Japan’s thriving economy and innovative market make it an attractive destination for foreign entrepreneurs looking to establish a business.
However, the process of setting up a company in Japan as a foreigner comes with its unique set of challenges and requirements.
This comprehensive guide aims to demystify the process, outlining the essential steps, documents, and considerations that foreign investors need to be aware of. From visa requirements to capital considerations, we’ll walk you through everything you need to know to start your business venture in Japan.
Similarities and Differences with Japanese Nationals
The Process: Similar but Unique
While the process of establishing a company in Japan is largely similar for both Japanese nationals and foreigners, there are specific nuances that foreign entrepreneurs must navigate. Here’s a breakdown of the process:
- Creating the Articles of Incorporation: This foundational document outlines the company’s rules and regulations. It must be created and authenticated by a notary public.
- Capital Transfer: The capital must be transferred to a designated bank account.
- Registration: The company must be legally registered at the Legal Affairs Bureau.
- Various Notifications: Submit necessary documents to tax offices and other government agencies.
- Business Manager Visa Application: Apply for a change to a Business Manager visa if necessary.
Unique Considerations for Foreigners
Foreign entrepreneurs face unique challenges and considerations, including:
- Language Requirements: Documents submitted in foreign languages must be accompanied by Japanese translations.
- Signature Certificates: Unlike Japanese nationals, foreigners may not have a seal certificate. In such cases, a signature certificate obtained from an overseas consulate or embassy in Japan is required.
- Visa Considerations: Specific visas, such as the Business Manager visa, may be required to run a company in Japan.
In the following sections, we’ll delve deeper into the specific requirements, costs, and special considerations for foreigners looking to set up a business in Japan.
Visa Requirements for Foreigners
Even if you’re a foreigner, you can establish a company in Japan if you meet specific conditions. However, the type of residency status or visa you hold may limit your activities within the country.
Types of Residency Status
Different residency statuses affect the ability to establish a company:
- Unrestricted Statuses: Those with statuses such as “Spouse of a Japanese National,” “Permanent Resident,” “Long-Term Resident” can establish a corporation just like a Japanese citizen, in any form you prefer.
- Restricted Statuses: Those with statuses like “Technical Skills,” “Humanities and International Services,” “Family Stay,” “Student” have restrictions and must apply for a change to a “Business Manager” visa.
For instance, if you’ve obtained a “Skills” visa and have been using it to develop your skills, you must change your residency status to a “Business Manager” visa if you wish to start your own company and manage a business. This change ensures that you can legally operate as a business manager in Japan.
Understanding the Business Manager Visa
Business Manager visa comes with the following three requirements:
- Secured Business Location: A physical location for the business must be secured.
- Capital or Investment: A minimum of 5 million yen in capital or investment or the employment of two or more full-time staff.
- Business Stability and Managerial Ability: Evidence of the business’s stability and the entrepreneur’s managerial ability must be demonstrated.
Process and Costs of Establishing a Company
- Decide on Basic Company Details: Decide on the company’s name, promoter, capital, business purpose, location of head office, etc. It is necessary to confirm that there is no identical trade name in the same location.
- Create Company Seals: Typically, three types of seals are created: representative director seal, square seal, and bank seal.
- Preparation and Certification of Articles of Incorporation: Articles of Incorporation are the rules and regulations of the company. The Articles of Incorporation are prepared and certified by a notary public at a notary public office.
- Transfer Capital: Transfer the capital to the designated bank account. The certificate of payment, typically a copy of the bank statement showing the transferred amount, is used as an attachment to the application for the company’s incorporation registration.
- Register the Company: Complete the legal registration at the Legal Affairs Bureau. Upon completion of the registration of incorporation, the company is legally established.
- Submit Various Notifications: Provide necessary documents to tax offices and other government agencies.
- Apply for Business Manager Visa Change: After establishing the company (if your residency status requires it), you must apply to the Immigration Bureau for a ‘Business Management Visa,’ which is necessary for running the business. Once the change to the Business Management Visa is approved, the entire process is complete.
- Statutory Fees: Approximately 250,000 yen.
- Professional Fees: 100,000 to 150,000 yen for services from judicial scriveners or administrative scriveners.
Necessary Documents for Foreign Entrepreneurs
- Application for Registration: An application for registration is a document that describes the basic matters of a company. Documents written in a foreign language are acceptable, but be sure to provide a Japanese translation.
- Articles of Incorporation: Articles of Incorporation is a document that outlines the rules and regulations of the company.
- Certificate of Paid-in Capital: This document certifies that the company has actually paid in the capital.
- Letter of Acceptance of Assumption of Office: A Letter of Acceptance of Office is a document that certifies that you have been appointed as a director of the company.
- Certificate of Seal Registration of Founder/Director: Foreigners who do not have a certificate of seal impression must provide a certificate of signature.
- Seal Registration Certificate: Seal Registration Certificate This certificate is used to register the company’s official seal with the Legal Affairs Bureau. It confirms the authenticity of the representative’s seal, which serves as the company’s registered signature.
Special Considerations for Foreign Entrepreneurs
Capital Payment Considerations
When establishing a company in Japan, foreign entrepreneurs must pay attention to the capital payment process. The Japanese Banking Act stipulates specific rules for capital payment, and understanding these rules is crucial.
Case 1: If the Promoter’s Bank Account is Not a Japanese Financial Institution
In this case, the promoter must either open an account with a Japanese financial institution or find a collaborator with a valid account to act as a director. This enables capital payment. To open an account in a Japanese financial institution, conditions such as “staying in Japan for more than six months for work or study” and “obtaining a residence card” must be met.
Case 2: If the Promoter’s Bank Account is a Japanese Financial Institution’s Overseas Branch
An overseas branch of a Japanese financial institution qualifies for capital payment. However, if transactions are in a currency other than the Japanese yen, proof of the exchange rate is required.
Starting a company in Japan as a foreigner is an exciting venture filled with opportunities. While the process may seem complex, understanding the legal requirements and following this step-by-step guide can make the journey smoother.
Whether you’re an experienced business owner or a new entrepreneur, Japan’s dynamic market awaits your innovation and creativity.
Don’t hesitate to seek our assistance at Tokyo Portfolio if needed, and take the first step towards your business success in Japan today!
Frequently Asked Questions
Q. Does the Process Differ for Foreigners Compared to Japanese Nationals?
The overall flow is the same, but foreigners need a signature certificate instead of a seal certificate and may need to obtain a Business Manager visa.
Q. What Can Replace a Seal Certificate?
A signature certificate issued by an overseas consulate can replace a seal certificate.
Q. How Much Money is Needed to Start a Company in Japan as a Foreigner?
If unable to employ two or more full-time employees, a capital of 5 million yen or more is required. Additionally, statutory fees of about 250,000 yen and professional fees ranging from 100,000 to 150,000 yen are needed.