Waseda University Institute of Comparative Law

     The General Incorporated Associations and General Incorporated Foundations Law (hereinafter, the "Law") pertains to the acquisition and validity of the juridical personality of an association or foundation whose purpose is not the distribution of surplus earnings (i.e.; a non-profit corporation). The Law was made public on June 2, 2006 and is to be enforced on December 1, 2008.
     This is not the only legal framework for such a legal entity existing in Japanese law. There is the incorporated school, the ecclesiastic corporation as well as other public interest corporations with special status under the law. Generally speaking, there are provisions for public interest corporations stipulated in the Civil Code of 1896. Under civil law, a private person may establish a public interest corporation under an "approval regime" where a charter is issued by competent authorities.
     However, under such a public interest corporation framework, a charter is not easily handed down and, even with a charter in hand and the corporation fully established, the complicated rules and regulations that must be abided by make this type of incorporation very difficult to maintain even as an organization conceived for the public interest. Moreover, there exist organizations that are non-profit (i.e. do not correspond to the provisions of the Company Law) but were not conceived for the public interest. A legal framework granting a juridical personality for such organizations was not in place.
     Because of increasing awareness concerning the difficulties associated with the establishment of a non-profit corporation and the many problems arising in the course of maintaining such a corporation subsequent to establishment, special laws regarding non-profit corporations (NPO Law, Non-Profit Mutual Benefit Corporation Law) were enacted leaving civil law provisions intact. However, the Law, which defines all corporations under civil law as general corporations except those corresponding to the existing special laws, came to be because these new laws did not achieve their intended purpose.

     The Law stipulates provisions regarding the establishment, employees, institutions, accounting, amendments to articles of incorporation, transfers of business and dissolution of a general incorporated association, the establishment, institutions, accounting, amendments to articles of incorporation, transfers of business and dissolution of a general incorporated foundation as well as common provisions regarding liquidation and combinations, among others.
     The Law establishes a "regulatory regime" under which a juridical personality may be obtained not by the existence, or lack thereof, of a public interest nature to the business undertaken, but rather by a set of procedures that include the drafting of articles of incorporation, authentication by a notary public and registration of the establishment. However, for corporations effectuating business for the public interest, receiving public interest certification enables them to become public interest corporations. Please note that the Law includes provisions regarding the scope of public law with respect to public interest corporations.

     Concerning the provisions on the scope of private law, the conventional framework is deemed to be in effect, except with respect to the abovementioned revisions regarding establishment. We may very well see in the future examples of organizations whose establishment is not registered nor is a juridical personality acquired regardless of their status as a corporation even under an "approval regime." Here is where the lengthy debate on the conventional legal system finds its pertinence. However, the enactment of the Law may affect the tone of this debate. It is necessary to observe closely the progression of this debate subsequent to its enactment. Contrastingly, the appropriateness in terms of government policy of easily acquiring a juridical personality under the Law is an issue that necessitates validation in the future.