Investors who set up a financial company in Japan must comply with the rules for licensing and registration with the country’s Financial Services Agency. Many types of financial institutions observe this rule, including but not limited to banks, insurance companies, non-bank companies, or audit firms.
Our company formation consultants in Japan can offer assistance related to setting up a Japanese financial company throughout the relevant registration phases and with the post-incorporation licensing.
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The regulator of the financial markets in Japan
The regulating authority for financial institutions in Japan is the Financial Services Agency of Japan (FSA) which belongs to the Cabinet Office.
The FSA in Japan maintains the stability of the financial systems in the country and protects the interests of the deposit holders, security investors and insurance policy holders.
It also makes sure that the financial systems in Japan operate smoothly by issuing the appropriate policies and supervising the private financial institutions. Our Japan company formation advisors can offer more details on this matter.
Moreover, the Securities and Exchange Commission, a branch of the FSA, was created to confer “fair, equitable, transparent and sound markets in both securities and financial futures”.
Even though it is not a regulatory authority, the Bank of Japan also possesses some powers to effectuate on-site examinations of the banks which have been opened into bilateral agreements and have current accounts with the Bank of Japan.
Licensed financial institutions in Japan
The following bank and banking activities need to be licensed in Japan:
- Banks: such as city and regional banks, labour banks, etc.;
- Agents of banks;
- Foreign bank’s agents.
The Financial Services Agency is the one that issues the license for banks and the other licensed entities listed above.
Additionally, a financial license (or registration with the regulatory authority) is required for the following categories of service providers other than banks and agents of banks:
- electronic payment services operators;
- insurance companies;
- trust companies;
- non-bank financial companies;
- audit companies;
- financial service intermediary businesses operators;
- financial instruments business operators;
- others: included here are mutual financial business providers, or fund transfer transaction analysis services providers.
The licensing requirements differ according to the type of activity the registered legal entity will be engaged in. Moreover, once investors open a financial company in Japan, they will need to observe the supervisory guidelines and policies, such as the Comprehensive Guidelines for the Supervision of Insurance Companies.
Other laws and regulations that are relevant to investors who open a company in Japan that will be involved in financial services are the ones related to anti-money laundering and combating financial terrorism.
Licenses for investment banks in Japan
Investment banks which undertake the following activities must obtain a license or have to register with the Prime Minister in Japan:
- The sale and purchase of securities;
- Brokerage, intermediary or agency of the sale and purchase of securities;
- Underwriting and offering securities;
- Advisory services which are non-discretionary;
- Management services which are discretionary.
According to S&P, Mitsubishi UFJ Financial Group Inc. is the largest bank in Japan by assets. The data for 2023 is summarized below by our experts in company formation in Japan:
- Mitsubishi UFJ Financial Group Inc. with total assets of 2,909 $billion;
- Sumitomo Mitsui Financial Group Inc. with total assets amounting to 2,034 $billion;
- Mizuho Financial Group Inc. with total assets of 1,912 $billion.
General licensing documents for financial companies in Japan
All those who set up a financial company in Japan are required to submit a registration application with the FSA. This will include the required application forms and documentations (according to the type of activity) and a mandatory registration and license tax of 150,000 yen.
The registration fee is paid to the tax office corresponding to the Financial Market Entry Office. Our team can help you with company registration in Japan for a financial company and with additional details about the payment of this fee.
Some examples of the main documents that are attached to the licensing application include the following:
- the application form;
- a description of the business and business methods;
- the company’s organizational structure;
- the company’s articles of incorporation;
- information about the major shareholders;
- the resumes of the company’s officers and key personnel;
- the certificate of residence for the company’s officers and key personnel;
- proof of solvency for the officers and important employees;
- proof of fee payment, and others.
The Japanese Banking Act
The Japanese legislation stipulates that the commercial and investment banking institutions are separated.
The main law which regulates the commercial banking activities in Japan is the Banking Act.
The registration and operation of securities and derivative-related business activities are regulated by the Financial Instruments and Exchange Act of Japan (FIEA). Our company registration representatives in Japan can provide further details on this subject.
Banks in Japan are usually restricted from engaging in securities and derivatives-related activities. In case a bank wants to do such transactions, it has to establish and register a separate entity.
Investors who open a financial company can obtain Japan residency when they make the investment and at the same time apply for the business manager visa which grants them permission to acquire the status of residence. Because several conditions apply in order for the application to be favourably considered by the authorities, we advise those interested to apply with our help.
As an investor in the country, one can also be interested in Japan immigration. Relocating permanently to the country is possible, however, under the standard route, the foreign national will need to have spent ten consecutive years in Japan before submitting his application. In some cases, exemptions can apply if the individual meets the criteria for the reduced period.
In case you would like to know more about the Japanese financial institutions, or if you need assistance in starting a company in Japan, please contact our Japan company formation advisors.