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Nominee Directors in Japan

Nominee Directors in Japan

Entrepreneurs who want to open a company in Japan should know that this requires appointing an individual as a director. Even though sometimes there are no legal residency requirements for the nominee director in Japan, utilizing a foreign resident could make it difficult to do business in Japan. In this article, our company formation consultants in Japan present you a few aspects related to nominee directors in Japan.

Changes in the local legislation in Japan

The business environment in Japan has changed so much in the sense that it became more international and because the new technology enables individuals to be in several places of the world at one time, that it has resulted in a growing pressure and demand for local businesses to be able to incorporate under the Japanese legislation without having a local nominee director.

Therefore, the officers of the Ministry of Justice announced in 2015 that the company registration practice in Japan used until then would be abolished, and that the Legal Affairs Bureaus would accept applications for the establishment of share (KK) company without having to present a local nominee director in Japan.

The abolition of the local nominee director requirement does not apply to branches of foreign entities in Japan. The Companies Act clearly rules that a branch of a non-Japanese company must have at least one nominee director who resides in the country.

Because this is a clear statutory requirement, it cannot be abolished by an administrative decision of the Ministry of Justice.

When is local residency required for nominee directors in Japan?

Nevertheless, the local residency is required for nominee directors in Japan for two main reasons:

1. The initial incorporation of a company in Japan necessitates proof of capital to be demonstrated in a personal local bank account of a director or of the shareholders, which could be difficult for businesses with non-Japanese nominee directors. Our Japan company formation agents can provide more information related to this matter;

2. The local companies and banking institutions could be hesitant to deal with businesses with foreign nominee directors, since there would be no authoritative person on the local scene to be held responsible for company negligence. 

In case you need to know more about who can be a nominee director in Japan, or for assistance related to setting up a company in Japan, please contact our friendly team.

We can also answer questions about immigration to Japan, for those foreign nationals who will enter the country based on a residence permit issued for their work and position as a company director. Remaining in the country for a minimum number of years, along with ensuring one’s financial independence and having a good conduct represent the basis for applying for permanent residency.