Basics of expanding into Japan for Indian companies.

The legal hurdles for foreign companies to enter the Japanese market are not particularly high.

You can also position it as a base for the Asian region, so please consider expanding your business to Japan.

Options for forms of entry into Japan

There are three possible ways to establish a base in Japan. Here are the basic characteristics of each.

1. Establishment of a Japanese subsidiary
   Since a Japanese corporation (subsidiary) has an independent legal personality, in principle, the home corporation (foreign company) is not directly liable to creditors (limited liability). Even if all the representatives are non-residents of Japan, it is possible to register the incorporation of a company (Civil and Commercial Notification No. 29 dated March 16, 2015) But it is difficult to open a bank account in the name of a non-resident of Japan, so in this case, you may need to be creative when paying in the capital. Kaisha, which is less expensive to establish and maintain, can also be selected as a form of company. However, unlike the LLC in the US, a limited liability company (Godo Kaisha) cannot be taxed as a member (pass-through taxation).
   
   
2. Establishment of Japanese branch
   The Japanese branch is treated as a part of the home corporation (foreign company) without having an independent legal personality, and the home corporation (foreign company) is directly liable to the creditors (unlimited liability). The branch must have at least one "representative in Japan" who is a resident of Japan.
   
   
3. Establishment of representative office
   A representative office may engage in activities such as market research, information gathering, advertising and promotion, and the purchase and storage of goods, but it may not engage in continuous transactions (business activities). In addition, since the representative office is treated as a part of the home corporation (foreign company), the home corporation (foreign company) is directly liable to its creditors (unlimited liability). It is not possible to open a bank account in the name of the company, and the office representative will have to open a personal account.

From a tax perspective, it is not possible to say which form is more profitable, and this is a case by case basis. Please consult with a specialist.

Basic rules regarding the name (trade name) of a company or branch

Trade names can also be registered in Roman characters (Article 50, Paragraph 1 of the Commercial Registration Regulations). In other words, there is no need to force the use of Japanese characters (kanji, hiragana, katakana, etc.), and the familiar sound of the trade name used in the home country can be used.

In addition, it is not allowed to register a company with the same trade name as another company's trade name already registered and with the same place of business (head office in the case of a company) (Article 27 of the Commercial Registration Law).

This means that you can use the same trade name as an existing company as long as the location of the business office is different, so there is no need to worry about this issue in Japan. because there may be other companies with the same trade name in the same building.

Capital when establishing a Japanese subsidiary.

In Japan, a company can be established with as little as one yen in capital.

However, if your business requires permits or licenses, if you need to obtain a management visa, or if you need to obtain a loan from a financial institution, you may be required to have a reasonable amount of capital depending on your individual circumstances, so you need to confirm this in advance.

The contents of business and authorization.

Depending on the nature of your business, you may need to obtain permits or licenses from government authorities, so this is an important point to check in advance. Permits and licenses are classified into the following five types.

• Notification: It is possible to run your business only by notifying the government authorities.
  
• Registration: It is possible to run your business by being listed in a directory after notifying the government authorities.
  
• Authorization: It is possible to run your business by applying to government authorities and meeting the requirements.
  
• Permission: It is possible to run your business by applying to government authorities and passing an examination.
  
• License: It is possible to run your business by applying to government authorities and meeting the requirements.

By Maki Shimoji
https://www.hnrlegalconsulting.com/maki-shimoji

Associate Legal Consultant (JAPAN DESK)

Company : HNR LEGAL ( Advocates & Legal Consultants)

Email: info@hnrlegalconsulting.com

Foot Notes

Regarding the handling of registration applications when all the representative directors of Uchikoku Co., Ltd. do not have an address in Japan (Notice) (Notice of Minsho No. 29, March 16, 2015) (Japanese)

Disclaimer: The content of this article is intended to provide a general guide to the subject matter only. Specialist advice should be sought about your specific circumstances. Should you have any legal query you may contact us at Need Legal Assistance.