SUMMARY OF SOME RECENT JAPANESE LEGISLATION

By J. H. Barkmeier, Division of Commercial Laws

The 73rd Session of the Japanese Diet enacted 87 laws, some of which are only minor revisions of existing laws while others are new subjects of legislation and of considerable importance. Full details of all of these laws are not as yet available but on the basis of reports from the Office of the American Commercial Attache a summary of several of these laws has been prepared.

NATIONAL GENERAL MOBILIZATION LAW

An Imperial ordinance

was issued on May 5, 1938, providing for the enforcement of Articles 1, 2, 3, 13, 21 to 26 inclusive, and 31, and for the formation of a National General Mobilization Inquiry Commission in accordance with authority granted by the National General Mobilization Law.

According to Article 1, "the national general mobilization referred to in this law is the control and utilization of personal and commodity resources to display most effectively the entire force of the State for the purpose of attaining the object of national defense in wartime (including incidents of the nature of war, and hereinafter designated merely wartime)."

Article 2. The general mobilization goods referred to in this law are the following:

(1) (2)

Arms, warships, ammunition, and other military goods. Clothing, foodstuffs, beverages and feed necessary for national general mobilization.

(3) Medical supplies, medical instruments and apparatus and other hygienic goods, as well as hygienic supplies for horses, necessary for national general mobilization.

(4) Vessels, aircraft, rolling stock, horses and other transportation facilities necessary for national general mobilization. (5) Communications facilities necessary for national general

mobilization.

(6) Materials for civil engineering and building purposes and those for lighting purposes necessary for national general mobilization.

(7) Fuel and electric power necessary for national general mobilization.

(8) Industrial materials, machinery, machine tools, equipment and other goods required for the production, repair, distribution or preservation of materials mentioned in each of the foregoing

paragraphs.

(9) Materials other than mentioned in each of the foregoing paragraphs necessary for national general mobilization to be so designated by Imperial ordinance.

Article 3.

The general mobilization businesses referred to this law are the following:

in

(1) Business pertaining to the production, repair, distribution, export, import or storage of general mobilization materials.

(2) Business pertaining to the transportation, and communication necessary for national general mobilization.

(3) Business pertaining to financing necessary for national general mobilization.

(4) Business pertaining to sanitation, veterinary attention for horses and relief necessary for national general mobilization.

(5) Business pertaining to education and training necessary for national general mobilization.

(6) Business pertaining to inquiry and research necessary for national general mobilization.

(7) Business pertaining to information or enlightenment and propaganda necessary for national general mobilization.

(8) Business pertaining to protection necessary for national general mobilization.

(9)

Enterprises necessary for national general mobilization to be so designated by Imperial ordinance other than those mentioned.

Article 13 states that the Government may, in accordance with the provisions of an Imperial ordinance, use or control or expropriate plants, working establishments belonging to general mobilization enterprises, or other facilities, and the entire facilities or any part of them that could be used for such purposes. In using or expropriating those facilities, the Government may cause employees of such establishments to be supplied with or to operate such patented inventions or registered utility models already in operation. The Government is also authorized to use or expropriate land, houses and other facilities necessary for general mobilization enterprises.

Article 21 provides that reports may be required regarding the vocational abilities of Japanese subjects. Article 22 relates to the training of technicians in schools or plants, and Article 23 empowers the Government to cause those producing, selling or importing general mobilization goods to store a fixed quantity of such goods or materials. Under Article 24 the Government may, by ordinance, cause owners of general mobilization enterprises to establish and execute specific programs, and under Article 25 to carry on experimental and research work. The Government is authorized by Article 26 to guarantee a fixed profit or grant a subsidy to those in the business of producing or repairing general mobilization materials. Article 31 pertains to the collection of reports, and authorizes competent officials to inspect the conditions of a particular business, account books and other items.

MACHINE TOOL MANUFACTURING LAW

The Machine Tool Manufacturing Law provides that persons who desire to engage in machine tool manufacturing must obtain the permission of the Government, an exception being made in the case of those whose facilities do not reach a scale to be specified by ordinance. The types of machine tools to which the law will apply are to be determined by ordinance. Those who may obtain the required permit are limited to joint stock companies, (Kabushiki Kaisha) established under Japanese law, having the majority of the stockholders and directors, the greater part of the capital and voting rights represented by subjects of the Empire, or Japanese companies in which the majority control is in Japanese nationals. When machine tool

manufacturing companies desire to increase or change their facilities, they must also obtain permission of the Government in accordance with provisions established by ordinance. An exemption from the income

and business profits taxes may be granted in relation to new or increased facilities for a period of 5 years.

AIRCRAFT INDUSTRY LAW

The Aircraft Manufacturing Industry Law establishes provisions similar to those applying to machine tool manufacturing in the manufacture of aircraft, fuselages, motors or parts and accessories, and contains similar restrictions as to nationality of ownership and exemptions from income and business profit taxes.

GOLD PRODUCTION PROMOTION LAW

The Gold Production Promotion Joint Stock Company Law provides for the creation of a company to engage in activities necessary for the promotion of the gold producing industry which includes the mining and refining of gold, the advancement of funds, or investment of capital in enterprises manufacturing tools and machinery for use in gold mining and refining, sales and purchases of tools, machinery materials or facilities necessary for mining and refining enterprises. It is stipulated that the capitalization of the company shall be 50,000,000 yen, of which one-half shall be invested by the Government, and the shares shall be held exclusively by Government, public bodies, Japanese subjects or Japanese juridical persons. The company is exempted from income and business profit taxes for a period of 10 years.

IMPORTANT MINERALS LAW

The Important Minerals Production Increase Law gives the Government extensive authority in the promotion of production of important minerals which include gold, silver, copper, lead, tin, antimony, mercury, zinc, iron, iron sulphide, chromite, manganese, scheelite, molybdenum, nickel and cobalt ores, coal, lignite, sulphur, gold sand, iron sand and tin sand and other minerals specified by ordinance. The Government may order holders of mining rights in important minerals to commence or continue operations when such measures are deemed necessary, and it also has the power to require reports and to regulate the transfer and amalgamation of mining rights.

ELECTRIC POWER CONTROL LAW

The fundamental objectives of the national electric power policy is revealed at the commencement of this law: "The Government is authorized to manage the generation and transmission of electric power, in order to lower the cost of electricity, ensure an adequate supply of power and to promote a wider range of its use (Art. 1)." The practical management of the plants, however, is conferred upon the Japan Electric Generation and Transmission Company (Art. 2). A Bureau called "Electricity Bureau" will be newly established to supervise the new company, and under this Bureau, practical plans for the erection of plants will be decided (Art. 3). An advisory council will be established to assist the above Bureau in deciding power rates and other important problems (Art. 5).

JAPAN ELECTRIC POWER GENERATION AND

TRANSMISSION COMPANY LAW

The Japan Electric Power Generation and Transmission Company will be established to take over all major new water and steam power equipment and all the main transmission systems. As a general principle, however, existing water-power equipment will be left as at present, but the power generated will be conveyed through the transmission system controlled by the new company.

As regards the valuation of the plants taken over, a half of the total value of construction costs and profit value will be considered as share of the private companies. Construction cost is defined as the cost actually paid out for construction, reduced by the amount for depreciation. The profit value will be decided in consideration of the average profit rate for the past ten years (Art. 9). The contributing companies will be paid in shares of the new power company (Art. 11). In case a contributing company cannot continue business with the plant left in its possession, it may request the new company to acquire the whole plant outright (Art. 14).

The contributing companies may request the new company to exchange the shares given to them into cash or company bonds at face value (Art. 15).

The holding of shares in the company is limited to the Government public bodies, subjects of the Empire and Japanese juridical persons who are not represented by foreigners or foreign companies for the majority of their shareholders or officials or the greater part of their capital or the majority of their voting rights (Art. 3).

The management of the new power company will be exercised by a President, Vice-President, five directors, and three auditors (Art. 18). The President and the Vice-President will be appointed by the Government among 10 candidates elected by the general meeting (Art. 20). Ex-officials who have been supervising the company cannot become directors for five years after their resignation from Government service (Art. 22).

The new company will be privileged to increase its capital even before calling up the unpaid capital, to the extent of three times its paid up capital. The Government guarantees a minimum dividend of 4 percent for ten years after the establishment of the company (Art. 32).

DEBENTURE

DISPOSAL LAW IN CONNECTION WITH

STATE MANAGEMENT OF ELECTRICITY

With the enforcement of the above mentioned laws, a difficult problem may arise with respect to the debentures of private companies issued on the security of their assets. This is especially true in connection with funded foreign borrowings. The law accordingly regulates that equipment on the security of which bonds are issued, will remain unaffected, even after the equipment is handed over to the new company (Art. 1). To protect the bondholders' interests, the new company shall guarantee both the principal and interest, in case obligations are not met by the contributing companies (Art. 3). In case all or a larger part of the mortgaged equipment is taken over by the new company, the Government is authorized to transfer the burden of the debt to the new company (Art. 4). In such

case, the company will reject repayment before maturity (Art. 7), while the Government will guarantee both the principal and interest (Art. 8).

AMENDMENT TO ELECTRIC POWER ENTERPRISE LAW

Government control will also be strengthened with respect to the retail service of electricity. Government supervision over the disposal of profits, depreciation and extension of service area is added to the original law (Art. 23). The Government is authorized to order private companies to take over or to exchange certain areas to permit lower charges (Arts. 24, 26).

According to the official return by the Communications Ministry, the existing plants to be taken over by the new power company were valued at about 670,000,000 yen at the end of 1936. Equipment was as follows:

1.

Water-power generation equipment.........none.

2. Transmission equipment.........6,300 kilometers among which 4,100 kilometers of more than 100,000 volts.

3.

4.

Sub-stations.........67 (3,900,000 kilo volt-ampere).
Steam-generation equipment.........41.

The electric power controlled by the new company will reach 1,800,000 kilowatts of steam-generated power and 2,000,000 kilowatts acquired from private companies.

The capital of the new company is estimated to reach 780,000,000 yen in the year of 1939.