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.
[ Documents to be attached to registration (Commercial Registration Law, Article 129) ]
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
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 ]
[ Prior notification based on the Foreign Exchange and Foreign Trade Law ]
Prior notification may be required depending on the foreign company’s nationality, the Japanese branch’s business purpose, 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 must notify the Labor Standards Inspection Office, the Employment Security Office, and the Social Insurance Office.