Things to Consider When Registering Business Entities in Japan

January 15th, 2013By Category: Starting a Business

shinonome

There is considerable literature written about the procedures involved in incorporating a company in Japan (or registering a Japan branch of a foreign company), but when thinking about set-up there are many unwritten conditions and factors that can also affect scheduling.

Legal conditions

First, whatever the type of entity you chose to setup, the laws require that:
You can name someone presently residing in Japan as Japan representative. You can provide an address in Japan to register the entity.

The Japan representative does not need to be a Japanese citizen, but does need to be a registered resident of Japan. As representative of the Japanese entity, the Japan representative bears responsibility for damages to the company arising from neglect of duties and is also liable for damages to third parties caused intentionally or through acts of gross negligence.

The issue of the address is also raised often. A company (or branch) can be registered at a residential address. However, if the company is to be used to sponsor certain classes of visas, the authorities require that the entity be registered at an actual physical office (virtual office will not suffice). This can also prove to be harder than expected, because it can often be more difficult for non-Japanese to lease property in Japan. Having a Japanese business partner to assist with such tasks can be helpful.

Other factors

There are many other factors which also can add several days (or potentially even weeks) to the incorporation process.

Foreign bank wire transfer times and maximum transaction amounts

If you are incorporating a new entity from another country, please do not forget about the time required by the banks to process your request to wire transfer the monies to be used as the initial capital of the company. While international wire transfers are much more convenient now, do not forget about maximum transaction amount limits or other forms of wire transfer authorization checks set by your bank, all things that can delay incorporation since a company cannot be incorporated in Japan until the capital amount can be confirmed received.

Registering personal seals

The Japan representative will be required to present a registered personal seal certificate (inkan shomeisho) as part of the incorporation process. While most Japanese have registered a seal with their local city hall, many foreigners living in Japan have not done so. If a non-Japanese resident of Japan is to become the Japan representative, please ensure that a seal is made and registered. The process to do this is very simple, however, it still does require making a seal and taking a trip to the local city hall to go through the motions which can add an extra day or two to incorporation scheduling.

Company seals

Unlike many countries, signatures are not used to officialize documents in Japan. Japan uses a system of registered seals when entering into contracts and formalizing documentation meaning that a set of seals will need to be ordered. Most seal makers can make a set of company seals in relatively short time, however, allowing a couple of days for this is advised.

Mailing documents

While some things can be done by email, there are still forms which need to be signed by principals. Therefore, when incorporating from outside Japan, keep in mind international mailing times. Most documents can be emailed, printed out, signed and mailed back to Japan, however when incorporating a Stock Company (“kabushiki kaisha”) the Articles of Incorporation which must be signed by the promoter and then notarized in Japan, should be specially bound into a booklet and signed (“seihon” and “wari-in” in Japanese) before acceptance by authorities in Japan. The practice of signing (initialing) the bottom corner of each page of a multi-page document is not recognized in Japan and while the documentation can be prepared and bound in Japan for signing, it does mean physically mailing the papers both ways, all adding another couple of days to the incorporation process.

Processing time by the Legal Affairs Bureau

Applications for the incorporation of new companies and registration of Japan branches are submitted to the Legal Affairs Bureau office with jurisdiction over the address of the new entity for processing. While processing times do vary from location to location, plan for around 7 to 10 business days before the registration certificates become available.

Generally speaking, factoring in the above plus the time required to collect and have documents notarized, if you are seeking to incorporate from outside of Japan, it is recommended to allow for approximately 6 to 8 weeks for registration to be completed. (This can of course be shortened somewhat depending on turnaround time and how quickly basic details such as the Representative Director and address requirements can be decided.)

Tags:

Author of this article

Shinonome Group

Shinonome Group provides counsel on a range of matters including business and commercial, immigration and visa, real estate, and estate planning and administration issues in Japan. Our goal is to achieve workable solutions quickly, accurately and professionally. We possess both the business knowledge and the legal expertise required to successfully handle a wide spectrum of issues.

Related articles that may interest you

Find your job in Japan.

Create resumes, apply to jobs, get head hunted by employers.

GO!
LATEST JOBS LISTINGS

Useful Japan services you may like

Sponsors

Top