Reform Plan for Public Interest Juridical Persons in Japan

6 August 2003

Office for Public Interests Corporation, Management Office, Minister's Secretariat, Ministry of Public Management, Home Affairs, Posts and Telecommunications of Japan1.

In recent times, scandals involving some public benefit juristic persons in Japan have served to erode public perceptions of these persons. Although the system of specified nonprofit corporations, nonprofit mutual benefit corporations, and other nonprofit corporations is being reorganized, the related provisions in the Civil Code that provide the legal grounds for establishing public benefit juristic persons have hardly been revised since enactment more than 100 years ago.

In view of this situation, the Administrative Reform Promotion Office of Cabinet Secretariat pointed out the need for a sweeping reform of the system of public benefit juristic persons in April 2001, and the government is now pursuing studies on reforming the system.

An outline of these studies is given below.

1. “Efforts Aimed at a Sweeping Reform of the System of Public Benefit Juristic Persons”

In March 2002, the government made a Cabinet Decision on a document entitled “Efforts Aimed at a Sweeping Reform of the System of Public Benefit Juristic Persons.”

This document provides for a radical and systematic review of the system of public benefit juristic persons. Its goal in doing so is to position nonprofit activities positively within the socioeconomic system in line with recent developments in socioeconomic conditions, as well as deal appropriately with various problems pointed out in connection with public benefit juristic persons. This review will be organized by the Cabinet Secretariat, which, with the cooperation of related ministries and private-sector experts, is to formulate “Guidelines for Reform of the System of Public Benefit Juristic Persons, etc. ” (tentative title) by the end of March 2003. This document will clarify the basic framework, schedule, and other factors concerning reform. Legal and other measures needed to implement this are to be established by the end of March 2006.

2. “Toward a Sweeping Reform of the System of Public Benefit Juristic Persons (Enumeration of Key Points)”

In April 2002, the Cabinet Secretariat published “Perspectives and Problems for a Sweeping Reform of the System of Public Benefit Juristic Persons” to contribute to future debate on the issue. Expert hearings on sweeping reforms of the system of public benefit juristic persons were held from April to June, presided over by the Prime Minister’s aides. On August 2, the Cabinet Secretariat published a document entitled “Toward a Sweeping Reform of the System of Public Benefit Juristic Persons (Enumeration of Key Points).” These Key Points describe the ideal future shape of private-sector nonprofit activities in Japan as well as problems with the existing system of public benefit juristic persons. On this basis, they then enumerate key points of debate concerning the basic framework for reform, its directionality, and so on.

3. “Basic Guidelines for Sweeping Reform of the System of Public Benefit Juristic Persons” (Tentative Title)

The government made a Cabinet Decision entitled “Basic Guidelines for Sweeping Reform of the System of Public Benefit Juristic Persons” (tentative title). Following is a brief summary of the Guidelines:
  • The government will establish a new and comprehensive nonprofit corporation system, where acquisition of a status as a juristic person is separated from the judgment in terms of public benefits and application of preferential measures. In order to promote nonprofit activities by the private sectors under this new system, the government will make it possible to establish nonprofit corporations only by registration, without permission from the related ministries.
  • The government will continuously consider preferential systems, including in taxation, taking a universal taxpaying duty into account.
  • The government will consider concrete measures to be taken for fair and rational juristic transition of existing public benefit juristic persons toward the new nonprofit corporation system, in line with the sweeping reform of the system of public benefit juristic persons taking place, etc.

The government is targeting the end of the year 2004 for making the framework of the new nonprofit corporation system more concrete, and the end of FY2005 for taking necessary legislative measures.

In order to promote the reform smoothly, it was agreed that the government would disclose related information to the public on a timely basis.

1 The Government of Japan submitted this summary of ongoing reforms to ICNL and authorized its posting on our website.