Methods and Procedures for Foreigners to Establish a Corporation in Japan

Japan, with its innovative business environment and stable economic growth, is an attractive country for entrepreneurs worldwide. Many foreign investors and entrepreneurs see great potential in expanding their businesses in Japan. The Japanese legal system actively welcomes the establishment of stock companies by foreigners, yet the procedures are detailed and strict, based on specific Japanese laws and regulations.

This article aims to provide a comprehensive explanation of the entire process of establishing a stock company in Japan, targeting foreign individuals considering such a venture. We offer reliable information based on key Japanese legal statutes, including the Japanese Companies Act, the Commercial Registration Law, the Foreign Exchange and Foreign Trade Act, the Civil Code, and the Immigration Control and Refugee Recognition Act.

This guide is crafted to be easily understood by English speakers learning Japanese, with a clear subject, avoidance of excessive passive voice, and plain language explanations while citing specific legal provisions. By doing so, we aim to provide a clear path for deeper understanding of the complex legal requirements and to facilitate a smooth company establishment process in Japan.

Qualifications and Residency Status for Foreigners Establishing a Corporation in Japan

Principles of Company Establishment by Foreign Nationals in Japan

Under Japanese law, foreign nationals are permitted to establish stock companies within Japan just as Japanese citizens are. The Japanese Companies Act (Act No. 86 of 2005) governs the establishment, organization, operation, and management of companies without imposing restrictions based on nationality. Article 1 of the Japanese Companies Act states, “The establishment, organization, operation, and management of a company shall be governed by this Act, except as otherwise provided by any other law.” Furthermore, Article 25, Paragraph 2 of the Japanese Companies Act stipulates that “Each incorporator must subscribe for at least one share at the time of the incorporation of a stock company,” with no provisions regarding the nationality of the incorporators.

Previously, it was required that at least one representative director reside in Japan. However, the Japanese Ministry of Justice abolished this requirement in a notice dated March 16, 2015. Now, even if all representative directors reside overseas, it is possible to apply for company registration in Japan. This change signifies that corporate establishment is possible even if investors or officers do not reside in Japan, reflecting a clear policy intent to make Japan more accessible to foreign investors and entrepreneurs. As a result, foreign nationals residing overseas can establish a company in Japan without physically relocating or finding a co-founder who resides in Japan, offering significant benefits in terms of flexibility during the initial stages of business expansion and contributing to the attraction of global talent and capital. However, this legal flexibility comes with practical challenges. For instance, it can be extremely difficult for a company composed solely of overseas residents to open a corporate bank account in Japan, a hurdle often described as formidable. This is because banks tend to require a representative with a physical presence and easy contactability in Japan for anti-money laundering measures and identity verification purposes. Therefore, while legal establishment is possible, securing a bank account, which is fundamental for business operations, often necessitates the support of collaborators or experts residing in Japan, highlighting an important practical aspect of the process.

Requirements and Importance of the Business Manager Visa in Japan

Foreign nationals who wish to stay in Japan for medium to long-term and manage a company they have established require a specific residency status. The most common one is the “Business Manager” residency status (visa). To obtain this status, the following key conditions must be met.

Regarding the scale of the business, it is required to employ at least two full-time staff members or to have a capital or total investment amount of 5 million yen or more. Securing a business office is also necessary, meaning that an independent office or store required for the business must be secured. Virtual offices or offices with short-term contracts may not be recognized due to their lack of continuity. Additionally, the continuity and stability of the new business, as well as the applicant’s own management capabilities, are examined. A detailed business plan is essential to prove this.

Visas for short-term stays, family stays, or study cannot be used to engage in business management activities while earning compensation in Japan. Foreign nationals with these residency statuses who wish to manage a company must undergo procedures to change to a “Business Manager” visa. On the other hand, foreign nationals with residency statuses such as “Permanent Resident,” “Spouse or Child of Japanese National,” “Spouse of Permanent Resident,” or “Long-Term Resident” are not restricted in their activities and can establish and manage a company without a “Business Manager” visa.

The information that anyone can establish a company regardless of nationality or place of residence, and the information that specific residency status is required for management activities, may seem contradictory at first glance. However, this indicates that under Japanese law, the act of creating a corporate entity called a “company” and the act of actually operating that entity within Japan are subject to different regulations. This distinction holds significant meaning for foreign entrepreneurs. Firstly, it is possible to establish a company in Japan and obtain its corporate status while being overseas. However, to personally manage that company within Japan and earn compensation, one must separately obtain the “Business Manager” residency status as defined by the Japanese Immigration Services Agency. Therefore, many foreign entrepreneurs need to proceed with the application for a “Business Manager” visa either concurrently with the company establishment procedures or after the establishment. Understanding this two-step process is key to business success in Japan. Especially since the minimum capital requirement under Japanese Corporate Law can be as low as one yen, but a practical requirement for obtaining a “Business Manager” visa is to have a capital of 5 million yen, it is essential to consider this point in financial planning.

Securing a Business Location

One of the requirements for obtaining a “Business Manager” visa in Japan is to secure an independent business location for conducting business activities. Using a virtual office, rental office, or registering a residential address is generally considered challenging, as it may be deemed to lack a physical presence. It is preferable to register an address with a solid rental contract for an office.

The Immigration Services Agency of Japan’s Ministry of Justice considers the existence of a physical business foundation essential when assessing the continuity and stability of a business. This reflects the intent of Japanese immigration policy to prevent the establishment of paper companies and support foreign entrepreneurs who genuinely intend and are capable of conducting business in Japan. JETRO (Japan External Trade Organization) offers furnished offices that can be used for free for up to 50 days if conditions are met, but this is only for temporary use, and a stable business location is ultimately necessary. Therefore, from the business planning stage, concretely considering the acquisition of an appropriate business location is a crucial factor directly linked to the success or failure of obtaining a visa.

The Basic Flow and Preliminary Preparations for Establishing a Corporation in Japan

Deciding on the Fundamental Matters for Company Establishment

When establishing a corporation in Japan, it is necessary first to decide on the basic matters that will be recorded in the articles of incorporation, which can be considered the ‘constitution’ of the company. These matters form the core of the company, and changing them later involves costs and effort, so it is crucial to make these decisions carefully.

The trade name is the name of the company. Under Japanese Corporate Law (Article 6, Paragraph 2), “A company must use the personalitys for ‘stock company,’ ‘partnership company,’ ‘limited partnership company,’ or ‘limited liability company’ in its trade name according to its type,” thus mandating the inclusion of “stock company” in the trade name. The business purpose defines the content of the business activities the company will engage in. Japanese Corporate Law (Article 27) obligates the inclusion of the ‘purpose’ in the articles of incorporation. The company can only operate within the scope of the business purposes stated in the articles. It is common practice to set these purposes broadly to consider potential future businesses. The head office location is the location of the company’s main office. The articles should specify the location up to the smallest administrative division (e.g., Tokyo Metropolis), and the specific address can be determined separately in a ‘Head Office Location Decision Document’ to reduce future registration change costs when relocating. The capital stock is the value of the property contributed at the time of the company’s establishment. Japanese Corporate Law (Article 27) mandates the inclusion of ‘the value of the property contributed upon establishment or the minimum amount thereof’ in the articles. Although it is possible to establish a company with as little as one yen under Japanese Corporate Law, a capital of at least 5 million yen is a de facto requirement for obtaining a ‘Business Manager’ visa. The incorporator is the person (contributor) who contributes at the time of the company’s establishment. There can be one or multiple incorporators. As for the officer structure, directors and representative directors are appointed, and foreigners can also assume these positions.

Deciding on the fundamental matters is not merely about fulfilling registration requirements; it is a strategic decision that affects the future prospects of the business and the possibility of obtaining visas. In particular, the business purpose defines the scope of future business expansion and affects the need for permits and licenses. Moreover, there is a discrepancy between the minimum amount required under Japanese Corporate Law and the substantial requirements for obtaining a Business Manager visa, so foreign entrepreneurs need to be acutely aware of the latter when planning their finances. This suggests the existence of a dual hurdle in practice that is not apparent from the legal text alone. Appropriate business purposes and sufficient capital are essential not only for establishing the company but also for the subsequent business operations and stable maintenance of residency status.

Drafting the Articles of Incorporation and Notarization by a Notary Public

The articles of incorporation are a document that sets out the fundamental rules for the organization and operation of a company, equivalent to the company’s ‘constitution.’ The creation of these articles is essential for the establishment of a stock company. The articles must include absolute mandatory items such as the purpose, trade name, head office location, the value of the property contributed upon establishment or the minimum amount thereof, and the names or designations and addresses of the incorporators. Japanese Corporate Law (Article 27) specifies the items that must be included in the articles of incorporation of a stock company.

The articles of incorporation of a stock company do not take effect without the certification of a Japanese notary public. Certification procedures at a notary office are required. Japanese Corporate Law (Article 30, Paragraph 1) stipulates, “The articles of incorporation referred to in Article 26, Paragraph 1, shall not take effect without the certification of a notary public.” The notarization of the articles involves a revenue stamp fee (40,000 yen, although not required for electronic articles) and a certification fee (ranging from 30,000 to 50,000 yen depending on the amount of capital).

When attaching documents created in a foreign language to the registration application, it is generally necessary to attach a Japanese translation for each document. For example, when using a certificate of signature or other proof created in a foreign language in Japan, a full Japanese translation must be attached.

The drafting and certification of the articles of incorporation are parts of the company establishment process that require particular legal rigor. Omissions or deficiencies in the absolute mandatory items can lead to the invalidity of the articles. Furthermore, the certification by a notary public is an important procedure that guarantees the authenticity of the articles. Foreigners advancing this process face multiple barriers, including accurate descriptions in Japanese, understanding of the Japanese legal system, and translation of foreign-language documents. This complexity suggests that the support of professionals (judicial scriveners or administrative scriveners) is extremely effective for streamlining the procedures and ensuring a reliable establishment. The fact that using electronic articles exempts one from the stamp duty further enhances the benefits of professional assistance from a cost-reduction perspective.

Capital Contributions and Certificates of Payment in Japan

Requirements for Capital Contribution Accounts

In Japan, the capital necessary for company incorporation must be deposited into a bank account designated by the incorporators. This bank account must belong to a financial institution as defined under Japanese Banking Law. Even if it is a Japanese branch of a foreign bank, the account can be used as long as the bank is established with the approval of the Prime Minister of Japan. However, capital contributions cannot be made through accounts at overseas branches of foreign banks.

Since a company’s bank account is not established at the time of incorporation, the capital is transferred to a personal account of one of the incorporators. If there are multiple incorporators, it is sufficient to use the personal account of any one of them. If an incorporator’s bank account is overseas or if the funds are remitted from abroad, it cannot be used directly because it is not an account of a financial institution stipulated by Japanese Banking Law. If foreign currency is used for the remittance from abroad, a currency exchange rate certificate is required to prove the amount of capital contributed in Japanese yen. Please request the issuance of this certificate from the financial institution where the account is held.

Capital contributions can be a particularly practical barrier for foreign entrepreneurs. Legally, it is acceptable to deposit into the personal account of an incorporator, but it is often difficult for incorporators residing overseas to establish a bank account in Japan in advance, and foreign bank accounts are generally not recognized. Therefore, according to the Japanese Ministry of Justice Civil and Commercial Affairs No. 41 Notice (dated March 17, 2017 (Heisei 29)), if none of the incorporators and directors at the time of establishment have a residence in Japan, it is possible to transfer the capital to the account of a collaborator in Japan with a power of attorney from the incorporator. In this case, the collaborator may become a director at the time of establishment and resign later. This is a practical solution that fills a gap in the legal system and is one of the specific solutions that experts can provide. The need for a currency exchange rate certificate indicates the additional administrative burden associated with international remittances, requiring attention to detail.

Creation and Attachment of Certificates of Payment

Under Japanese Corporate Law, Article 34, Paragraph 1, the incorporators must, without delay after subscribing to the shares at the time of incorporation, pay in full the amount of money contributed for those shares.

After the capital contribution is completed, the representative director creates a certificate of payment. This certificate includes the amount paid, the number of shares issued, the date of payment, and the bank account information where the payment was made, and is accompanied by a copy of the bank passbook (front cover, back cover, and the page where the payment is recorded). Even if the payment is made before the date of the articles of incorporation, it can be used as a certificate of payment if it is recognized as a contribution made for that establishment.

The certificate of payment is an important document that officially proves that the capital has actually been paid into the company. Its creation and attachment are requirements for commercial registration and ensure that the company’s establishment is conducted legally. Especially for foreign entrepreneurs, securing clear proof from the bank (copy of the passbook, currency exchange rate certificate, etc.) is extremely important as the source of funds and the remittance route can become complex. This facilitates the verification of the legitimacy of the funds during later registration reviews and tax audits.

Appointment and Registration of Directors Under Japanese Corporate Law

Eligibility of Foreign Nationals for Executive Positions in Japanese Companies

Regardless of nationality, foreign individuals can become directors or other officers of a Japanese company if appointed by a resolution at the shareholders’ meeting. Since there is no requirement for a place of residence, not only foreigners residing in Japan but also those living abroad can serve as officers in Japanese companies.

However, when a foreign national residing in Japan receives remuneration as an officer, they must have a residence status of “Permanent Resident,” “Spouse or Child of Japanese National,” “Long-Term Resident,” or “Business Manager.” For those with working visas such as “Engineer/Specialist in Humanities/International Services,” it is necessary to confirm the scope of activities allowed. If the activities fall under business management, a change of visa may be required.

While there is a high degree of freedom in appointing officers, foreign entrepreneurs should pay particular attention to the restrictions on “activities” within Japan due to residence status. It is possible for foreign nationals living overseas to become officers, but to actually engage in management activities in Japan, obtaining the appropriate visa is essential. This means aligning the requirements of two different legal fields: the status of an officer under Japanese Corporate Law and the activity permission under Japanese Immigration Control Law. Especially for foreign nationals residing with a working visa who become officers, their duties as an officer may exceed the scope of activities allowed by their current residence status, potentially affecting future visa renewals. Therefore, it is wise to consult with a specialist in advance.

Certificate of Signature as an Alternative to the Certificate of Seal Impression in Japan

Typically, when establishing a company in Japan, the certificate of seal impression (inkan shomeisho) of the incorporators or directors is required. However, non-resident foreigners who do not have a resident registration in Japan cannot obtain a certificate of seal impression. In such cases, a certificate of signature (sign shomeisho) or a sworn affidavit with a verified signature can be used as an alternative. The certificate of signature attests that the applicant’s signature was indeed made in the presence of a consul or similar authority.

As a general rule, certificates of signature issued by the authorities of the applicant’s home country (such as administrative agencies, embassies, or consulates) are accepted. If there is no system for a certificate of signature in the home country or under certain specific circumstances, a certificate of signature issued by a Japanese notary public or administrative agencies of the country of residence may also be accepted. For certificates of signature created in a foreign language, a full Japanese translation must be attached.

There are no direct provisions regarding certificates of signature in the Japanese Commercial Registration Law itself. However, directives from the Japanese Ministry of Justice (for example, the June 28, 2016 (Heisei 28) Civil Commercial No. 100 directive, and the February 10, 2017 (Heisei 29) Civil Commercial No. 15 directive) have clarified the handling of foreign nationals’ certificates of signature. While the certificate of seal impression is an extremely important means of personal identification in Japanese business customs, it is not familiar to foreigners, especially those residing overseas. The certificate of signature bridges this gap. This fact demonstrates the personalityistic of the Japanese legal system where the basic framework is established by law, but the detailed practical operations are supplemented by directives and administrative guidance from the Ministry of Justice. This means that foreign entrepreneurs need to be well-versed not only in the legal provisions but also in the latest administrative practices and directives. Experts ensure the smooth progress of registration procedures by accurately understanding these directives and preparing the appropriate documents.

Key Points on Name Representation in Japanese Commercial Registration

In Japanese commercial registration records, the names of foreigners cannot be represented in foreign languages as a general rule. Therefore, names must be transcribed into Katakana for registration. There should be no space between the surname and given name, and it is necessary to either connect the names continuously or use personalitys such as “、” or “・”. For foreigners from kanji-using regions, registration using kanji that are recognized in Japan is also possible.

Starting from April 1, 2024 (Reiwa 6), for real estate registrations where a foreign individual becomes the owner, it is required to include not only the Katakana representation of the name in Japanese but also a Romanized version along with information that verifies the Romanized name. This is to facilitate the confirmation of identity by matching registration information with official documents such as passports. However, this requirement for Romanized notation is limited to cases where foreign individuals own real estate and does not apply to foreign corporations. In commercial registration, it is advisable to prepare documents with both Katakana and alphabet notations of the name (e.g., Michael Okamoto). It is important to maintain consistency in the representation of names across all documents, such as registration application forms, acceptance of appointment documents, seal registration forms, and seal certificates, to avoid the need for corrections.

The rules regarding the representation of foreign names reflect the efforts of Japan’s registration system to adapt to internationalization. While maintaining the traditional principle of Katakana representation, the introduction of Romanized notation in real estate registration responds to the dual demands of stricter identity verification and improved international convenience. In commercial registration, the practice of including an alphabet notation is recommended, which may suggest the direction of future legal amendments. For foreign entrepreneurs, accurately understanding these notation rules and ensuring consistency in name representation across all submitted documents is essential for smooth registration procedures.

Acceptance of Appointment Documents and Shareholders’ Meeting Minutes Under Japanese Corporate Law

When an officer is appointed in Japan, an acceptance of appointment document is required to prove that the officer has consented to the appointment. The selection of directors and other officers is carried out by resolution at the shareholders’ meeting. Therefore, the minutes of the shareholders’ meeting are also necessary as an attachment for registration applications. While the minutes of shareholders’ meetings and board of directors’ meetings can be created in English, in Japanese registration practice, it may be necessary to attach a Japanese translation.

The acceptance of appointment document and the shareholders’ meeting minutes are fundamental documents that certify the lawful execution of a company’s decision-making process. These documents demonstrate that the appointment of officers is based on the will of the shareholders and ensure the transparency of the company’s governance. When foreigners are involved, difficulties may arise in the creation and understanding of these documents due to language barriers and cultural differences. In particular, the choice of language for the minutes (creating in English and attaching a Japanese translation) requires consideration of the balance between practical flexibility and legal requirements.

Application for Company Registration with the Legal Affairs Bureau in Japan

Preparation and Submission of the Registration Application

In Japan, a company is legally established by applying for incorporation registration with the Legal Affairs Bureau. The application must be made in writing and include the applicant’s name and address, and in the case of a company, the trade name, head office, representative’s name and address, reason for registration, items to be registered, and the amount of registration and license tax. The applicant or their representative or agent must sign and affix their seal to the application. Article 17, Paragraph 2 of the Japanese Commercial Registration Law specifies in detail the items to be included in the application. When a foreigner applies for registration, a signature alone is sufficient, but a certificate from the authorities of the home country proving the authenticity of the signature must be attached.

The registration application must be accompanied by several documents, including the articles of incorporation (certified by a notary public), consent forms for the appointment of directors at the time of establishment, documents proving that the capital has been paid in (payment certificates), and a seal registration certificate for the company’s representative seal. Article 18 of the Japanese Commercial Registration Law mandates the attachment of a document proving the authority of the agent when applying through an agent. Furthermore, Article 19 of the Japanese Commercial Registration Law requires the attachment of a permit or a certified copy thereof from the authorities when applying for registration of matters that require government approval. Documents attached in a foreign language must, in principle, be accompanied by a Japanese translation.

Commercial and corporate registration can also be applied for online. For online applications, the applicant creates the application information, attaches the document information, and transmits the application data. The electronic signature of the applicant or their agent is required. The company incorporation registration is the final stage in establishing the legal existence of a company and is the most stringent procedure. Inaccuracies in the application details or attached documents can lead to the rejection of the registration under Article 24 of the Japanese Commercial Registration Law, thus requiring utmost accuracy. This process is based on the fundamental principle that the Japanese commercial registration system aims to maintain the credibility associated with trade names and companies and contribute to the safety and smoothness of transactions (Article 1 of the Japanese Commercial Registration Law). In recent years, the introduction of online applications has contributed to the efficiency and convenience of the process, but it also comes with new technical requirements, such as the preparation of electronic signatures. Foreign entrepreneurs should understand these strict requirements and seek professional support when necessary to aim for a smooth completion of the registration.

Completion of Registration and Establishment of the Company

Approximately two weeks after applying for registration with the competent Legal Affairs Bureau in Japan, the company’s registration is completed, and the company is legally established, allowing it to commence business operations. Upon completion of the registration, the company can obtain a Certificate of Registered Matters (Certificate of All Historical Matters), which is an important document that officially proves the existence of the company.

The completion of the registration signifies that the company has acquired legal corporate status and can begin activities as an independent entity. This is not merely the end of a procedure but a momentous occasion when the company becomes a subject capable of entering into contracts, owning property, and being a party to lawsuits, among other legal rights and obligations. Only at this point can it be said that the establishment process has legally concluded.

Notifications and Obligations After Establishing a Company in Japan

Notifications to the Tax Office

After establishing a company, it is necessary to submit various tax-related notifications to the head of the tax office with jurisdiction over the place of tax payment.

The Corporate Establishment Notification Form is the most important document to inform the tax office that the company has started business as a corporation. It must be submitted within two months from the date of the company’s establishment. The attachments include a copy of the articles of incorporation, a certificate of registered matters (certificate of all history items) or a copy of the registry, a shareholder register, and a balance sheet at the time of establishment. The Corporate Establishment Notification Form should list the names of the representative directors or representative members in Katakana.

Other main notification documents include the Blue Tax Return Approval Application Form, which is submitted to receive tax incentives; the Establishment Notification Form for Salary Payment Offices, which is submitted when paying salaries to employees; and the Application Form for Approval of Special Provisions for the Payment Period of Withholding Income Tax, which is submitted to receive the special provision to pay withholding income tax semi-annually.

Even after the company registration is complete, the legal procedures are not over. Various notifications to the tax office are the beginning of ongoing compliance that is essential for a company to conduct economic activities in Japan. Neglecting these notifications can result in not receiving tax incentives or being subject to penalties. In particular, the approval application for the blue tax return is very important for reducing the company’s tax burden and should be addressed promptly after establishment. Foreign entrepreneurs are strongly recommended to actively utilize the support of professionals such as tax accountants to understand Japan’s complex tax system and to submit accurate notifications at the appropriate times.

Notifications to the Bank of Japan Under the Foreign Exchange and Foreign Trade Act

The Foreign Exchange and Foreign Trade Act of Japan (Act No. 228 of 1949, hereinafter referred to as “Japanese Foreign Exchange Law”) regulates investments that may threaten Japan’s national security or affect the smooth operation of the international economy. Non-residents, whether individuals or corporations, are obligated to notify the Minister of Finance and the minister in charge of the business through the Bank of Japan when making an investment of 10% or more in a Japanese company, or in cases that fall under “inward direct investment, etc.” Article 26, Paragraph 2 of the Japanese Foreign Exchange Law defines “inward direct investment, etc.,” and Article 27 stipulates the “notification and recommendation for changes regarding inward direct investment, etc.”

Depending on the nature of the business being invested in and the nationality or location of the investor, the notification may be either a prior notification (required before making the investment) or a post-investment report (required after the investment is made). Prior notification is mandatory for investments in specific “core industries” (such as weapons, nuclear power, cybersecurity, etc., which are related to national security) or investments from certain countries or regions. Even when prior notification is not required, if a non-resident foreign investor makes an investment of 10% or more in a Japanese company, they must submit three copies of the “Notification Form for Acquisition of Shares, Equity, Voting Rights, or Authority to Exercise Voting Rights or Management of Shares” within 45 days of the company’s registration date.

Notifications under the Foreign Exchange Law are particularly complex and crucial compliance requirements for foreign investors. This is not merely a matter of information gathering but a regulatory measure for maintaining Japan’s national security and economic order, with potential penalties for violations (as per Article 69-6 and subsequent articles of the Japanese Foreign Exchange Law). In particular, determining whether the investment target falls under a “core industry” requires specialized knowledge, and prior due diligence is essential. Furthermore, the fact that foreign residents in Japan are not required to notify under the Foreign Exchange Law when establishing a company is a concrete example of how residency can impact legal obligations, highlighting the importance for foreign entrepreneurs to accurately understand their situation. To navigate this complex regulatory environment, the support of experts well-versed in international legal affairs is indispensable.

Notifications to Other Government Agencies

After establishing a company in Japan, various notifications to government agencies other than the tax office are required, depending on the nature of the business and whether employees are hired. If you employ workers, you must submit a notification of establishment for health insurance and welfare pension insurance to the Pension Office, a notification of establishment for labor insurance relations to the Labor Standards Inspection Office, and a notification of establishment for employment insurance to the Public Employment Security Office (Hello Work).

Depending on the business, specific licenses or permits may be necessary (for example, a restaurant business license, travel agency registration, or temporary staffing agency permit). Some of these licenses or permits must be obtained before starting the business. These notifications and permissions are essential steps for legally operating your business. Particularly, obtaining certain permits can be time-consuming, depending on the nature of the business, so it is crucial to check and prepare for these from the planning stage of company establishment. Neglecting these procedures could result in the suspension of business activities or the imposition of penalties. This underscores that company establishment is not merely about completing registration procedures but requires comprehensive preparation for future business operations.

Opening a Corporate Account in Japan

After establishing a company, it is necessary to open a bank account in the company’s name (corporate account) for business activities. For foreign nationals living abroad who establish a company in Japan, “opening an account in the company’s name” is often seen as a “major hurdle.” This is particularly true for newly established small-scale enterprises, where the company and its representative are easily conflated, and financial institutions frequently deem cooperation with a representative residing in Japan as essential.

Opening a corporate account is a vital element for a company to smoothly conduct its business operations. However, for foreign-owned companies, especially those established solely by representatives living overseas, it is one of the most challenging practical tasks. This difficulty arises because Japanese banks have intensified their account opening scrutiny due to stricter measures against money laundering and enhanced identity verification. While the easing of the residency requirement for directors has lowered the barrier to establishment, it has also manifested as a new barrier in subsequent business operations. To address this issue, having a collaborator residing in Japan (for example, a co-founder or a trustworthy agent) is extremely important. Experts can provide specific advice and support to facilitate this challenging process.

Summary

The process of establishing a joint-stock company (Kabushiki Kaisha) in Japan offers significant opportunities for foreign entrepreneurs, but it also involves complex procedures based on a wide range of Japanese laws, including the Companies Act, the Commercial Registration Law, the Foreign Exchange and Foreign Trade Act, and the Immigration Control and Refugee Recognition Act. In particular, there are numerous legal and practical challenges unique to foreigners, such as the relaxation of regulations concerning the residency of representative directors, the relationship between capital requirements and residency status, and notification obligations under the Foreign Exchange Law associated with investments from abroad. Additionally, attention to detail is required for the use of signature certificates in place of seal registration certificates and the peculiarities of name notation in commercial registration. To accurately understand these complex requirements and proceed with procedures without delay, the support of experts proficient in law, taxation, and immigration affairs is indispensable.

Monolith Law Office has a wealth of experience and deep expertise in company establishment within Japan, especially in cases involving foreign nationals. Our firm can provide legal advice, assist with the preparation of necessary documents, act as a proxy for notifications to relevant government agencies, and offer comprehensive support for complex legal, tax, and immigration procedures at each stage of establishing a joint-stock company as explained in this article. Our office includes several attorneys who are native English speakers and hold foreign legal qualifications, enabling smooth communication in our clients’ native languages while resolving questions about the Japanese legal system and providing optimal solutions. As a strong partner for successful business expansion in Japan, please consult with Monolith Law Office. We are committed to vigorously supporting the growth of your business from a legal perspective.