Notice on Establishing a Japanese Subsidiary with Specific Business Content

October 25, 2019

Question:

I have a Chinese corporation with an agricultural business purpose, and I plan to establish a subsidiary or a branch in Japan with the same agricultural objective. Do I need to report it somewhere in advance?

Answer:

It is necessary to notify the Bank of Japan in advance.

Explanation:

When a foreign company invests or lends to a Japanese corporation, or when a foreign company establishes a branch office in Japan (inward direct investment), depending on the business purpose under the Articles of Incorporation of a Japanese corporation or the nationality of a foreign corporation, etc., it is necessary to notify the Minister of Finance and the appropriate minister of the inward direct investment before conducting the transaction.

When a foreign corporation establishes a stock company as a subsidiary in Japan, or establishes a Japanese branch office, prior notification to the Minister of Finance and the appropriate minister is required when certain business objectives are listed in the Articles of Incorporation. The following are some examples of such business objectives.

・Rice farming
・Grains farming other than rice
・Vegetable farming (including cultivation of mushrooms)
・Fruit farming
・Flower farming
・Industrial crop farming
・Potato/Sweet Potato farming
・Other cultivated farming

Even if you did not list any mentioned above as a business purpose in the Articles of Incorporation, prior notice is still needed if you actually conduct the business. Therefore, in doing so, it is better to clearly state it in the Articles of Incorporation.

If it is not clear under which of the aforementioned categories the agricultural business to be conducted in Japan would qualify for, it is recommended to inquire and confirm with the Bank of Japan and relevant authorities to avoid violation of notification duties.