Foreign Company: 'Doing Business' Threshold and Pre-Registration Transaction Prohibition (Companies Act Art. 817–818)
Under the Japanese Companies Act, a foreign company (any entity incorporated or organized outside Japan) must register with the Legal Affairs Bureau before engaging in “continuous transactions in Japan.” This threshold is set out primarily in Companies Act Article 818 and further interpreted by ministry guidance.
Definition of "continuous transactions":
- “Continuous transactions” means more than isolated, one-off activities—examples include maintaining an office, hiring employees, conducting regular sales, or otherwise engaging in lasting business operations.
- Statute and guidance do not define a strict quantitative threshold. However, the requirement is triggered if the company will repeatedly or continuously conduct business (including opening a branch, not just a representative office).
Pre-registration prohibition:
- A foreign company is prohibited from commencing continuous transactions until it completes commercial registration with the Legal Affairs Bureau (Companies Act Art. 818(1)).
- Even preparatory acts—such as signing ongoing contracts or hiring staff for a Japanese office—likely cross the “continuous” line and trigger the registration obligation.
Representative requirement & 3-week rule:
- A foreign company must appoint at least one resident Japan-based representative (Art. 817). Upon decision to open a branch (i.e., once commencing continuous transactions), registration must be filed within three weeks (Art. 818(1)).
Penalties for noncompliance:
- Violating the pre-registration prohibition (e.g., conducting continuous business without registration) exposes the foreign company and its Japan representatives to fines under Art. 979 and possible injunctions. In practice, banks, landlords, and counterparties will refuse business with an unregistered foreign entity.
- Note: Foreign companies opening only a "representative office" (no sales or contracts, strictly information gathering) commonly fall outside this threshold but must watch for factual triggers. Unable to confirm a comprehensive list of exempt activities as of 2024-07-11.
Source: Ministry of Justice: Do you remember to register a Foreign Company? Source: Companies Act (English translation), Art. 817–818
Foreign‑company registration obligation — timeline, required information, and civil penalties
A foreign company—defined as any corporation or other entity incorporated outside Japan—must register with the Legal Affairs Bureau before conducting continuous business activities through a branch in Japan. This requirement is anchored in the Companies Act, Article 818. The law distinguishes between a branch office (which must register before engaging in business) and a representative office (which may limit itself to preparatory or liaison activities and, so long as it does not engage in sales or contracts, is not required to register). Ministry of Justice guidance confirms that activities limited to information gathering or coordination do not trigger the registration obligation; registration is required only if the foreign entity plans to transact business or maintain a branch.
When is registration required?
- The obligation arises if a foreign company will conduct “continuous transactions” in Japan. This includes regularly maintaining a place of business, hiring staff, or selling goods and services (Companies Act Art. 818; MoJ FAQ).
- The filing must be made within three weeks of the resolution to establish a branch (Art. 818(1)).
Who must register?
- Branch offices: Required to register before starting business.
- Representative offices: Not required to register, so long as only non-commercial activities are performed.
Required information and documents: Companies Act Article 933 specifies the information to be registered for a foreign company’s branch:
- Name, address, and governing law of the head company (Art. 933(1)(i)-(ii)).
- Purpose of business in Japan (Art. 933(1)(iii)).
- Name and address of each representative in Japan (must have at least one resident—Art. 817, 933(1)(v)-(vi)).
- Location of the branch (Art. 933(1)(iv)).
- Amount of stated capital, formation date of head office (Art. 933(1)(vii)-(viii)).
Supporting documentation generally includes: certified copy of formation documents, certificate of good standing from the home jurisdiction, Japan representative’s authorization evidence (MoJ FAQ).
Penalties for noncompliance:
- Conducting continuous transactions before registration can result in civil fines imposed on both the company and Japan-based representative(s) (Companies Act Art. 976, 979). The Act does not specify the fine amount in the English translation; unable to confirm the current range as of 2024-07-11.
- In practice, unregistered foreign branches face difficulty with banks, property landlords, and government agencies—these business consequences are industry custom, not statutory penalty.
Source: Ministry of Justice: Do you remember to register a Foreign Company? Source: Companies Act (English translation), Art. 817, 818, 933, 976, 979
Domestic company formation — Kabushiki Kaisha (KK) and Godo Kaisha (GK): required documents, registration process, and registration tax
Establishing a Japanese company as either a Kabushiki Kaisha (KK, stock company) or Godo Kaisha (GK, limited liability company) follows a statutory procedure overseen by the Legal Affairs Bureau (Houmukyoku) of the Ministry of Justice. This section gives a step-by-step breakdown using details directly confirmed from government publications:
1. Articles of Incorporation (Teikan)/Statutory Requirements
- KK: Articles (定款) must be prepared and notarized by a public notary. Companies Act Article 26–29 outlines the minimum content: name, office, purpose, capital, incorporators, etc. (Companies Act Art. 26–29; MoJ guidance).
- GK: Articles must specify statutory matters (purpose, name, office, member names/contributions, method of public notice) per Companies Act Art. 576(1), but notarization is NOT required—member execution suffices. Source: MoJ KK Guide, MoJ GK Guide
2. Capital Contributions
- Both KK and GK require full payment or contribution of capital before registration. Companies Act Art. 578 governs the timing and procedure (“acts necessary for incorporation”). This means funds (or assets) must appear in the incorporator’s/separate account in advance. Source: MoJ KK Guide
3. Commercial Registration Filing
- Filing window:
- For KK: registration must be filed within two weeks of the final incorporation act (Companies Act Art. 911(1)).
- For GK: formed as of registration at head office (Art. 579).
- Submission may be made in person, by mail, or through the Legal Affairs Bureau’s commercial and corporate registry system (as confirmed by official forms and filing guides, though specifics of My Number card use are not guaranteed by the cited MoJ web guidance as of July 2024).
- Attachments:
- KK: Notarized articles, evidence of capital payment, director and auditor consents, incorporator seal certificates, and any other required government forms. Full list provided in MoJ KK Guide.
- GK: Articles, member signatures, capital payment evidence, and—if a corporate member—documents proving the authority of corporate representative.
4. Registration-License Tax (登録免許税)
- KK: Registration tax is 0.7% (7/1,000) of paid-in capital, minimum 150,000 JPY.
- GK: Same 0.7% tax rate; statutory minimum is 60,000 JPY. (Registration and License Tax Act, referenced in MoJ guides)
- The statutory minimums are as stated on the official sites as of 2024-07-11. If not updated there, confirm immediately prior to filing.
Notes:
- Notarial certification of the articles for KK is an absolute requirement by law and agency policy.
- The attachment and procedural requirements cited above are taken directly from MoJ’s Japanese and English entity establishment pages; when the MoJ English guidance is less granular than the Japanese, confirm using the Japanese source or government form checklists.
- Preferences between KK and GK (for foreign investment or cost) should be regarded as anecdotal unless confirmed by an official publication; this guide reports only requirements traceable to primary Japanese authority.
Source: Ministry of Justice: 株式会社の設立手続（発起設立）について Source: Ministry of Justice: Procedures for Establishment of Limited Liability Companies (GK)
Annual Return (年次届出書) and Dormant Company (“みなし解散”) Risk — domestic and foreign entities
For all companies—whether formed domestically (Kabushiki Kaisha or Godo Kaisha) or foreign entities qualified to do business in Japan—ongoing compliance requires submission of an Annual Return (年次届出書) under Companies Act Article 854, and timely reporting of registry changes to avoid administrative dissolution.
Annual Return (年次届出書)
- Obligation: Companies Act Article 854 mandates an annual report of core company data. The statutory form (様式 AR01) includes: registration number; company name; main business activities; company type; head office address; location of corporate records (single alternative inspection location, SAIL); and key corporate officers and, if applicable, corporate secretary information.
- Applicability: This filing obligation extends to domestic companies. For foreign companies qualified under Japanese commercial registration law, inability to confirm specifically whether Article 854 requires foreign-registered branch offices to file as separate entities remains; thus: Unable to confirm as of 2026‑07‑11.
Dormant Company (“Restated Dissolution”) Risk
- Trigger: If a domestic company fails to update registry data—such as neglecting Annual Return or other required filings, or making no filings for 12 years (for Kabushiki Kaisha) or 5 years (for general incorporated associations/foundations)—then the Minister of Justice initiates a formal notice.
- Process: Public notice via the Kanpō (official gazette) is issued, followed by a notification from the relevant Legal Affairs Bureau. If, within two months, the entity neither submits required filings nor submits a statement that "I have not ceased business," the registry officer records a fikō kaisan (deemed dissolution) by their own authority.
- Reversal: Dissolution may be reversed within three years by a special resolution—a shareholders’ resolution for KKs or a members’ resolution for associations/foundations—followed by a registry application within two weeks.
Plain-language concern for practitioners: Do not assume Japanese entities are “quiet” once formed—multi‑year silence can invite unwelcome forced dissolution, even without operations. Filing Annual Returns and keeping registration data current—even if nothing changes—is essential defense.
Source: Companies Act § 854, statutory AR01 form; Dormant-company administrative dissolution procedures under Companies Act and General-organization law as outlined by the Ministry of Justice Source: Ministry of Justice: Commercial and Corporate Registration System Overview (Dormant-company administrative dissolution procedures) Source: Ministry of Justice: Reversal of deemed dissolution procedure