CASE
For a non-Japanese person to come to Japan and start a business, it is necessary to “register the incorporation of a company” and “obtain a status of residence.” Are there any important points to keep in mind?
2023.8 Sakurai’s answer
When a foreigner comes to Japan to start a business, a status of residence of “Business Manager Visa” is required, except in cases where the foreigner can obtain a status of residence without work restrictions (permanent resident, long term resident, spouse or child of Japanese national, spouse or child of permanent resident, etc.). This explanation is based on the assumption that this is not a case applicable to a status of residence without work restrictions.
In order to obtain “Business Manager Visa” status for the purpose of running a business, it is usually necessary to prove that the foreigner “has already started a business in Japan at the time of application” and that the business is “appropriate, stable, and continuous. As one of the important documents to prove them, the articles of incorporation, certificate of company registration*, etc., and on a case-by-case basis, you need to submit business plans, office lease contracts, minutes of resolutions on remuneration for officers, employment contracts for employees, resident certificates, etc. to the Immigration Services Agency. When a company is established and an application is filed for the company as a place of business, the company’s registration and supporting documents will be examined to determine whether or not the status of residence will be granted. If the incorporation is registered, but the manager of the company cannot obtain a status of residence and cannot reside in Japan, the company will be meaningless. In order to avoid such situations, we will explain what you should pay attention to when establishing a company and going through the application process for status of residence according to the following case study.
*In April 2015, a new 4-month period of stay for preparation for establishment was newly stipulated for “Business Manager Visa”, so, it is not always necessary to attach a certificate of registered matters of the established company.
Case study
A foreigner becomes the promoter, establishes the company as the beneficiary owner with more than half of the capital contribution, and assumes effective management of the business.
(1) To appoint said foreign national as a representative director.
We recommend to appoint him/her as a representative director, not as a director, as he/she must be substantially engaged in the management of the business. (If he/she is a representative director, he/she is more likely to be judged as the one who makes decisions on important matters related to the operation of the business and executes the business).
(2) The home of the said foreign national and the location of the company's head office must be in different places.
The business office for operating the business related to the application must be located in Japan, in other words, there is a requirement to secure an office to prove that the company has a business presence, in principle, the location of the company’s head office and the home of the foreign national concerned should be separate.
- When renting the location of the head office
The lessee shall be in the name of the company, and the purpose of use shall be in line with the company’s business purposes, such as for offices and for stores. - If you have no choice but to locate the head office in the same location as your home
Establish a room exclusively for business purposes equipped with facilities for the company to conduct its business, clearly distinguish the rent, utilities, etc. to be borne by the company from those pertaining to the residential portion, and post a sign at the entrance. Some do not allow the case that visitors to pass through the residence area from the entrance to the office. - If the home is rented by the individual foreigner
Obtain written consent from the lessor to sublease a portion of the property to the company and to change the purpose of use of that portion to an office, etc.
(3) Amount of capital
The “size of the business” must meet one of the following requirements.
①Operated by two or more full-time employees residing in Japan
②The amount of capital or the total amount of contribution must be at least 5 million yen.
③Being deemed to be on a scale equivalent to ① or ②.
Usually, it is difficult to meet the requirements of ① at the start of a company, and a reasonable contribution of capital is necessary to substantially operate a business, ③is often chosen.
(4) Source of capital
When applying for a Certificate of Eligibility for “Business Manager Visa” status, the Immigration Services Agency will ask how the foreigner raised the capital, so it is necessary to be able to clearly explain the source of the funds. Since the application for registration is not required to reveal the circumstances of the capital deposit, it is often the case that cash brought into the country without declaration at customs at the time of entry is deposited as capital into the account of the promoter or others. However, you must submit documents to the Immigration Services Agency that can prove that you have remitted your investment from abroad. If the remittance is from a third party other than the foreigner concerned, it is not considered to be an investment by the foreigner concerned. If the foreigner received a gift from the remitter, a gift agreement must be submitted; if the foreigner borrowed money, a loan agreement must be submitted. Even if the money was transferred by the foreigner himself/herself, if he/she has just graduated from school or has no work experience, it is necessary to explain why he/she has the funds. It is difficult to correct the situation after the funds have been moved in a way that is hard to explain, care should be taken.
Since this investment falls under the category of “inward direct investment” under the Foreign Exchange and Foreign Trade Law, it is necessary to submit an advance notification or an ex-post report to the Minister of Finance and the minister having jurisdiction over the project via the Bank of Japan.
(5) Composition of the Board of Directors
Since the foreigner concerned must engage in activities commensurate with the status of residence granted in Japan, it is difficult for more than one foreigner in a small company to obtain “management/administrative” status of residence. Even if both foreign nationals invest 5 million yen each and are appointed as representative directors of a Japanese corporation, if the Immigration Services Agency determines that “considering the size of the company, it cannot be considered that the company has the activities (volume of business) of two representative directors”, only one of them can obtain “Business Manager Visa” status. Then, you might think to aim “Engineer/Specialist in Humanities/International Services “status as an employee instead of a manager, but it’s not sure you’ll be able to do it, if you do not have education or work experience related to the work you intend to engage in, you will not be able to fulfill the requirements for “Engineer/Specialist in Humanities/International Services” status of residence. In order to avoid a situation where one party cannot stay in Japan even though they have invested 5 million yen each, the scheme should be carefully considered at the initial stage, such as each person establishing a company instead of two people jointly investing in one company.
As described above, there is a close relationship between the registration of the incorporation of a company in Japan by a foreigner and the acquisition of “Business Manager Visa” status of residence, the procedure should be carefully made while considering the relationship between them.
