Q&A

Inheritance

Please give me an overview of the inheritance system in Japan.

First of all, if the decedent (i.e., the deceased person) has created a will, the division of inheritance will proceed in accordance with the will.

If there is no will, the heirs are to discuss the division of the inheritance. If an agreement is reached between all of the heirs, a written agreement on the division of the inheritance is made. If no agreement is reached, any of the heirs may apply to a family court for conciliation on the division of the inheritance. If no agreement is reached even through conciliation, the case will be referred to adjudication proceedings, and the family court will make a decision on how to divide the property.

In Japan, the marital property system is based on the separate property system. Under this system, when a spouse has died, property in the name of the decedent will be divided among all heirs without an adjustment between the decedent and the surviving spouse being made prior to the division of property.

What are the statutory inheritance shares?

The legal heirs are the spouse and blood relatives, and if the decedent had a spouse, that spouse will always be an heir. Blood relatives are granted a position of heir in the following order of precedence: (1) children (including an heir per stirpes), (2) lineal ascendants (e.g., parents), and (3) siblings (including an heir per stirpes).

The legal inheritance shares (legal portion) of a spouse and any other heirs are established as follows:

Heirs	Statutory share of the spouse	Total statutory shares of other heirs
Spouse and children	1/2	1/2
Spouse and decedent’s parents	2/3	1/3
Spouse and decedent’s siblings	3/4	1/4

What forms of wills are valid in Japan?

The following three forms are recognized as ordinary forms of a will.

1. (1)Holographic will (Handwritten will)

   This is a will in which the testator (i.e., the person who makes a will) prepares the entire text in his/her own handwriting. This form is simple, but there is a risk of invalidity due to failure to meet certain requirements.

2. (2)Notary deed will

   This is a will prepared at a notary public office with the involvement of a notary public.

3. (3)Secret will

   This is a type of will the existence of which is certified by a notary public, but the contents of which are kept secret from anyone including the notary public. As with (1), this type of will has a risk of invalidity due to failure to meet certain requirements.

Is it possible to instruct in my will that one heir should inherit all of the inheritance?

In Japan, the “legally reserved portion” is reserved for certain heirs. If all of the property is inherited by a single heir, a claim for abatement may be made by another heir(s) in order to preserve his/her legally reserved portion.

The legally reserved portion is granted to a spouse and children (including an heir per stirpes) and to lineal ascendants if the decedent had no child.

The legally reserved portion is equivalent to one-half (1/2) of the legal inheritance share.

My father, who was a non-Japanese living in Japan, died in Japan and has left a handwritten will. Can I apply for probate of the will to a Japanese family court?

If the testator’s last place of residence was in Japan, the Japanese court system has jurisdiction for probate of the will.

As for the governing law for probate in such a case, the law of the forum (lex fori) is usually applied in practice.

There exist cases in which probate of a will of a non-Japanese resident in Japan has been accepted by a Japanese court. Likewise in your case, probate may be conducted in accordance with Japanese law in a Japanese family court.

Can a surviving spouse continue to live in a residence that is in the decedent’s name after his/her death?

In an amendment to the inheritance rules in 2019, the right of residence of the surviving spouse (i.e., the right to continue to live in the residence free of charge after the death of his/her spouse who was the owner of the residence) is stipulated in the civil law.

Under the new rules, the surviving spouse’s right of residence will be financially valued and the division of the inheritance will be made taking into account such value. The valuation of a right of residence is lower than the valuation of ownership of the residence; therefore, the amount of liquid assets to be inherited by the spouse will increase compared to a case where the spouse inherits ownership of the residence.

Even if the surviving spouse does not obtain the right of residence, he/she is entitled to live in the residence for at least 6 months (“short-term right of residence”) until the division of inheritance is finalized.

I am a common-law wife/husband and not officially married. Do I have the right to inherit my partner’s property?

With respect to common-law marriage, unlike the right to share property upon dissolution of a common-law marriage, the right of inheritance is not acknowledged in practice.

Therefore, the ways of leaving an inheritance to a common-law partner would be to make a gift during one’s life or to make a bequest in a will. Keep in mind that other heirs may have legally reserved portions.

The decedent died leaving a large amount of debts. Are the heirs obliged to inherit the debts?

Under Japanese law, heirs inherit both positive and negative assets, which means that the heirs must inherit the debts as well.

However, there is a system that allows renunciation of an inheritance. If the amount of debts is greater than the amount of assets, an heir may make a statement to the family court that he/she renounces the inheritance. It should be noted, however, that a renunciation of an inheritance must be stated to the family court within 3 months from the time he/she becomes aware of the death of the decedent and of the fact that he/she has become an heir.

Divorce

What is the procedure for divorce under Japanese law?

In Japan, there are four methods for divorce.

1. (1)
   Divorce by mutual consent
2. (2)
   Divorce by mediation
3. (3)
   Divorce by ruling of family court judge
4. (4)
   Divorce by trial

In Japan, (1) divorce by mutual consent is the most common divorce method, and divorce by mutual consent is possible if both spouses agree to it.

Divorces (2) through (4) are divorce methods that involve the court, but since it is necessary to go through mediation before court proceedings (the conciliation-first principle), the parties who wish to divorce first file a petition for divorce mediation with the family court. In mediation, the parties discuss the terms of divorce through a neutral third-party mediator, and if they reach an agreement, the mediation is concluded.

If the parties are unable to reach an agreement at mediation, the parties will go to divorce court, where a family court judge will decide whether or not there are grounds for divorce and other conditions of the divorce. (In some cases, the judge will make a ruling before any divorce trial, but if there is dissatisfaction with the ruling, the divorce trial will be held.)

In what cases is divorce recognized under Japanese law?

If the parties cannot agree on divorce, the Civil Code stipulates that divorce is possible under the following circumstances (Civil Code Article 770).

1. (1)
   Adultery
2. (2)
   Malicious desertion
3. (3)
   When the death of the spouse has not been ascertained for more than three years.
4. (4)
   The spouse suffers from a severe mental illness from which recovery is not expected.
5. (5)
   Other serious reasons that make it difficult to continue the marriage.

Even in cases not falling under (1) through (4) above, if the marriage is deemed to have broken down due to domestic violence, for example, the divorce may be granted on the grounds that there are “serious reasons that make it difficult to continue the marriage”.

Can a couple get a divorce if they have been living separately for many years?

Japanese law does not clearly stipulate the number of years of separation required to obtain a divorce.

However, if the period of separation is prolonged, there is a possibility that the couple will fall under the grounds for divorce stipulated by the Civil Code, as “serious reasons that make it difficult to continue the marriage.

Generally, a period of separation of 3 to 5 years may be considered grounds for divorce.

Under Japanese law, what happens to custody of the children in the event of divorce?

While many countries around the world have adopted a joint custody system, Japanese law has adopted a sole custody system.

Therefore, upon divorce, it is necessary to decide which parent will have custody of the children.

If there is a dispute over custody, how is the custodial parent determined by the court?

In deciding who will have custody, the family court will consider the following factors from the perspective of the best interests of the child.

• ―Continuity in custody and care

  The court will consider the child’s current environment, and if there are no problems with the child’s current environment, the court will put emphasis on stability and consider the option that will provide continuing care.

• ―Will of the child

  If the child has reached a certain age, the child’s opinion will be respected.

• ―Priority to the mother

  Mothers tend to be given priority as the custodial parent, especially when the children are young.

• ―Attitude toward visitation

  Refusing visitation with the other parent without a reasonable reason may have a negative impact on the determination of custody.

In addition, various other factors such as financial situation, health situation, and the need for a custodial assistant are comprehensively taken into consideration when deciding who will have custody of the children.

How are child support payments determined?

The court has published a child support calculation table, and child support is determined based on the income of both parties.

How is the division of property determined under Japanese law?

The basic idea in Japan is that a husband and wife shall be entitled to one-half of the property that they have built up during their marriage as their common property.

On the other hand, property that was owned by one of the spouses prior to the marriage or property acquired during the marriage that was acquired independently of the spouses’ cooperation (e.g., through inheritance) is considered proprietary property and is not subject to division of property.

We were not formally married, but were in a common-law marriage. Is there a division of property in the dissolution of a common-law marriage?

In past court cases, property division has been recognized upon dissolution of a common-law marriage in the same manner as in the case of divorce, and property built up through cooperation during common-law marriage can be considered as subject to division of property.

In addition to the division of property and child support, are there any other financial benefits that are problematic in a divorce?

Under Japanese law, there is no obligation to provide support to the other spouse after divorce. If there are children, only child support is an issue.

On the other hand, in cases where adultery or severe domestic violence led to divorce, the responsible spouse may be ordered to pay alimony to the other spouse. Alimony is often awarded in the range of 500,000 yen to 3,000,000 yen, depending on the case.

Labor Issues

I work for a foreign company in Japan. In this case, which country’s laws would apply to labor issues?

The General Act on Application of Laws provides that, in principle, the laws of the place chosen by the parties apply. Therefore, if any place is specified in your labor contract, the laws of that country will apply.

If there is no explicit agreement regarding the governing law, the “laws of the place with which the contract is most closely related” apply, which means the laws of the country where the employee is working will be the governing law.

Furthermore, it has been construed that even if a foreign law is chosen by the parties, mandatory Japanese provisions for labor protection apply to employees working in Japan. Therefore, Japanese laws apply to matters related to employment termination, minimum wages, industrial accidents, etc.

I was fired by my company, but I do not think there was a good reason for it. Is there any way to dispute the dismissal?

In Japan, there are strict rules regarding dismissal. Therefore, generally speaking, companies cannot easily fire an employee.

It is important to firstly confirm the reasons behind your dismissal. If the reasons for dismissal have not been specified in writing, you may request a certificate stating the reasons for dismissal.

In a case involving a fixed-term labor contract, in principle, the employer cannot dismiss the employee during the fixed term unless there are “compelling reasons”. Therefore, the instances in which an employer may dismiss an employee are restricted.

Also, even in a case involving a labor contract without a fixed term, the law provides that a dismissal is invalid unless there are “objectively reasonable grounds” and the dismissal is “considered to be appropriate under generally accepted social conventions”. For example, a dismissal may be valid when an employee has committed a material violation of work orders or workplace rules, whereas an immediate dismissal for a minor mistake or minor incompetence may be considered invalid.

If the dismissal is invalid, the employee may request to be reinstated to the workplace and may also claim back wages and other benefits from the employer for the period during which the employee was unable to work due to the invalid dismissal.

What are the procedures of a dismissal?

The Labor Standards Law provides that an employer wishing to dismiss an employee is required to give at least 30 days advance notice or, if no advance notice is given, to make a payment in lieu of advance notice in an amount equivalent to the employee’s average wages for at least 30 days.

In a case of a disciplinary dismissal, an employer may immediately dismiss an employee without giving advance notice or making a payment in lieu of advance notice if the employer obtains prior approval for such immediate dismissal from the Labor Standards Inspection Office.

I frequently work overtime, but my company does not pay me overtime. How should I deal with this situation?

You can make a claim for overtime pay from the company. In calculating the overtime pay, it is important that you have evidence to prove the hours you worked. In addition to time cards and/or software for managing starting and finishing times, records of emails sent or records of logging in and out of the computer used for your work and other such work-related activity may also serve as evidence. It will be helpful to preserve these items as evidence.

I am employed under an annual salary system. Can I claim overtime pay?

Even if you work on an annual salary basis, your employer is required to pay overtime. Therefore, if you work in excess of the statutory working hours, you may make a claim for overtime pay unless you fall under an exception provided by the Labor Standards Law (e.g., if you are in a position of supervisor or manager).

I got injured in an accident on the job. What kind of compensation can I receive?

If you are injured in an accident on the job, it constitutes an occupational injury. In this case, the following two types of compensation are available:

1. (1) Industrial accident compensation insurance benefits

   If the accident is recognized as an industrial accident, you may receive benefits from the government such as coverage of medical expenses, compensation for absence from work, and injury compensation benefits in case of residual disability.

2. (2)Damages from the company

   The covered items and amount to be paid under (1) are fixed. If there are damages exceeding such items and amount, you may claim for damages from the company. The kinds of damages that can be claimed from the company include medical expenses, loss of salary during one’s absence from work, and compensation for mental suffering due to hospitalization/outpatient treatment as well as compensation for residual disability and lost wages (wages that would have been earned in the future if the industrial accident had not occurred).

I suffer from depression due to power harassment by my boss and have become unable to work. Can I receive compensation for an industrial accident?

If you suffer mental illness such as depression due to work-related stress, the issue would be whether the illness was genuinely caused by your work. There are certain hurdles that must be overcome to have the illness recognized as an industrial injury.

Specifically, it must be recognized that there was a “strong psychological burden due to work” during a certain period (approximately 6 months). The Ministry of Health, Labour and Welfare has published a chart for evaluating the psychological burden caused by work, and classifies burdens into “Strong”, “Medium”, and “Weak” categories with concrete examples.

Furthermore, it must be recognized that one’s onset of depression was not caused by non-work-related factors. The Ministry of Health, Labour and Welfare has also published a chart for evaluating the psychological burden caused by non-work-related matters, and classifies such burdens into categories labeled as “I”, “II”, and “III” with specific examples. For example, divorce, separation, and the onset of a serious illness are classified as category “III” burdens (i.e., the most stressful category), and in a case where such factors are present, more caution will be exercised in recognizing the case as an industrial accident.

Bankruptcy Procedure

Can a non-Japanese person file for bankruptcy in Japan?

Foreign nationals may file a petition for bankruptcy with a Japanese court to seek relief from their debts if they have a domicile or property in Japan.

In this case, property located in foreign countries will also be subject to liquidation, and foreign creditors will also be allowed to participate in the bankruptcy proceedings.

If a foreign national files for bankruptcy, will it have an adverse effect on his/her status of residence?

Even if a foreign national files for bankruptcy, this in itself does not directly affect his/her status of residence.

However, in making a decision on the status of residence, the immigration authorities may take into account whether the person in question has sufficient assets and skills to earn a living independently. In this sense, his/her financial condition may be relevant to his/her status of residence.

How can I file a petition for bankruptcy?

First of all, you need to prepare a written petition summarizing the circumstances under which you have become unable to pay your debtor(s) as well as materials related to your assets (e.g., bank passbooks/statements).

There are two types of bankruptcy proceedings: (1) bankruptcy proceedings with a trustee and (2) bankruptcy proceedings that are terminated upon commencement of the proceedings (“simultaneous termination”). When a petition for bankruptcy is filed with a court, the court decides whether to appoint a bankruptcy trustee and continue the proceedings or to terminate the proceedings simultaneously with the commencement of the proceedings. In principle, the court will appoint an attorney-at-law as a bankruptcy trustee, and the bankruptcy trustee will investigate the assets of the individual seeking bankruptcy, liquidate the assets if there are any, and distribute the proceeds to the creditors. On the other hand, if the individual filing for bankruptcy has no property worth more than ¥200,000, the court will decide not to appoint a trustee and will instead issue an order of termination of the proceedings simultaneously with an order of commencement of the proceedings.

1. (1)

   In bankruptcy proceedings with a trustee, you will be interviewed by the bankruptcy trustee after you have filed a petition. Then, a creditors meeting will be held at the court. If there are any assets, the assets will be liquidated and the proceeds will be distributed to the creditors.

2. (2)

   In cases of simultaneous termination, the individual filing for bankruptcy will be required to attend an interrogation for discharge to be held at the court with his/her representative.

After the proceedings described in (1) and (2) above, the court will issue an order of discharge and the bankrupt individual is released from his/her debts. Under (1), it usually takes 3 months to 1 year from the filing of the petition until the order of discharge is issued. Under (2), the order of discharge is usually issued a few months following submission of the petition.

Are there debts that remain after bankruptcy?

Foreign nationals may file a petition for bankruptcy with a Japanese court to seek relief from their debts if they have a domicile or property in Japan.

The following claims are designated as non-dischargeable claims under the Bankruptcy Act:

1. (1)
   Claims for taxes
2. (2)
   Claims for damages for a tort (which is an act or failure to act that causes an injury or harm to another person and amounts to a civil wrong for which a court can impose liability) that the bankrupt individual has committed in bad faith
3. (3)
   Claims for damages for a tort harming the life or body of another person that the bankrupt individual has committed intentionally or by gross negligence
4. (4)
   Claims based on family relationships (e.g., child support or marriage expenses)
5. (5)
   Claims of an employee and claims for return of an employee’s deposit which have arisen from an employment relationship (e.g., salaries)
6. (6)
   Claims that the bankrupt individual knowingly failed to include in the list of holders of dischargeable claims
7. (7)
   Claims for fines

My debts have been incurred partly due to my wasteful spending. Can I still receive a discharge?

The Bankruptcy Act provides that if the individual filing for bankruptcy has significantly reduced his/her assets or incurred an excessive amount of debts by wasteful spending or gambling, it constitutes grounds for ineligibility for discharge.

However, even if such circumstances exist, it does not necessarily mean that you cannot receive a discharge.

Even in cases where there are grounds for ineligibility for discharge, the court, in reality, often grants a discharge at its discretion, taking into consideration various circumstances such as the gravity of the situation and the attitude of the individual filing for bankruptcy. Therefore, even in such cases, we recommend that you consult an attorney.

What are the disadvantages of going bankrupt?

The major disadvantage is that it is registered on a so-called black list of personal credit information agencies. Once registered on this black list, it will generally be difficult to take out a new loan or get a credit card for approximately 5 to 10 years (depending on the financial institution).

Your current bank account may be temporarily frozen if you have received a loan from your bank, but otherwise you can continue to use it as before.

In addition, commencement of bankruptcy proceedings is a ground of disqualification for certain occupations (e.g., attorney, CPA, tax accountant, and security guard). However, if the restricted rights of a bankrupt individual are restored (including where an order of discharge has become final and binding), the restrictions on your qualifications cease to exist.

What are the costs involved in filing a petition for bankruptcy?

In addition to attorneys’ fees, you will have to pay a fee to the court for making a public notice in an official gazette (approximately ¥10,000 to ¥20,000 depending on whether it is a proceeding with a trustee or a simultaneous discontinuance). Also, in a proceeding with a trustee, you will be obligated to pay remuneration for the trustee (at least ¥200,000) and any other actual expenses (e.g., stamps and postage stamps).

Criminal Procedure

What procedures will be taken after a suspect is arrested?

After a suspect is arrested by the police, the case is referred to a public prosecutor within 48 hours of the arrest.

If the public prosecutor finds that further detention of the suspect and further investigation are necessary, the public prosecutor will make a request within 24 hours to the relevant court for further detention. The ultimate decision as to whether the suspect should be detained is made by the court. In many cases, suspects remain detained after their arrest.

On the other hand, in cases where the offence is minor or where there is no need for detention, it is possible that the public prosecutor will not make a request for detention. Also, the court could reject the request from the public prosecutor. In these cases, the suspect is released.

Once a decision to detain the suspect is made, the suspect will be detained for 10 days from the date of the request for detention. If further detention is necessary for the investigation, the detention can be extended for another 10-day period. The maximum detention period is 23 days from the time of arrest.

The public prosecutor will investigate the case during the detention period and decide whether to prosecute the suspect before the expiration of the detention period. If the suspect is prosecuted, his/her detention will continue after the prosecution.

I am currently under arrest and detained at a police station. How can I seek my release?

There are different ways to seek a release depending on the phase of your detention.

If it is after the arrest and before the relevant court makes a decision regarding detention, the strategy would be to prevent the detention by submitting a written opinion to the public prosecutor to the effect that such request should not be made or by submitting a written opinion to the court to the effect that such request should be rejected.

If the court has already made a decision that you should be detained, you may file an objection under the quasi-appeal (jun-kokoku appeal) system.

If you are already prosecuted, you may seek your release through the bail system. If bail is granted by the court, you will be released on condition that you deposit the bail bond. A request for bail is more likely to be approved than a quasi-appeal before prosecution, because in most cases, the investigation has been completed by this stage. The amount of bail bond differs depending on the case, but it is generally between ¥1.5 million and ¥3 million.

In any case, in making a decision whether to release the suspect/accused or to continue the detention, the court will consider various factors such as: the possibility of destruction of evidence, the threat of escape, and the severity of the case. When seeking a release, it is important to show that there is no possibility of destruction of evidence or escape by submitting a letter of undertaking from a family member or a written oath made by the suspect/accused.

If the accused is a non-Japanese, it is possible that bail will be granted upon condition that the defense counsel keeps the suspect’s/accused’s passport or upon other conditions in order to prevent the accused from fleeing Japan. When the suspect/accused is a foreigner without a status of residence, he/she will be principally detained at an immigration detention center upon release, and bail will not be granted.

How long does it take from the commencement of prosecution to the sentencing?

In ordinary and simple cases in which the defendant is not denying the charges, sentencing tends to occur approximately two months after the commencement of prosecution.

Typically, the first trial is held approximately 1.5 months after the commencement of prosecution to examine the evidence and to question the accused, and then the hearing is concluded. The court renders its judgement approximately 2 weeks after the conclusion of the hearing.

On the other hand, if the case is complicated or if the accused is denying the charges, it can take several months or even years before the judgement is rendered, because it takes a lot of time to conduct questioning of the witnesses and sort out relevant issues and evidence.

Please tell me about the composition of the court in criminal cases.

Ordinary criminal cases are handled by a professional judge(s).
On the other hand, a lay judge trial system has been introduced for certain serious crimes (e.g., murder, robbery causing death or injury, violation of the Stimulants Control Act (smuggling for profit), and vehicular homicide). Under this system, 6 lay jurors and 3 professional judges are in charge of the fact-finding and the sentencing.

I have a family member currently in detention, but he/she is prohibited from contacting anyone other than his/her defense counsel. Is there any way to get in touch with him/her?

In cases where there is an accomplice(s) or in cases of organized crimes, the court may prohibit access to the suspect in order to prevent the destruction of evidence. If the court does so, the suspect is not allowed to meet anyone other than the defense attorney and, in some circumstances, is prohibited from giving or receiving items.

However, even if such a prohibition has been imposed, you may file a petition with the court requesting that the prohibition of access be partially lifted. The prohibition of access is often lifted for a family member(s) not involved in the case. It should be noted that even if a suspect or his/her family members are non-Japanese, use of languages other than Japanese for communication (during visits or in correspondence) is basically not allowed.

I have been prosecuted and convicted. How will this affect my status of residence?

The effects on one’s status of residence differ depending on the type of crime and severity of the punishment.

1. (1)

   A sentence of life imprisonment and a sentence of imprisonment with or without labor exceeding one year (excluding a suspended sentence) constitute grounds for deportation. Note that certain offences (e.g., illegal immigration, overstaying a visa, and drug offences) are grounds for deportation even if the sentence is suspended.

2. (2)

   Even if your conviction does not constitute grounds for deportation, the conviction itself may be considered as a disadvantageous factor in procedures related to an extension of one’s period of stay or a change of one’s status of residence and may lead to rejection of your application.

I manage a company in Japan as a president (representative director), but I have been arrested. Can I remain in my current position?

You may be disqualified from being a company director under the Companies Act depending on the type of crime and severity of the penalty. In this case, you must resign from your current position.

If you are convicted of certain company-related crimes (e.g., a violation of the Companies Act, the Financial Instruments and Exchange Act, or the Bankruptcy Act), you cannot be a director for two years after the completion of the sentence or, if the sentence is suspended, until the end of the probationary period.

Also, if you are sentenced without suspension to imprisonment with or without work for any other crimes, you cannot hold the position of director until you complete your prison sentence.

Establishment of a company

Can foreigners or foreign companies establish or set up a Japanese corporation or a Japanese branch?

There are no nationality requirements for establishing a Japanese corporation. Therefore, foreign nationals and companies with foreign capital can establish and set up Japanese corporations or Japanese branches in Japan.

Is it possible for a corporation to be established with a foreign director on its board?

Yes, it is possible.

Is it necessary for a foreigner to have an address in Japan when establishing a company in Japan?

No, it is not necessary. Even if all the representative directors reside abroad, it is possible to apply for a company registration in Japan.

I am currently a foreign student. When is the best time for me to start a company here in Japan?

It is recommended that you incorporate the company around the date of your graduation ceremony and apply for a Business Manager Visa thereafter.
After establishing a company but before operating that company, you must acquire a Business Manager Visa. (If you fail to complete this required process, it is possible that your actions would be considered “Activity Other Than That Permitted under the Status of Residence Previously Granted”.)

Are there any advantages for foreigners and foreign companies to set up in Japan?

By establishing a business base in Japan, there is the advantage of ensuring credibility and making it easier to do business in Japan.

I heard that there are various forms of corporations in Japan. What forms are there?

You heard correctly: Japan does allow for various forms of corporations. For example, there are stock companies (Kabushiki Kaisha), limited liability companies (Godo Kaisha), general incorporated associations, and incorporated nonprofit organizations (NPOs). Each form has its own characteristics; thus, we will ask you the purpose or target of your business and propose the appropriate form of corporation.

What’s the difference between a Kabushiki Kaisha (Japanese K.K.) and a Godo Kaisha (Japanese G.K.)?

Both are forms of limited liability companies, but there are some key differences. One important distinction is that the costs (both to set up and to maintain a K.K. versus a G.K.) differ. The costs associated with a Godo Kaisha are lower than those of a Kabushiki Kaisha.

What forms are there for foreigners and foreign companies to expand into Japan?

There are three possible methods: (i) establishing a Japanese corporation, (ii) setting up a Japanese branch (sales office), or (iii) setting up a representative office.

What are the advantages and disadvantages of each of the three forms of expansion into Japan?

1. (1)

   In the case of establishing a Japanese corporation, it is possible to start the business smoothly as it acquires a legal personality. In addition, official documents are issued to show the existence of the legal entity, which increases its credibility. On the other hand, the disadvantage is that it is expensive to establish and operate.

2. (2)

   In the case of setting up a Japanese branch (sales office), a certain degree of creditworthiness can be obtained as official documents are issued to show the existence of the office. There is a disadvantage in that it costs some money to set up.

3. (3)

   In the case of setting up a representative office, the advantage is that no registration is required and therefore no costs are incurred. On the other hand, it has the disadvantage that it lacks credibility as there is no official documentation to prove its existence. In addition, it is not possible to open a bank account in the name of the corporation.

How many incorporators are needed to set up a company in Japan?

Even merely 1 incorporator is acceptable.

What amount of capital do I need to start a company?

There is no requirement for a minimum amount. You can invest merely ¥1 to set up a company if you wish.
However, the amount of capital represents the strength of the company. In the case of a newly established company, the amount of capital is directly used as an indicator of the size and credit of the company, so a certain amount is required.
If the capital is ¥10 million or more, consumption tax will be levied from the first year of establishment. Therefore, many companies are established with a capital amount of less than ¥10 million.
Besides, please note that a certain amount of capital may be required depending on the purpose of establishing the company. If you plan to obtain a Business Manager Visa, ¥5 million or more in capital is necessary. If you are going to start a recruiting and dispatching business/agency for temporary personnel, ¥20 million or more in capital is required. If you are planning to start an employment placement business/agency, your amount of capital must be ¥5 million or more.

Can I use a bank account at an overseas branch of a Japanese bank to deposit my investment of capital?

Yes, fortunately, you can.

How many directors are needed to set up a company in Japan?

Even merely 1 director is acceptable.

Can I use English alphabet in the name of a company?

Yes, you can. It is permissible to not only use Japanese but also the alphabet in a company name.

When establishing a Japanese corporation, do I have to create a seal?

It is necessary to create a representative’s seal. The representative’s seal must be registered with the registry office.

What are Articles of Incorporation?

Articles of Incorporation are articles or clauses that describe the essential points of a company. Listed together in a single document (called the Articles of Incorporation), they cover such matters as the company’s name, the corporate purpose, and the like.

At which notary public office do I need to have the articles of incorporation certified?

It must be done at a notary public office in the prefecture where the company’s head office is located. For instance, if you plan to set up your head office in Tokyo, you must have the articles of incorporation certified at a notary public office in Tokyo.

Where can I submit the necessary documents to register a company?

Documents must be submitted to the Regional Legal Affairs Bureau.

To which Legal Affairs Bureau do I need to apply for registration of incorporation?

You must apply to the Legal Affairs Bureau that has jurisdiction over your company’s head office location. For example, if you plan to set up your head office in Minato-ku, Tokyo, you will need to apply to the Tokyo Legal Affairs Bureau Minato Branch.

How much does it cost to set up a company in Japan?

You must pay at least the following expenses to set up a company in addition to our legal fee:

1. (1)
   Registration Tax ¥150,000
2. (2)
   Certification of the Articles of Incorporation ¥50,000
3. (3)
   Revenue Stamp ¥40,000

How long does it take to set up a company in Japan?

The process usually takes approximately 2 to 4 weeks.

After registering my company, do I have to report it to any particular public offices?

Yes, you do. It must be reported to the tax office and city office.

Can I open a bank account in the name of the corporation as soon as I apply for registration of incorporation?

When you open an account at a financial institution in Japan, you need to submit a certified copy of the company registration. Therefore, you cannot open a bank account for your company until the entire registration procedure is completed.

When setting up a representative office, is it necessary to register with the Legal Affairs Bureau?

No registration is required. As representative offices are not expected to conduct business activities in Japan, there is no need to register with the tax office.

Is it possible to open a bank account at the representative office?

Since the representative office does not have a legal personality, it is impossible to open a bank account in the name of the representative office.

Which of the three forms is the best way to obtain a business manager visa?

It is possible to obtain a business manager visa either by establishing a Japanese corporation or by setting up a Japanese branch.

If I invest \1 and set up a company in Japan, is it possible to get a Business Manager Visa?

Unfortunately, the answer is no. If you want to obtain a Business Manager Visa, we recommend investing at least ¥5,000,000.

Do I have to get a Business Manager Visa to set up a company in Japan?

Not necessarily. If you have one of the following visas, you do not have to acquire a Business Manager Visa:

1. (1)
   Permanent Resident Visa
2. (2)
   Spouse of Japanese National
3. (3)
   Spouse of Permanent Resident
4. (4)
   Long Term Resident (Japanese Descendant and his/her spouse, Child of Japanese National, and Permanent Resident)

Currently, I have a Specialist in Humanities Visa and work for a Japanese company. I want to quit my job and start my own company. Do I have to change my visa?

Yes, you do. Your visa should be changed to a Business Manager Visa in order for you to become a director and start your own business.

Is it possible to acquire a Business Manager Visa by registering your own home or virtual office as the company office?

The examination will be quite strict if you plan to turn part of the property you are using as a residence into an office. For a greater chance of approval, we recommend that you establish your office in a separate location from your home residence.

I’m a university student now. I want to start my own business as soon as possible. If I quit my university now, would it be possible to get a Business Manager Visa?

Yes, it would be possible. A post-secondary degree is not a prerequisite for obtaining a Business Manager Visa.

When borrowing from a financial institution, which form of expansion is preferred?

The best option is to establish a Japanese corporation. There are two main types of Japanese corporations: joint-stock companies and limited liability companies, but there is little difference between the two in terms of financing in the early stages of incorporation.

I’m not Japanese. Do I have a chance to get a loan from a bank to start my own business?

Yes, you do. You can apply for a loan from Japan Finance Corporation, which is a bank established by the Japanese government.

How much money might I be able to borrow?

The loan amount depends on the case. The average amount is between ¥3,000,000 and ¥10,000,000.

How long does it take to get a loan from Japan Finance Corporation?

It usually takes 2 to 3 weeks from the date of the interview.

After starting a business in Japan, what kinds of taxes do I have to pay?

There are several types of taxes imposed on a company established in Japan. These include corporate taxes, enterprise taxes, consumption taxes, and the like.

If I set up a company in Japan, can I buy properties in Japan even if I am the only shareholder of the company?

Yes, it is possible to do so. We can provide support to you not only in finding and buying property but also in obtaining a loan from a bank.