competent Ministry or the governor of other prefecture, has committed the act provided for in the preceding paragraph in his/her prefecture, may order said real estate specified joint enterprise operator to discharge the operations manager.

(3)

The provisions of Article 34, paragraph (3) and the provisions of the second half of paragraph (1) shall be applied mutatis mutandis to the case of the preceding paragraph.

(Public Notice of Supervising Disposition)

Article 38

When the competent Minister or Prefectural Governor carried out the disposition pursuant to the provisions of Article 35, paragraph (1) or paragraph (2) or Article 36, he/she shall issue a public notice to that effect as specified in the ordinance of the competent Ministry.

(Guidance)

Article 39

In order to ensure the proper management of the real estate specified joint enterprise or facilitate the sound development of the real estate specified joint enterprise, the competent Minister may give any necessary guidance, advice, and recommendations to all real estate specified joint enterprise operators, and, in the case of Prefectural Governor, to the real estate specified joint enterprise operators who are conducting the real estate specified joint enterprise in the areas of his/her prefecture.

(On-Site Inspection)

Article 40

(1)

When the competent Minister or Prefectural Governor finds it necessary to enforce this Act, he/she may order the person who operates the real estate specified joint enterprise (excluding the special enterprise operator; the same shall apply here under in this paragraph) or the person who conducts transactions with the person operating said real estate specified joint enterprise or the person who is entrusted with the operations of said real estate specified joint enterprise by the person operating said real estate specified joint enterprise to submit the report or data on the operations or assets of the person operating said real estate specified joint enterprise, or otherwise direct his/her official to enter the office or other places of the person who operates the real estate specified joint enterprise or the person who is entrusted with the operations of said real estate specified joint enterprise by the person operating said real estate specified joint enterprise where the operations are conducted, inspect the status of operations or assets, or the record books and documents and other properties of the person who operates the real estate specified joint enterprise, or otherwise question the persons concerned.

(2)

An official shall, when conducting an on-site inspection pursuant to the provisions of the preceding paragraph, carry an identification card and present it at the request of the persons concerned.

(3)

The right to conduct on-site inspection pursuant to the provisions of paragraph (1) shall not be construed as the right to conduct criminal investigation.

Chapter IV-II Special Enterprise Operators

Article 40-2

(1)

The provisions of Article 3, paragraph (1) shall not apply to the special enterprise.

(2)

A corporation intending to conduct the special enterprise must notify the following matters to the competent Minister in advance as specified in the ordinance of the competent Ministry:

(i)

Trade name or business name and address.

(ii)

The names of officers and the name of the employee specified by Cabinet Order, if any.

(iii)

The name and location of the office.

(iv)

The amount of capital or contribution.

(v)

The trade name or business name and address of the real estate specified joint enterprise operator to which operations are entrusted.

(vi)

Other matters specified in the ordinance of the competent Ministry.

(3)

The following documents shall be attached to the notification pursuant to the provisions of the preceding paragraph:

(i)

The articles of incorporation or a document in lieu thereof.

(ii)

The certificate of registered matters or a document in lieu thereof.

(iii)

A document stating any other matters specified by Cabinet Order.

(4)

When there has been change in the matters set forth in each item of paragraph (2), the special enterprise operator shall notify the competent Minister of this within 30 days as specified in the ordinance of the competent Ministry.

(5)

In the case where a special enterprise operator operates the special enterprise, the special enterprise operator shall be deemed to be a real estate specified joint enterprise operator that received the permission under Article 3, paragraph (1) from the competent Minister, and the provisions of Article 11, paragraph (1); Article 12 through Article 14 and Article 23, paragraph (1) in addition to Article 39 of the Financial Instruments and Exchange Act as applied mutatis mutandis (excluding paragraph (3) proviso and paragraph (5)) as well as the provisions of Chapter VII pertaining to these provisions shall apply. In this case, the phrase "from Article 5, paragraph (1), item (i) through item (viii)" in Article 12 shall be "from Article 40-2, paragraph (2), item (i) through item (v); the phrase "the list of real estate specified joint enterprise operators" in the same Article and Article 13 shall be "the list of special enterprise operators"; the phrase "from Article 5, paragraph (2), item (i) through item (iv)" in the same Article shall be "Article 40-2, paragraph (3), item (i) and item (ii)" and the term "when" in Article 23, paragraph (1) shall be "when the real estate specified joint enterprise operator entrusts the operations related to real estate transactions."

(6)

When an enterprise started by a special enterprise operator as a special enterprise no longer falls under the category of special enterprise, the competent Minister may take necessary measures with regard to said special enterprise operator by setting a period not longer than three months.

(7)

When an enterprise started as a special enterprise has come to do not fall under the category of special enterprise, the special enterprise operator must submit the notification to that effect within a period of 30 days as specified in the ordinance of the competent Ministry to the competent Minister.

(8)

When the competent Minister finds it necessary to confirm the status of the operations of a special enterprise, he/she may order the special enterprise operator to submit to the extent necessary the report or data for reference regarding the matters related to the notification pursuant to the provisions of paragraph (2), or otherwise cause his/her official to enter the office or other places where operations are conducted, inspect the record books and other properties or question the persons concerned with regard to the matters related to the notification pursuant to the provisions of the same paragraph.

(9)

The provisions of paragraph (2) and paragraph (3) of the preceding Article shall be applied mutatis mutandis to on-site inspection pursuant to the provisions of the preceding paragraph.

Chapter V Real Estate Specified Joint Enterprise Association

(Real Estate Specified Joint Enterprise Association)

Article 41

(1)

A general incorporated association that is using the term "Real Estate Specified Joint Enterprise Association" in its business name shall stipulate in the articles of incorporation to the effect that it seeks to protect the business partners, aims to contribute to the sound development of real estate specified joint enterprises, and allows the real estate specified joint enterprise operators to join it as its members.

(2)

The general incorporated association specified in the preceding paragraph (hereinafter referred to as the "Association" in the chapter) shall carry out the following operations in order to achieve its purpose:

(i)

Providing the members with guidance, recommendations, and other services in order for them to comply with the provisions of this Act; the Building Lots and Buildings Transaction Business Act; the Act regulating the receipt of contributions, the receipt of deposits, and interest rates as well as other laws and regulations with regard to the operations of the real estate specified joint enterprises conducted by the members.

(ii)

Providing guidance, recommendations, and other services necessary for the regulation of the contents of the real estate specified joint enterprise contract and protection of the interest of the business partners.

(iii)

Resolving complaints from the business partners regarding the operations of real estate specified joint enterprises conducted by the members.

(iv)

Research and study necessary for ensuring the proper and rational use of real estate and restraining speculative transactions.

(v)

Other operations necessary for achieving the purpose of the Association.

(3)

It shall not be possible to change the stipulation made in the articles of incorporation pursuant to the provisions of paragraph (1).

(4)

When an Association is established, the Association must submit a notification to that effect to the competent Minister with the copies of the certificate of registered matters and the articles of incorporation, within two weeks after the on which the Association is established.

(5)

The Association must make the list of members available for public inspection.

(6)

In order to ensure the proper management of the real estate specified joint enterprise or facilitate the sound development of the real estate specified joint enterprise, the competent Minister may demand the Association to submit a report on the necessary matters or may give necessary guidance, advice, and recommendations

(Restrictions on the Use of Business Name)

Article 42

(1)

Other than those of the Association, no person shall use the term "Real Estate Specified Joint Enterprise Association" in his/her business name.

(2)

Other than members of the Association, no person shall use the term "Member of the Real Estate Specified Joint Enterprise Association" in his/her business name.

(Resolution of Complaints)

Article 43

(1)

When a business partner, etc. makes a proposal for resolving a complaint regarding the operations of the real estate specified joint enterprise conducted by a member, the Association must hold consultations to provide the business partner, etc., who is making the proposal with the necessary advice, investigate the circumstances under which the complaint was made, inform said member of the contents of the complaint, and seek prompt disposition thereof.

(2)

When the Association finds it necessary to resolve the complaint for which the proposal prescribed in the preceding paragraph has been made, the Association may demand the member to provide explanation orally or in writing, or submit relevant data.

(3)

When the Association makes the demand pursuant to the provisions of the preceding paragraph, the member shall not refuse it without justifiable grounds.

(4)

The Association shall ensure the members are informed of the proposal under item (i), the circumstances under which the complaint was made, and the result of the resolution.

Chapter VI Miscellaneous Provisions

(Closure of Operations as a Result of Rescission of Permission)

Article 44

When the permission under Article 3, paragraph (1) ceased to be effective pursuant to the provisions of Article 11, paragraph (2) or the permission under the same paragraph was rescinded pursuant to the provisions of Article 36, the person who was the real estate specified joint enterprise operator pertaining to said permission or his/her general successor shall still be deemed to be a real estate specified joint enterprise operator to the extent and for the purpose of closing down the operations based on the real estate specified joint enterprise contract entered into by said real estate specified joint enterprise operator, or the entrusting special enterprise operator related to said real estate specified joint enterprise operator.

(Technical Replacement of Terms in Applying the Provisions of this Act to a Foreign Corporation)

Article 45

In cases where an real estate specified joint enterprise operator or a special enterprise operator is a foreign corporation, or in cases where the real property pertaining to the real estate specified joint enterprise is located in a foreign country, technical replacement of terms and other matters necessary when applying the provisions of this Act to said real estate specified joint enterprise operator or said special enterprise operator, or to said real estate specified joint enterprise shall be specified by Cabinet Order.

(Special Provisions Concerning Trust Companies)

Article 46

(1)

The provisions of Article 3 through Article10 and Article 36 shall not apply to the trust companies that received the license under Article 3 or Article 53, paragraph (1) of the Trust Business Act (Act No. 154 of 2004) (excluding the trust companies specified by Cabinet Order) and submitted the notification pursuant to the provisions Article 77, paragraph (3) of the Building Lots and Buildings Transaction Business Act (applicable only to the trust companies that received the registration under Article 29 of the Financial Instruments and Exchange Act in the case of trust companies intending to conduct the business referred to in item (iv); referred to as the "specified trust companies" hereunder in this Article).

(2)

The provisions of this Act, excluding the provisions in the preceding paragraph, shall apply to the specified trust companies operating the real estate specified joint enterprise, deeming that these trust companies are the real estate specified joint enterprise operators that received the permission under Article 3, paragraph (1) from the competent Minister.

In this case, the phrase "the permission under Article 3, paragraph (1) or the approval under Article 9, paragraph (1)" in Article 23, paragraph (1) shall be "the notification under Article 46, paragraph (3) or paragraph (4)" and the phrase "the disposition pursuant to the provisions of Article 36" in Article 38 shall be "the order to suspend operations pursuant to the provisions of Article 46, paragraph (5)."

(3)

When a specified trust companies intends to operate the real estate specified joint enterprise, it must submit a notification to that effect to the competent Minister, attaching the general conditions of the real estate specified joint enterprise contract with the notification.

(4)

When there has been change in the matters recorded on the list of real estate specified joint enterprise operators provided for in Article 12 (excluding the matters set forth in Article 5, paragraph (1), item (v) and item (vi)) or there has been addition to, or change in the general conditions of the real estate specified joint enterprise contract, the specified trust company that is deemed to be a real estate specified joint enterprise operator pursuant to the provisions of paragraph (2) must submit the notification to that effect to the competent Minister within 30 days as specified in the ordinance of the competent Ministry.

(5)

When the specified trust companies that is deemed to be a real estate specified joint enterprise operator pursuant to the provisions of paragraph (2) falls under any item of paragraph (1) of Article 35, in an especially serious situation or has violated the order to suspend operations pursuant to the provisions of the same paragraph or paragraph (2) of the same Article, the competent Minister may order the said specified trust company to suspend its operations in whole or in part for a period not longer than five years.

(6)

The matters necessary for applying the provisions of this Act to the financial institutions concurrently operating trust business and the trust companies specified by Cabinet Order under paragraph (1) shall be specified by Cabinet Order.

(Exclusion from Application)

Article 46-2

The provisions of Article 19 through Article 21; Article 22; Article 24 through Article 26 as well as Article 28, paragraph (2) and paragraph (3) as well as Article 40 of the Financial Instruments and Exchange Act, as applied mutatis mutandis, shall not apply in cases where the real estate specified joint enterprise operator conducts the real estate specified joint enterprise with a special investor as its counterparty or as its business partner.

Article 47

(1)

The provisions of Article 22 shall not apply in cases where the building lots and buildings trader provided for in Article 2, item (iii) of the Building Lots and Buildings Transaction Business Act (referred to as the "building lots and buildings trader" hereunder in the next paragraph) is the counterparty.

(2)

The provisions of Article 26 shall not apply in cases where the business partner is a building lots and buildings trader.

(3)

The provisions of this Act shall not apply to the National Government and Local Governments.

(No Application of the Provisions of the Building Lots and Buildings Transaction Business Act)

Article 48

The provisions of the Building Lots and Buildings Transaction Business Act shall not apply to the business partners who conduct real estate transactions based on the contract provided for in Article 2, paragraph (3), item (i) as well as to other business partners specified by Cabinet Order.

(Application Route)

Article 48-2

The application and other documents required to be filed with the competent Minister pursuant to the provisions of Article 5, paragraph (1); Article 8, paragraph (1); Article 9, paragraph (1) and paragraph (2); Article 10; Article 11, paragraph (1) as well as Article 40-2, paragraph (2), paragraph (4) and paragraph (7) must be processed through the Prefectural Governor having jurisdiction of the location where the main office is established (in cases where the provisions of Article 11, paragraph (1) apply, the main office of the person who falls under any item of the same paragraph).

(Administrative Classification of Affairs)

Article 48-3

The affairs that are to be processed through the office of a Prefectural Government pursuant to the provisions of Article 12 and Article 13 (including cases where these provisions are applied after deemed replacement as provided for in Article 40-2, paragraph (5)) as well as the provisions of the preceding Article (in respect of the affairs to be processed pursuant to the provisions of Article 12 and Article 13, applicable only to the maintenance, recording, and inspection of the list of real estate specified joint enterprise operators pertaining to the real estate joint enterprise operators that received the permission from the competent Minister) shall be the statutory entrusted affairs referred to in item (i) provided for in Article 2, paragraph (9), item (i) of the Local Autonomy Act (Act No. 67 of 1947).

(Competent Ministers)

Article 49

(1)

The competent Ministers in this Act shall be as follows:

(i)

The Prime Minister and the Minister of Land, Infrastructure, Transport, and Tourism (hereinafter referred to as the "Minister of MLIT") for the matters related to the real estate specified joint enterprise pertaining to the contracts which are comparable to the real estate specified joint enterprise contracts set forth in Article 2, paragraph (3), item (i) or item (ii) or the real estate specified joint enterprise contracts set forth in item (i) or item (2) out of the real estate specified joint enterprise contracts set forth in item (iv) of the same paragraph, or otherwise the contracts specified by Cabinet Order as similar real estate specified joint enterprise contracts with the objective of pecuniary contribution and provide for the splitting of residual assets or refunding of contribution with money when the contract is terminated.

(ii)

The Minister of MLIT for the matters related to real estate specified joint enterprises other than the real estate specified joint enterprises provided for in the preceding item.

(2)

The ordinance of the competent Ministry in this Act shall be a Cabinet Office Ordinance and an Ordinance of the Ministry of Land, Infrastructure, Transport and Tourism.

(3)

The Prime Minister shall delegate authority (excluding authority specified by Cabinet Order) to the Commissioner of the Financial Services Agency.

(4)

The authority delegated to the Commissioner of the Financial Services Agency pursuant to the provisions of the preceding paragraph and the authority of the Minister of MLIT under this Act can be delegated, in part, to the Chiefs of Local Branch Bureaus and Departments (Director-General of the Finance Bureau or Finance Branch Bureau in the case of the authority delegated to the Commissioner of the Financial Services Agency).

(Submission of Date to the Minister of Finance)

Article 49-2

When the Minister of Finance finds it necessary to formulate a plan or initiative for the system of real estate specific joint enterprises in connection with the system for resolution of financial failures and financial crisis management, which are under jurisdiction of said Minister, he/she may request the Prime Minister to submit the necessary data and to provide an explanation.

(Delegation to the Ordinance of the Competent Ministry)

Article 50

In addition to the matters provided for in this Act, the matters necessary to execute this Act shall be set forth in the ordinance of the competent Ministry.

(Transitional Measure)

Article 51

In cases where an order enacted, revised, or abolished pursuant to the provisions of this Act, it shall be possible to specify the required transitional measures (including the transitional measures with regard to penal provisions) to the extent rationally necessitated by the order as a result of its enactment, revision, or abolishment.

Chapter VII Penal Provisions

Article 52

A person who falls under any of the following items shall be sentenced to a term of imprisonment of three years or less with work or a fine of three million yen or less, or be subject to the imposition of cumulative punishments with a term of imprisonment and fine:

(i)

A person who operated the real estate specified joint enterprise in violation of the provisions of Article 3, paragraph (1) without receiving the permission under the same paragraph.

(ii)

A person who received the permission under Article 3, paragraph (1) by a wrongful means.

(iii)

A person who caused other person to operate the real estate specified joint enterprise in violation of the provisions of Article 15.

(iv)

A person who violated the order to suspend operations provided for in Article 35, paragraph (1) or paragraph (2), or Article 46, paragraph (5).

Article 52-2

In the case of violation of the provisions of Article 26-2 (applicable only to the part pertaining to item (i)) or Article 39, paragraph (1) of the Financial Instruments and Exchange Act, as applied mutatis mutandis, the representative, agent, employee, or other hired person of the real estate specified joint enterprise operator who committed the act shall be sentenced to a term of imprisonment of three years or less with work or a fine of three million yen or less, or be subject to the imposition of cumulative punishments with the imprisonment and fine.

Article 52-3

A person who falls under any of the following items shall be sentenced to a term of imprisonment of one year or less with work or a fine of three million yen or less, or be subject to the imposition of cumulative punishments with the imprisonment and fine:

(i)

A person who intentionally did not report the facts or reported false facts in violation of the provisions of Article 20, paragraph (1).

(ii)

A person who reported false facts in violation of the provisions of Article 20, paragraph (2).

(iii)

A person who operated a special enterprise without submitting notice in violation of Article 40-2, paragraph (2).

(iv)

A person who violated an order issued pursuant to the provisions of Article 40-2, paragraph (6).

(v)

A person who failed to submit notification or submitted false notification in violation of the provisions of Article 40-2, paragraph (7).

Article 53

A person who falls under any of the following items shall be sentenced to a term of imprisonment of one year or less with work or a fine of one million yen or less, or be subject to cumulative punishments with both imprisonment and fine:

(i)

A person who violated the conditions attached pursuant the provisions of Article 4, paragraph (1).

(ii)

A person who changed the type of operations or made additions or changes to the general conditions of the real estate specified joint enterprise contract provided for in Article 5, paragraph (2), item (iv) in violation of the provisions of Article 9, paragraph (1).

(iii)

A person who violated the provisions of Article 39, paragraph (2) of the Financial Instruments and Exchange Act, as applied mutatis mutandis.

(iv)

A person who lent money or securities to the other party, or acted as a broker, intermediary, or agent for a third part in respect of lending money or securities to the counterparty in violation of the provisions of Article 22.

Article 53-2

In the case of item (iii) of the preceding Article, the economic benefit gained by the offender or a third party who knowingly gained such benefit shall be confiscated. If said economic benefit cannot be confiscated in whole or in part, the collection of equivalent value shall be enforced.

Article 54

A person who falls under any of the following items shall be sentenced to a term of imprisonment of six months or less with work or a fine of 500 thousand yen or less, or be subject to the imposition of cumulative punishments with the imprisonment and fine:

(i)

A person who made false statement in the application for permission under Article 5, paragraph (1) or the documents set forth in each item of paragraph (2) of the same Article.

(ii)

A person who gave an indication that is markedly different from the facts or seriously misleading the public in violation of the provisions of Article 18, paragraph (3).

(iii)

A person who failed to provide the documents or reports in violation of the provisions of Article 24, paragraph (1); Article 25, paragraph (1); or Article 28, paragraph (2); or provided documents or reports without stating the matters specified in these provisions; or provided documents or reports containing false statements.

Article 55

A person who falls under any of the following items shall be fined 500 thousand yen or less:

(i)

A person who made false statement in the application for permission under Article 8, paragraph (1).

(ii)

A person who opened office or did not take necessary measures in violation of the provisions of Article 17, paragraph (3).

(iii)

A person who provided the applicant for the real estate specified joint enterprise contract with the documents provided for in Article 24, paragraph (2) without signing his/her name and affixing his/her seal.

(iv)

A person who provided the party to the real estate specified joint enterprise contract with the documents provided for in Article 25, paragraph (2) without signing his/her name and affixing his/her seal.

(v)

A person who provided the business partners with the documents provided for in Article 28, paragraph (3) without signing his/her name and affixing his/her seal.

(vi)

A person who did not maintain the documents nor provide such documents for inspection at the request of the business partners, maintained the documents containing false statement, or provided such documents for the inspection of the business partners in violation of the provisions of Article 29.

(vii)

A person who did not prepare the record books and documents nor preserve these record books and documents, prepared false record books and documents, or preserved such false record books and documents in violation of the provisions of Article 32.

(viii)

A person who did not prepare the business report, did not submit such a business report, prepared a false business report, or submitted such false business report in violation of the provisions of Article 33.

(ix)

A person who failed to discharge the operations manager in violation of the order provided for in the first half of paragraph (1) or paragraph (2) of Article 37, or appointed the operations manager in violation of the provisions stipulated in the second half of paragraph (1) of the same Article (including cases where these provisions are applied mutatis mutandis to paragraph (3) of the same Article) Article).

(x)

A person who failed to report, failed to submit date, prepared false reports, or provided reports containing false statements in violation of the provisions of Article 40, paragraph (1) or Article 40-2, paragraph (8); or otherwise refused, prevented, or challenged the on-site inspection prescribed in these provisions.

(xi)

A person who submitted a false notification with regard to the notification provided for in Article 40-2, paragraph (2).

(xii)

A person who provided the documents provided for in each item of Article 40-2, paragraph (3) that contain false statements.

Article 56

A person who falls under any of the following items shall be fined 300 thousand yen or less:

(i)

A person who failed to submit notification or submitted false notification in violation of the provisions of Article 10 or Article 40-2, paragraph (4).

(ii)

A person who violated the provisions of Article 16, paragraph (1).

(iii)

A person who displayed the signs provided for in Article 16, paragraph (1) or similar signs in violation of the provisions of paragraph (2) of the same Article.

(iv)

A person who failed to maintain the list of operations managers, failed to state the matters specified in the same paragraph on such list, or made false statement in violation of the provisions of Article 17, paragraph (2).

(v)

A person who concluded the real estate specified joint enterprise contract which is not based on the general conditions of the real estate specified joint enterprise contract, or acted as agent in the conclusion thereof in violation of the provisions of Article 23, paragraph (1) (including cases where these provisions are applied after deemed replacement as provided for in Article 40-2, paragraph (5) and Article 46, paragraph (2)) or paragraph (2).

(vi)

A person who failed to prepare a list of business partners, did not maintain such a list, did not provide for inspection at the request of the business partners, or otherwise prepared a false list of business partners, maintained such list, or provided the business partners with such list for inspection in violation of the provisions of Article 30.

(vii)

A person who used the term "Member of the Real Estate Specified Joint Enterprise Association" in his/her business name in violation of the provisions of Article 42, paragraph (2).

(viii)

A person who operated the real estate specified joint enterprise without submitting notification or submitting false notification in violation of the provisions of Article 46, paragraph (3).

(ix)

A person who failed to submit notification or submitted false notification in violation of the provisions of Article 46, paragraph (4).

Article 57

(1)

When the representative of a corporation (including a non-corporation incorporated association or foundation with a stipulation for the representative or administrator; the same shall apply hereunder in this paragraph), or the agent, employee, or other hired person of a corporation or individual has committed illegal acts in connection with the operations or assets of said corporation or individuals specified in each of the following items, not only shall the offender be punished but also the corporation shall be punished by the fine prescribed in each of said items as well as the said individual by the fine prescribed in the respective Articles:

(i)

Article 52-2:

punishable by a fine of 300 million yen or less

(ii)

Article 52; Article 52-3, item (i) or item (ii); or Article 53, item (iii):

punishable by a fine of 100 million yen or less.

(iii)

Article 52-3, item (iii) through item (v); Article 53, item (i), item (ii) or item (iv), or the preceding three Articles:

punishable by the fine prescribed in the respective Articles.

(2)

In cases where the provisions of the preceding paragraph apply to non-corporation, incorporated associations, or foundations, the representative or administrator shall represent the said non-corporation, incorporated association, or foundation with regard to procedural acts and the provisions of the law concerning criminal proceedings shall apply mutatis mutandis in cases where the corporation is treated as the defendant or suspect.

Article 58

A person who did not submit notification or submitted a false notification in violation of Article 11, paragraph (1) shall be punishable by a non-penal fine of 1 million yen or less.

Article 59

A person who used the term "Member of the Real Estate Specified Joint Enterprise Association" in his/her business name in violation of the provisions of Article 42, paragraph (1) shall be punishable by a non-penal fine of 100 thousand yen or less.