Legal procedures required for a foreign company to operate in Japan

For example, suppose a foreign company wants to set up a branch office in Japan and start a business. What regulations are there under the Companies Act?

Incidentally, when a foreign company establishes a subsidiary in Japan, the subsidiary is a Japanese company based under the Japanese Companies Act, so what we are talking about branch here does not apply to the subsidiary. 

 [ Registration obligations of foreign companies ]

A foreign company is a corporation or other foreign entity established in compliance with the laws and regulations of a foreign country, which is the same as or similar to a company (Article 2, Item 2 of the Companies Act).

 When a foreign company intends to continue doing business in Japan, it is necessary to appoint a representative in Japan (Article 817, Paragraph 1 of the Companies Act) and register the foreign company. In addition, one or more of the representatives in Japan must be a person having a domicile in Japan (Article 817, Paragraph 1 of the Companies Act).

 A foreign company wishing to continue doing business in Japan must apply for registration of the foreign company within three weeks from the date of appointment of the representative in Japan.

 [ Penalties for violation of the registration obligation ]

In the event of a breach, the representative or manager of the foreign company in Japan may be subject to a fine of up to one million yen (Article 97, Item 1 of the Companies Act). (Article 97, Item 1 of the Companies Act). 

 [Matters to be registered (Article 933 of the Companies Act) ]

  • Matters to be registered to establish the most similar type of company in Japan (joint-stock company, or limited liability company) (trade name, business purpose, location of head office and branch offices, amount of capital, etc.)
  • The applicable law of incorporation of the foreign company
  • The name and address of the representative in Japan
  • Method of a public notice, web page address, etc.
  • Others

 [ Documents to be attached upon registration (Article 129 of the Commercial Registration Law) ]

  • Application form 

 The applicant or a representative must affix their name and seal to the application form. It must be affixed with the seal previously submitted to the registration office when affixing a seal. Suppose the representative in Japan is a foreigner. In that case, it is sufficient to sign the document instead of affixing a name and seal. Still, in that case, a signature certificate from the government agency of the applicant’s home country must be attached to confirm that the signature is that of the applicant.

  • A document sufficient to confirm the existence of the head office.
  • A document certifying the qualification of the representative in Japan
  • Articles of Incorporation of the foreign company or other documents sufficient to identify the nature of the foreign company
  • Other documents

These documents must be certified by the competent authorities of the foreign company’s home country or by a consular or other authorized officials in Japan.

 [ Registration and License Tax ]

90,000 yen

 [ Prior notification based on the Foreign Exchange and Foreign Trade Law ]

Prior notification may be required depending on the nationality of the foreign company, the business purpose of the Japanese branch, and the products handled.

 [ Taxation ]

Notification that the company has become a foreign corporation, a notice of establishing a payroll office, etc., and, if necessary, notification of blue tax returns, withholding income tax deadlines, etc.

 [ Labor Matters ]

If a foreign company hires employees, it will need to notify the Labor Standards Inspection Office, the Employment Security Office, and the Social Insurance Office.