A Japanese branch office is a business location that provides services in Japan but under direction by the foreign company. It can engage in profitable activities, but is not expected to engage in independent decision making. A branch office is a relatively simple method for establishing a base of operations in Japan and must be registered, and have a resident representative who is authorized to represent the branch.
Like the representative office, a branch office does not have its own legal entity status, but instead is encompassed by the corporate status of the foreign company. Therefore the foreign company is ultimately liable for debts and credits generated by the activities of its Japanese branch office. A Japanese branch office, however, may open bank accounts and lease real estate in its own name.
C. Registration steps
1. Check Availability of Name
According to the Doing Business Project, the name must be checked but applying for an examination at the Legal Affairs Bureau of Similar Corporate Names, to ensure if does not conflict with any existing Japanese companies with similar corporate names.
To do so, it is necessary to go to the local Legal Affairs Bureau (Homukyoku / 法務局). Since the website is only in Japanese, it will likely require assistance from a Japanese lawyer or agent.
Time: 1 day
Cost: 450 JPY
2. Appoint a Representative
A branch will require a representative who is resident in Japan that is authorized to act on behalf of the company. There is no formal process for appointment, but some kind of written agreement between the representative and the foreign company should be created. Ideally it is a good idea to get a copy translated into Japanese if any authority or potential business partner or client needs to see it in future.
If the representative needs to sign anything, e.g. contacts or a lease, they will need to first obtain an official ‘name seal’ (inkan / 印鑑) and then have this seal certified (inkan shomeisho / 印鑑証明書), usually done at the resident’s local city hall. They will need to bring their Japanese resident ID.
Alternatively they can organize to have a signature attestation issued by the Embassy/Consulate of the person’s country of citizenship. However this would be required for every time something is signed, and generally requires booking an appointment at the embassy. If a representative is likely to only sign one or two things this may be sufficient. However if they are expected to sign multiple or regular agreements, obtaining and certifying a name seal would be recommended, especially as the process is cheap and fast.
Time:
If applying for the official seal, it reportedly can take anywhere from 1 day to 3 months, but around 3 weeks should be more than enough in most cases.
Signature attestation at embassy: Requires booking an appointment, so may take 1 week or more depending on the embassy.
Cost:
- No costs directly associated with appointment of the representative
- Creation of ‘name seal’ (inkan / 印鑑): 300 yen
- Certifying the seal (inkan shomeisho / 印鑑証明書): 300 yen
- Translation of the agreement may also attract translator fees.
- Signature attestation at embassy: Generally no charge
3. Prepare and Certify Articles of Incorporation
An affidavit is based on the Registry Certificate and the Articles of Incorporation of the parent company as well as the seal certificate (inkan shomeisho / 印鑑証明書) of the Representative in Japan. The affidavit needs to be certified at the relevant embassy/consulate or a public notary of the parent company’s home country.
An affidavit for registering a branch office contains the details such as the name of the parent company, address of the head office, the company’s activities, amount of capital, names of the Directors, the date of establishment of the branch office in Japan, address of the branch office, name and address of the Representative in Japan.
To be able to prepare such affidavit, the following documents are required:
- Registry certificate of the foreign parent company
- Articles of Incorporation of the parent company
- Japanese translation of the above documents
- Seal certificate (inkan shomeisho / 印鑑証明書) or signature attestation of the Representative from their local embassy
- Branch office’s official seal (to be registered at the registry office)
The affidavit must be certified by the relevant country’s Embassy/Consulate in Japan, or a public notary of the country where the foreign company is registered.
Time: 1 day
(Additional time may depend on availability of appropriate parties e.g. legal professionals to prepare the documents).
Cost: Notarization Fee: 50,000 yen
4. Register Branch Office at Legal Affairs Bureau
A branch office may begin business operations after registering its establishment with the Legal Affairs Bureau (Homukyoku / 法務局). In bigger cities (i.e. Tokyo) you will most likely need to make an appointment in advance.
Because it is seen as a foreign owned and directed office, the exact process will depend on what is determined to be the most similar form of Japanese corporation, based on documents such as the foreign company’s articles of incorporation, establishment certificate, registration certificate, and so on.
The exact documents required depend on the parent company business structure, so it is recommended to confirm what documents you will need while making an appointment. At the very least you would most probably need:
- Branch office address, lease and date of establishment
- Resident ID of representative
- Article of association of parent company (translated to Japanese)
- A copy of the agreement between parent company and representative
Once the application is processed, a Certificate of Seal Registration & Certificate of Registered Matters is required to open a bank account in the branch’s name.
Cost: 90,000 yen
Time:
- Appointment waiting time may take 1-2 weeks
- Application itself may be processed on the day but more likely will take 1-2 weeks.
5. Establish an Office
Although there is no formal registration process it is required to have a company office in order to register a company in Japan.
An advantage of establishing a physical office is that having a lease agreement under the company’s name proves a certain level of reliability and can smooth other steps, in particular opening a bank account.
Services and virtual offices are also available. However, a guide on GaijinPot states that if the company is to be used to sponsor certain classes of visas, the company must registered at an actual physical office (virtual office will not suffice). Another account on Momo-Catalogue also notes that when opening a bank account, the bank wanted to perform an inspection of the company office space and assets to prove the company was not a fake company.
Time: n/a
Cost: n/a
6. Notify Tax Office
According to the Doing Business Project, notification of the company incorporation must be filed within 2 months of the incorporation date. The application for the approval of blue tax returns must be filed either within 3 months of the incorporation date, or a day prior to the end of the first fiscal year, whichever comes first.
Time: 1 day
Cost: No charge
7. Notify Local Tax Office
According to the Doing Business Project, the company will need to also file a Notification for the Commencement of Business at the local tax office.
If the company head office is located in the Tokyo Metropolitan Government region, it must file notification within 15 days of company incorporation. If the head office is outside Tokyo’s wards, the company must file a Notification of Incorporation at the tax office of the local municipal government and prefectural government within 1 month of company incorporation.
Time: 1 day
Cost: No charge
8. File labour insurance notifications and employment rules at Labor Standards Inspection Office
Upon recruitment, the company must file without delay the following documents at the competent Labor Standards Inspection Office:
- Notification of the application for labor insurance
- Notification of the commencement of labor insurance within 10 days of the insurance coverage commencement date
- Notification of the approximate insurance contributions within 50 days of the insurance coverage commencement date
- The rules of employment (once the company hires 10 or more employees)
- Agreement on overtime and holiday work (the “36 agreement”) if the company anticipates that its employees will work overtime or on public holidays, irrespective of the number of employees.
Time: 1 day
Cost: No charge
9. Apply for health insurance and public welfare pension at Japan Pension Service
As soon as the company and its employees are covered for health insurance and public welfare pension, the company must file the following documents at the Social Insurance Office within 5 days of the business insurance coverage commencement date:
- Notification of the acquisition of insured status
- The insurance details covering Health and Employee Pension insurance
Time: instant (online)
Cost: No charge
10. File company application for employment insurance at Public Employment Security Office
The notification of the company’s application for employment insurance must be filed at the Public Employment Security Office within 10 days of commencement of employment by the company.
When a new employee is recruited, he/she is automatically insured under the company’s employment insurance. The company must thus file a “Notification of Acquisition of Insured Status under Employment Insurance” at the Public Employment Security Office by the 10th day of the month immediately consecutive to that of the employee’s appointment date.
Time: instant (online)
Cost: No charge
11. Open Commercial Bank Account
Once the company has been registered, a corporate bank account can be opened. However, it may be an involved process due to Japanese laws requiring bank account holders to be cleared before approval. Furthermore, as seen in comments on this Quora discussion, Japanese banks (not including international banks) generally offer little English and may also place strict controls on foreign transfers, such as needing in-person clarifications each time payments are received from overseas.
A personal anecdote of a foreigner who started a small business in Japan describes the initial documents for opening a business bank account including the following:
- An explanation of your company’s activities and what you plan to use the bank account for.
- Certificate showing complete records of your company to-date (rireki jikou zenbu shoumeisho /履歴事項全部証明書) obtained from the local Legal Affairs Bureau.
- Company seal certificate
- Identification of person applying for account
- Copy of certificate of incorporation (teiken no utushi / 定款の写し).
- notification of incorporation as submitted to the tax office (houjin setsuritsu todokedesho / 法人設立届出書)
- tax report for commencement of payroll as submitted to the tax office (kyuryou shiharai jimusho tou no kaisetsu todokedesho / 給与支払事務所等の開設届出書)
The bank will review the application and may contact you for additional information such as promotional materials such as company brochures, or the tenancy agreement for its premises, or information about the products sold.
Time: 3 days – 2 weeks
Cost: no charge (monthly fees and minimum deposit requirements can depend on the bank)