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.

Representative Office is established by a foreign company as a location to conduct preparatory and auxiliary activities prior to commencing full-scale business operations in Japan. Such activities are limited to market research, information collection, procurement of goods, and advertising.

Direct business activities, including sales and contract execution, are not permitted.

From a legal standpoint, there are no specific procedural requirements for establishing a Representative Office, and registration under the Companies Act or with the Legal Affairs Bureau is not required.

Under the Companies Act, there is no requirement for officers to reside in Japan. Therefore, even if all officers reside outside Japan, there is no legal issue.

Although a company can be established without any resident in Japan, it is highly likely that a resident of Japan will be required when opening a bank account after the company has been incorporated.

Note that if a Japan Branch Office is established instead of a subsidiary, at least one representative residing in Japan is required.

There are no restrictions on the nationality of officers.

When incorporating a company, it is required under the Companies Act to specify the location of its head office in the Articles of Incorporation. Accordingly, it is necessary to designate an address within Japan as the registered head office at the time of incorporation.

It is not required that the registered head office be a physical office actually used for business operations. It is permissible to use the address of a virtual office or a rental office, and it is also possible to temporarily use the residential address of a director or other person as the head office.

On the other hand, in the case of establishing a Branch Office in Japan (a Japan branch of a foreign company), it is possible to register a Representative in Japan without setting up an actual place of business (office) or virtual office.

However, for practical purposes such as opening a corporate bank account or completing administrative procedures, the presence of a physical office—such as exclusive premises and resident personnel—may be required. Therefore, securing an appropriate address is indispensable in practice.

With respect to a foreign corporation acting as a shareholder, documents evidencing that the corporation has been duly incorporated and registered under the laws of its home jurisdiction—such as a certificate of incorporation, certificate of registered matters, Articles of Incorporation, and documents indicating the composition of its directors or shareholders—must be prepared. Based on these documents, an Affidavit will be prepared.

In addition, for the representative of the foreign corporation or any individual who is to be appointed as a director of the company to be established, a copy of their passport and a government-issued identification document stating their current residential address should be provided for identification purposes. If such identification material does not contain their address, a utility bill or other document evidencing their current residence must be submitted. Based on these documents, a Signature Certificate will be prepared.

When a foreign company invests to establish a company in Japan, an Affidavit must be prepared based on the company’s certificate of incorporation, Articles of Incorporation, and other relevant documents, which must be duly notarized.

As a general rule, the Affidavit must be notarized either by a notary public located in the home country of the foreign company, or by the embassy or consulate of that country located in Japan. An Affidavit notarized by the embassy or consulate of the relevant country located in a third country, or by a notary public in a third country (such as the country where the representative resides), cannot be used for registration with the Legal Affairs Bureau in Japan.

Only a person with representative authority for the foreign company (e.g., the CEO) may sign the Affidavit and have it notarized by a notary public in the home country. An employee or agent who does not possess such authority cannot be the affiant.

As a general rule, a Signature Certificate of a person such as a representative of a foreign company (e.g., CEO) or a person to be appointed as a director of the company to be incorporated in Japan, must be notarized by a notary public located in the country of which the signer is a citizen, or by the embassy or consulate of that country in Japan. Notarization by the embassy or consulate of the relevant country located in a third country is also accepted.

However, if there are unavoidable circumstances, such as the unavailability of notarization services in the country of nationality, notarization by a notary public in the country where the signer resides may be exceptionally permitted.

Please note that, as a general rule, the Affidavit must be notarized either by a notary public located in the home country of the foreign company, or by the embassy or consulate of that country located in Japan. Therefore, if the home country of the foreign company and the nationality of its representative are different, care must be taken, since the place of notarization for the Affidavit and the Signature Certificate may differ.

A beneficial owner refers to a natural person who ultimately owns or controls a company and can substantially influence its business management. Listed companies and their subsidiaries are treated as natural persons for this purpose.

When establishing a company, the beneficial owner is determined according to the following hierarchy:

(i) a natural person who holds more than 50% of the shares of the company to be established;
(ii) if no person falls under (i), a natural person who holds more than 25% of the shares;
(iii) if no person falls under (ii), a natural person who has dominant influence over the business activities;
(iv) if no person falls under (iii), the representative director of the company to be established is deemed the beneficial owner.

At the time of notarizing the Articles of Incorporation at a Japanese public notary office, the name, nationality, address, date of birth, and other information of the beneficial owner must be declared, and identification documents such as a passport must be submitted.

When a Japanese company is established with foreign corporate investors, the shareholder structure of the foreign company must be traced to identify the ultimate natural person who controls the Japanese company as the beneficial owner, who must then be declared accordingly.

As a company does not yet have a bank account prior to its incorporation, the capital contribution is to be paid into a bank account in Japan held in the name of the subscriber.
In cases where the subscriber is a foreign entity and does not have a bank account in Japan, it is permissible to delegate authority to a third party who has a bank account in Japan to receive the capital contribution, and to have the contribution paid into such third party’s account.

However, if any of the subscribers or directors at the time of incorporation has an address in Japan, delegation to a third party is not permitted, and the capital contribution must be paid into such person’s bank account in Japan.

Following the payment, a copy of the relevant bankbook (including the cover, inside cover, and the page recording the deposit) must be submitted to the Legal Affairs Bureau as documentary evidence of payment. If a bankbook is not issued or online banking is used, a printout of the transaction details or equivalent document may be submitted in its place.

Note that in the case of a Godo Kaisha (limited liability company), submission of a copy of the bankbook is not required. Instead, a receipt for the capital contribution may be prepared and submitted.

After the capital contribution has been completed, an application for incorporation may be filed. Upon completion of the registration, a bank account may be opened in the name of the newly incorporated company, and the contributed capital may then be transferred to such account.

No, merely confirming that the account has a balance equal to or greater than the amount of the capital is not sufficient to prove that the capital has been duly paid.

In the incorporation of a company, the subscriber(s) must actually transfer the amount of capital into the designated bank account by means such as remittance or transfer.

To certify the payment of capital, a record of the deposit showing all of the following items is required (such as a copy of a bankbook or an online banking transaction history screenshot):

1. Name of the financial institution and its branch,
2. Name of the account holder (the person who receives the capital contribution), and
3. Date and amount of the deposit.
   Accordingly, a balance certificate or a screenshot showing a sufficient account balance alone is not adequate.
   Please note that it is acceptable to make the payment in a lump sum or in several installments.

When a foreign company establishes a company in Japan, it may be required to file a report with the Bank of Japan pursuant to the Foreign Exchange and Foreign Trade Act (FEFTA).

Specifically, if a foreign company or a non-resident individual acquires 10% or more of the voting rights in the newly established Japanese company, it is, in principle, required to submit a post-investment report on inward direct investment within 45 days from the date of company registration. (Note: Certain industries may require prior notification under applicable laws and regulations.)

This report must be submitted to the Minister of Finance and the competent minister through the Bank of Japan.

Failure to fulfill the reporting obligation may constitute a violation of the FEFTA. It is therefore important to take appropriate measures, including consultation with legal professionals.

When a foreign company or a non-resident individual establishes a company in Japan, it is generally sufficient to submit a post-investment report on inward direct investment after the company is established.

However, if the business to be conducted by the newly established company in Japan includes any designated industries that are subject to regulation for reasons such as national security or public health, prior notification under the Foreign Exchange and Foreign Trade Act (FEFTA) is required before the company is established.

If prior notification is required, it must be submitted within six months prior to the date of the company registration, through the Bank of Japan, to the Minister of Finance and the competent minister overseeing the relevant industry. The investment will then be subject to a prescribed screening process.
The review period is 30 days in principle, although it may be shorter depending on the case. Company registration can only proceed after the screening is complete.

In addition to establishing a Kabushiki Kaisha (KK) or Godo Kaisha (GK), establishing a business office (Japanese branch) in Japan also requires prior notification if the business conducted at the branch involves designated industries.
However, if no physical office is established and only a Representative in Japan is registered, prior notification is not required.

Pursuant to the Foreign Exchange and Foreign Trade Act (FEFTA), prior notification is required for investments in designated business sectors, which are subject to certain restrictions on foreign investment from the perspective of national security, protection of advanced and sensitive technologies, public health, and the security of critical infrastructure.

Examples of designated business sectors include:

• Software development and data processing
• Telecommunications
• Apparel manufacturing
• Retail electricity business
• Wind and solar power generation
• Aquaculture and fishery processing
• Manufacturing of aircraft engine components and drones
• Manufacturing of industrial machinery for semiconductor production
• Manufacturing of pharmaceuticals, vaccines, and raw materials for the treatment of infectious diseases
• Manufacturing of medical devices such as ventilators and dialysis machines
• Manufacturing of equipment for rare earth extraction and resource exploration vessels

Whether a business falls under a designated business sector is determined not only based on the purposes stated in the Articles of Incorporation, but also on the actual business activities conducted.
Even if such business is not described in the Articles of Incorporation, prior notification is required if the company actually engages in a designated business.

Furthermore, even if a company does not initially engage in a designated business at the time of incorporation, prior notification must be submitted when such business activities are commenced at a later stage.

In registration applications, original documents are generally required for submission to the Legal Affairs Bureau. Documents such as Affidavits and Signature Certificates signed by representatives of foreign companies or officers residing overseas must be sent as originals to Japan.

Regarding electronic signatures used instead of handwritten signatures, the Legal Affairs Bureau only accepts certain types of electronic signatures; therefore, electronic signatures provided by foreign service providers cannot be used for registration applications.

The representative of the foreign company or the officers of the company to be established must sign the necessary documents for the registration application, complete the authentication procedures for the Affidavit and Signature Certificate in their home country, and after all original documents are gathered, submit the registration application to the Legal Affairs Bureau. The date of the registration application is regarded as the company establishment date (effective date).

The time required from the registration application to completion varies depending on the processing status and congestion of the Legal Affairs Bureau, but it usually takes about two weeks to one month.
After the registration is completed, the company’s Certificate of Registered Matters and Certificate of Seal Impression will be issued.

After the completion of the company registration, the following procedures are required:

• Opening a bank account;
• Notification to the tax office and local government authorities;
• Enrollment procedures for social insurance;
• Acquisition of necessary permits and licenses depending on the business activities.

In addition, when there are changes such as share transfers, changes of officers, additional capital contributions, head office relocation, or amendments to the business objectives, preparation of documents and application for registration with the Legal Affairs Bureau are required.

Furthermore, in the case of a stock company (Kabushiki Kaisha), it is necessary to hold an ordinary general shareholders’ meeting after the end of each fiscal year and to pass resolutions on matters, such as approval of financial statements and election or re-election of officers.