If foreigners set up a company in Japan, do they need to notify the Bank of Japan?
If a non-resident foreigner or foreign company establishes a company with 10% or more stake, it must report to the Bank of Japan.
Legal obligation to report to the Bank of Japan（BOJ）
In Japan, there is a foreign exchange and foreign trade Act (called 外為法) that applies to transactions such as “transfer of funds” and “transfer of goods and services” between Japan and foreign countries.
If a non-resident individual or a foreign corporation (including affiliated companies) invests 10% or more in establishing a company, it will be subject to restrictions under the Foreign Exchange Act. Therefore, investors must submit a report to the responsible minister via the Bank of Japan by 15th of the month following the registration date.
If you do not submit a report despite the obligation to submit, there is also a penalty provision.
In addition, depending on the nationality and the type of business you are going to do, please be aware that there may be an “obligation to notify in advance”.
What investments are required to report to the BOJ:
When foreign investors make the following transactions, they need to report to the BOJ.
- Acquisition of shares of listed companies in Japan, with an investment ratio of 10% or more. This shareholding ratio includes shares owned by foreign investors who have a special relationship with the acquirer.
- Acquisition of shares of Japanese unlisted companies (less than 10% not required to report). However, you do not have to report if you take stock from other foreign investors.
Foreign investors includes:
The Foreign Exchange Act stipulates that “foreign investors” are as follows.
- Individual who is nonresident
- Corporation established under foreign law or corporation having main office in foreign country (including branch in Japan of these corporations)
- Companies in which the total of voting rights held directly or indirectly by persons or companies listed in 1 or 2 account for 50% or more
- A Japanese corporation in which the individual who is a non-resident is an executive or an executive with representative authority has a majority
Even in cases other than 1 to 4 above, if you invest in a Japanese company for a foreign investor, you are considered a foreign investor.
How to report to BOJ
The report is accepted by the Bank of Japan International Bureau of Balance of Payments Division Foreign Exchange Procedure Group and the nearest branch of the Bank of Japan, but the Bank of Japan has announced that it should be mailed directly to the head office of the Bank of Japan. The reporting period is until the 15th of the month following the company establishment registration date. If the reporting deadline is a holiday, until the day before the holiday. In the case of mail, the deadline for submission is required.
The number of copies submitted is the number of finance ministers + the minister of state responsible for business. If you include a copy of the report and a reply envelope, you will receive a copy of the acceptance seal.
Nippon Post Co., Ltd. Nihonbashi Post Office I box 30
Bank of Japan International Bureau of Balance of Payments Division Foreign Exchange Procedure Group
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