Establishing a business in Japan

A Q&A guide to establishing a business in Japan.

This Q&A gives an overview of the key issues in establishing a business in Japan, including an introduction to the legal system; the available business vehicles and their applicable formalities; corporate governance structures and requirements; foreign investment incentives and restrictions; currency regulations; and tax and employment issues.

To compare answers across multiple jurisdictions, visit the Establishing a business in... Country Q&A Tool.

This article is part of the global guide to establishing a business worldwide. For a full list of contents, please visit www.practicallaw.com/ebi-guide.

Contents

Legal system

1. What is the legal system in your jurisdiction based on (for example, civil law, common law or a mixture of both)?

The legal system in Japan is based on civil law.

 

Business vehicles

2. What are the main forms of business vehicle used in your jurisdiction? What are the advantages and disadvantages of each vehicle?

Under the Japanese Companies Act, there are four types of business vehicle:

  • Stock company (Kabushiki Kaisha).

  • Limited liability company (Godo Kaisha).

  • General partnership company (Gomei Kaisha).

  • Limited partnership company (Goshi Kaisha).

The main form of business vehicle used in Japan is a stock company. The majority of business vehicles operated in Japan are unlisted stock companies.

Shareholders in a stock company and members in a limited liability company only bear limited liability. As to the operation side, directors or a board of directors are taking responsibility for the daily business of a stock company. On the other hand, members of a limited liability company can operate the business of the limited liability company by themselves, unless one or more managing members are appointed in the articles of incorporation.

All partners in a general partnership company and general partners in a limited partnership company bear unlimited liability.

In general, to avoid unlimited liability, equity investors choose stock companies or limited liability companies as business vehicles. For tax reasons, a limited liability company may be more preferable to overseas investors on some occasions (for example, limited liability companies can be deemed as pass-through entities under US tax laws), but, as it is a relatively new form of legal entity, it is sometimes being deemed as lacking legal stability compared to a stock company. Accordingly, the main form of business vehicle used in Japan is a stock company.

 

Establishing a presence from abroad

3. What are the most common options for foreign companies establishing a business presence in your jurisdiction?

Foreign companies generally establish a business presence in Japan by:

  • Registering as a foreign company and establishing a branch.

  • Establishing a subsidiary company (usually using a stock company).

  • Appointing an agent, distributor or franchisee.

  • Setting up a partnership.

Registering as a foreign company and setting up a branch is generally the simplest way for foreign companies to establish a business presence directly in Japan. A branch itself, however, does not have an independent corporate status. A registered foreign company is legally responsible for the activities of its branch in Japan.

 
4. How can an overseas company trade directly in your jurisdiction?

A foreign company that is looking to continuously carry out its business in Japan, can either:

  • Establish a branch or subsidiary in Japan.

  • Find a Japanese partner company to form a joint venture or appoint the Japanese partner company as its agent.

A foreign company that wants to establish a branch or a subsidiary in Japan must specify its representatives and place of business in Japan and complete the registration process. In the case of a branch, at least one of its representatives in Japan must be domiciled in Japan.

For the formalities for setting up a partnership, see Question 5.

 
5. What are the formalities for setting up a partnership?

A general partnership is established when each of the partners promises to engage in a joint business by making a contribution. No formalities are required to enter into a general partnership agreement. Partners of a general partnership have unlimited liability regardless of their participation in the management of the partnership.

A limited liability partnership (Yugen Sekinin Jigyo Kumiai) has been available in Japan since 2005. A limited liability partnership is not a company, but a partnership formed only by partners looking to limit their liabilities. To establish a limited liability partnership, it must be agreed in a partnership agreement that each individual or legal entity participant will both:

  • Make a capital contribution.

  • Jointly conduct profit-oriented business activities in which the partner's maximum liability is limited to the amount of the partner's capital contribution.

At least one of the partners in a limited liability partnership must be an individual domiciled in Japan or a legal entity with its head office or principal office in Japan. The partnership agreement must be registered on the commercial registry.

General partnerships and limited liability partnerships do not have an independent legal personality. Both a general partnership and a limited liability partnership are pass-through entities for tax purposes. The assets of the partnership are jointly owned by all partners. This means that:

  • A partner who disposes of his/her share of the property in the partnership cannot assert his/her claim against the partnership and third parties dealing with the partnership.

  • A partner cannot seek a division of the property in the partnership before the partnership is liquidated.

 
6. What are the formalities for setting up a joint venture?

A foreign company can set up a joint venture with a local business partner under the form of a stock company (having a legal personality) or limited liability partnership (not having a legal personality). There are no specific requirements for setting up a joint venture. In general, a joint venture agreement, shareholders' agreement or partnership agreement will be executed to determine how to operate the joint venture.

 
7. Are trusts available in your jurisdiction?

Various types of trusts are available in Japan.

The answers to the following questions relate to stock companies.

 

Forming a private company

8. How is a private limited liability company or equivalent corporate vehicle most commonly used by foreign companies to establish a business in your jurisdiction formed?

Regulatory framework

The corporate vehicle most commonly used by foreign companies is a stock company (Kabushiki Kaisha), which is mainly regulated by the Companies Act. The incorporation of a stock company must be registered on the commercial registry maintained by the Ministry of Justice.

For more information on the Ministry of Justice, see box: The regulatory authorities.

Tailor-made or shelf companies

In general, stock companies are tailor-made.

Formation process

The necessary steps for the incorporation of a stock company are as follows:

  • Drafting the articles of incorporation.

  • Notarisation of the articles of incorporation by a notary public. The fee for notarisation is JPY50,000 (JPY40,000 stamp duty will be charged separately).

  • Capital contributions by the incorporators and other subscribers.

  • Appointment of directors (and corporate auditors, if any) on incorporation.

  • Examination by directors (and corporate auditors, if any) of the legality of the stock company's formation and whether the contributions by the incorporators and other subscribers have been completed.

  • Registration of the incorporation of the stock company on the commercial registry maintained by the Ministry of Justice, at the location of its head office. Application for registration can be filed electronically. The fee for registration is an amount equivalent to 0.7% of the amount of the paid-in capital (but the minimum fee payable is JPY150,000).

  • The registration process is completed within approximately two weeks after the filing of the application, but the incorporation date of the company is the date of the application.

The trade name of a stock company must include the wording "kabushiki kaisha".

Company constitution

The articles of incorporation are the basic documents for a stock company. Shareholders' agreements may be concluded when the companies formed are joint ventures. Model documents for Japanese articles of incorporation are available and are often used for efficient drafting, although details may differ in each specific case. The Japan National Notaries Association provides its model documents on its website (www.koshonin.gr.jp/ti.html).

The articles of association must include the following:

  • Purpose of the business.

  • Trade name.

  • Place of the principal office.

  • Value or minimum amount of assets contributed at the time of incorporation.

  • Name and address of each incorporator.

  • Total number of authorised shares.

Items that do not have legal effect unless they are stipulated in the articles of incorporation include, for example:

  • Items regarding contributions in kind.

  • Property that is agreed to be assigned to the stock company after its formation, the value of the property, and the name of the assignor.

  • Compensation or other special benefits which the incorporator(s) are to obtain through the formation of the stock company.

  • Formation of governing bodies of the company (board of directors, corporate auditors, representative directors, and so on).

 

Financial reporting

9. What financial reports must the company submit each year?

There are no reporting obligations for a branch office of a foreign company from a legal perspective (tax filing is a separate issue).

A subsidiary (in a form of a stock company) of a foreign company must publicly disclose the balance sheet (in the case of a large company, the balance sheet and profit and loss statement) of the subsidiary for each fiscal year.

 

Trading disclosure

10. What are the statutory trading disclosure and publication requirements for private companies?

A stock company (Kabushiki Kaisha), limited liability company (Godo Kaisha), general partnership company (Gomei Kaisha) and limited partnership company (Goshi Kaisha) must respectively add "Kabushiki Kaisha", "Godo Kaisha", "Gomei Kaisha" or "Goshi Kaisha" after their company names for completing legal formalities.

There are otherwise no special trading disclosure requirements.

 
11. How do companies execute contracts or deeds?

Legally, oral agreements are valid, but in practice companies execute written agreements by either:

  • Signing.

  • Affixing the company seal.

In general, no other formalities are legally required. However, certain types of documents may require notarisation or other formalities depending on their nature, such as written notice with kakutei hizuke (a date stamp affixed by a notary public), which is commonly used for the perfection of transfers of receivables against third parties.

A representative director can execute all contracts on behalf of the company, while other directors and personnel may have limited authority under internal company rules. If the signatory is not the representative director, documents certifying the signatory's authority are commonly requested to confirm its authorisation.

The company seal system is a unique system in Japan. The seal impression of the company seal must be registered at the local legal bureau at the time of applying for the company's incorporation. The registered seal impression is not disclosed to the public. If the company seal is affixed to a contract, it will be deemed to be executed by the representative director of the company. It is also a common practice for the counterparty in important transactions to require a certificate of the company seal impression, to confirm the authenticity of the seal impression affixed to a contract document. The certificate of the registered seal impression can be obtained only by the representative who has registered the seal.

 

Membership

12. Are there any restrictions on the minimum and maximum number of members?

The minimum number of members or shareholders of a company is one person. There is no maximum limit on the number of members or shareholders.

 

Minimum capital requirements

13. Is there a minimum investment amount or minimum share capital requirement for company formation?

There is no minimum investment amount or share capital requirement. A company can be incorporated with JPY1.

 
14. Are there restrictions on the transfer of shares in private companies?

Under Japanese law, in principle, shares are freely transferable, but the transfer of shares in private companies can be restricted if certain clauses are included in its articles of incorporation. In general, articles of incorporation of private companies include a clause that requires approval of the shareholders or board of directors for the transfer of shares.

First refusal rights are commonly seen in joint venture agreements.

 

Shareholders and voting rights

15. What protections are there for minority shareholders under local law? Can additional protections be given?

Cumulative voting for appointing directors is allowed in Japan unless the articles of incorporation state otherwise. Therefore, even minority shareholders have the opportunity of appointing director(s).

Japanese law also permits certain types of companies to issue shares of different classes and to let shareholders of those different classes elect their own directors. In this case, if minority shareholders can occupy a majority of votes within their share class, they have the opportunity to appoint a director to the board.

Further, under the Companies Act, minority shareholders are granted certain rights against the company and directors including, without limitation, the right to:

  • Require the inspection of the books, records and shareholders' register of the company.

  • Require the convocation of the general shareholders' meeting and to submit an agenda for the meeting.

  • Request that the company initiate a lawsuit to pursue the liability of directors.

  • Initiate a shareholders' lawsuit.

  • Request suspension of illegal conduct by directors.

  • Request the dismissal of directors and corporate auditors in certain cases.

Additional protections can be given if there are certain clauses in the articles of incorporation or shareholders' agreement, such as put option for its shares.

 
16. Are there any statutory restrictions on quorum or voting requirements at shareholder meetings? Must quorum or voting rights be proportionate to shareholdings?

There are statutory quorum and voting requirements at shareholder meetings. For ordinary resolutions, the quorum is met when shareholders with a majority of the voting rights attend the meeting, but this quorum requirement can be changed by the articles of incorporation, subject to certain restrictions (for example, the quorum cannot be less than one-third for some types of shareholder meetings).

Approval by a majority of the voting rights of the participating shareholders is required to pass ordinary resolutions, but this requirement can also be changed by the articles of incorporation, subject to certain restrictions.

 
17. Are specific voting majorities required by law for any corporate actions (for example, increasing share capital, changing the company's constitution, appointing and removing directors, and so on)?

In addition to ordinary resolutions of the shareholders' meeting, there are three types of resolutions:

  • Special resolution (Tokubetsu Ketsugi).

  • Extraordinary resolution (Tokushu Ketsugi).

  • Unanimous resolution.

Special resolution. A special resolution is passed if the following requirements are met:

  • Shareholders who have a majority of the total voting rights of shareholders who are eligible to vote at the shareholders' meeting attend the meeting.

  • A proposal in question is adopted by no less than two-thirds of the voting rights of the attending shareholders.

For example, the following items are adopted by special resolution:

  • Purchase by the company of shares with transfer restrictions.

  • A company's acquisition of its own shares from specific shareholders.

  • Acquisition of a class of shares with the condition that the company will acquire all of the class shares by resolution of the shareholders' meeting.

Extraordinary resolution. An extraordinary resolution is passed if the following requirements are met:

  • A proposal is adopted by not less than a half of the shareholders who are eligible to vote at the shareholders' meeting in question.

  • The proposal is adopted by not less than two-thirds or three-fourths (depending on the proposals to be resolved) of the total voting rights of the attending shareholders.

For example, the following items are adopted by extraordinary resolution of a shareholders' meeting:

  • An amendment to the articles of incorporation to the effect that all shares have transfer restrictions.

  • A merger, share transfer (kabushiki iten) and share transfer subject to transfer restrictions (kabushiki kokan), and so on, as consideration for the merger, share transfer (kabushiki iten) and share exchange (kabushiki kokan) will be provided to shareholders who own shares with no transfer restrictions.

Unanimous resolution. The resolution is passed if a proposal in question is adopted or approved by all shareholders. For example, the following items are adopted by unanimous resolution:

  • An amendment to the articles of incorporation to the effect that all shares are with such conditions that enable the company to acquire these shares on the occurrence of designated events or regarding an amendment to those conditions (except an abrogation).

  • A release of directors' liabilities to reimburse a company for the amount illegally extended from the company to shareholders in connection with an exercise of shareholders' rights.

 
18. Can voting majorities required by law be disapplied to protect a minority shareholder (for example, through class rights or weighted voting)?

In general, multiple voting shares or weighted voting is not allowed. Each shareholder must be treated equally, in accordance with the class and number of shares that the shareholder owns.

However, there are some exceptions. For example, cumulative voting for elections of directors is permitted unless it is forbidden by the articles of incorporation. In addition, a company that restricts share transfers of all of its shares can treat shareholders unequally in terms of voting rights at the shareholders' meeting, by setting this out in the articles of incorporation.

Further, by issuing multiple classes of shares, the company can limit the items on which certain classes of shareholders can vote on at the shareholders' meeting. However, this does not mean that the voting rights they have can be treated unequally.

 

Sectoral restrictions

19. What are the conditions or restrictions on establishing a business in specific industry sectors? Are there industry sectors in which it is not permitted to establish a business?

Under the Foreign Exchange and Foreign Trade Act (FEFTA), investments in certain industries (such as aviation, weaponry, nuclear power, space development, energy, telecommunications, broadcasting, railway, passenger transportation, oil and leather goods) require the filing of a prior notification with the Minister of Finance and the competent minister (through the Bank of Japan).

In addition to the general foreign investment regulations under the FEFTA, foreign investment regulations are included in laws regulating certain industries that are related to public infrastructure (such as telecommunications, broadcasting and aviation). For example, foreign investors cannot hold:

  • 20% or more of voting rights in a basic broadcaster listed on a stock exchange (Broadcast Act).

  • One-third or more of voting rights in a domestic air carrier listed on a stock exchange (Civil Aeronautics Act).

 

Foreign investment restrictions

20. Are there any restrictions on foreign shareholders?

The basic law that governs foreign investments is the Foreign Exchange and Foreign Trade Act (FEFTA).

Under the FEFTA, in general foreign transactions including investments in Japan can be freely conducted. However, exceptions apply to:

  • Investments from countries with which no treaties on inward direct investment have been entered (including some countries in Africa and Central Asia).

  • Investments in certain industries (see Question 19).

  • Certain designated transactions conducted by persons related to Iran, which require a notification to be filed with the Minister of Finance and the competent minister (through the Bank of Japan) at least 30 days prior to the making of the investment.

The government can recommend a change to the details of, or the cancellation of, the investment on its review of the notification. A foreign investor who receives such a recommendation can either accept it or reject it. However, if the foreign investor does not accept the recommendation(s), the government can order a change to the details of, or the cancellation of, the investment, which is legally binding.

In addition, many of the transactions that do not require prior notification require ex post facto reporting depending on the type and size of the transaction. For example, an acquisition of shares in an unlisted company by a foreign investor from a Japanese investor, by which the foreign investor will hold 10% or more of the company shares, requires ex post facto reporting.

 
21. Are there any exchange control or currency regulations?

Under the FEFTA, inward and outward payments are, in general, not subject to a prior filing obligation, except for certain extraordinary cases where a special economic sanction is imposed.

A certain inward and outward payments require ex post facto reporting depending on the type and size of payment. In this case, a party who resides in Japan is responsible for making such report.

 
22. Are there restrictions on foreign ownership or occupation of real estate, or on foreign guarantees or security for ownership or occupation?

Under the Foreign Exchange and Foreign Trade Act, there are no restrictions on foreign ownership or occupation of real estate, or on foreign guarantees or security for ownership and occupation. However, certain acquisitions of real estate by a foreign person require ex post facto reporting, depending on the type and size of transaction.

 

Directors

23. Are there any general restrictions or requirements on the appointment of directors?

Under the Companies Act, the following persons cannot act as directors:

  • A company or other entity (not a natural person).

  • A person who is an adult ward (seinen hi kouken nin), under curatorship (hi hosa nin) or treated similarly under foreign laws and regulations.

  • A person who has been sentenced to a penalty for having violated the provisions of the Companies Act or the Act on General Incorporated Association and General Incorporated Foundation (Act No. 48 of 2006), or for having committed a certain crime, where two years have not elapsed since the day on which the execution of the sentence was completed or the sentence no longer applied.

  • A person who violated the provisions of other laws and regulations, was sentenced to imprisonment or a severe penalty and who has not completed the execution of the sentence or to whom the sentence still applies (excluding persons for whom the execution of the sentence is suspended).

There is no requirement or restriction for directorship in respect of nationality, age, gender or previous bankruptcy.

Following a recent relaxation of residency requirements announced by the Ministry of Justice, since 16 March 2015, Japanese companies no longer need to have at least one representative director that is a resident in Japan.

 

Board composition

24. What are the legal requirements for the composition of a company's board of directors?

Structure

The Companies Act allows great flexibility for company structure. Even a board of directors is not necessarily required depending on the company's amount of stated capital and liabilities and whether the transfer of shares is restricted.

If a company chooses to have a board of directors, it must have at least one company auditor who audits the execution of directors' duties. If it is a small or medium-sized company whose shares have restrictions on transfer, it can choose to have an accounting adviser instead of a company auditor.

A large-sized company whose shares, either all or in part, do not have any restriction on transfer, must have a board of company auditors that is composed of at least three company auditors, unless it is a company with an audit and supervisory committee or a company with a nominating committee, and so on.

Number of directors or members

A single director is sufficient in the case of a company without a board of directors.

If a company establishes a board of directors, it must be composed of at least three directors.

Employees' representation

No employee has a statutory right to board representation, although an employee can be appointed as a director.

 

Reregistering as a public company

25. What are the requirements for a business to reregister as a public company?

Membership

Under the Companies Act, a public company is defined as a company whose shares, either all or in part, do not have any restriction on transfer.

A public company must have a board of directors and at least one company auditor. Further, a public company that is a large-sized company must have a board of company auditors.

There is no restriction on the minimum and maximum number of shareholders of a company, regardless of whether the company is a public or a private company.

A public company that is listed on a stock exchange in Japan must meet the relevant requirements of the stock exchange for the number of shareholders.

Share capital

The minimum capital requirement was abolished by the Companies Act. A company can be incorporated with JPY1.

There is no minimum net asset requirement.

A listed company must follow the applicable requirements for share capital under the rules of the relevant stock market.

 

Tax

26. What main taxes are businesses subject to in your jurisdiction?

The main taxes generally applicable to businesses are corporate tax and consumption tax.

Corporation tax

Corporation tax is a tax on the income of companies. This is a national tax and paid through a self-assessment by the company. The taxable income of the company is calculated by reducing the amount of gross revenue by the amount of deductible expenses. The corporation tax rate is generally 23.4%. However, if the company's capital is JPY100 million or less, the rate of 15% applies to the first JPY8 million of income. The company must file its tax return with the relevant tax office and pay the applicable tax within two months from the end of each fiscal year, which can be extended for one month. In addition to the national corporation tax, the local governments where a company is located also impose taxes on the income of the company (that is, corporate enterprise tax and corporate inhabitant tax).

Consumption tax

Consumption tax corresponds to a value added tax, which is imposed on nearly all domestic transactions and import transactions and is payable by the seller. The consumption tax rate is currently 8% of the sales amount. The rate was scheduled to be increased to 10% in April 2017, but the Japanese Government decided to postpone the increase until October 2019. Certain transactions, such as transfers and lending of land, transfers of securities or financial transactions, are excluded for consumption tax purposes. The consumption tax is paid by companies whose revenue for a certain period (in principle, the fiscal year preceding the last fiscal year) was at least JPY10 million. A taxpayer entity is allowed to credit, from the amount of consumption tax that it owes, the amount of consumption tax paid in relation to the purchases of goods or services it provides. The company must file and pay the consumption tax within two months from the end of each fiscal year. No extension is allowed for the due date of consumption tax.

Stamp duty

Stamp duty is imposed when a contract or other documents provided in the Stamp Duty Act are prepared. This is a national tax and, in principle, paid by affixing a stamp on the document. The applicable tax rate depends on the type of document. For example, as of November 2016, the stamp duty rates are as follows:

  • JPY10,000 on a real property purchase agreement where the purchase price is over JPY10 million and up to JPY50 million.

  • JPY 100,000 on a loan agreement where the amount of the loan is over JPY100 million and up to JPY500 million.

  • JPY40,000 on original articles of incorporation prepared on incorporation of a company (except for electronic articles of incorporation).

  • JPY40,000 on a merger agreement or a company split agreement prepared in accordance with the Companies Act or the Insurance Business Act.

 
27. What are the circumstances under which a business becomes liable to pay tax in your jurisdiction?

Tax resident

A foreign company that has a permanent establishment in Japan becomes subject to Japanese taxation in respect of its domestic sourced income and must pay tax based on the self-assessment.

There are three types of permanent establishments, including a branch, an agent and the carrying out of construction work (for more than one year). A representative office that conducts only secondary operations such as information gathering or customer relations development is not considered to be a permanent establishment. An independent agent who provides, as part of its ordinary business, certain services independently from a foreign company, is also excluded from the definition of a permanent establishment.

Non-tax resident

Once a foreign company is deemed to have a permanent establishment in Japan, the foreign company becomes subject to Japanese taxation in respect of its domestic sourced income (see Question 26).

 
28. What is the tax position when profits are remitted abroad?

Foreign companies are only subject to Japanese taxation in respect of their domestic sourced income. Under the Income Tax Act and the Corporate Tax Act, domestic sourced income for the purposes of Japanese taxation includes:

  • Income from business carried on in Japan.

  • Rents from real property located in Japan.

  • Dividends from Japanese companies or distributions of profit from certain investment trusts in Japan.

  • Interests on loans to be used for a business operated in Japan and granted to a person carrying such business in Japan, and so on.

Most of the domestic sourced income is subject to withholding tax at source. The tax rate is generally 15% to 20%.

 
29. What thin-capitalisation rules and transfer pricing rules apply?

Thin-capitalisation rule

A subsidiary in Japan that receives a loan from its foreign parent company in the amount of more than three times the amount of capital contributed by that foreign parent into the subsidiary cannot include in its deductible expenses the interest corresponding to that excess.

Transfer pricing rule

If the transaction price between the affiliated companies diverges from the price that would be used if the transaction was with an unrelated third party, that transaction is deemed to be conducted using an unrelated third party price, and the relevant tax liability is subject to recalculation.

For more information on tax on corporate transactions see: Practical Law Tax on Corporate Transactions Global Guide.

 

Grants and tax incentives

30. Are grants or tax incentives available for companies establishing a business in your jurisdiction?

To facilitate investment in Japan, the Japanese Government offers various tax incentives targeting foreign companies doing business in Japan, including:

  • Tax incentives for companies that relocate their headquarters from the 23 wards in Tokyo to other regions, or that enhance and expand the function of their headquarters in those regions.

  • Incentives regarding special zones.

  • Tax incentives based on the Industrial Competitiveness Enhancement Act.

  • Tax credit for research and development expenses.

  • Immigration treatment incentive.

  • Subsidy programmes regarding the 2011 Tohoku earthquake and tsunami.

Local governments also offer various incentives and support exclusively for foreign companies that are planning to open an office in their region.

For more information on tax incentives for investing in Japan, see www.jetro.go.jp/en/invest/incentive_programs/.

 

Employment

31. What are the main laws regulating employment relationships?

The main laws regulating employment relationships include the:

  • Labour Standards Act.

  • Labour Contract Act.

  • Labour Union Act.

  • Labour Relations Adjustment Act.

  • Industrial Safety and Health Act.

  • Minimum Wages Act.

  • Act on Securing the Proper Operation of Worker Dispatching Undertakings and Improved Working Conditions for Dispatched Workers.

The Labour Standards Act and the Labour Contract Act provide for the fundamental principles of individual labour relationships. The Labour Union Act provides for the fundamental principles of collective labour management relationships.

Regardless of whether an employer is Japanese or a foreign corporate person, and whether a worker is Japanese or a foreign national, so long as the business operates in Japan, labour and employment laws apply mandatorily in various aspects, including wages, working hours, leave, personnel transfer (shukko), job rotation (haiten) and termination of employment.

 
32. What prior approvals (for example, work permits, visas, and/or residency permits) do foreign nationals require to work in your jurisdiction?

A foreign national who wishes to work in Japan must obtain a relevant work visa in advance. There are various types of work visa depending on the type of job, including a highly skilled professional visa, a working visa for business manager, journalist, legal/accounting services, medical services, researcher, engineer, intra-company transferee, and so on.

To apply, an applicant must submit necessary documents such as passport, certificate of eligibility and employment agreement to the relevant Japanese embassy/consulate general (if the applicant is yet to enter Japan) or the relevant immigration bureau (if the applicant is already in Japan).

 

Proposals for reform

33. Are there any impending developments or proposals for reform?

Significant amendments to the Civil Code are under discussion. The bill of the amendment was submitted to the Diet (the Japanese Parliament) on 31 March 2015 and carried over to the Diet in 2017.

The Diet is still discussing an amendment to the Labour Standard Act, which provides that an extra wage rate of time and a half for any hours worked over 60 in a month applies not only to large companies, but also to small and medium sized companies.

The amendment to the Act on the Protection of Personal Information has partially come into force in January 2016, so that the Personal Information Protection Commission was established as an independent administrative institution. The remaining part of the amendment, which includes a clarification of the definition of "personal information", an increase in the number of companies to be regulated and the improvement of the international treatment of personal information, is scheduled to take effect in 2017.

The amendment to the Act on Prevention of Transfer of Criminal Proceeds (anti-money laundering law) became effective in October 2016. The amendment broadened the scope of regulated transactions and strengthened the measures of identification by financial institutions, professions, and so on.

 

The regulatory authorities

Ministry of Justice

Main activities. The Ministry of Justice is responsible for corporate registrations, real estate registrations, immigration procedures and so on.

W www.moj.go.jp/ENGLISH/index.html

Ministry of Finance

Main activities. The Ministry of Finance is responsible for tax matters, customs and tariff, foreign exchange matters, and so on.

W www.mof.go.jp/english/index.htm

Japan Fair Trade Commission

Main activities. The Japan Fair Trade Commission is responsible for regulating private monopolies, fair trade, contemplated business combinations (including mergers), and so on.

W www.jftc.go.jp/en/index.html

Ministry of Health, Labour and Welfare

Main activities. The Ministry of Health, Labour and Welfare is responsible for labour regulations, pensions, the medical and pharmaceutical industries, and so on.

W www.mhlw.go.jp/english

National Tax Agency

Main activities. The National Tax Agency is responsible for proper and fair taxation and collection, and so on.

W www.nta.go.jp/foreign_language/index.htm



Online resources

Horei Data Teikyo System (Japanese only)

W www.law.e-gov.go.jp/cgi-bin/idxsearch.cgi

Description. This site provides Japanese texts of Japanese laws and regulations, and is maintained by the Ministry of Internal Affairs and Communication. Changes in laws and regulations are generally updated within a month or so.

Japanese Law Translation

W www.japaneselawtranslation.go.jp/?re=02

Description. This site provides English translations of major Japanese laws and is maintained by the Ministry of Justice. The translations are unofficial and only the original Japanese texts are binding. Accordingly, the translations provided on this website should be used for reference purposes only.



Contributor profiles

Takao Shojima, Partner

Anderson Mori & Tomotsune

T +81 3 6888 5826
F +81 3 6888 6826
E takao.shojima@amt-law.com
W www.amt-law.com

Professional qualifications. Japan, Attorney-at-law (Bengoshi), 2005; New York, Attorney-at-law, 2012

Areas of practice. Corporate; mergers and acquisitions; venture capital; private equity.

Non-professional qualifications. Bachelor of Law, University of Tokyo, 2001; LLM, University of Southern California, 2011

Languages. Japanese, English

Professional associations/memberships. Dai-ni Tokyo Bar Association.

Publications

  • "Recent Legal Precedents to be Noted for Minimizing Risks of M&A", Business Lawyers website, 2016.
  • "Latest Legal Practice Based on Material Cases - M&A", Business Legal Affairs, 2016.
  • "Changes in Finance/M&A Practice under the amended Companies Act" (co-author), Chuokeizai-sha, 2015.
  • "Electricity System Reform", Newsletter of the IBA Legal Practice Division, 2013.
  • "Corporate Governance in Foreign Countries – Australia", Gekkan Kansayaku, 2013.

Raku Raku, Partner

Anderson Mori & Tomotsune

T +81 3 6888 5879
F +81 3 6888 6879
E raku.raku@amt-law.com
W www.amt-law.com

Professional qualifications. Japan, Attorney-at-law (Bengoshi), 2007; New York, Attorney-at-law, 2013

Areas of practice. Corporate; mergers and acquisitions; venture capital; private equity; merger control; China practice.

Non-professional qualifications. Bachelor of Law, University of Tokyo, 2005; LLM, University of Virginia, 2012

Languages. Japanese, English, Chinese

Professional associations/memberships. Dai-ichi Tokyo Bar Association.

Publications

  • Co-author, "Analysis of Reverse Termination Fee", Kinyu Shoji Hanrei, 2014.
  • Co-author, Case review for "Rakuten v. TBS (provisional injunction)", Analysis and Expansion of M&A Judicial Precedents, Keizai Horei, 2010.
  • Co-author, "Japanese Business Law and Practice", Anderson Mori and Tomotsune, Law Press China, 2009.

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