How can a foreigner become a founder? A concise guide to opening a business in Japan

Many foreigners from around the world are establishing companies to start businesses in Japan. However, understanding Japanese laws and procedures is not straightforward. This article provides a clear explanation of the steps and key points for foreigners who wish to become founders (initial investors) and proceed with company formation in Japan.

The key points of this article are as follows:

We will explain the procedures for establishing a company with a foreign founder.

1.How can a foreigner become a founder?

Establishing a company in Japan is possible not only for Japanese nationals but also for foreigners. Therefore, a company can be established regardless of whether the founders reside in Japan or abroad.

1-1. Who is a Founder?

A founder is a person who invests in the company at the time of its establishment and proceeds with the establishment procedures. The founder “initiates” the company formation, establishes the corporate status through the company establishment procedures, and becomes a shareholder after the company’s formation.

1-2. Can You Become a Founder Without Being in Japan?

It is not necessary to reside in Japan to become a founder. Foreign individuals and foreign corporations can establish a company in Japan by following the appropriate procedures. However, to actually start the business, various steps are required, such as capital payment, opening a corporate bank account, and dealing with procedures at the Legal Affairs Bureau and tax office. Without someone to support these tasks in Japan, it would be challenging to commence business operations. Therefore, it is essential to have collaborators such as acquaintances, friends, or professionals within Japan to assist with these procedures.

1-3. Visas and Residency Status Required for Operating a Business in Japan

To operate a business within Japan, foreigners must obtain the appropriate visa. It is crucial to note that the range of activities permitted varies depending on the type of visa or residency status.

In most cases, a “Business Manager Visa” is required to run a company. This visa allows individuals to engage in business management activities within Japan. To obtain this visa, certain investment thresholds (usually 5 million yen or more) must be met, and it must be demonstrated that the business can sustain itself. This includes submitting a business plan and financial projections.

Additionally, those holding visas such as “Permanent Resident,” “Long-Term Resident,” “Spouse or Child of a Japanese National,” or “Spouse or Child of a Permanent Resident” can manage a business in Japan just like Japanese nationals.

Given that visa applications can be complex and time-consuming, consulting with experts or administrative scriveners (gyoseishoshi) is advisable. This can help streamline the visa application process and expedite the start of your business.

We guarantee 100% success in obtaining a Business Manager Visa and establishing a company with our Visa Guarantee Program.

[Important] Possible Changes to the Requirements for the Business Manager Visa (as of August 2025)

There are reports suggesting that the requirements for obtaining a Business Manager Visa may become stricter around October 2025. Although this is not confirmed information at this stage, the following points have been highlighted as potential changes:

・Increase in capital requirements
(Current) ¥5 million or more → (Proposed revision) ¥30 million or more

・Mandatory employment of full-time staff
(Current) Choice between capital requirement or hiring → (Proposed revision) In addition to the capital requirement, employment of at least one full-time staff member will be mandatory

・Introduction of requirements for the manager’s background and academic qualifications
“At least 3 years of management/administration experience” or “A master’s degree or higher related to management/administration”

For those considering starting a business in Japan or applying for a Business Manager Visa, it is necessary to prepare on the assumption that such changes may take place.

For the latest information and procedures tailored to your specific situation, please feel free to contact our office.

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2. The Process of Establishing a Company by Foreign Founders

Let’s explore the process of establishing a company in Japan with foreign founders. This process includes several crucial steps, starting from selecting the company type, obtaining a signature certificate, creating the articles of incorporation, paying in the capital, and finally, applying for the registration of establishment.

2-1. Choosing the Type of Company (Kabushiki Kaisha or Godo Kaisha)

In Japan, you can mainly choose between two types of companies: Kabushiki Kaisha (KK) and Godo Kaisha (GK). The choice depends on the scale of the business, the management style, and the need for funding.

A Kabushiki Kaisha (KK) allows for capital raising through the issuance of shares and is generally suitable for those aiming for a large-scale business. On the other hand, a Godo Kaisha (GK) offers more flexible management and is suitable for startups and small businesses.

2-2. Obtaining a Signature Certificate

When establishing a company in Japan, necessary documents include the seal registration certificate and registered seal of the founders and directors (if the founder is a corporation, a certified copy of the corporate register is also required). While these documents can be easily obtained by residents of Japan, it can be challenging for foreign residents acting as founders or directors.

To substitute for the seal registration certificate and registered seal, a “Signature Certificate” is used.

A signature certificate verifies that the signature on important documents is indeed that of the signatory. Both founders and directors need this certificate.

To obtain a signature certificate, a foreign national can apply at their home country’s embassy or consulate.

For example, if an American citizen is temporarily staying in Japan to establish a company, they can obtain a signature certificate from the American Embassy or Consulate in Japan. Similarly, if they are proceeding with the company formation process while residing in the U.S., they can obtain the signature certificate from a notary office or government agency within the U.S.

Even if a foreign national resides abroad and their nationality and country of residence differ, a signature certificate issued by their home country’s embassy or consulate is valid.

For instance, if an American living in Australia wants to establish a company in Japan, they can use a signature certificate issued by the American Embassy or Consulate in Australia. In such cases, the signature certificate eliminates the need for a seal registration certificate and registered seal.

Signature certificates created in a foreign language must be submitted with a Japanese translation to the Legal Affairs Bureau and notary office during the company establishment process.

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2-3. Creating the Articles of Incorporation

Creating the articles of incorporation is a crucial step in establishing a company. The articles of incorporation specify the basic information about the company, such as its name, purpose, location, names of the founders, and capital amount. For a Kabushiki Kaisha (KK), the articles of incorporation must be created in the presence of a notary public and then certified at a notary office. For a Godo Kaisha (GK), the involvement of a notary public is not required.

2-4. Payment of Capital

After determining the amount of capital investment by the founders in the articles of incorporation, the founders must transfer the capital to a designated bank account. Copies of the bankbook showing the transaction history or transaction statements are required for the registration process at the Legal Affairs Bureau.

If any of the founders or directors reside in Japan, the capital can be transferred to the bank account of the Japanese resident. If all founders and directors reside outside of Japan, the bank account of a collaborator (a third party, either an individual or a corporation) residing in Japan can be used.

The bank account for the capital transfer can be with a domestic bank (established under Japanese law) branch in Japan, an overseas branch of a domestic bank (e.g., New York branch), or a branch of a foreign bank (established under foreign law) located in Japan. Branches of foreign banks located outside of Japan (e.g., Boston branch of New York Bank) cannot be used.

When transferring capital from an overseas bank to a Japanese account, be aware that “exchange fees” and “remittance fees” may be deducted from the amount sent. It is advisable to transfer an amount slightly higher than the specified capital to account for these fees.

2-5. Applying for Company Registration

Finally, you need to apply for company registration at the Legal Affairs Bureau. Some parts of the registration process can be completed online. Once the registration is complete, the company acquires legal corporate status.

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3.Post-Establishment Procedures

After establishing the company, several procedures are required. These include opening a corporate bank account, submitting a notification of the commencement of business to the tax office, and completing social insurance procedures. All of these must be completed before the company can officially start its operations. It can be challenging for overseas residents to handle these procedures alone, so it is essential to have collaborators or appoint at least one director who resides in Japan.

3-1. Opening a Corporate Bank Account

Once the company establishment is complete and it is recognized as a legal entity, the next step is to open a corporate bank account. A corporate bank account is essential for managing the company’s funds and conducting transactions. Typically, accounts can be opened at local banks, credit unions, or online banks. However, the procedures for opening an account vary by bank, and some banks may require an appointment. Prepare the necessary documents, such as the corporate registration certificate, and submit them to the bank to open the account.

3-2. Submitting a Notification of Commencement of Business to the Tax Office

Next, it is necessary to submit a notification of commencement of business to the tax office. This is to inform the tax office that a new business has started. The notification must be submitted within two months of the company’s establishment. This process ensures that the company is recognized for tax purposes and incurs obligations to pay income tax, corporate tax, and other applicable taxes.

3-3. Social Insurance Procedures

After establishing the company, especially if you plan to hire employees, it is necessary to complete social insurance procedures. This includes enrolling in health insurance and employee pension insurance, as well as workers’ compensation insurance and employment insurance. These insurances apply to all employees, and the company is legally obligated to carry out these procedures in accordance with the law.

4.Summary

We have outlined the key points and procedures for foreigners to become founders.

However, these are just examples. The necessary procedures and points of caution may vary depending on individual circumstances. Additionally, laws and regulations can change, so it is important to stay updated with the latest information.

Establishing a company is a crucial step, and mistakes can lead to significant regrets. Handling the procedures alone can be challenging, and inexperienced handling can cause unforeseen troubles. Consistent support is needed, from capital payment and remittance fees to visa applications.

We strongly recommend consulting with experts regarding the necessary procedures and points of caution. Utilizing the knowledge and experience of professionals will help you proceed with the process safely and efficiently, ensuring a smooth start to your business.