Who can be a Representative Director and what are the residency requirements in Japan?

January 7, 2018

Appointing a representative director is a required step to start a business in Japan. So what is a representative director, and is legal residency or Japanese nationality a requirement for that position?

A representative director is a director with essentially the company’s highest authority, with the right to enter into business and legal contracts on behalf of the corporation. This person is registered publicly on the official corporate register, and official corporate seal certificate. A company may have more than one representative director if needed.

Recently the laws have changed to allow non-residents to become sole representative directors of a company, whereas previously at least one local representative director was needed. This holds true for the Stock company type (kabushiki kaisha) type as well as the LLC type (godo kaisha) where representatives are called “members”. Therefore incorporated companies can now maintain companies with only foreign directors.

However, while local residency is no longer mandatory for incorporating a company in Japan, it can still be a practical necessity for the below two major reasons.

1.Initial incorporation requires proof of capital to be shown in a personal Japanese bank account of a director or shareholders, which may be difficult for companies with foreign-only representative directors.

2.Japanese business and banking institutions may be hesitant to deal with companies with only non-resident representative directors, as there is no authoritative figure nearby to hold responsible for company negligence.

If you are planning to come to Japan and become your company`s local representative director, then your immigration status will be of utmost importance. The visa status that allows you to operate a company in Japan are the following:

• Permanent Resident
• Spouse or child of Japanese National
• Spouse or child of Permanent Resident
• Long-term Resident
• Business Manager Visa

The most common visa is the Business Manager visa, which your company will be the sponsor for your stay in Japan.

Requirements for the Business Manager visa

The Business Manager visa application process can be fraught with complexity and frustration, especially if you’re confused with the various requirements and procedures. While additional documentation may be requested depending on your situation, every Business Manager visa applicant must meet the following prerequisites without exception:

• Successful incorporation/registration of your business—Your visa application cannot be submitted without the trade name of an existing company.

• Office address—To comply with visa standards, it must be a physical office that is clearly reserved for business use. Some home offices may be deemed acceptable, as long as there is a clear separation between business and personal space.

• Capacity requirement—Your business must have at least 2 full-time employees residing in Japan, or have a minimum of 5 million yen in starting capital. You may be required to hire employees depending on the scope of your business.

• Academic qualification for managers—In general, it is recommended to have at least 3 years of experience in business management and administration (this may include time spent studying business management and administration at a graduate school). However, there can be exceptions if the applicant has sufficient capital or work experience.

Securing your peace of mind during the visa approval process

Without legal resident status, you may not be able to secure a personal bank account needed for incorporation of the company itself, one of the necessities of a business manager visa, Fortunately, you can get around this limitation by securing the services of a qualified Nominee Director on a temporary basis.

Here at RSM Shiodome Partners, we truly understand the concerns and needs of our international clients. With our Nominee Director services, you can:

• Benefit from native business expertise and assistance in incorporating your company under temporary nominee director services.
• Conduct essential business and legal operations such as opening a corporate bank account after the incorporation.
• Get in-depth advice and assistance with your visa application
• Prepare for the responsibilities of assuming your company’s representative directorship
• Be reassured with the temporary and transitional purpose of our service and obtain full control of your business after nominee term.

A common misconception about Nominee Directors is that they are a long-term business expense that can be difficult to remove once the need for them has passed. At RSM Shiodome Partners, the interim nature of our service is included in the contract, which ensures the Nominee Director’s resignation once your Business Manager visa is approved.