The Act on General Rules for Incorporated Administrative Agencies establishes common rules for Incorporated Administrative Agencies together with the Individual Acts that define each agency's name, purpose, and scope of operations. It is consulted when a reader needs to understand the difference between agency categories, how objectives and plans are set, how operational performance is evaluated, or which finance and accounting rules apply. This article covers those common structural provisions, as verified on e-Gov Law Search and Japanese Law Translation, and does not explain the Individual Act of any particular agency.
Incorporated Administrative Agencies and Individual Acts
The Act begins by defining its relationship with the statutes that create specific agencies. Article 1 and Article 2 are therefore the first provisions to check before reading an Individual Act for a particular agency.
Article 1(1) states that the Act establishes the fundamental common matters forming the basis of the Incorporated Administrative Agency system, including the basis for agency administration. It works together with Individual Acts, which provide each agency's name, purpose, scope of operations, and related matters. Article 1(2) states that the organization, administration, and management of each Incorporated Administrative Agency are governed by the Act in addition to the relevant Individual Act. The statutory design is therefore two-layered: this Act supplies general institutional rules, while the Individual Act supplies agency-specific identity and business scope.
Article 2(1) defines an Incorporated Administrative Agency as a corporation incorporated under this Act and the relevant Individual Act as one of three categories: an Agency Managed under the Medium-term Objectives, a National Research and Development Agency, or an Agency Engaged in Administrative Execution. The definition connects those agencies to Public-Sector Processes, etc.; these are processes and services that need secure implementation from a public perspective, do not need to be implemented directly by the State itself, and may not be properly implemented if entrusted to private entities or need to be conducted monopolistically by a single entity.
Article 2(2), Article 2(3), and Article 2(4) then separate the three agency categories. An Agency Managed under the Medium-term Objectives performs public-sector processes from a medium-term perspective while displaying a certain degree of independence and autonomy. A National Research and Development Agency performs research and development-related processes from a medium- to long-term perspective to maximize research and development results. An Agency Engaged in Administrative Execution performs processes that must be securely executed under State instructions or other close State involvement, based on objectives set for each business year.
Medium-Term Objectives, Plans, and Annual Plans
For Agencies Managed under the Medium-term Objectives, the Act connects the competent minister's objectives to the agency's plans. Articles 29, 30, and 31 create a sequence from objectives, to a Medium-term Plan, to an Annual Plan.
Article 29(1) requires the competent minister to set objectives concerning the running of operations to be achieved by an Agency Managed under the Medium-term Objectives during a period of not less than three years and not more than five years. The minister must give instructions to the agency regarding those Medium-term Objectives and make them public, and the same rule applies when the objectives are revised. Article 29(2) requires the Medium-term Objectives to specify the Period for the Medium-term Objectives, matters concerning improvement of the quality of services provided to citizens and other operations, matters concerning improvement of operational efficiency, matters concerning improvement of financial conditions, and other important matters concerning the running of operations. Article 29(3) requires the competent minister to hear the Committee's opinions in advance when setting or revising the Medium-term Objectives.
Article 30(1) requires the agency, after receiving the Article 29(1) instructions, to prepare a Medium-term Plan for achieving the Medium-term Objectives based on those objectives and pursuant to order of the competent ministry, and to obtain authorization from the competent minister. The same rule applies when the agency revises the plan. Article 30(2) requires the Medium-term Plan to specify measures for achieving objectives on service quality and other operations, measures for achieving efficiency objectives, budget, revenue and expenditure plans, funding plans, and other matters specified by order of the competent ministry. Article 30(4) requires the agency to make the authorized Medium-term Plan public without delay.
Article 31 converts the authorized Medium-term Plan into annual operation planning. Before the start of each business year, an Agency Managed under the Medium-term Objectives must establish an Annual Plan for the running of operations for that business year, based on the authorized Medium-term Plan, notify the competent minister, and make the plan public. Article 31(2) adjusts this timing for the first business year, when the agency has obtained authorization for its first Medium-term Plan after formation.
Evaluation, Review, and Operational Improvement
The Act does not stop at planning. It links objectives and plans to evaluation results, review at the end of the objective period, and possible measures by the competent minister.
Article 28-4 provides a cross-category rule on treatment of evaluation results. An Incorporated Administrative Agency must ensure that evaluation results are reflected appropriately in the relevant Medium-term Plan and Annual Plan, Medium to Long-term Plan and Annual Plan, or Annual Objective Plan, and in improvement of the running of operations. The agency must also make public how evaluation results are reflected for each fiscal year. This article is important because it prevents evaluation from remaining only a record after the fact; the statutory text connects it to future planning and operational improvement.
Article 32(1) requires an Agency Managed under the Medium-term Objectives to undergo evaluation by the competent minister after the end of each business year. The matters evaluated differ depending on where the business year falls within the Period for the Medium-term Objectives. For ordinary years, the evaluation concerns operational performance during the relevant business year. For the business year immediately preceding the last year of the period, the evaluation covers both performance during that year and the performance expected by the end of the period. For the last business year, it covers both performance during that year and performance during the full period.
Article 32 also gives the evaluation a public and supervisory function. The competent minister must notify the agency and the Committee of the evaluation results and make the results public. The Committee may state opinions to the competent minister if it finds this necessary. Article 32(6) allows the competent minister, when necessary based on the evaluation results, to order the Agency Managed under the Medium-term Objectives to improve the running of operations or take other necessary measures. Article 35 then requires review by the end of the Period for the Medium-term Objectives regarding whether the agency should continue operations or maintain its organization, and regarding overall aspects of operations and organization, with required measures based on that review.
Research and Administrative-Execution Agency Variants
The Act uses a similar planning-and-evaluation architecture for National Research and Development Agencies and Agencies Engaged in Administrative Execution, but the periods and emphasis differ. These differences follow from the definitions in Article 2.
Article 35-4 requires the competent minister to set Medium to Long-term Objectives for a National Research and Development Agency during a period of not less than five years and not more than seven years, give instructions to the agency, and make the objectives public. The objectives must include the Period for the Medium to Long-term Objectives, matters concerning maximization of research and development results and improvement of the quality of other operations, matters concerning efficiency, matters concerning financial conditions, and other important matters concerning operations. Article 35-5 then requires the National Research and Development Agency to prepare a Medium to Long-term Plan based on those objectives and obtain authorization from the competent minister. Article 35-6 provides for evaluation of operational performance for National Research and Development Agencies, and Article 35-8 applies provisions for Agencies Managed under the Medium-term Objectives with deemed replacements.
Article 35-9 sets Annual Objectives for an Agency Engaged in Administrative Execution. The competent minister must set objectives for each business year, give instructions to the agency, and make them public. Article 35-10 requires the agency to prepare an Annual Objective Plan for achieving those objectives, notify the competent minister, and make it public. Article 35-11 provides for evaluation of operational performance for Agencies Engaged in Administrative Execution, including evaluation of performance during the relevant business year and, where applicable, expected performance by the end of the business year. Article 35-12 allows the competent minister to issue an order necessary for supervision of operations if particularly necessary to ensure achievement of the Annual Objectives or enforcement of the Act or the Individual Act.
Business Year, Corporate Accounting, and Financial Statements
Chapter IV applies finance and accounting rules across Incorporated Administrative Agencies. Articles 36, 37, and 38 are the starting points for readers checking reporting cycles and financial documents.
Article 36(1) sets the business year of an Incorporated Administrative Agency as beginning on April 1 each year and ending on March 31 of the following year. Article 36(2) provides a special rule for the first business year: it begins on the date of formation and ends on March 31 of the following year, or March 31 of the same year if the agency is formed between January 1 and March 31. This business-year rule anchors later deadlines for annual plans, evaluations, and financial statements.
Article 37 states that, as a general rule, accounting of an Incorporated Administrative Agency is based on corporate accounting principles pursuant to order of the competent ministry. Article 38(1) requires the agency, for each business year, to prepare a balance sheet, profit and loss statement, documents concerning appropriation of profits or disposal of losses, other documents specified by order of the competent ministry, and annexed detailed statements, and to submit those Financial Statements to the competent minister within three months from the end of the business year to obtain approval. Article 38(2) requires attachment of a business report, a statement of accounts by budget category, and an audit report; where the agency must be audited by an accounting auditor under Article 39(1), the attached materials include an audit report and financial audit report. Article 49 requires an Incorporated Administrative Agency, when commencing operations, to establish accounting rules and notify the competent minister, and Article 50 delegates necessary finance and accounting matters beyond the Act and Cabinet Orders to order of the competent ministry.