When a non-Japanese launches a business in Japan, this can be done either as a sole proprietorship or by setting up a company. However, given the fact that some companies will not engage in transactions with individuals and the relationship with resident status, setting up a company is more advantageous, and for that reason is very common.
An LLC (godo kaisha) vs. a Joint Stock Company (kabukishiki kaisha)
The first issue is whether to choose the limited liability company (godo kaisha) form or the joint stock company (kabushiki kaisha) form for your company.
At Kobe Legal Partners, the limited liability company form is often chosen by individuals who launch a business since the formation itself and the post-formation operational management are simple and straightforward.
In addition, for those who do not have a Japanese bank account or a person in Japan willing to help out, setting up a limited liability company may be the only option since, unlike the joint stock company, a copy of a bank account is not necessary when registering the establishment of the company.
Steps for Setting up a Company
In Japan, setting up a company (either a limited liability company or a joint stock company) involves the following steps:
- Preparation of the Articles of Incorporation
- Payment of capital
- Election/appointment of directors and officers, when applicable, as well as statutory auditors
- Registration application
Once the Legal Affairs Bureau has completed the registration of the company, the company will then exist officially as a company.
Resident Status (Visa)
When a non-Japanese sets up a company in Japan and starts operating a business in Japan, in addition to the procedures for setting up a company, the foreign national must also obtain a “business manager” visa. This means that the company must be set up in a way that the foreign national will be able to satisfy the requirements for getting a “business manager” visa.
However, persons with the following resident status can manage a company based on that resident status without having to satisfy the requirement for, and obtain, a business manager visa.
Resident status where a business manager visa is not required
- Permanent resident
- Spouse of Japanese
- Spouse of permanent resident
- Long-term resident
Note: The resident status of a long-term resident is up to five years and must be renewed.
There is no need for renewal by a permanent resident.
Points to keep in mind for non-Japanese setting up a company in Japan
Since there is no minimum required capital amount to set up a company, a company can be set up with just 1 Japanese yen. However, this is not true when obtaining a business manager visa. A business manager visa requires an investment of 5 million yen or more. For that reason, when a business manager visa is required, the company must have 5 million yen or more in capital.
When applying for the business manager visa, a separate, physical office is required. Virtual or shared offices do not meet the requirements. In addition, if you turn part of your residence into an office, it must be clearly separated from the residential part.
Even if it is small, renting a separate office would probably facilitate a smoother process. There are offices that can be easily rented by non-Japanese who come from overseas to Japan to launch their business.
Certificate of Seal Impression
When a company is set up, the incorporator must sign and affix his or her seal to the Articles of Incorporation or the proxy for the draft Articles of Incorporation. The seal used at this time must be the seal that is registered with the local government.
In addition, the director at the time of incorporation must also sign and affix his or her seal, which also is the type of seal registered with the local government, on the letter of acceptance of appointment.
For non-Japanese who live in Japan but do not have a certificate of seal impression, you will need to obtain a signature certificate from the consulate of your home country. However, since some consulates do not offer this service, it is necessary to confirm in advance. For those who live in Japan, we recommend obtaining a registered seal since the procedures will go much more smoothly if you have a certificate of seal impression when you set up a company.
For people who do not live in Japan, you must obtain a certificate from a person in your home country, such as a notary, who is authorized to authenticate your signature on the Articles of Incorporation, the proxy for the draft Articles of Incorporation or the letter of acceptance of appointment.
When setting up a joint stock company in Japan, the capital is paid into the bank account of the incorporator or the director at the time of incorporation, and a copy of the passbook for this account is required for the company registration application.
This bank account must be one of the following:
- Head or branch office of a bank in Japanese (foreign bank is also OK)
- Overseas branch of a Japanese bank
The name on the bank account can be the person who is incorporating the company (the incorporator), the director at the time of incorporation, or a person designated by the incorporator.
When this type of bank account is not ready, since a joint stock company cannot be set up, the incorporator may decide to incorporate as a limited liability company instead of as a joint stock company.
Notification, etc under the Foreign Exchange Laws
When a non-resident of Japan is the incorporator and sets up a company, prior notice and post-facto report must be carried out to the Minister of Finance and the Minister having jurisdiction over the company’s business through the Bank of Japan.