Main legislation pertaining to trusts

The legislation relating to trusts include the Trust Act, which is the fundamental law for trusts; the Trust Business Act, which establishes the regulations for operators of trusts as a business; and the Act on Engagement in Trust Business by a Financial Institution, which establishes the regulation for financial institutions that concurrently undertake trust business.

Apart from this legislation, the Financial Instruments and Exchange Act regulate a cross section of financial instruments to ensure user protections. The regulations under this Act also apply to investment trust instruments.

Trust Act

The Trust Act is the fundamental law concerning trusts that prescribes matters such as the requirements and effect of a trust, as detailed in the following 13 chapters.
There had effectively been no amendments to the Trust Act in more than 80 years since its enactment in 1922, but Japan's trust system developed toward a focus on commercial trusts. Recently, there has been growing need in the area of commercial trusts for new investments and financial systems, whereas expectations for the use of trusts in the area of civil trusts led to the overall amendment to the Trust Act in December 2006, which came into force in September 2007, to modernize the system and increase its flexibility as much as possible.

Chapter 1
General Provision: prescribes matters such as trust definitions, a trust's coming into effect, and qualification of a trustee
Chapter 2
Trust Property, etc: prescribes matters such as requirements for perfection concerning property that belongs to trust property, scope of trust property, restrictions on execution and other actions for property that belongs to trust property, and the relationship between trust property and bankruptcy, and other proceedings for a trustee
Chapter 3
Trustees, etc: prescribes matters such as the trustee's powers, duties, liabilities, and change
Chapter 4
Beneficiaries, etc: prescribes matters such as acquisition and exercise of rights by a beneficiary, beneficial interest, and the appointment of a trust caretaker, etc if there is no beneficiary
Chapter 5
Settlors: prescribes matters such as settlors' rights, transfer of status, and special rules for trusts and related matters, with provisions on the acquisition of beneficial interest upon the death of the settlor
Chapter 6
Modification, Consolidation, and Splitting of trusts: prescribes matters such as the ability to modify, consolidate, and split of the trustat the agreement of the settlor, the trustee, and the beneficiary
Chapter 7
Termination and Liquidation of Trusts: prescribes matters such as termination of a trust, grounds for commencement of liquidation, and vesting of residual assets
Chapter 8
Special Rules on Trusts With Certificates of Beneficial Interests: prescribes matters such as the issuance of certificates indicating beneficial interest, special rules for assignment, partial reduction in the trustee's obligations as defined in the terms of trust, and the establishment of the beneficiaries' exercise of rights and the beneficiaries meeting plan for such decision making
Chapter 9
Special Rules on Limited Liability Trusts: prescribes measures such as the requirements for trust where the trustee's obligation is limited to the trust property and restriction on distribution of trust property to the beneficiary, etc
Chapter 10
Special Rules on Limited Liability Trusts With Certificates of Beneficial Interest: prescribes matters such as the appointment of an accounting auditor for a limited liability trust, which is a trust with certificates of beneficial interest
Chapter 11
Special Rules on Trusts with No Provisions on the Beneficiary: prescribes matters such as the requirements, duration, and settlor's rights for a trust with no provisions on the beneficiary
Chapter 12
Miscellaneous Provisions
Chapter 13
Penal Provision

Please refer to the Japanese Law Translation Database System for specific details on the Trust Act.

Trust Business Act

The purpose of the Trust Business Act is to ensure the protection of the settlors and beneficiaries of trusts by securing fairness in the acceptance of trusts and other related transactions through the provision of the necessary matters for those conducting trust business, as detailed in the following eight chapters.
The Trust Business Act was enacted together with the Trust Act in 1922; however, following World War II, only financial institutions concurrently conducting trust business provided trust business in Japan. The need to expand the range of entities that are allowed to provide trust business to non-financial corporations and others and the increased need to abolish restrictions on assets that could be entrusted prompted amendments and enforcement of the Trust Business Act in 2004.

Chapter 1
General Provisions: prescribes the definitions for trust business, trust companies, and similar entities
Chapter 2
Trust Companies: prescribes matters such as the license, registration and scope of trust business, the rules for acts pertaining to acceptance of a trust, accounting, and supervision
Chapter 3
Foreign Trust Business Operators: prescribes matters such as the license, registration, and supervision of foreign trust business operators
Chapter 4
Persons Authorized to Give Directions: prescribes the duty of loyalty and rules for conduct of a person who conducts business related to providing instructions on methods of management or disposition of trust property
Chapter 5
Agents for Trust Agreement: prescribes matters such as the registration, operations, and supervision of agency for trust agreements
Chapter 5-2
Designated Dispute Resolution Organization: prescribes matters such as the designation of persons engaged in the operations and supervision of the business of dispute resolution
Chapter 6
Miscellaneous Provisions
Chapter 7
Penal Provisions

Please refer to the Ministry of Justice's Japanese Law Translation Database System for specific details about the Trust Business Act

The Act on Engagement in Trust Business by a Financial Institution

The Act on Engagement in Trust Business by a Financial Institution (Concurrent Business Act) prescribes the rules for financial institutions that conduct trusts business under the Prime Minister's authorization, as detailed in the following six chapters.

Trust companies established in accordance with the Trust Business Act conducted trust business in Japan prior to World War II, but The Law Concerning the Concurrent Undertaking of Savings Bank Business and Trust Business by Ordinary Banks (called the "Act on Engagement in Trust Business by a Financial Institution" under the Financial System Reform Act of 1992) was enacted in 1943, promoting mergers between trust companies and banks and trust business has long been managed by banks that have concurrently conducted trust business in accordance with the Concurrent Business Act.

Chapter 1
General Provision: prescribes matters such as authorization for Authorization for Engagement in Trust Business and mutatis mutandis application of the Trust Business Act
Chapter 2
Business: prescribes matters such as the application of the granting of credit to one person in accordance with the Banking Act, procedures for changing clauses in regular type trusts, and entering into contracts that compensate losses pertaining to money trusts where no investment method is specified
Chapter 3
Supervision: prescribes matters such as reports notices, suspension of the trust business , and the state of assets
Chapter 4
Designated Dispute Resolution Organization: prescribes matters such as the designation of persons engaged in the operations and supervision of the dispute resolution business
Chapter 5
Miscellaneous Provisions
Chapter 6
Penal Provisions

Major points of Trust Act Amendments (2006)

Main points of the Trust Business Act Amendment (2004, 2006)

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