Foreign companies entering Japan – Differences between subsidiaries, branches, and representative offices 【EN-bus-105】

① Establishment of a subsidiary (Japanese corporation)
② Establishment of a branch (Japanese branch office)
③ Establishment of a representative office

In this article, we will clearly explain the characteristics, advantages and disadvantages of each type of entry.

Characteristics of the three types of entry

Establishment of a subsidiary (Japanese corporation)

What is a subsidiary (Japanese corporation)?

A subsidiary (branch in Japan) is a company established by a foreign company to carry out business activities .

How to Establish

When a foreign company establishes a subsidiary (Japanese corporation) in Japan, it will establish a legal entity such as a joint stock company or a limited liability company as defined by Japanese Companies Act .

Features

Since a subsidiary (Japanese corporation) is a separate legal entity from the foreign company, the foreign company is responsible for the investment. The subsidiary can open a bank account and rent real estate .

Establishment of a branch office (Japan branch office)

What is a branch office (Japan branch)?

A branch office (Japanese branch) is a base that a foreign company sets up to carry out business activities in Japan .
It can be set up in a simpler way than establishing a subsidiary (Japanese corporation).

Installation Method

(1) Securing a base of operations
(2) Deciding on a representative
(3) Registering necessary information

Features

A branch office (a Japanese branch office) does not have legal status under Japanese law and is treated as part of a foreign company. Therefore, the liability arising from the activities of a branch office (a Japanese branch office) is directly attributable to the foreign company. A branch office can open bank accounts and rent real estate .

Representative Office

What is a representative office?

A representative office is a base established by a foreign company in order to prepare for full-scale business in Japan .
Therefore, it can carry out activities such as market research, information gathering, and advertising, but cannot conduct direct business activities .

Installation Method

No registration is required to establish a representative office.

Features

A representative office cannot open a bank account or rent real estate . The head office of the foreign company or the representative office’s representative person will be the party to the contract.

Advantages and disadvantages of the three types of entry

The advantages and disadvantages of each form of entry are as follows: