Setting Up a Company in Japan as a Foreigner: A Six-Step Guide

Foreign nationals and foreign companies set up a company in Japan under the same laws and procedures as Japanese founders. A kabushiki kaisha (株式会社, KK) can be incorporated even if every shareholder and director is a foreign national and every representative director lives overseas. Foreign founders do, however, face some additional preparation: obtaining and translating home-country documents, arranging an account to receive the capital, and reporting under the Foreign Exchange and Foreign Trade Act (外為法, FEFTA). This guide walks through the process in six steps, from preparation to post-incorporation filings, using the most common route: incorporation of a KK by its promoters (発起設立).

The incorporation process at a glance

Start with the overall picture. The timeline varies considerably depending on how long it takes to prepare home-country documents and to remit the capital.

1. Decide the basics

Decide the trade name, business purpose, head office address, amount of capital, directors and fiscal year. The following points in particular deserve careful thought at the outset, because changing them later requires a change registration, with the time and cost that entails.

• Business purpose: This is checked when applying for licenses, opening a bank account and in visa screening. Describe it specifically, including businesses you plan to start in the future.
• Head office address: This becomes the registered head office. If you will apply for a Business Manager visa (経営・管理ビザ), the premises must also function as a genuine place of business.
• Amount of capital: Set it with working capital, visa criteria and tax classifications such as consumption tax in mind. See How much capital to put into a Japanese company for details.
• Type of company: Besides a KK, you can choose a godo kaisha (合同会社, GK), whose articles do not need to be notarized.

If the representative director does not live in Japan

Following a change in the Ministry of Justice’s practice in 2015, an application to register the incorporation of a KK can be filed even if all representative directors live overseas. Without a director or staff member resident in Japan, however, opening a corporate bank account, signing an office lease and dealing with the tax office become harder. Decide before incorporation who will serve as the company’s point of contact in Japan.

2. Gather home-country documents

Promoters and directors who are not registered as residents in Japan cannot obtain a Japanese seal certificate. Instead, they prepare a signature certificate issued in their home country or a sworn statement certified by a notary. Documents in foreign languages must be accompanied by a Japanese translation.

Main documents

• Passport or other proof of identity
• Signature certificate (a seal certificate for those living in Japan)
• Proof of address (such as a sworn statement)
• Where a foreign corporation acts as promoter, documents proving the corporation’s existence and its representative (such as a sworn statement)

Signature certificates are generally obtained from a notary in the home country or from the home country’s embassy or consulate in Japan. The documents available and the procedures differ by country, and an apostille or consular legalization may also be required. For details, see Apostilles and sworn statements for foreign documents.

3. Prepare the articles of incorporation and have them certified

A KK must have its articles of incorporation (定款) certified at a notary office (公証役場). At certification, the company’s prospective beneficial owner must be declared to the notary. The same applies when the shareholders are foreign nationals.

• Paper articles require a ¥40,000 revenue stamp, but no stamp is needed if the articles are prepared electronically.
• The notary’s certification fee depends on factors such as the amount of capital. Check the latest amounts in the guidance of the Japan National Notaries Association.
• A GK does not need its articles certified.

4. Pay in the capital

In a promoter incorporation, the promoters pay in their investment after the articles are certified. As a rule, the receiving account is one held in the promoter’s name at a bank in Japan. If the promoter has no Japanese account, there are alternatives such as using the account of a person the promoter has authorized, so confirm the approach with a judicial scrivener (司法書士) in advance.

When remitting from overseas, allow for the days it takes for funds to arrive and for exchange-rate movements. Keep the remittance records: they also serve as evidence of the source of funds in Business Manager visa screening.

5. Apply for incorporation registration

Apply for registration (登記) of the incorporation at the Legal Affairs Bureau (法務局) with jurisdiction over the head office address. The date the application is filed becomes the company’s date of incorporation. Application forms and completed examples are published on the Legal Affairs Bureau’s website.

Once registration is complete, you can obtain a certificate of registered matters and a seal certificate for the company. These are used to open a corporate bank account and for various filings.

6. FEFTA procedures and post-incorporation filings

FEFTA reporting

Investment by a foreign investor counts as inward direct investment under FEFTA. In most cases, a post-investment report is filed through the Bank of Japan within 45 days of the investment. If the company will operate in a designated sector, such as those related to national security, prior notification before the investment may be required. A foreign investor who is a non-resident completes the procedures through a resident agent. For details, see FEFTA notifications and reports for inward direct investment.

Main filings after incorporation

Pre-incorporation checklist

1. Full names of all promoters and directors and how they will be written in Japanese, dates of birth and addresses
2. The type of signature certificates and sworn statements to obtain in the home country, and how long they take
3. The amount of capital, the remitting source and the receiving account
4. The terms of the lease for the head office premises (whether business use is permitted)
5. A draft of the business purpose, and whether any licenses are required
6. The fiscal year (financial year-end month) and the professionals who will handle tax and accounting
7. Whether the business falls within a sector requiring prior notification under FEFTA

Sorting these out first makes it easier to move quickly from drafting the articles to registration. Home-country documents in particular can cause delays of several weeks if they have to be obtained again, so have a professional in Japan check their contents before you obtain them.

Common pitfalls for foreign founders

• Obtaining and translating home-country documents takes longer than expected
• No account is available to receive the capital, and the payment method has to be reworked
• The business purpose omits activities that require a license
• The type of office lease does not satisfy visa or license requirements
• After incorporation, opening a corporate bank account takes time and delays the start of trading

Incorporation, visas, bank accounts and offices are interlinked. For example, Business Manager visa screening examines whether the office is genuine and how much capital has been invested, while banks examine the substance of the business before opening an account. Planning the whole process at the outset avoids having to redo steps.

Summary

Foreign nationals and foreign companies can set up a company in Japan through the same procedures as Japanese founders. The process has six steps: deciding the basics, preparing home-country documents, certifying the articles, paying in the capital, registering the incorporation, and FEFTA reporting and post-incorporation filings. Before applying, check the registration and license tax, certification fees and filing deadlines against the latest guidance from the Legal Affairs Bureau, notary offices, tax offices and other authorities.

Working with partner judicial scriveners, administrative scriveners and certified tax accountants, TIMOA provides end-to-end support, from preparing home-country documents and drafting the articles to remitting the capital, registering the incorporation, FEFTA reporting and post-incorporation filings. For details, see our Japan Entry & Company Setup page.