When foreigners want to establish entity in Japan- corporation, LLC, or branch office

Our office frequently receives the request from foreigners living outside of Japan that they want to establish some entity in Japan and create corporate bank account. It becomes extremely difficult recently, however, because of the strict rule of money laundering law and order from Financial Bureau to Japanese banks – not the banks to make the entities create corporate account easily.

First of all, to establish Japanese Corporation, the promoter of the corporation has to have Japanese Bank Account to show the Legal Bureau he actually has the money and put the capital amount to his bank account. Therefore, the foreigner, living outside of Japan, usually does not have bank account in Japan, is required to ask some friend to be a promoter of the establishment of Process.

Second, to establish Japan Branch of Foreign based corporation, Japan representative is required to have an address and registered his stamp on this residential address. Residential Certificate and Stamp Certificate are required to submit Legal Bureau for establishing the branch office. It means that such person has to be Japanese or foreigner having middle to permanent residential permission. Therefore, to establish Japan Branch of Foreign based corporation, the foreign based person or entity needs some person having residency here in Japan cooperate the process.

Lastly, even after creating Japanese Corporation or Japan Branch, that person or entity encounters the difficulty – Banks, especially Mega Banks (3 biggest bank, Mitsubishi UFJ, Mizuho and Mitui Sumitomo), do not easily accept such entity to create corporate bank account – regardless Japanese made or Foreigners made the corporation of branch. This is chicken-and – egg debate but the bank may ask whether the company already have some relationships or contracts with Japanese Companies and if say no, the bank will close the door- although this is obvious no company willingly have a relationship or make a contract with foreign based corporation or branch without having the corporate bank account. When establishing the Japanese entity, it is far better to create Corporation, rather than LLC or Japan branch because of banks understand the company wants to have a serious commitment with Japan – Capital amount is basically bigger than LLC , the entity endures the complex process than others, and Articles of Incorporation was attested by Notary Public Officer in Japan. In fact, Notary Public Officer would distribute the certification that the person having majority of stock of this Corporation does not have anti-social power with the attestation of Articles of Incorporation. This certification is effective for the process moving forward. However, still, if the purposes of the entity are not clear, vague or too much, the bank guess the purpose of establishing the company is to make the bank account itself, the bank may not accept to put the entity into the process – not even inspect the corporation’s history, credit or transaction at all.

Therefore, if you want to create the Japanese entity only for making the corporate Japanese bank account, I urge you to think whether you have a person or entity to associate with such process in Japan, whether alternative county to do this process easier exists and reconsider to pursue the process in Japan. Of course, if you are seriously required to do so because you have a transaction or need to expand the business here in Japan, our office willingly helps the process.