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How to Buy a Company in Japan




As Japan does not have any gregistered agent systemh or equivalents, it is not easy for a non-resident foreigner to incorporate or form a company in Japan.  According to the Japanese law, at least one representative or director must have a residence in Japan to form or keep a company.


The same is also required if a foreign corporation is going to establish an office.  Such foreign corporation must appoint a representative in Japan.  Such representative may be the same person as the representative of the corporation, but is required to have an address in Japan.


Under this situation, it may be a convenient way to buy a Japanese company when a foreign person wishes to have his/her business in Japan, especially if such foreign person does not want to reside in the small apartment in the small, Far East country.  To buy a company already operating in the country is also advantageous because it will save your energy and time to build a new business in a country of which trade customs is quite unknown to you.


In general, there are four ways to deal a Japanese company:

1.      Transfer of the equity shares

2.      Transfer of the operation

3.      Merger or consolidation

4.      Issuance of new stocks to a third party


The differences among those above are principally the different taxations.  In the case of transferring the equity shares, the shareholders selling those equity shares are taxed; in the case of transferring the operation, the company selling the trade rights (goodwill) and other properties are taxed; in the case of issuing new stocks to a third party, the older shareholders have no benefits to be taxed (on the contrary, they may suffer due to their decreased shares in the whole capitalization). 


Among them, to deal a company through the merger or consolidation is too complicated for small companies.  The most common way to deal is, needless to say, through the transfer of the equity shares.


It is interesting to know that some of the company dealings are done for the purpose of dealing the real estates.  In Japan, the real estates such as a land or building are, in general, most expensive.  Accordingly, taxation on such dealings is also high.  However, the tax on the stock dealing is not so high.  Therefore, if you want the real estates owned by a company, it may be less expensive to buy the whole company than directly buy the real estates.  The real estates are still owned by the same company, but you own them indirectly through your ownership of the company.


It must be noted, however, it is not popular for Japanese company owners to sell their company if it is still making profits.  A profitable company may sell for a good price, but it is said that most of the Japanese companies to be sold have problems unsolvable by the company owners.  It is most probable that you should reconstruct and improve the operation of the company after purchasing it.  One of the possible biggest problems is the liability out of books.  You must especially be careful in the prior research to find such hidden debts.


Furthermore, if you are a non-resident foreign person, you are subject to the obligation to report under Foreign Exchange and Foreign Trade Act when you are purchasing a Japanese company.


à Resources Books on Japan  [Law]

[Banking and Finance]


List of Recently Promulgated Japanese Laws

              Japanese Laws Promulgated in 2003  Japanese Laws Promulgated in 2002  Japanese Laws Promulgated in 2001

English Translations of Major Japanese Laws

              Civil Code  Commercial Code  Law Application Principles Act  Banking Act  Investment Trust and Investment Corporation Act  Foreign Exchange and Foreign Trade Act  Business Registration Act  Customs Act  Customs Tariff Act  Foreign Lawyers Act


Japanese Business Information

              Can a Small Business Make Money from Japan?  Fund-Raising in/from Japan  Venture Capitals in Japan  How to Buy a Real Estate in Japan?  How to Buy a Company in Japan?


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