Branch Office of a foreign company is regarded under Japanese law as an extension of the foreign company, which does not have legal personality independent of the foreign company. Accordingly, any rights or obligations arising from the activities of the Branch Office belong directly to the foreign company.

In contrast, a subsidiary (such as a Stock Company “Kabushiki Kaisha” or a Limited Liability Company “Godo Kaisha”) is an independent juridical person established under Japanese law with investment from a foreign company. Rights and obligations arising from the subsidiary’s activities are attributed to the subsidiary, and the foreign company bears only the liability as an investor as provided under law.

Furthermore, a Branch Office must appoint at least one Representative in Japan who has an address in Japan, pursuant to the Companies Act.

On the other hand, in the case of a subsidiary, there is no legal requirement under the Companies Act that directors or officers must reside in Japan. However, in practice, a resident in Japan may be required for post-incorporation procedures such as opening a bank account, tax filings, or administrative processes.