6. Procedures for Incorporating a Business and Renting an Office
Procedures for Incorporating a Business and Renting an Office Overview
Before obtaining a Business Manager VISA, you have to establish a company in Japan. Hurdles for foreigners in starting a new business in Japan are becoming much lower due to globalization. For instance, even if all of the directors and shareholders live outside of Japan, you can now establish a company in Japan. However, as a foreigner, you may still face other obstacles in the process of establishing your company. With regards to the business office, the possibility that a foreigner without an address in Japan can contract an office is quite low. The purpose of this article is to discuss the specific procedure for corporate registration and securing a business office in Japan to help you establish a company smoothly.
• Securing a Business Office• Establishing a Company• Things to Do After the Completion of Corporate Registration
Securing a Business Office
Prior to the corporate registration and the application for a Business Manager VISA, a business office should be obtained. You must have an office space contracted in the name of your corporations used for the running of your business. The office space could be a rental office with independent private rooms or incubation offices.
We have summarized the criteria of a business office below:
The criteria of a business office:
• The contract must be made under the name of a corporation for business use.• There must be a joint guarantor.• Office equipment such as phones, computers, and photocopy machines must be set up.• There must be enough space for the running of your type of business.• There must be a space for administrative and management work.• It must not be a short-term lease space that has been contracted monthly.• Virtual offices are not permitted.
*In Kobe City, you cannot use a coworking space as a business office.
Since the company will not be established at the time of signing the lease contract for the office, one of the directors or shareholders of the company should first sign the contract as an individual. After the establishment of the company, the name on the contract should be switched to that of the company name. It is worth pointing out that it is hard for foreigners who live abroad or have a VISA with a short-term period of stay to sign a lease contract for the business office. Therefore, it is recommended for one of the directors/shareholders to arrive in Japan on a Startup Visa and then go through a series of procedures needed to establish a company. In addition, you can find a partner in Japan who can cooperate as well.
The Procedure of Contracting a Business Office in the Name of an Individual
a. Consult with a real estate agent and choose a property that meets the criteria for a business office that has been described above.
b. Fill in an application for the property you want to rent and submit all the necessary documents to the real estate agents.
Items to be filled in the application form:
· Personal information of all residents (name, gender, date of birth, etc.)· Workplace information (company name, address, telephone number, etc.)· Personal information of the joint guarantor (name, gender, date of birth, etc.)
For a Contractor:
Certificate of residence for all residentsProof of identity (residence card, passport, etc.)Photographs of all residents (snapshots are acceptable)Proof of income (withholding tax statement, certificate of tax payment etc.)Proof of enrollment or recruitment (business card, employment letter, admission letter, etc.)
For a Joint Guarantor:
• Guarantor letter• Seal registration certificate• Certificate of residence• Proof of income (withholding tax statement, certificate of tax payment, etc.)
*In case you cannot find a Japanese guarantor, a guarantee company would help. The guarantee fee is about one month’s rent for the first contract period.
c. Receive a background check.
Your application will be accepted if you are gainfully employed and have not defaulted on credit card or cell phone bills.
d. Sign the lease contract.
You and the joint guarantor should sign the contract with your registered seals (実印- Jitsuin).
e. Pay for the initial expenditures and get your office key.
Japan External Trade Organization (JETRO) Temporary Office
This is a free office space temporarily available for the running of a business. Whether it is a startup company that is already incorporated overseas or individuals seeking to start a new business in Japan, they can use this service as long as they meet JETRO’s requirements. Please contact JETRO for specific details if you wish to use this service.
Note that this office space cannot be used as a business office for corporate registration.
Tokyo, Osaka, Kobe, Nagoya, Yokohama, Fukuoka
• The office space can be used free of charge for 50 days. The period can be extended, but rent would be charged.• Security deposit and communication fees (such as telephone charges, courier and postage charges) are paid separately.• Availability of private rooms with telephone and network access, and shared facilities such as meeting rooms.
Establishing a Company
The basic matters of the company, such as the type of the company, the name of the company, business purpose, and location of the business office has to be decided before the corporate registration. The first thing you should decide on is the type of company. Although there are various types of companies in Japan, the popular choices are the joint-stock company (株式会社- Kabushikikaisha) and the limited liability company (合同会社- Goudoukaisha).
After deciding on the type of company you want to establish, the next step is to obtain a corporate seal, which is required for the validation of all major business, banking, or legal transactions. Most companies in Japan use 3 different types of seals to conduct business operations.
Corporate Representative Seal (代表印- Daihyoin)
• It must be registered at the Legal Affairs Bureau under the name of the company’s representative director.
• After the completion of registration, you should obtain a seal certificate, which certifies the authenticity of the seal.
• You must have obtained the representative seal and the seal certificate before you can validate agreements and contracts on the company’s behalf.
Corporate Bank Seal (銀行印- Ginkoin)
• When you open a bank account, a bank seal needs to be registered at the bank for it.
• Your corporate representative seal can also be used for banking. However, companies typically create a separate seal for banking transactions to ensure a proper division of business transactions and a more simplified and accurate internal recording process.
• Japanese banks reject requests to register a signature instead of an official seal.
Square Seal (角印- Kakuin)
It is generally reserved for everyday business transactions with less legal significance than the corporate representative seal and the banking seal.
How to obtain corporate seals
It is recommended to purchase a set of the three types of the corporate seal through an online seal shop. You can choose the design and the material of the seal. You can also create a corporate seal in Kanji, Katakana, or English.
The procedure for corporate registration
Next, you must go through the procedures from steps A to E to establish a company.
a. Prepare the Articles of Incorporation (定款- Teikan)
The elements of the articles of incorporation vary slightly depending on the type of the company. The basic elements are listed as follows:
1. Absolute matters
Absolute matters are matters that must be stated for the articles of incorporation to be valid. The elements of absolute matters are as follows:
· Trade name
· Place of the principal office
· Value or minimum amount of assets contributed at the time of incorporation
· Name and address of each promoter
2. Main relative matters
Main relative matters are matters that do not have legal effect unless stated in the articles of incorporation. It consists of:
· Names of persons contributing in kind, assets to be contributed, the value of the assets, and number and type of shares allocated.
· Assets to be taken over by directors and shareholders after the coming into existence of the corporation, the value thereof, and the name of the transferor.
· Incorporation expenses incurred by the corporation
· Appointment of auditor(s)
· Establishment of a board of directors
· Rules on payment of dividends of surplus
3. Relative matters
Relative matters may be freely determined if they do not contravene the Companies Act, such as:
· Notice of convocation of the General Shareholder Meetings
· Business year
b. Acquire the Seal Certificate or the Signature Certificate
After the above matters are decided, the model of the articles of incorporation shall be revised, and the articles of incorporation of the company shall be prepared by all the directors and shareholders of the company.
All the shareholders and directors (including the applicants for the incorporation) should submit Seal Certificates or Signature Certificates to make their seals or signatures legally valid.
Foreign directors with a visa of period-of stay over three months can obtain the seal certificates at the local municipal office.
A signature certificate is accepted as an alternative in case the directors or shareholders live overseas or are staying in Japan for less than 3 months.
How to obtain a signature certificate
• If you are in Japan, you can apply for a signature certificate at the embassy or consulate of your nationality.
• If you are in your home country, you can apply at the notary office of your country of nationality.
• A signature certificate issued by the embassy or consulate of your nationality will be accepted even if you are in another country.
c. Have the Articles of Incorporation Notarized by a Notary Public’s Office
When the articles of incorporation is completed, it is essential to go to the local notary public’s office to undertake certification of the articles drawn up. However, this is not required for a limited liability company (合同会社- Goudoukaisha).
A PDF file of the articles of incorporation with an electronic signature or the articles of incorporation as a hard copy is both acceptable. A hard copy of the articles of incorporation cost 40,000 Japanese yen in stamp tax. No stamp duty is required if you choose the electronic articles of incorporation. However, you must purchase dedicated software or a representative service for digital signatures and digital certificates.
• Three copies of the Articles of Incorporation• Seal Certificate of each investor and director• Revenue stamps (in the case of a hard copy): 40,000 Japanese yen• Certification fee: 50,000 Japanese yen• Certified copy of the articles of incorporation: 250 Japanese yen per page• Power of attorney (if a proxy is applying for the certification of the articles of incorporation)
a. Deposit the Capital
Since the company’s bank account cannot be opened before the corporate registration is completed, it is necessary to use an investor’s personal bank account to deposit the initial capital.
1. Open a personal bank account.
Only the following people are recognized as an account holder:
• An incorporator• A director in an incorporation• A document clarifying that the incorporator has delegated the right to receive the payment to the account holder (power of attorney) must be attached to the application of the opening of the personal bank account.• A person other than the incorporator and the director at incorporation (not restricted to a “natural person”, and including a juridical person) (a “Third Person”)
This is only accepted in the case where all of the incorporators and directors at incorporation do not have addresses in Japan. A power of attorney, which delegates the right to the Third Person, must be attached.
2. Transfer the prescribed amount of capital to the account
3. Prepare the payment certificate
A sealed document that meets the following two conditions can be accepted as a payment certificate.
• A document certifying the amount paid into the bank account or other institution that handles the payment known as the “Payment Handling Institution.”
• Only domestic banks located in Japan and abroad, and foreign bank branches located in Japan are acceptable. Branches of foreign banks in foreign countries are not acceptable.• It should be prepared by the representative director at incorporation or the representative executive officer at incorporation.• If the amount deposited is written in foreign currency on the document, the following 2 items must be included.• The exchange rate on the payment date (e.g. At a rate of --- yen per dollar on DD MM, YYYY• The payment amount in Japanese yen, which is calculated based on the exchange rate on the payment date.• A copy of a deposit passbook, or a bill of the transaction, or other documents prepared by the Payment Handling Institution.
1. The printed transaction detail of the internet banking is included.
2. All the following must be mentioned in the document:
a. Name of the Payment Handling Institution (with the branch office name where the bank account was opened)b. Contribution payment historyc. Name of the account holder
b. Apply for the corporate registration
In addition to going to the Legal Affairs Bureau to apply for company registration, you can also apply by post or online. Please choose the method that is convenient for you.
You can download some of the necessary documents from the home page of the Legal Affairs Bureau
• A certified copy of the articles of incorporation• Resolution for the location of the head office• Acceptance of appointment• Seal Certificate or Signature Certificate of all the directors and shareholders• Capital payment certificate
The method of obtaining a corporate seal has been discussed above. You need to submit the corporate seal notification form together with other documents at incorporation. Only after the corporate registration is completed can you apply to the Legal Affairs Bureau for the certificate of corporate seal impression so that the corporate seal will be legally valid.
If there are no problems with the contents of the documents, the corporate registration will be completed in about 7 to 10 days. The date of incorporation will be the date the application is received by the Legal Affairs Bureau. Please note that the Legal Affairs Bureau will not notify you of the completion of the corporate registration.
Things to Do After the Completion of Corporate Registration
a. Obtain the certificate of registered matters and the certificate of corporate seal impression
Both certificates can be obtained at the Legal Affairs Bureau. They will be required on numerous occasions such as opening the company bank account, filling various documents in the tax office, making contracts, etc. Therefore, it is recommended to acquire more than one of both certificates.
b. Change the name of the office contractor
In changing the name on the lease contract has to change from an individual to a corporate, the contract needs to be re-signed.
1. Rescind the house lease contract.2. Fill an application in the name of the company and submit all the necessary documents.Items to be filled in the application form:
• Corporate Information (Company name, address, and telephone number, etc.)• Personal information of all residents (Name, gender, date of birth, etc.)• Personal information of the joint guarantor (Name, gender, date of birth, etc.)
For a Contractor
• Copy of the corporate registration certificate• Company seal registration certificate• Company profile (brochure, photos of the business office, etc.)• Proof of identity (residence card, passport, etc.)• Certificate of residence (住民票- Juminhyo) for all residents• Photographs of all residents (snapshots is acceptable)For a Joint Guarantor• The documents are the same as that of the individual contract.• In most cases, the lease contract is signed in the name of a company, and the CEO of a company will be the joint guarantor.
3. Receive a background check.Unlike individual contracts that focus on the background check of the residents, in the case of corporate contracts, the corporate information will be examined.4. Sign the lease contract, stamp it with the registered company seal, then pay for the initial expenditures.
Stay tuned for further articles on “How to Start a Business in Japan,” our series on foreign entrepreneurship!
• How to Start a Business in Japan: An Overview• All you need to know about the Startup VISA• Procedures for Coming to Japan with a Startup VISA: Renting a House and Resident Registration• Procedures for Coming to Japan with a Startup VISA: Obtaining a Phone Number, a Name Seal, and a Personal Bank Account• A Guide to Obtain a Business Manager VISA
Future articles would be discussing:
• Banking in Japan• Application for labor insurances after incorporation• Making a Business Plan• And more.