Japan overhauls laws governing non-profits

Japan has reformed its outdated public benefit corporation (PBC) rules, in force since the late 19th century. The reforms usher in a new legal framework for ‘general not-for-profit corporations’, to include the present general public benefit corporations (koeki hojin) as well as mutual benefit organizations (chukan hojin).  The new legislation will be incorporated in the Civil Code and will apply to all organizations that seek to become legal entities irrespective of whether they wish to apply for recognition of ‘public benefit status’.
In addition, there will be a simplified process for incorporation, making it entirely non-discretionary and applying standards similar to those for for-profit corporations. Any civil society organization may apply for registration at the local Registry Office once a notary has inspected the corporate documents for conformity with the Act.

There will be a new application system for not-for-profit corporations that seek to be classified as authorized public benefit corporations (APBCs). This status will be determined by a Public Benefit Corporation Commission (PBCC), which includes a mix of academics, scholars and sector professionals under the auspices of government. Similar councils will be established to carry out authorization and oversight functions at the local, prefectural level.

Reforms had been advocated by the sector, especially the Japan Association of Charitable Organizations (JACO). There is concern among sector representatives about the extensive and restrictive rules concerning application for APBC status, but they are working with the PBCC to try to ease the burdens of the new regulatory regime.

For more information
Contact Tatsuo Ohta of JACO at ohta@kohokyo.or.jp or Karla Simon of ICCSL at simon@law.edu

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