Article 21. Prohibition of Competition by Transferor of a Business

(Compare Article 25 of the former Commercial Code)

1. In those situations where a corporation has transferred a business (hereinafter in this Chapter called the “transferring corporation”), unless the related parties have indicated to the contrary, the transferor may not engage in the same kind of business in the same city, town or village (or ward in the special wards of the Tokyo capital, and in the designated cities of Article 252-19, paragraph 2 of the Local Self Governments Law (Law No. 67 of 1974). Hereinafter in this paragraph, the same), or any adjacent city, town or village for a period of 20 years.

2. When the transferring corporation has made a special agreement not to engage in the same line of business, such special agreement shall be valid only for a period not exceeding 30 years from the date of the transfer.

3. Notwithstanding the provisions of the previous two paragraphs, the transferring corporation may not engage in the same line of business for purposes of unfair competition.

Disclaimer: This translation is for general reference purposes only and is provided on an “as is” basis with no warranties made whatsoever. Attorney Roderick H. Seeman (licensed in the USA) shall not be responsible for any consequences resulting from the use of this translation. Reliance must be placed on the original Japanese text of the laws. In the text of the translation article headings are added in parenthesis are not in the Japanese language original and are added only for the purposes of enhanced comprehension.

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