2 Electronic Authentication System Based on the Commercial Registration System

(1) Significance of the System

1. Outline of the Commercial Registration System

   In the Japanese commercial registration system, certain matters related to merchants, which includes companies, are registered in the commercial register. As for companies, such important particulars as a purpose, a name, a head office, branches and directors must be registered (Art. 188 of the Commercial Code, Art. 13 of the Yugen-kaisha Act, etc.). The register is offered for public inspection (Art. 10 of the Commercial Registration Act) and certified copies of the commercial register are issued (Art. 11 of the Commercial Registration Act).

   In the commercial registration system, an impression of a seal (inkan) of an applicant for registration is in advance submitted to the commercial registry to identify the applicant for registration (Art. 20 of the Commercial Registration Act). The commercial registry can issue a certificate of an impression of a seal to those who submit a seal to the commercial registry, etc. (Art. 12 of the Commercial Registry).

2. Utilization of the Commercial Registration System

   In Japan, a corporation's certified copy of the commercial register, a certificate of qualifications, and a certificate of an impression of a seal, all of which are issued based on the commercial registration system, are widely used to certify the existence of a company, power of representation of a company's director, and the identity of a director. These documents must be submitted when applying for real estate or car registration, etc. and are widely used in transactions, especially in such important transactions as financial transactions, between private entities or individuals based on consent of parties to transactions.

   The reasons why the information registered in the commercial register is widely used in applications to public entities and in transactions between private entities are as follows: the commercial register contains information on all companies universally because a company is deemed legally established only when it is registered in the commercial register (Art. 57 of the Commercial Code, Art. 4 of the Yugen-kaisha Act); and the contents of commercial register are highly accurate because a company cannot set up the fact against a bona fide third party, for example, the changing of a director, if the fact is not registered (Art. 12 of the Commercial Code), because those who fail to register or register false information intentionally are punished (Art. 498(1)1 of the Commercial Code, Art. 157 of the Penal Code) and because in registering applicants are required to submit certain documents necessary to investigate the contents of the application and the contents of applications are examined by a registrar, who is a public officer and has specialized legal knowledge. In addition, the State Redress Law is applied to inappropriate conduct of a registrar and the government compensates damage to those who rely on information registered in the commercial register.

3. Utilization of the Commercial Registration System in Electronic Authentication

   As the purpose of electronic authentication is to confirm the identity of a generator of an electronic document, the identity of a subscriber must somehow be confirmed in an electronic authentication system. In particular, the identity of a subscriber must be confirmed with great accuracy in electronic authentication systems used for electronic commerce and applications. It will then be possible to establish systems to utilize information registered in the commercial register, which covers all companies in Japan and is widely used as a highly reliable certification method, as part of a framework to realize secure electronic commerce and applications.

   There can be two possible schemes to utilize information registered in the commercial register in the area of electronic authentication, that is, a scheme to provide private certification authorities with information registered in the commercial register and a scheme for the commercial registries as certification authorities. The purpose of the former is to set up a system to enhance reliability of service provided by private certification authorities by providing information registered in the commercial register to private certification authorities. The purpose of the latter is to offer a method of authentication that is as reliable as such paper-based documents as a corporation's certified copy of the commercial register, certificate of qualifications, and certificate of an impression of a seal. Of course certification authorities and parties to a transaction can determine whether to use the systems or not (but in the case of application to public entities, it may be possible to require applicants to use certain certification authorities such as those operated by commercial registries by law governing the procedure of the application.).