Key Points for Incorporating a Company in Japan as a Non-Resident

Establishing a company in Japan involves specific legal requirements that differ from other jurisdictions. This guide outlines three critical points every non-resident should understand before proceeding with incorporation.

Registered Head Office Must Be Located in Japan

Under the Companies Act of Japan, every corporation must designate a registered head office with a physical address in Japan. This is a mandatory legal requirement — a foreign address cannot serve as the registered office of a Japanese entity.

The registered address is used for all official correspondence with government authorities, court documents, and public registry records. It must be a valid, deliverable address within Japan’s territory.

Practical note for non-residents: If you do not yet have a physical office in Japan, it may be possible to use the address of a share office, a virtual office service, or your legal representative. However, depending on the nature of the business, it may not be possible to establish a virtual office or shared office as the registered address. For example, businesses that require licenses or permits.

Capital Contribution Must Be Deposited into a Japanese Bank Account

At the time of incorporation, founders are required to pay in the initial share capital before the company is formally registered. Under Japanese company law, this capital payment (haraikomi) must be made into a bank account held at a financial institution located within Japan.

Typically, this means transferring the capital contribution to a personal bank account held by one of the founders in Japan — the company itself does not yet have an account at this stage, as it does not legally exist until registration is complete.

Once incorporation is registered with the Legal Affairs Bureau, the company may open its own corporate bank account and the capital funds are transferred accordingly.

Important for non-residents: Opening a bank account has become extremely difficult. Generally, even for residents, non-Japanese are said to need to stay for at least six months to open a bank account.

Foreign Exchange Reporting Obligations (FEFTA)

Foreign investment in Japan is regulated by the Foreign Exchange and Foreign Trade Act. Non-resident investors establishing or investing in a Japanese company may be subject to notification requirements under this law, depending on the industry and structure of the investment.

Prior Notification
In certain sectors designated as sensitive — including national security, public safety, communications, broadcasting, aviation, maritime transport, nuclear energy, and other specified industries — foreign investors must submit a prior notification to the relevant Minister and the Minister of Finance before completing the investment. The investment may not proceed until the review period (generally 30 days, extendable in certain cases) has elapsed without objection.

Post-Transaction Report
For investments not subject to prior notification, a post-transaction report must be filed with the Bank of Japan within 45 days of the investment being made. This requirement applies broadly to inward direct investment by non-residents, including the acquisition of shares in a newly established Japanese company.

Please note: The applicable procedure depends on the industry classification of your business and the structure of your shareholding. Failure to comply with FEFTA notification requirements may result in penalties.