Law Concerning the Regulation of Receiving of Capital Subscription, Deposits and Interest on Deposits = Shusshi hou = 出資法

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In this page, I will explain ” Law Concerning the Regulation of Receiving of Capital Subscription,
Deposits and Interest on Deposits = Shusshi hou = 出資法 ( Hereinafter referred to as “ Law of Receiving of Capital Subscription )”.
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In several decades ago there was a crime relating to this law.
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An organization named F company received about 4.5 billion yen from many and unspecified persons ( 150,000 persons ).
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At the time F company received 4.5 billion yen, it promised that it would reimburse all amount of money when customers withdraw their money ( Principal guaranteed = Ganpon hosho ).
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And it announced that customers could receive interest of 2% every month.
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( Annual interest rate will be 24% ).
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F company announced it guaranteed high interest rate and collected a lot of money.
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Then at last F company filed bankruptcy and most of persons could not receive their money.
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There have been a lot of this kind of cases.
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In order to punish F company according to crime of fraud, intention of deception should be proven by prosecutor.
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If F company thought it could pay interest of 2% monthly, it could not be punished by crime of fraud.

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So, this Law of Receiving of Capital Subscription ( SHUSSHI HO ) is required.
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In the case a person violates of this Law of Receiving of Capital Subscription, criminal penalty ( Keiji batsu ) should be imposed.
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Roughly speaking

1)  It can not guarantee reimbursement of principal in the case payment from Many and Unspecified persons is capital contribution.
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2)  It can not deposit money of Many and Unspecified persons in the case F company is not bank.
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3) It can not lend money to Many and Unspecified persons with more than limit of borrowing rate.
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As for 1)
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It can not receive capital contribution  ( = capital subscription ) from Many and Unspecified persons with promising that it will reimburse whole amount of money to Many and Unspecified persons.

In principal, “capital contribution” can not be reimbursed to investors.

So, in the case a company ( Named G company ) collects capital contribution from Many and Unspecified persons ( In this case, Many and Unspecified persons will become shareholders of new company after incorporation of company ) to incorporate a company and receive money, it is not prohibited by this Law of Receiving of Capital Subscription.
Because in this case, G company does not guarantee reimbursement of principal and contributors also understand it.
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As for 2)
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Prohibition of receipt of deposits of money is enacted.
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In Law of Receiving of Capital Subscription, ” receipt of deposits of money ” means that a company receives deposit money from Many and Unspecified persons.
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Of course bank is allowed to receive deposit of money ( It has permit ).
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In the case a company ( named Debtor company ) receives money as loan, Debtor company guarantees reimbursement of principal.
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However, it is not included in this “ receipt of deposits of money”.
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Because, Debtor company does not receive money from Many and Unspecified persons, but from specified person.
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As for 3)
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In the case a company ( named L company ) lends money to persons or legal entity, loan rate should be 109.5% or less per a year .
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( In the case L company lends money as business purpose, limit is 29.2% per a year)
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I believe these knowledge is necessary when you start fund business in Japan.
coolforeignerinJapan2017,January

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