SECTION 41 In managing a trust or delegating any person to manage a trust in accordance
with Section 37, if there is any expenses, proceeds or other properties obliged to pay a third
person which a trustee rightfully pays from property held in its own capacity with due
necessity, the trustee shall be entitled to obtain reimbursement from proceeds or property
out of the trust property unless the trust instrument specifies that the payment shall be
borne by the trustee.
The right to obtain reimbursement from the proceeds or property under the first paragraph
shall have priority over the claim of a beneficiary and the claim of a third person against
the trust property and may be immediately exercised, at any time before the trust is
terminated. In cases where the transformation of trust property is necessary in order to
reimburse the proceeds or property to the trustee, the trustee is empowered to do so but
only to the extent that it is done in good faith.
For the purpose of protecting the trust property, the SEC shall have the power to issue
notifications prescribing rules, conditions and procedures concerning the payment of the
trustee’s own money or property to the third person under the first paragraph or the
exercise of trustee’s right under the second paragraph.
SECTION 42 A trustee shall be prohibited from exercising the right under Section 41
unless the trustee has performed all of its obligations owed to the trust except where those
obligations can be set off under the Civil and Commercial Code.
SECTION 43 In cases where a trustee fails to manage the trust in accordance with the trust
instrument or this Act, the trustee shall be liable to indemnify the trust.
In cases where it is necessary and there is a reasonable ground for the benefit of the trust,
the trustee may apply for the SEC Office’s approval prior to the management of trust in a
different manner from those stipulated in the trust instrument. The trustee shall not beliable under the first paragraph if the trustee manages the trust property as approved, in
good faith and for the best interest of the trust.
In case of joint management of the trust by several trustees under Section 39, all trustees
shall have joint liability under the first paragraph provided, however, that liability amongst
the trustees shall not apply the principle of joint debtor, but shall be in accordance with the
terms as agreed by those trustees. Whatever agreed, any trustee shall not be liable to other
trustees, if proven that it had objected or had been defrauded in failing to comply with the
trust instrument or this Act.
Right and Protection of Beneficiary
SECTION 44 Subject to Section 40 and the second paragraph of Section 43, a beneficiary
has the right to demand a trustee to manage a trust in accordance with the trust instrument
or this Act and to claim compensation for the benefit of the trust, in cases where the trustee
fails to manage the trust in accordance with the trust instrument or this Act.
In cases where the trustee fails to manage the trust in accordance with the trust instrument
or this Act and causes the trust property to be disposed or transferred to any other person,
the beneficiary shall be entitled to trace and recover such property from any person
regardless of whether such person directly acquired such property from the trustee and
whether the trust property was transformed into a different form or state, unless the
acquisition of the property was done in good faith and for value, providing further that the
person acquired that property did not know or should not have known that the acquired
property has been disposed or transferred in breach of trust.
The beneficiary shall be entitled to be reimbursed for any actual expenses incurring from
exercising right under the first and second paragraphs from the trust in an amount as
ordered by the court.
SECTION 45 Any person, acquired property from a trust or assisted in transferring of the
trust property if knew or should have known that a trustee had transferred property in
contravention to the trust instrument or this Act and such transferring has caused damage to
the trust, shall jointly with the trustee under Section 44 be liable as joint debtors. A
beneficiary shall be entitled to claim compensation from such person for the benefit of the
trust. The provision of the third paragraph of Section 44 shall apply mutatis mutandis.
With respect to the liability under the first paragraph, the court shall determine an amount
of liability for such person as the court thinks fit by considering circumstances in which
such person’s participation causing damage to the trust property.
SECTION 46 In cases where a beneficiary has notified the new trustee to perform duty
under Section 40 within a reasonable period of time but the new trustee fails to perform
duty within such period, the beneficiary shall be entitled to claim compensation from the
liable trustee or trace and recover property from a third person, as the case may be, for the
benefit of the trust, and the provisions of the third paragraph of Section 44 shall apply
SECTION 47 A beneficiary shall be entitled to inspect and make copy of an account of
trust property or any document as specified in the notification of the SEC Office during the
business hours of a trustee.
The trustee may be reimbursed for the actual and necessary expense of the copying under
the first paragraph but not more than the rate specified in the notification of the SEC
SECTION 48 In cases where several beneficiaries have the right to obtain an interest
specified under the second paragraph of Section 13 or to obtain the remaining property
after the trust is terminated under the third paragraph of Section 53, unless the trust
instrument provides otherwise, each beneficiary shall obtain such interest or property in
proportion to the benefit which each beneficiary is entitled to obtain from the trust as
specified in the trust instrument.
SECTION 49 Unless a trust instrument provides otherwise, in case where there are several
beneficiaries, exercise of such beneficiaries right under this Act shall be under the
(1) the amendment to the trust instrument under Section 20 or Section 21, the removal
of the trustee under Section 23(2), the appointment of the new trustee under Section 24 or
filing of the motion for termination of trust under Section 51(2), can be made only by
approval from the beneficiaries having interest in the trust property not less than threefourth
of all interest in the trust property.
(2) the claim of compensation for the benefit of the trust property under the fourth
paragraph of Section 26, the motion for imposing the trustee to perform duty in accordance
with the trust instrument or this Act, the claim of compensation for the trust or the recovery
of the trust property under Section 44, Section 45 or Section 46, can be exercised by any
SECTION 50 Trust property shall not be divided amongst personal creditors of a trustee.
In cases where a trustee becomes bankrupt as a result of its own debt or ceases to be a
juristic person, the trust property shall not be deemed as bankruptcy estate or property in
liquidation, as the case may be.