Terminology

Terminology

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Affidavit

Foreigners who live outside of Japan are required to obtain affidavits notarized by notaries public of their same nationalty. An affidavit is accepted as a substitute for a certificate of registered personal seal. The affidavit is made with information extracted from many documents such as the Articles of Incorporation, bylaws, incorporation registration certificate, and corporation nationality certificate, and should be legalized by a notary public of your home country.

Business Transfer

If all or a part of the business of one company is transferred to another company as a business deal, the procedures of business transfer are also done in accordance with the provisions of the Companies Act of Japan. When transferring any credits or debts and contractual positions that constitute the business, it is necessary to get approval from each party concerned. On this point, business transfer is different from corporate separation.

Branch Office

Independent corporate status is not given to a branch. A branch is treated as an extension of a foreign company incorporated overseas. Therefore, establishing a branch is different from establishing a subsidiary (a Japanese corporation).
As stated above, for a foreign company to conduct business in Japan, it must have a branch or a subsidiary. The procedures of setting up a branch are relatively simple compared to establishing a subsidiary. The basic realraments are deciding a base of operation, appointing a resident branch representative, and registering necessary matters with administrative authorities.
Once you have a branch, you can open a bank account or rent / lease real property.

Certificate on Registered Matters

Foreigners with registered residences can apply for a “Certificate on Registered Matters.” In real estate registration procedures, this certificate is accepted instead of a resident card.

Corporate Separation

All or a part of the assets and liabilities of one company are taken over by another company. Corporate separation is classified into two types, “corporate separation by absorption” and “corporate separation by new incorporation.” In the former case, the assets and liabilities are taken over by the existing company, and by the new company in the latter case. Further classification is made by considering who takes over the shares issued by the transferee company in exchange for the transferred assets and liabilities. When the shares are issued by the transferee company to the transferor company, it is referred to as “bunsha” type, and when the new shares are issued to the shareholders of the transferor company, it is referred to as “bunkatsu” type. The type of corporate separation can be chosen out of the four classifications. The procedure of corporate separation must be taken in accordance with the provisions of the Corporate Separation Law of Japan. The process differs depending on which type is chosen.

Corporate Separation by Absorption

Under a “corporate separation by absorption” structure, all or a part of the transferee company’s assets and liabilities are assumed by other existing companies.

Corporate Separation by New Incorporation

Under this structure, all or a part of the transferor’s assets and liabilities are assumed by a newly established company. Corporate separation by new incorporation can be done either by one company or jointly by multiple companies. This approach is generally used for the purpose of reorganization within group companies.

Equity Transfer

A newly established company acquires all the issued shares of a target company. As a result, a relationship of parent and subsidiary company is created.

Intracompany Transferee Visa

This is the visa for foreign nationals who are transferred from companies established in foreign countries to headquarters, branches or other business places in Japan to be engaged in engineering or international services for a limited period of time.

Investor / Business Manager Visa

This is the visa for foreign nationals who invest in, operate, and manage a business in Japan.

Merger

Merger is an M&A approach that combines two or more companies to form a single company that takes over all the rights and obligations of all the companies involved.

Merger by Absorption

One company absorbs another company and takes over all the assets and liabilities of the absorbed company.

Merger by Incorporation

Two or more companies merge to form a new company that assumes all the assets and liabilities of the resolved companies.

Representative Office

Before foreign enterprises officially start their business in Japan, they can use representative offices for preparatory operations. Direct business activities are not allowed via representative offices, but it is possible to do activities such as market research, information collection, purchasing office items, and advertisement. To conduct business in Japan, a foreign company needs to make and officially register a branch or subsidiary (a Japanese corporation).
Since a representative office is not allowed to open a bank account or rent/lease real property under its name and address, a headquarters’ manager or a representative office manager needs to use his/her personal name in some cases. Representative offices are not registered with any administrative authorities.

Signature Certificate

Foreign nationals with resident status in Japan can request issuance of personal seal registration certificates. Foreign nationals without resident status in Japan may need “signature certificates” to certify the authenticity of their signatures. You can obtain information about issuance of signature certificates from your home country’s embassy in Japan.

Skilled Labor Visa

This is a visa for foreign nationals who will be engaged in activities which require special industrial techniques or skills.

Stock Swap

One company acquires all of the issued shares of a target company. As a result, a relationship of parent and subsidiary company is created.

Stock Transfer

One company acquires shares from shareholders of another company, to make it a subsidiary. The interested company acquires shares from each shareholder of the target company through individual negotiation.

Subsidiary (a Japanese Corporation)

Establishing a subsidiary in Japan means making an independent Japanese corporation capitalized by a foreign company.
Unlike a branch, a subsidiary is a separate company from the parent company overseas. Therefore, any credits or debts incurred from the business activities by the subsidiary belong to the subsidiary. The parent company overseas assumes responsibility as a capital investor as provided under Japanese law.
When a foreign company intends to establish a subsidiary in Japan, it needs to select a corporation type under the Japanese Companies Act. There are four corporation types; joint-stock corporation (KK), limited liability company (GK), unlimited partnership, and limited partnerships. The last two types are rarely chosen because equity participants bear unlimited rather than limited liability. In most cases, a joint-stock company or a limited liability company is chosen. You can establish a company by registering it through the procedures required by applicable laws and regulations.
Since a subsidiary has a corporate status, you can open a bank account or rent/lease real property under its name.

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