【EN-sup-102】How can a foreigner set up a company in Japan? From procedures to necessary visas explained [JA-sup-102]

“I’m a foreigner, but can I set up a company in Japan?”
“I want to start a business with a friend who has foreign nationality, but are there any special procedures we need to go through?”

You may have opened this website with these questions in mind. There may
be various reasons why you want to start a business together with other foreigners living in Japan, or want to develop a business that does not yet exist in Japan.

To get straight to the point, foreigners can set up a company in the same way as Japanese people. However,
the hurdles are higher for foreigners than for Japanese people, as their activities in Japan are restricted by their residence status and there are conditions for the documents required for incorporation .

This article explains what is needed and the process for foreigners to set up a company, as well as visas and points to note. We
hope that this article will help you make decisions and take action toward setting up a company, while understanding that “setting up and running a company is by no means easy.”

 

table of contents

• 1. Foreigners can establish companies using almost the same methods and procedures as Japanese people.
• 2. If a foreigner is involved in the management of a company, he or she needs a residence status that allows management activities.
• 3. Conditions for obtaining a status of residence to operate a company
  • 3-1. Conditions for obtaining a business manager visa
  • 3-2. Conditions for obtaining a residence qualification visa
• 4. What is needed for foreigners to set up a company in Japan?
  • 4-1.Bank account for capital payment and capital payment certificate
  • 4-2. Seal registration certificate or signature certificate
• 5. Six steps for foreigners to set up a company
  • 5-1. Step 1: Decide the basics of your company
  • 5-2. Step 2: Prepare the articles of incorporation and have them certified by a notary public
  • 5-3. Step 3: Transfer capital
  • 5-4. Step 4: Apply for incorporation at the Legal Affairs Bureau
  • 5-5. Step 5: Submit notifications to government agencies and institutions
  • 5-6. Step 6: Apply for a Business Manager Visa
• 6. Costs required for foreigners to set up a company
• 7. Frequently Asked Questions about Establishing a Company by Foreigners
  • 7-1.Q. Can a company be established even if the promoters do not live in Japan?
  • 7-2.Q. Can I start a company without a residence status or any collaborators?
  • 7-3.Q.Where should I go for advice regarding company establishment?
• 8. Summary

1. Foreigners can establish companies using almost the same methods and procedures as Japanese people.

Foreigners can set up a company in almost the same way and with the same procedures as Japanese people.

There are certain conditions specific to foreigners when submitting documents, but as long as these conditions are met, the procedure itself is not very different from when Japanese people set up a company.
There are also no particular restrictions on the business that can be started, as long as it is not illegal under Japanese law (e.g. drug trafficking, prostitution, etc.).

However, even if there is no problem with establishing a company itself, you must pay attention to your residence status when engaging in management activities after establishment.

2. If a foreigner is involved in the management of a company, he or she needs a residence status that allows management activities.

If a foreigner actually wants to run a company, he or she needs a residence status (visa) that allows management activities. This
is because the Immigration Control Act stipulates that foreign nationals must operate within the scope of their residence status.

There are two main types of residence status that allow you to engage in company management: residence status and activity status .

If you engage in business management activities with a status of residence other than those listed above and receive remuneration for such activities, you will be considered to be engaging in illegal activities as part of activities outside of your status of residence.
For example, a foreigner on a student visa can prepare to establish a company, but actually taking on the role of representative director and receiving remuneration for such activities will be considered to be engaging in activities outside of his or her status of residence.
In this case, you will need to apply for a change of status of residence to one that allows you to engage in business management activities.

In addition, among the visa statuses for engaging in company management activities, there are no restrictions on activities for any of the four residence statuses, but the scope of activities for the activity status of the Business Manager visa is defined as follows:

Activities to operate trade or other businesses in Japan or to engage in the management of said businesses (excluding activities to operate or manage businesses that cannot be conducted by law without the qualifications listed in the legal and accounting services section of Appended Table 1-2 of the Immigration Control Act).

Reference: Immigration Services Agency website: Status of residence “Business Manager”

The term “business management” refers to the following activities:

 Activities as an officer (representative director, director, auditor, etc.) engaged in the decision-making, execution, and auditing of important matters related to the operation of the business Activities as
a person  engaged in the management of an internal organization equivalent to or higher than the administrative department (general manager, factory manager, etc.)
Reference: Immigration Services Agency, Entry and Residence Examination Guidelines, Part 12

If you are engaged in activities that fall within these definitions and receive remuneration for such activities, you will need a business manager visa (or a residence status such as a permanent resident visa).

If you establish a company in Japan and manage it from overseas, you do not need any residence status because this does not constitute “residency.”
If you are visiting Japan for a short period of time for meetings or liaison work without remuneration, you will be fine with a short-term visitor visa as described below. However, if you are paid remuneration, you will need a business manager visa even if you are visiting Japan for a short period of time.

If a person is appointed as a manager of a Japanese corporation and receives remuneration from the Japanese corporation, that person will be subject to the “Business Manager” status of residence even if
he/she visits Japan for a short period of time for meetings, liaison duties, etc. related to the management of the business. However, if the person is not appointed as a manager of the Japanese corporation, or if he/she is appointed as a manager but is not receiving remuneration from the Japanese corporation, he/she will enter Japan with the “Temporary Visitor” status of residence and participate in the meetings, etc.

Reference: Immigration Services Agency, Entry and Residence Inspection Guidelines, Part 12

3. Conditions for obtaining a status of residence to operate a company

We have summarized the conditions for obtaining a residence status that allows you to manage a company.

3-1. Conditions for obtaining a business manager visa

There are three conditions to obtain a Business Manager visa.
You will need to notify the Immigration Bureau that you meet these conditions.

3-1-1. The business establishment must be located within Japan.

First, you must have a place of business in Japan to operate your business.
The place of business cannot be in any form, and the following requirements are set out:

When applying for a residence status, you will be asked to submit documents such as a “real estate register copy” and “lease contract” to verify that you meet these requirements.

3-1-2. The total amount of capital or investment is 5 million yen or more, or the company employs two or more full-time employees.

The total amount of capital or investment must be 5 million yen or more, or two or more full-time employees must be employed.
This is a measure of the scale of a business, and either one of these must be met.

Total capital or investment is 5 million yen or more

If you provide capital or investments totaling 5 million yen or more, you will need to prove ① who contributed and ② how they contributed .

① does not necessarily have to be contributed by the applicant himself, friends or relatives can do it.
② is important, and in order to prove that it is not a shoddy donation, documents must be prepared that clearly show where and how the contribution was made.
Examples include “remittance records,” “copies of bankbooks,” and “loan agreements.”

If you are borrowing from a friend or relative, you will also need documentation proving your relationship to the applicant (such as a “parent-child relationship notary certificate”).

Employ two or more full-time staff

If you hire two or more full-time employees, they must be Japanese nationals residing in Japan, or individuals with the following residence status: “Permanent Resident,” “Spouse or Child of a Japanese National,” “Spouse or Child of a Permanent Resident,” or “Long-Term Resident.”
Part-timers, dispatched employees, and contract employees are not permitted.

3-1-3. The business is stable and sustainable, and the manager has management skills.

The business you are about to start must be stable and sustainable, and the owner must be recognized as having management skills.
To achieve this, it is essential to create and submit a business plan.

A business plan is very important
to convince the examiner why a foreigner wants to run a company in Japan . It is required to create a plan that is persuasive about stability and continuity while specifically including the planned contents such as products and services, sales forecast, expenses, organizational structure, etc.
It is also effective to submit documents that can support the contents of the business plan.

3-2. Conditions for obtaining a residence qualification visa

The conditions for obtaining residency status are as follows.
The requirements for each status are quite strict and limited.
If you do not have residency status and want to start running a company quickly, it is practical to obtain a business manager visa.

4. What is needed for foreigners to set up a company in Japan?

The following items are necessary for foreigners to establish a company. Please
refer to 4-1 and 4-2 for details on the “Bank Account and Capital Payment Certificate” and “Seal Registration Certificate or Signature Certificate,” which are requirements unique to foreigners.

The table below summarizes the documents required for registration application, extracted from the above.
If these documents are written in a foreign language, they must be accompanied by a Japanese translation.

4-1.Bank account for capital payment and capital payment certificate

A capital payment certificate is a document that certifies that the capital required to establish a company has been paid into an account designated by the promoters. It is prepared after the payment has been made. Please note
that the bank accounts through which capital can be paid are specified as follows, and not all accounts are eligible .
You can check whether a branch falls under this category by checking the bank’s registered matters certificate, etc.

When using option 2 in the table above, the transaction may be conducted in a currency other than Japanese yen, in which case proof of the exchange rate is required.

In the case of 4, the promoter can open a Japanese bank account, or ask a collaborator who already has a valid bank account to become a promoter or director.
Many financial institutions have conditions for the former, such as “having a resident card” or “staying in Japan for more than six months,” which can be difficult for foreigners who live overseas or are staying in Japan for a short period of time.
Therefore, it is easier to proceed with the preparations for the latter, using a collaborator’s account.

4-2. Seal registration certificate or signature certificate

A seal registration certificate is a document that certifies that the seal (jitsuin) used when concluding important contracts is genuine.
Please check as follows as to whose certificate is required, as it will differ depending on the form of establishment.

If you are a foreigner and have not registered your seal, you can use a signature certificate as a substitute for a seal certificate.
A signature certificate can be obtained from your home country’s government office, notary public office, or embassy in Japan.

Please note that the certificate must be used within three months of issue when applying for registration, so be sure to pay attention to the deadline.

5. Six steps for foreigners to set up a company

Now let’s take a look at the six steps required for a foreigner to set up a company in Japan.

5-1. Step 1: Decide the basics of your company

First, decide on the basic details of the company.
The items to be decided are the company name (trade name), company address (head office location), capital, business purpose, etc. These are the details to be written on the registration application to be submitted in the future.

Make sure that there are no other companies with the same name at the same location.
In principle, foreigners with residency status can freely set their capital and company address.
On the other hand, if you are applying for a business manager visa, you must meet the requirements listed in 3-1 above.

5-2. Step 2: Prepare the articles of incorporation and have them certified by a notary public

Create the articles of incorporation and have them certified by a notary public.
Please note that the articles of incorporation contain mandatory items that must be included, and if these items are not included, the articles of incorporation will not be valid.

Once created, prepare the following documents and submit them to a notary public’s office to be certified by a notary public.

Please also refer to Chapter 6 for specific amounts of certification fees and fees for issuing copies of the articles of incorporation .

It is also possible to submit an electronic version of the Articles of Incorporation in PDF format online, without printing them.
In this case, the 40,000 yen revenue stamp fee is not required, but software and a card reader capable of electronic signatures are required separately.

*If you are establishing a limited liability company, certification of the articles of incorporation is not required.

5-3. Step 3: Transfer capital

After the articles of incorporation are certified, the capital is transferred to the bank account designated by the promoters. Please refer to the explanation in 4-1
above for bank accounts where transfers can be made . A payment certificate is required when applying for incorporation registration, so be sure to create one after the transfer.

The standard amount of capital is 5 million yen or more as mentioned in 3-1-2 if you are obtaining a business manager visa
. On the other hand, if you have residency status, you can legally establish a company with as little as 1 yen.
However, please note that if the capital is too small, you may not be able to gain the trust of banks and business partners, which could cause problems in running your company.

5-4. Step 4: Apply for incorporation at the Legal Affairs Bureau

Once you have prepared all the necessary documents and preparations, you can apply for incorporation registration at the Legal Affairs Bureau.
Once you have applied to the Legal Affairs Bureau in the location where the company you plan to establish is located and completed, the company will be legally established.
Depending on how busy the Legal Affairs Bureau is, it is expected to take about 7 to 10 days from application to completion.
After completing the registration, be sure to obtain a Certificate of All Historical Matters from the Legal Affairs Bureau, which is required when filing with government agencies.

Please also refer to the website of the Legal Affairs Bureau for the format and examples of the documents required for application.

Commercial and Corporate Registration Application Forms

5-5. Step 5: Submit notifications to government agencies and institutions

Once the company registration is complete, you will need to submit notifications to various government offices and institutions.
Examples of documents that must be submitted and where to submit them include the following:

In addition, if you are renting a business premises under a personal name, you will need to change the name to a corporate name. If your business requires licenses and permits, such as travel agency or secondhand goods dealer, you will need to obtain those licenses and permits. You will then need to complete the necessary procedures.

Once you have completed this step, those who have residency status or are working in management from overseas can start running their company.

5-6. Step 6: Apply for a Business Manager Visa

If you do not have a residence status that allows you to manage a company, now is the time to apply for a Business Manager Visa.
If you apply before your company is established, the Immigration Bureau may question the feasibility of your application and not approve it.
If you apply after you have completed various procedures such as registration applications and are ready, you will have a higher chance of obtaining a Business Manager Visa.

If your application for a business manager visa is approved, you will be able to officially manage your company.

6. Costs required for foreigners to set up a company

The costs required for foreigners to set up a company can be roughly summarized as follows:

By the way, these are the costs involved in the incorporation procedures, so in addition to this, you will need to prepare capital and costs for creating an environment in which you can start your business.

7. Frequently Asked Questions about Establishing a Company by Foreigners

We have compiled a list of frequently asked questions regarding foreigners setting up a company.

7-1.Q. Can a company be established even if the promoters do not live in Japan?

A: Yes, you can.

Previously, at least one of the representative directors had to have an address in Japan, but according to a notice from the Ministry of Justice dated March 16, 2015, it is no longer necessary for all directors to have an address in Japan. However,
in this case, in order to check whether there is a risk of threatening Japan’s national security as stipulated by the Foreign Exchange and Foreign Trade Act, a notification of company establishment must be submitted via the Bank of Japan to the Minister of Finance and the Minister with jurisdiction over the business. Notification is often submitted after the application for establishment registration, but in some cases, advance notification is required depending on the country and business content. Be sure to check in advance before applying for establishment registration.

Also, as mentioned in 4-1, please note that capital cannot be deposited into an account at an overseas branch of a foreign bank.

7-2.Q. Can I start a company without a residence status or any collaborators?

A: Yes, you can.

However, even in such a situation, you will still need to find a real estate company that will rent an office space, and you will need to consider the bank account restrictions mentioned in 4-1 , so compared to having a partner, the hurdles are much higher.
Before you start preparing to set up your company, you may want to consider looking for a partner who lives in Japan.

7-3.Q.Where should I go for advice regarding company establishment?

A. You can get advice at the following locations, either for a fee or free of charge.

Some local governments also have support centers to help foreigners set up and manage their companies.
For example, in Tokyo, you can use the following institutions.

When choosing a consultation service, be sure to clarify what you want to discuss and what you want to be addressed.
If you want more in-depth, individual needs to be addressed, it is recommended that you use a paid consultation service.

8. Summary

Finally, we have summarized the key points regarding company establishment by foreigners.

If you are having trouble, such as “I want to set up a company in Japan, but I’m worried about whether I can go through the procedures properly” or “The procedures are too difficult and I’ve given up,” please consider consulting a specialist.