Process of Incorporating a Japanese Subsidiary

Once you have considered the three key points discussed in “Key Considerations before Setting Up a Japanese Subsidiary”, the next step is to proceed with the actual incorporation of a subsidiary. The various requirements will significantly impact the timeline and budget for a successful market entry in Japan.

1. Incorporation Process

The necessary documents for incorporation are typically as follows:

• Articles of Incorporation for the new company
• Report on the beneficial owner(s) of the company
• Certificate of incorporation of the parent company
• Signature certificate of the parent company’s CEO
• Resolution by incorporator(s)
• Acceptance letters from directors
• Signature or seal certificates of the directors
• Proof of receipt of stated capital, accompanied by a copy of the bank passbook
• Power of Attorney

For a KK (Kabushiki Kaisha), the Articles of Incorporation must be notarized at a notary office, while this step can be skipped when incorporating a GK (Godo Kaisha).

2. Three Types of Company Seals

Despite the general trend toward paperless transactions, most companies still prepare three types of seals during incorporation. One of these seals must be registered as the official corporate seal with the Legal Affairs Bureau. The registered seal is required for important transactions and contract signings by your Japanese subsidiary. Its authenticity is confirmed by a “seal certificate” (known as “inkan shoumei-sho” in Japanese), similar to a notary-issued signature certificate used to verify a CEO’s signature in other countries.

Of the remaining two seals, one is typically registered with the company’s bank for financial transactions at the bank. The final seal is often used for routine business operations, such as issuing invoices, though this is not mandatory.

3. Report or Prior Notification under the Foreign Exchange Act

After incorporation, the company must submit a report on foreign direct investment to the Bank of Japan within 45 days. In certain sensitive industries, prior notification is required. The list of industries subject to prior notification has been expanded in recent years, so it is encouraged to carefully review the latest regulations beforehand.

4. Notifications to Local Government Offices

As with any newly incorporated companies in Japan, regardless of ownership, reports of incorporation must be filed with the tax department of local municipality offices. Additionally, if the company’s directors are work visa holders residing in Japan and work for the company fulltime, they must be registered for health insurance and the public pension system.

5. Additional Procedures for Regulated Industries

In addition to the report or prior notification under the Foreign Exchange Act, certain industries require a license or registration with Japanese national or municipal authorities. This includes, but is not limited to, financial services, pharmaceutical, real estate brokerage, construction, travel agencies, hotels, nursing care, staffing, headhunting, transportation, manufacturing or sales of specific goods (e.g., food, certain nutritional supplements, drugs, liquor, used products, cosmetics or certain fresh foods). The complexity of the procedure varies depending on the type of license. Industry-specific regulations can affect the entire incorporation schedule and should be reviewed in advance.

For further information and questions, please contact Ms. Masako Banno, who is in charge of this article, via her email address or the following link.
https://www.okunolaw.com/en/contact/