Procedures for establishing a company in Japan with foreign capital

The first issue is deciding whether to incorporate as a stock company or as a limited liability company.

Since your choice of the most appropriate corporate form in Japan is linked to tax regulations in your home country, it is advisable to include a Japanese certified tax accountant・certified public accountant who is very familiar with foreign corporate taxation issues in your consultations.

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1Consultation about the Articles of Incorporation and items for registration; ordering the corporate seal.

The following are important matters that must be decided.

• Trade name (i.e., company name)
• Headquarters
• Business areas/activities the company will engage in
• Stated capital
• Date of incorporation
• Accounting period
• Method of public notice
• Officers
• Investors

Because the headquarters will be the base for the business, it is important to decide carefully.

When a foreign officers and employees apply for resident status (similar to a visa), and such person clears all requirements to obtain the resident status as a “business ”, it will then be necessary to look for an .

When applying for registration of incorporation for your company, you will need to have  your corporate seal ready and notify the authorities about your corporate seal. Since it can take several days for a corporate seal to be made, please be sure to do this as soon as you have decided on your trade name (corporate name).

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2Preparing the Draft of Articles of Incorporation

Kobe Legal Partners will prepare a draft of the Articles of Incorporation based on Japan’s corporate laws.  Our office can prepare Articles of Incorporation with the Japanese and English provisions appearing side-by-side for easier reading. However, only the Japanese version will be the official version, with the English version used for reference only.

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3Obtaining Necessary Documents

• If the investor is a foreign company, then the Articles of Incorporation and registration information for that company need to be sent from the home country.
• Japanese individuals who will become officers must provide a certificate of seal impression and foreign persons residing overseas who may become an officer must provide a certificate attesting to the genuineness of their signature.
• Our firm will prepare all other necessary documents, such as powers of attorney (proxy) and affidavits for you in both English and Japanese. The certificate attesting to the genuineness of signature and affidavits must be signed in the presence of a local notary for authentication purposes.
• Please note that the actual required documents will vary from company to company.
• Once the documents are ready, we will ask you to send them to our office.

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4Certification of Articles of Incorporation

• For stock companies, we will arrange for the Articles of Incorporation to be certified at a notary’s office in Japan.
• For limited liability companies, certification by a notary is not necessary; the electronic signature of a shihoshoshi-lawyer (i.e. our firm) the Articles of Incorporation is sufficient.

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5Remittance of the Capital Amount

Immediately following the certification of the Articles of Incorporation, the capital amount must be remitted to bank account in Japan.

The bank account to which the remittance is made must be at a Japanese bank or the Japanese branch of a foreign . Remittance to a foreign branch of a Japanese bank is also acceptable. When the investor is a foreign individual or a foreign company, and the bank mentioned above does not have a branch, it is common for the capital amount to be remitted to the bank account of a person who has a Japanese bank account (e.g, the directors at the time of incorporation).

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6Submission of Application for Registration of Incorporation to Legal Affairs Bureau

Once all the required documents are ready, the next step is submitting the application for registration of incorporation to Japan’s Legal Affairs Bureau. The registration is usually completed in about 3 days.

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7Notification to Bank of Japan

Legally required reports about inbound to the Minister of Finance and the Japanese ministry having jurisdiction over the particular industry based on Japan’s foreign exchange laws are accomplished by notifying the Bank of Japan.

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8Opening a Bank Account

First, you need to open a bank account for the Japanese corporate entity (whether a stock company or a limited liability ).

Even when a Japanese national opens a new bank account, the screening can take 2-3 weeks.

As such, when foreign capitalized-companies open bank accounts, you may have communication issues or problems with screening, so it make take more time than normally required for a Japanese company.

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9Notifications to the city tax office, prefectural tax office, national tax office, social insurance office, etc.

Corporate entities must pay both a corporate tax and a corporate resident tax, which each requires notification at the appropriate tax offices. If it is difficult for you to do this on your own, a certified tax accountant can do this on your behalf.

Similarly, various applications related to national health insurance and the national pension must be made at the appropriate social insurance office. Again, if it is difficult for you to do this on your own, a licensed social insurance consultant can do the necessary applications on your behalf.

We would be happy to introduce you to a certified public accountant or licensed social insurance consultant from the Kobe Legal Partners network.

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10Hello Work

In addition to the conventional direct hiring methods, you might consider using Hello Work when you hire workers. Hello Work is a government-run job centers and registration is required to use Hello Work for hiring purposes. Again, if it is difficult for you to do this on your own, a licensed social insurance consultant can do the necessary registraton on your behalf.

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11Application for Resident Status

When a foreign officer or employee needs to apply for a resident status to stay in Japan, you will need to prepare a business plan and submit it with other necessary documents in your application for resident status to the immigration authorities.

Let’s finally launch your business!