The Ministry of Education is accelerating the restructuring of underperforming private universities. It will encourage voluntary wind-downs by allowing school corporations to take a portion of their property when they are dissolved. It will also set up safeguards for students at closed universities, such as supporting transfer admissions or providing consolation payments.
The Ministry of Education said on Apr. 6 it will preannounce legislation for an enforcement decree of the Private University Structural Improvement Act containing these measures. The move is intended to set specific standards and procedures in line with the law taking effect in Aug.
First, the government will codify the entire process of private university restructuring. It will establish standards and procedures for every stage, from a "financial diagnosis" that evaluates fiscal health, to designating universities in management crisis, to supporting structural improvement.
It will also institutionalize procedures for asset liquidation when a university closes or a school corporation is dissolved. The decree will specify who receives any remaining cash, buildings, or land after closure, and it will set a legal basis for appointing a responsible liquidator.
It will also encourage voluntary restructuring by universities. If a university in management crisis carries out a plan to normalize operations, some restrictions on the use of reserves and regulations on disposing of asset will be eased. In addition, when dissolving a school corporation, it may receive part of the remaining property as a settlement fund or provide grants to public-interest or social welfare corporations.
Safeguards for students and faculty and staff are also included. Students at closed universities will receive transfer support, and if they do not transfer, they will be paid consolation money for interrupted studies within the scope of remaining property. Faculty and staff dismissed due to closure will also receive compensation or severance consolation payments. Researchers will likewise be protected so they are not disadvantaged in their research activities.
In addition, records of closed universities will be managed so that graduates and faculty and staff can continue to obtain diplomas and certificates of career.
However, penalties will be strengthened in cases of misconduct such as embezzlement or accounting fraud. If an entity fails to comply with a corrective order, it cannot receive a dissolution settlement fund. Transferring property to a public-interest or social welfare corporation that has committed illegal acts will also be restricted. Even afterward, if an illegal act is confirmed, the property in question can be recovered to the national treasury.