Trust Company License in Japan: Requirements and Process (Part 1)

Series “Japan’s Financial Licenses: A Practical Guide” (3 parts), Part 1: this series covers, one by one, the three financial licenses that foreign companies ask us about most. Part 1 covers the license for a discretionary trust company, Part 2 covers custody-type trust company registration, and Part 3 covers the banking license. For a map of all financial licenses, see Japan’s financial license types and the registration process.

Accepting trusts as a business in Japan generally requires a license under Article 3 of the Trust Business Act (信託業法). A company that handles trusts in which the trustee manages and disposes of trust property at its own discretion is referred to in practice as a discretionary trust company (運用型信託会社). Only a kabushiki kaisha (KK) with a board of directors and related organs can be licensed, and its stated capital and net assets must each be at least JPY 100 million. Applications generally go to the Local Finance Bureau (財務局) with jurisdiction over the head office. This article is based on the laws and Financial Services Agency (FSA, 金融庁) publications we could confirm as of 30 October 2026.

What is trust business, and when do you need a license?

The Trust Business Act defines “trust business” as the business of accepting trusts (Article 2(1)). It then provides that no one may carry on trust business without a license from the Prime Minister (Article 3). The licensing authority is delegated to the Commissioner of the FSA, and part of it is further delegated to the Directors-General of the Local Finance Bureaus.

The key question is whether you accept trusts as a business. Deposits of money made incidentally to other transactions, and similar arrangements that a Cabinet Order designates as posing no risk to the protection of settlors and beneficiaries, are excluded from trust business. Conversely, even if a contract never uses the word “trust”, an arrangement in which you take title to someone else’s property and manage or dispose of it for that person may amount to accepting a trust.

• Activities that are likely to need a license: taking in money, securities, real estate or other assets from clients and managing or disposing of them at the trustee’s discretion; holding assets in your own name to manage them for investors.
• Activities that are likely to fall outside: a one-off trusteeship not carried on as a business (for example, acting as trustee of a so-called family trust). The analysis can change depending on whether the activity is repeated and whether you are paid, so check case by case.
• Activities subject to other rules: selling or soliciting trust beneficial interests may be regulated under the Financial Instruments and Exchange Act (FIEA, 金融商品取引法). This needs to be analysed separately from the trust business license.

Soliciting clients in Japan to entrust assets to you from an overseas base can also raise the question of a Japanese license. Before preparing a Japanese-language website or sales materials, map out which activities take place in Japan and check case by case.

Discretionary vs custody-type trust companies and other trust providers

There are several types of trust provider. A “trust company” under the Act includes both a company licensed under Article 3 and a custody-type trust company (管理型信託会社) registered under Article 7. “Discretionary trust company” is the term the FSA and others use to distinguish a licensed trust company from the custody type.

Custody-type trust business is the business of accepting only trusts in which trust property is managed or disposed of solely on the instructions of the settlor or others, or trusts involving only acts of preservation or use or improvement that does not change the nature of the property (Article 2(3)). If you accept even one trust that leaves room for the trustee to manage assets at its own discretion, you need the discretionary license. Part 2, custody-type trust company registration, covers the requirements and practice for the custody type in detail.

Banks and similar institutions carry on trust business with an authorisation under the Act on Engagement in Trust Business by Financial Institutions (兼営法). Trust banks and other institutions of this kind are financial institutions engaged in trust business. The banking license itself is explained in Part 3, the banking license. Separately, an enterprise value charge trust company under the Business Financing Promotion Act (事業性融資推進法) is a different licensing regime, and the FSA’s supervisory guidelines have a separate chapter for it.

License requirements for a discretionary trust company

The review has two tiers: review criteria (Article 5(1)) and grounds for refusal (Article 5(2)). If any ground for refusal applies, the license cannot be granted. Beyond that, the authorities examine in substance whether the review criteria are met.

Financial base: maintaining capital and net assets after launch

It is not enough for capital and net assets to exceed JPY 100 million on the application date. Under the FSA’s supervisory guidelines, the authorities check the balance sheet and how net assets were calculated, and assess from projected income and expenditure whether the financial base will be maintained after launch. You should assume that a plan in which start-up losses push net assets below JPY 100 million will struggle as it stands. Prepare a multi-year financial plan that includes arrangements for capital increases and the parent company’s support policy.

Personnel: placing staff with three or more years of trust experience

The supervisory guidelines set out specifically what is checked in reviewing personnel. For example, the department with head-office business functions must have several people with knowledge of trust business, at least one of whom has three or more years of experience in trust business. The departments that manage and dispose of trust property must also have staff experienced in that work.

The compliance department needs people with knowledge of trust business and trust-related laws (the Trust Act, the Trust Business Act and others). The internal audit and financial management departments also need people with knowledge of trust business. For directors engaged in day-to-day management, knowledge and experience of compliance and risk management are considered in addition to trust knowledge and experience. Knowledge and experience are demonstrated through CVs, training records and similar evidence.

Statement of business methods: designing it for each type of trust

The statement of business methods (業務方法書) is the central document of the application. It sets out, among other things, the types of trust property to be accepted, how trust property will be managed and disposed of, how it will be segregated, and the organisation for carrying out trust business. The supervisory guidelines state that the authorities also check whether the competence standards required of officers and employees in each department are clear, in light of the scale and nature of the business. Describe concretely, for each type of property you will accept (money, securities, real estate, intellectual property rights and so on), how it will be managed and who will be responsible.

Major shareholders and limits on other business

A major shareholder is, in principle, a person holding 20% or more of the voting rights of all shareholders, or 15% or more where facts specified by Cabinet Office Order exist. There are disqualifications for both individual and corporate major shareholders (Article 5(2)(ix) and (x)), and the applicant submits a written pledge, among other documents, that none apply. Anyone who becomes a major shareholder after licensing must file a notification of voting rights holding without delay (Article 17).

A trust company is in principle limited to trust business (Article 21(5)). It may carry on only trust business plus statutory businesses, such as trust agreement agency, the purchase and sale of trust beneficial interests and property management, and businesses that have been approved. Approval covers businesses related to trust business that are unlikely to impair the proper and reliable conduct of trust business (Article 21(2)). If your group runs other businesses, decide early which of them will sit in the trust company.

Conduct rules and ongoing obligations after licensing

Obtaining the license is not the finish line. A trust company owes continuing duties as a trustee, together with conduct rules and reporting obligations under the Act.

The trustee’s basic duties are set out in the Trust Act (信託法): the duty of care of a prudent manager in Article 29, the duty of loyalty in Article 30 and the duty to segregate property in Article 34. Some Trust Act duties can be reduced by the terms of the trust (such as the trust agreement), but the Trust Business Act separately imposes regulatory duties and organisational requirements on trust companies. Note that lightening duties by contract does not remove the regulatory duties.

When you outsource part of the business, selecting and supervising the service provider remains the trust company’s responsibility. If you plan to leave system operations or back-office work to an overseas parent, be ready to explain how you will oversee the provider, protect information and respond to regulatory inspections. Changes to the trade name, officers, the statement of business methods and similar matters may require prior or subsequent notification or approval, so check the procedure before making changes.

The FSA publishes a list of licensed and registered trust companies. It shows the head office location and the date of license or registration, which helps when researching partners and competitors or comparing business scopes.

The application process and the competent authority

Applications generally go to the Local Finance Bureau with jurisdiction over the head office. The supervisory guidelines describe a flow in which the Local Finance Bureau receives the application and processes it through the bureau in coordination with the FSA. Where a foreign trust business operates through a branch in Japan, the FSA is the point of contact.

1. Map the structure: chart who entrusts what to you and on whose judgment assets are managed and disposed of. Decide at this stage whether you need the discretionary license, or whether custody-type registration, a trust agreement agency or an alliance with an existing trust company would suffice.
2. Pre-application consultation: explain the business plan, draft statement of business methods, organisation and financial plan to the competent Local Finance Bureau (the FSA for a foreign trust business branch). Several rounds of revising and re-explaining materials are typical.
3. Incorporation and building the organisation: incorporate a KK with a board of directors and company auditor(s) or equivalent organs and provide stated capital of JPY 100 million or more. Hire experienced staff and put in place internal rules, systems, segregation arrangements and anti-money laundering measures.
4. License application: file the application with the documents specified by the Ordinance for Enforcement, such as the articles of incorporation, a certificate of registered matters, the statement of business methods, a balance sheet, a document setting out projected income and expenditure, officers’ CVs and pledges concerning major shareholders.
5. Review: the application is reviewed against the criteria and grounds for refusal in Article 5. You may be asked for additional materials, and officers or staff may be interviewed.
6. License and lodging the business security deposit: once licensed, lodge the business security deposit with the official depository nearest the head office before starting business.
7. Launch and post-launch obligations: business reports, change notifications, inspections and other obligations follow.

On timing, this article does not give a specific number of days for the standard processing period. In general, the standard processing period does not include pre-application consultation. Overall timelines vary widely with how far your organisation is prepared, so decide when to pay in capital and hire staff as the pre-application consultation progresses.

Entry routes for foreign companies and financial groups

A foreign trust company or financial group has three main ways to start trust business in Japan. Whichever route you take, accepting trusts as a business in Japan requires a Japanese license.

Choose between a subsidiary and a branch by weighing how capital is provided, where decisions are made, how the structure fits home-country regulation, tax and other factors. We compare the two in general terms in Japan branch vs subsidiary. A foreign investor acquiring shares in a Japanese company may also need to file under the Foreign Exchange and Foreign Trade Act (FEFTA, 外為法), so also check FEFTA inward direct investment: prior notification and post-investment reports.

Instead of aiming straight for the discretionary license, you can first build a client base as a trust agreement agent in partnership with an existing trust company, or start with custody-type registration by limiting yourself to instruction-based products. The FSA also runs the Financial Market Entry Office (拠点開設サポートオフィス), which supports market entry by overseas asset managers and others in English. Its main focus is financial instruments business such as asset management, and whether trust business licensing is covered by English-language procedures needs to be checked case by case.

Preparing overseas documents and substance in Japan

Applications from foreign groups typically require documents prepared overseas, such as the parent’s corporate registration and financial documents and materials on officers and major shareholders. Translations and home-country certificates take time, so start preparing them in parallel with pre-application consultation. Whether the Japanese entity has real substance in decision-making and operations also matters. If every important decision is made at home and Japan has only a contact point, it becomes hard to explain the personnel and business management structure.

Common review issues and a pre-application checklist

A discretionary trust company license takes more than well-prepared paperwork. In pre-application consultation, the following points are typically examined in concrete terms.

• Why the discretionary type is needed: if you cannot explain where the trustee’s discretion lies, you will be asked whether the custody type would suffice.
• A realistic revenue model: weak grounds for expected trust volumes, fee levels and costs affect the assessment of the financial base.
• Depth of staffing: a set-up that depends on a single experienced person and would stop if that person left is a weakness.
• Conflict-of-interest management: if group products or real estate are placed in trust property, explain how this fits the restrictions in Article 29.
• Outsourcing oversight: explain what is outsourced to an overseas parent or system vendor and how it is overseen in Japan.
• Transparency of major shareholders: you may be asked for materials on the overseas parent’s ownership, ultimate controllers and financial position.

Pre-application checklist

• You have identified the types of trust and property you will accept and can explain why the discretionary license is needed
• You have a design for a KK with a board of directors and company auditor(s), an audit and supervisory committee or nominating and other committees
• You can provide stated capital of JPY 100 million or more and have a financial plan and capital policy that keep net assets at JPY 100 million or more after launch
• You have funds set aside to lodge the business security deposit
• The head-office department will have several people with trust knowledge, at least one with three or more years of trust business experience
• You have suitable people for the compliance, internal audit and financial management functions
• Your draft statement of business methods describes concretely the types of property, management and disposition methods, segregation methods and the organisation
• You have finished checking major shareholders and officers against the disqualifications and gathered the necessary documents
• You have mapped out other businesses and identified those that need approval
• You have settled your outsourcing providers and your procedures for conflict-of-interest management and anti-money laundering

Summary: the discretionary trust company license and how TIMOA can help

The discretionary trust company license is a license under Article 3 of the Trust Business Act. Its central requirements are a kabushiki kaisha, stated capital and net assets of at least JPY 100 million, a business security deposit, and personnel, including experienced trust professionals, and a statement of business methods. After licensing, the duties of loyalty and care, segregation, restrictions on conflicted transactions and reporting obligations continue. Foreign groups choose between setting up a Japanese company and obtaining a license for a Japanese branch as a foreign trust company.

Together with partner professionals such as attorneys and administrative scriveners, TIMOA supports structuring, setting up your Japanese company, preparing for pre-application consultation and drafting application documents. For details, see our Permits & Financial Licenses service.

Other parts of this series

• Part 2: Custody-type trust company registration
• Part 3: The banking license