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The Act on Facilitation of Business Succession Entered into Force Today

On April 1, 2016, the Act for the Partial Revision of the Act on Facilitation of Succession of Management of Small and Medium Sized Enterprises (Act on Facilitation of Business Succession) entered into force, after being approved by the 189th ordinary session of the Diet on August 21, 2015, and promulgated on August 28, 2015. Aiming to facilitate business succession at small and medium enterprises (SMEs) and small enterprises, the revised act provides measures for expanding the scope of inheritance rights concerning the reserved portion, stipulated under the special arrangement of the act, to non-relatives, as well as measures for increasing the amount of mutual aid funding for business succession among relatives under the Small Enterprise Mutual Relief Projects Act.

1. Background and purpose of the act

As the diversity of business succession has been advancing, the cases where non-relatives of decedents inherit businesses are increasing recently, reaching about 40% of all business successions, whereas, in about 90% of such cases two decades ago, the relatives of decedents inherited the businesses. In addition, it is also necessary for Japan to promote measures for facilitating smooth business succession under the Basic Act for Small and Medium Sized Enterprises and other acts, so as to sustain the business development of SMEs and small enterprises. In light of these situations, METI will take measures for facilitating smooth business succession at SMEs and small enterprises and endeavor to sustain their business development.

2. Outline of the act

1) Partial revision of the Act on Facilitation of Succession of Management of Small and Medium Sized Enterprises (Act on Facilitation of Business Succession)

  1. Revising the special arrangement on the reserved portion so as to expand the scope of the right of inheritance for the portion to cover non-relatives
    Concerning the special arrangement on the reserved portion under which a claimant for the legally reserved portion is limited to relatives of the decedent,* the scope of the revised act is to be expanded to cover business succession by non-relatives.

    *Note: Under this special arrangement, a successor who has received shares in the business from the decedent is able to independently submit a request to the family court for a final legal decision on renunciation of the legally reserved portion if the successor reaches an agreement with other relatives and is recognized by the METI Minister as being in conformity with the requirements in advance.

  2. Enhancing the functions of SMRJ, in supporting business succession of SMEs
    The revised act is to stipulate a provision under which the Organization for Small and Medium Enterprises and Regional Innovation, JAPAN (SMRJ), will be able to provide support including necessary advice to business owners, business successors, and others, so as to encourage a more systematic process of business succession.

2) Partial revision of the Small Enterprise Mutual Relief Projects Act

The revised act is to review the Small Enterprise Mutual Relief Projects under which individual business operators and the board members of companies lay aside reserve funds for lifestyle stability in the case of closing a business or entering retirement. This project is conducted by SMRJ.

  1. Facilitating the smooth business succession of small enterprises
    The revised act is to increase the amount of mutual aid money when individual business operators leave their businesses to their relatives or when board members at 65 years of age or older have retired, thereby facilitating the business succession of small enterprises.
  2. Allowing small enterprises to flexibly change the premium of mutual relief in accordance with their business conditions
    The revised act is to allow small enterprises to flexibly change the premium of mutual relief so as to make Small Enterprise Mutual Relief Projects more user-friendly.

3) Partial revision of the Act on the Organization for Small and Medium Enterprises and Regional Innovation, Japan, Independent Administrative Agency (SMRJ Act)

  1. Enhancing the functions of SMRJ, in supporting business succession of SMEs (reposted)
  2. Abolishing the commissioning to financial institutions by SMRJ, of the service concerning the application fee system under the Small Enterprise Mutual Relief Projects
    The revised act is to abolish the system under which small enterprises pay an application fee when joining the mutual relief projects, from the viewpoint of streamlining the procedures concerning the projects.

Release date

April 1, 2016

Divisions in Charge

  • Information in general

    Policy Planning Division, Business Environment Department, Small and Medium Enterprise Agency

  • Information on the Act on Facilitation of Business Succession and the SMRJ Act (3), i.)

    Corporate Finance and Tax Affairs Division, Business Environment Department, Small and Medium Enterprise Agency

  • Information on the Small Enterprise Mutual Relief Projects Act and the SMRJ Act (3), ii.)

    Small Enterprise Division, Business Support Department, Small and Medium Enterprise Agency

Ministry of Economy, Trade and Industry1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8901, Japan Tel: +81-(0)3-3501-1511
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