Friday, September 7, 2018

Resident representative is not necessary for Japanese corporations

A resident representative is no longer necessary for Japanese corporations (Note: A resident representative is still necessary for a branch registration in Japan.).

I keep receiving emails regarding this residency requirement and replies that you no longer need a resident representative (except branch registrations). However, one thing you should note is that you will have difficulty in opening a corporate bank account. Most of the Japanese banks request a resident representative as one of the must requirements to open an account.

Once you open a corporate bank account, you may be able to remove the resident representative, but it depends on each bank. First, you should contact your bank regarding this residency requirement before removing the resident representaive. Removing the resident representative without consulting your bank may result in the freeze of the account in the worst case.

Monday, February 5, 2018

How the change and filing of directors are done in Japan

There are some procedural aspects that should be considered before filing an application for registration regarding the change of representative directors in Japanese companies.

Here I explain the details using a sample case.

Sample Case

- The company is a Kabushiki Kaisha (the most common type of companies in Japan).
- The company has a board of directors.
- There are three directors and one auditor at the company.
    Director A (=Representative director)
    Director B
    Director C
    New Director D (=New representative director)
    Auditor E
- At an annual shareholders' meeting, the term of office of current (representative) directors expire.
- The new representative director takes over the office of current representative director.
- The current representative director leaves the company.

The procedures are as follows:

Option A

1) Annual shareholders' meeting - all the (representative) directors' term of office expires and directors (B, C, and D) are appointed

2) Board meeting - A new representative director D is appointed among from the directors BCD.

Note: Director A's term of office expired at the close of shareholders' meeting, and therefore, he was not present at the subsequent board meeting.

Option B

1) Annual shareholders' meeting - all the (representative) directors' term of office expires and directors (A, B, C, and D) are appointed.

2) Board meeting - A new representative director D is appointed among from the directors ABCD.

3) Director A resigns after the board meeting.

Note: Director A was reappointed at the shareholders' meeting.

In Option B, the term of office of Director A expires once, but he is reappointed at the shareholders' meeting as the director. And he resigns on the same day after the board meeting. Why does he do such a messy affair?

The reason is that you can save troubles of directors. There is a rule that you can omit directors' certificates (except a new director) at the filing of the change of directors, if the current representative director (A) is present at the board meeting to appoint a new representative director (D).

If you choose Option A, you need to submit all the directors' notarized certificates of signature (if a director is a Japan resident, he submits a certificate of seal). The director should go to a notary office and get the certificate notarized. It is difficult for a busy director to do it.

If you choose Option B, the only person who submits the certificate is Director D, and the other directors do not need to submit it. They just need to sign (or put their seals on) the documents. If this is attractive to your company, this option is worth adopting.

Friday, February 27, 2015

Corporate seals in Japan

In Japan, a seal (stamp) is commonly used on a document to show that it is understood and made in an authentic way. As for the corporate seal, we usually make three types of seals such as:

- Representative seal
- Bank seal
- Kaku-in (square seal)

A representative seal is registered at the Legal Affairs Bureau (Houmu Kyoku) and therefore, you can obtain the certificate of seal impression which is used at important transactions (opening a bank account, executing a contract of a big deal, company/property registration, etc.). Each representative can register his/her representative seal at the Legal Affairs Bureau.

A bank seal is registered at banks and is used for bank transactions.

A Kaku-in is a square seal used rather informally than the other two. It is placed on invoices, or decoratively placed together with the representative seal on contracts.

You can use one seal for all three purposes to save cost.

Keep your seals in a secure place. A person who has the seal (and some other information) can withdraw your fund from your bank account, and change the registration of your company before you know it.

Tuesday, January 20, 2015

Resident representative requirement for the company registration (follow-up)

In my previous blog entry, the news article I mentioned seemed to be hastily posted. There has been no follow-up report from the newspaper company. However, it is certain that the Ministry of Justice is still studying the way how they can react on this issue of modifying the rule of resident representative when registering a company/branch.

On the other hand, there is a progress on Business Manger visa. Nikkei Newspaper reported that, starting from coming April, the Government will start a new type of Business Manger visa that is valid for four months. Currently, there are Business Manager visa for longer term (1/3/5 years) but it is difficult to obtain such a visa for a regular investor. 4-months Business Manager visa has less requirements.

Currently, foreign nationals/companies wishing to come to Japan and incorporate a company has to have a resident representative and office address beforehand. These are heavy burden for common investors.

With the 4-months Business Manager visa, you can come to Japan without having resident representative and office address.  After entering Japan, you can take up your abode, register you as a foreign resident, and complete the incorporation processes. If these processes are done withing the time limit of four months, you will be able to renew the Business Manager visa with longer period of validity.

In short, even if the requirement of resident representative remains, foreign nationals/companies with enough fund to travel to Japan and rent a residence can obtain the 4-months Business Manager visa and start preparation of incorporation/branch registration in Japan.

Wednesday, December 3, 2014

Resident representative requirement for the company registration to be abolished

Currently, a company incorporated in Japan and a branch office registered in Japan must appoint a local resident representative, and it has been the problem for the foreign companies considering to enter into Japan market.  However, it is reported that the Ministry of Justice will lift this regulation by the end of this year.

This will give a big boost to the foreign companies planning to invest in Japan.

At the same time, the requirements for Investor/Business Manager visa are also to be loosened. The details will come out by the end of March, 2015.

The source is here (sorry, Japanese only).

Monday, October 13, 2014

Basic Requirements and Facts for Japanese Companies

Company Name - Prior examination of a company name is not required, but an application to form a company with the same name and address with an existing company will be rejected. You can use alphabets, Arabic figures, Japanese Characters (Hiragana, Katakana, and Kanji), and some marks (symbols). The Japanese word to indicate a type of corporation should be included in the company name. For example, "ABC Kabushiki Kaisha".

Directors - Japan requires at least one director, with no upper limit of the number of maximum directors. A company cannot be a director. Only a natural person can be a director. Nationality is not a requirement. There are two types of directors.  One is director and the other is representative director.  A representative director is a director with representation right of the company and should be appointed from among directors. At least one representative director should reside in Japan. Board meeting for directors can be held anywhere in the world or at multiple places using telephone or video conference system, or even a unanimous written consent of directors can be a replacement for the board resolution if it is included in the Articles of Incorporation of the company. There is no need to have a board at a company. A company with a board should have at least three directors and one statutory auditor. In case of a company without board, there is no such requirement. One director is enough, and the regulations regarding the board meeting do not apply.

Shareholders - Any natural person, judicial person, or non-judicial organization of any nationality can be a shareholder, though those who are going to conduct a certain type of business (ex. defense industry, utility, etc.) or of a certain country should obtain a prior permission.  There are no lower and upper limit for the number of shareholders. Shareholder meetings can be held anywhere in the world or at multiple places using telephone or video conference system, or a unanimous written consent of shareholders can be a replacement for the resolution of meeting of shareholders.  In contrary to the board meeting, in case to hold a shareholders resolution in the form of unanimous written consent, it is not required to have a related clause in the Articles of Incorporation.

Company Secretary - Unlike many other countries, a Japanese company does not need to appoint a company secretary.  It is not in the Japanese legal system.

Share Capital - For Japanese companies, a shareholder is requested to invest at least one Japanese yen. If there is only one shareholder at a company, the minimum share capital is JPY1. If there are two shareholders, the minimum is JPY2. Sometimes, the minimum share capital is stipulated in laws other than the Companies Act. Ex. a company generally has to have at least JPY 5 million or more as the share capital, to apply for a Investor/Business Manager Visa. Share capital should be expressed in the Japanese yen but can be paid in foreign currencies or in the form of contributions in kind. The share capital in cash should be deposited at a Japanese bank account in case you incorporate a Kabushiki Kaisha (KK), but in case of a Godo Kaisha (GK, Japanese LLC), you do not need to use a Japanese bank.  You can just pay it to the representative of the company in cash.

Registered Address -  Japanese companies must supply a local Japanese address as their registered company address. Registered addresses cannot be a PO Box, they are required to be a physical address.

Public Information - The Japanese Companies Act requires that details about directors (representative directors should provide their personal addresses), auditors and other officers (if any) are public information. A Company must file details with the Legal Affairs Bureau in its district.  KKs and branches of foreign companies are required to supply the method of public notice (ex. announcements of financial results) in the company registry. Shareholders are not public information in the case of KKs.  On the other hand, operating members (=shareholders) in GKs (LLC) must disclose their names. Representative members of GKs must disclose their names and addresses.

Taxation - There are many kinds of taxes in Japan such as corporate tax, corporate resident tax, withholding tax, consumption tax and so on.  It would be better to consult an Japanese accountant before you start forming an entity or registering a branch in Japan.  One thing I would like to point out here is a company should pay corporate resident tax of JPY70,000 per year (the amount is for the company with the share capital below JPY 10 million), regardless of the profit you make in Japan.

Ongoing Compliance - Companies including branch offices or other entities in Japan are required to prepare and maintain accounts. Small companies do not need to undergo an audit on their accounts and operations.

Every company is required to file an annual tax return with the tax authorities (for a bigger company, more than once a year).  The commercial registration of a KK needs to be renewed at least once in ten years.  An annual general meeting must be held once a year, soon after the close of annual accounts. These two regulations do not apply to a GK.

Others - I wrote this article based on the regulations on Kabushiki Kaisha, the most common form of company in Japan.  Therefore, different rules apply to other entities such as Godo Kaisha (Japanese LLC)  or branch registration.  It is recommended to take a professional's advice before registering your company/branch in Japan.

*Requirement of residency of representative was abolished on March 16, 2015, and you no longer need to have a resident as representative of companies (KK/GK). However, you still need to appoint a resident representative if you register a branch office in Japan.

Wednesday, May 14, 2014

Japan's regulation on bitcoin

It is reported that the Japanese government is considering not to control the transactions using bitcoins but just to introduce a system where bitcoin exchangers are requested to file a prior notification to the government before they do business.

Article from Mainichi

Additional information on Jan. 26, 2018.
Since Oct. 2017, the Japanese government launched the cryptocurrency exchange regulation, making the exchange completely legal when a company obtains the license.

Resident representative is not necessary for Japanese corporations

A resident representative is no longer necessary for Japanese corporations (Note: A resident representative is still necessary for a branch ...