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(1) Defining the issues
Ministry of Education, Culture, Sports, Science and Technology (MEXT) authorities
are of the view, in relation to the entry of joint-stock companies into universities,
that "this is a simple approval of the inclusion of joint-stock companies within
the entities that can establish universities and the provisions to be otherwise
applied shall be those of the School Education Law and the standards concerning
the establishment of universities". In the first place, this view approves joint-stock
companies gaining status as entities that can establish universities. To be specific,
the carrying on of educational and research businesses has been approved by the
current Law on Special Zones for Structural Reform (the 'Special Zones Law') as
an economic activity of joint-stock companies. This brings us to the next issue;
when joint-stock companies carry on educational businesses, where is the divide
between the principles of joint-stock companies and the School Education Law and
the standards concerning the establishment of universities? That is to say, the
question is as to the scope of the liability of joint-stock companies carrying
on educational businesses. As there is no thesis directly confronting this issue
I intend to step out on a limb here to define the issues and invite the constructive
criticism of those who are expert in the field.
(2) Scope of the various laws and regulations now controlling
joint-stock companies
Joint-stock companies are subject to the provisions of almost all the laws regulating
private legal relationships, including the Commercial Code, the Anti-Monopoly
Law, the Consumer Protection Law, the Consumer Contracts Law, the Installment
Sales Law, the Law Concerning Specified Commercial Transactions and various taxation
laws. For joint-stock companiesA complying with all these laws regulating private
legal relationships is a fundamental element of their existence; it is impossible
to run a joint-stock company in violation of these laws.
Firstly, a legal relationship will arise between universities set up by joint-stock
companies and their students pursuant to the general private law of contract.
The fundamental starting point for joint-stock companies is to completely perform
the commercial contract relationship with students and, on that basis, to observe
the various laws recorded above, moreover complying with business accounting principles
('income - expenditure = profit' etc.) and accomplishing sound management. If
the university's performance of the contractual relationship with students were
to be impeded by the provisions of the School Education Law and standards concerning
the establishment of universities and other laws and regulations, the university
would be systematically liable for non-performance of its obligations to students
in relation to the portion of performance impeded and would be unable to survive
as a business. In other words, this would negate the very carrying on of educational
businesses by joint-stock companies, leading to the significance of the approval
given by the Special Zones Law being ignored. Supposing joint-stock companies
were compelled to perform obligations under the School Education Law and standards
concerning the establishment of universities, if companies were therefore liable
for non-performance of obligations, that burden should be compensated by subsidies
and grants from the state and from local governments. All in all, this is because
relief for the burdens that would arise from universities set up by joint-stock
companies being unable to pursue market principles should be provided by those
who impede the laws of economics. However, the current Special Zones Law has no
system for payments of subsidies and grants, nor does it contain any provisions
on exemption from corporations tax and other taxes, the laws applicable to joint-stock
companies taking effect in these matters. It follows that it is the intention
of the legislature (the Diet) that the liability for non-performance should be
borne by the company itself. Whilst this is the theoretical legal basis, in terms
of formalities, the Special Zones Law is a law enacted after the School Education
Law and the standards concerning the establishment of universities so that there
is also the underlying legal principle that a later law takes precedence. Accordingly,
it should be understood that, due to the fundamental nature of joint-stock companies,
it is not permissible for a joint-stock company to unilaterally alter, by the
application of the School Education Law and the standards concerning the establishment
of universities, terms on (i)lecturers, (ii)A educational materials and texts,
(iii)teaching methods and (iv)time, place and methods agreed pursuant to a contract
entered into with consumer students who intended to do so.
| (3) |
Harmonization of and the rational basis for
the legal principles behind joint-stock companies and education |
My position as explained above is not that my interpretation means that all room
for the application of the School Education Law and the standards concerning the
establishment of universities to joint-stock companies is removed. That law and
the standards can be applied to most matters concerning preparation of the external
conditions for education and research, such as academic rules for the recognition
of attendance credits, the system for promoting student scholarships, the welfare
system for academic staff and the MEXT licensing system.
An interpretative guide such as that above, on the one hand, affirms university
management based on the fundamental requirements of joint-stock companies and,
on the other hand, will bring to fruition respect for the principles required
by the nation of education and research activity. I see it as something that will
produce a rational harmonization of both requirements. This kind of interpretative
basis can also be given the thumbs up from the perspective of national economic
policy. To be specific, the government slogan "Privatize whatever can be done
privately" is also consistent with overarching policies of the Council for Comprehensive
Regulatory Reform, which is seeking to open up government enterprises (school
education is currently a government enterprise) to the private sector (in other
words, approval for the entry of joint-stock companies into that sector) and develop
and cultivate service industries (the education sector is the largest service
industry in Japan) and with those of the Council on Economic and Fiscal Policy.
Many government enterprises are labor intensive and if they are privatized they
will become high value added industries. Value at sale is almost equal to the
amount of added value. What is more, there is a conspicuous job creation effect.
(4)Comparison of existing universities and those set up
by joint-stock companies
The attached materials show the points of difference on major points between the
two systems pursuant to the above explanation. As the table is a schematic representation
of the points of contrast between the Joint-stock Company Law, which is the system
that supports capitalism and the uniquely Japanese School Education Law, its nature
means that it may not be a legally accurate statement of the concepts involved,
however I consider that it has real merit in clarifying the differences mentioned.
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