Recent Changes in Laws Regarding Nonprofit Corporations and Charitable Trusts in Japan

Zeitschrift für Japanisches Recht /Journal of Japanese Law No.45 (2018)

18 Pages Posted: 20 Jun 2019

See all articles by Nobuko Matsumoto

Nobuko Matsumoto

Gakushuin University, Faculty of Law

Date Written: January 1, 2018

Abstract

Varies types of nonprofit organizations are active in Japan. A common feature of these is that they can earn profits but cannot distribute them to their members. Two systems of nonprofit corporations are known: general corporations and public interest corporations on the one hand, and NPO corporations and approved NPO corporations on the other. The Article examines the legal structure of these four entities. For this, it summarizes the status quo and discusses the latest trends.

In 2008, the Japanese nonprofit corporation law, that was originally enacted almost 100 years ago, was fundamentally reformed. The main purpose of this change was to make it easier to incorporate nonprofit corporations. In the reform, two new types of nonprofit corporations were introduced, namely, general corporations and public interest corporations. There are two types of these corporations: association-type corporations and foundation-type corporations. Association-type corporations have members, while foundation-type corporations do not. All that is required today to set up a general corporation is to enter it at a registry. Thus it has become much easier after the reform to incorporate such organizations. To turn a general corporation into a public interest corporation it has to obtain an additional authorization. The principal objective of a public interest corporation must be to operate a business which promotes the public interest.

Another category of Japanese nonprofit corporations is the NPO corporation, including the approved NPO corporation. The latter has an additional approval from the authorities. It is for historical reasons that Japan has these two different systems of nonprofit corporations. NPO corporations are among the most common nonprofit corporate structures in Japan.

The Japanese government is currently at work reforming the law governing charitable trusts, which has not been revised since 1922, when it was enacted. In 2016, within the Japanese Legislative Council, a section responsible of trust law, was set up and began discussing the reform of charitable trust law. In January 2018, a tentative report was published and the Ministry of Justice started collecting public comment. Charitable trusts in Japan have not necessarily been used actively as vehicles of charitable activities due to certain problems that have been experienced in practice in the past. The reform responds to these problems and is intended to make charitable trusts more flexible and easy to use.

Keywords: Japanese law, nonprofit organization, nonprofit corporation, charitable trust

JEL Classification: K22, K29

Suggested Citation

Matsumoto, Nobuko, Recent Changes in Laws Regarding Nonprofit Corporations and Charitable Trusts in Japan (January 1, 2018). Zeitschrift für Japanisches Recht /Journal of Japanese Law No.45 (2018), Available at SSRN: https://ssrn.com/abstract=3402854

Nobuko Matsumoto (Contact Author)

Gakushuin University, Faculty of Law ( email )

1-5-1 Mejiro
Toshima-ku Tokyo, 171-8588
Japan

HOME PAGE: http://www.univ.gakushuin.ac.jp/en/

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