Q&A Examples from Members

Company housing for executives is not treated as a special benefit if it is provided under the welfare rules on the same basis as for other staff, or because it is needed for work such as emergency response.
However, the corporation must receive a reasonable rent from the executive concerned.

Board and councilor meetings must be held and run as set out in the corporation's endowment act.
If the endowment act states something like "XX shall act on behalf of the chair when the chair is unable to perform their duties," XX will hold the board meeting in place of the chair.
If the endowment act has no such provision, we believe you need to consider whether the chair can attend online or by other means, or whether to reschedule.
When you submit copies of the minutes to the prefecture, you may be told that the meetings were improperly held.
If you have any concerns, we recommend consulting the prefecture.

Changing basic assets requires an amendment to the articles of incorporation.

Reference: application for approval to amend the articles (endowment act) (Excel: 124KB) / from the Tokyo Metropolitan Government Guide to Operating Medical Corporations (October 2023 edition)
https://www.hokeniryo.metro.tokyo.lg.jp/iryo/hojin/uneitebiki.html

Model articles
Article X: Of the assets of this foundation, the following shall be basic assets.
(1) Real estate and XX yen among the assets in item 1, paragraph 1 of the preceding article
(2) Donated money and goods designated to be incorporated into basic assets
2. Basic assets may not be disposed of or pledged as collateral. However, where there are special reasons, they may be disposed of or pledged following a resolution of the board of directors.

There is no specific penalty. A specified medical corporation's articles should state who acts for the chair when the chair cannot perform their duties, so please run the corporation in line with those articles.

Particularly if the hospitalization is long, paying the same salary during hospitalization, when no medical care is provided, as before it may be questioned. Please be careful on this point.

The spouse and relatives within the third degree of kinship of each executive must not exceed one third of the total number of executives.

For a non-physician to become chair of a specified medical corporation, prefectural approval is required (proviso to Article 46-6, paragraph 1 of the Medical Care Act).
The Ministry of Health, Labour and Welfare notice on "Revision of the Medical Corporation System and Prefectural Medical Councils" also only states that specified medical corporations require the prefectural governor's approval under the Medical Care Act.
However, hospital chairs are in principle physicians, and a reason is required to appoint a non-physician, so we think you need to ask your prefecture in advance about the reason and the specific procedure.

For reference, here is information on applying for approval of a non-physician chair.
<Three cases for the special exception on appointing the chair>
The special exception (a non-physician becoming chair) is not granted without limit.
The prefectural governor approves it only in the following cases.

(1) When the chair has died or can no longer continue as chair due to serious illness or injury, and a non-physician (non-dentist) spouse or other person seeks to become chair while the chair's child is studying at a medical or dental school, or until the child completes clinical or other training after graduating

(2) A medical corporation that falls under any of the following
　- A specified medical corporation or social medical corporation
　- A medical corporation operating a regional medical care support hospital
　- A medical corporation operating a medical institution accredited through the hospital function evaluation by the Japan Council for Quality Health Care

(3) A medical corporation that the prefectural governor finds, taking into account the candidate's background, the board composition and other factors, poses no risk of impairing proper and stable operation

Q1: Can a dentist become chair of a medical corporation?
A1: Yes. Dentists serve as chair at several medical corporations.

Q2: Must the general meeting decide the hospital director?
A2: The hospital director is decided by the general meeting and the board of directors.

Q3: Can a dentist not become a hospital director?
A3: That is correct; they cannot.

Q4 and 5: In this case, should the vice-chair basically chair the meeting? If the vice-chair declines, may someone else do so?
A4 and 5: Either the former chair or the vice-chair may chair it.

Q6: In that case, does the substitute have no voting rights?
A6: At board meetings, there is no restriction on the chairperson's voting rights. The chairperson of the general meeting has no voting rights.
https://www.mhlw.go.jp/web/t_doc?dataId=00tc3595&dataType=1&pageNo=1

Q7: How much should the salary be raised when a new chair takes office?
A7: It depends on whether the chair guarantees the borrowings.
If the chair gives a personal guarantee, we would like to see at least the normal salary plus 1% of the outstanding loan balance paid.

Q8: How much should the salary be raised when a new hospital director takes office?
A8: It depends on size, but the going rate is around 20 million yen a year.

Once a business is designated as ancillary in the articles, there is unfortunately no provision allowing it to be included in the related core business accounts; separate accounting is required. Keeping separate accounts also helps you understand the assets and profit and loss of that ancillary business.

The beds counted for hospitals in unprofitable areas are general or long-term care beds as defined in Article 7, paragraph 2 of the Medical Care Act. Medical long-term care beds are therefore eligible, but long-term care insurance beds and long-term care medical facilities are outside the scheme.

If you first put in place rules on sign-on bonuses and rewards and then pay them in line with those rules, this does not conflict with the certification requirements.
Paying sign-on bonuses or rewards only to related parties would conflict with the certification requirements, so please be careful. Also note that income tax must be withheld from these payments.

It is possible, but if the corporation gives up specified status and dissolves, its residual assets must be donated to the state or similar bodies. It may be better not to dissolve the medical corporation, but to change the chair and hand the whole corporation over to that physician.

An auditor who did not attend should not sign, as this would likely breach the articles. No additional signatory is needed either. The minutes writer need not sign if their name is stated in the minutes.

Q1. We must publish a notice in the Official Gazette. Would a notice on our website be acceptable instead?
A1. Yes, if the articles provide for electronic public notice. If they only mention notices "in the Official Gazette or the XX newspaper" and do not mention electronic notice, it is not allowed.

Q2. Which is better, electronic notice or the Official Gazette?
A2. Electronic notice: more likely to be seen via your website, but low cost.
Official Gazette: harder to find online. Extra editions become unavailable after about a month. High cost (roughly 1 million yen or more).
Whether to prioritize cost or a less visible method is up to your corporation.

Q3. Which is more common, electronic notice or the Official Gazette?
A3. Our impression is that the Official Gazette is more common (to avoid the contents becoming more widely known than necessary).

Q4. Where do we apply for an Official Gazette notice?
A4. Each prefecture has an Official Gazette sales office where you can apply.

<Reference>
How to apply for an Official Gazette notice
https://www.gov-book.or.jp/asp/Kanpo/KoukokuEntryTop/?op=1

If the articles provide for it, only board meetings may use written resolutions (see below). As your articles have no such provision, you cannot do so and would need to amend the articles.

- Medical Care Act, Article 46-7-2　
Articles 91 to 98 of the Act on General Incorporated Associations and General Incorporated Foundations (excluding each item of Article 91, paragraph 1 and Article 92, paragraph 1) apply mutatis mutandis to the boards of directors of medical corporations that are associations or foundations.

- Act on General Incorporated Associations and General Incorporated Foundations, Article 96
(Omission of board resolutions)
Article 96: A general incorporated association with a board of directors may provide in its articles that, where a director makes a proposal on a matter to be resolved by the board and all directors (limited to those entitled to vote on the matter) express their consent in writing or by electronic record (unless an auditor objects to the proposal), a board resolution approving the proposal is deemed to have been made.

A. A general meeting cannot proceed or pass resolutions unless a majority of all members attend (Article 46-3-3, paragraph 2 of the Medical Care Act). The general meeting therefore cannot be held by written resolution.

This is also set out in the model articles for specified medical corporations.

Article 22
The matters listed in the left column of the following table must be approved by the general meeting held at the time listed in the right column.
(Table omitted)
2. Unless otherwise provided, resolutions at the meeting in the preceding paragraph require a majority of all members to attend and approval by a majority of those present.

A. Councilor meetings of specified medical corporations (associations) are not covered by the Medical Care Act, so they are held in line with the model articles below.
As resolutions require a majority of all councilors to attend, the councilor meeting cannot be held by written resolution.

Model articles for specified medical corporations
Article 23
The matters listed in the left column of the following table must be approved by the councilor meeting held at the time listed in the right column.
(Table omitted)
2. Resolutions at the meeting in the preceding paragraph require a majority of all councilors to attend and the consent of a majority of those present.

Based on the above, no meeting can be held in writing without amending the articles.

Based on the above, the board of directors.

Based on the above, the general meeting and the councilor meeting.

Under the model articles, amending the articles of a specified medical corporation requires resolutions of the general meeting and the councilor meeting, which require a majority to attend, and of the board. Written resolutions are therefore not possible.

Model articles for specified medical corporations
Chapter 9: Amendment of the Articles and Dissolution
Article 40: These articles may not be amended without following the procedures in Articles 22, 23 and 27 and obtaining the approval of the governor of XX Prefecture (the Director-General of the XX Regional Bureau of Health and Welfare).

Finally, for general, board and councilor meetings alike, holding meetings by web or video conference is permitted as an exception. You may wish to use this if meeting in person is difficult.

Twelve councilors, of whom up to four may be relatives. Six must be appointed from outside the medical corporation.