|@||The textAttachment AAttachment B|
NORISUGI & ASSOCIATES
TOTATE INTERNATIONAL BLDG. 2F
(as of September 2007)
M e m o r a n d u m
OUTLINE OF LEGAL FRAMEWORK FOR ESTABLISHMENT
OF A JAPAN-BASED OFFICE BY A FOREIGN CORPORATION
The purpose of this Memorandum is to outline the legal framework for the establishment of an office in Japan by a corporation incorporated outside the jurisdiction of Japan (gForeign Corporationh). There are three alternatives for holding an office in Japan; (1) liaison office, (2) branch office and (3) corporation.
I. Liaison Office in Japan (gJLOh)
A. Company Law
There are no specific regulations, requirements, restrictions, et al. in the Company Law with regard to the establishment and maintenance of the JLO. Furthermore, there are no official records nor certificates supported by the statute available to promulgate the existence of the JLO. Thus, the existence of the JLO cannot be asserted against third parties, and accordingly, a representative of the JLO (gJLO Representativeh) would have difficulties with a third party with respect to such matters as leasing office space, opening bank accounts, etc. in the name of the JLO.
B. Foreign Exchange Control Law (gForex Lawh)
1. There are no reporting or licensing requirements under the Forex Law in respect of the establishment, maintenance, etc. of the JLO.
2. The JLO Representative is allowed to receive the remittance of funds from the headquarters free from license or notification requirements, insofar as the funds are received to cover only the current expenses necessary for the maintenance of the JLO.
|II. Branch Office in Japan (gJBOh)
A. Company Law
1. The Company Law stipulates that the Foreign Corporation, who intends to carry out commercial transactions gon a continuing basis in Japanh, should appoint a representative of the corporation in Japan (gJBO Representativeh) and may establish a place of business. The place of business so established is called the JBO, which must be registered with the competent Legal Affairs Bureau (gLABh) of the Ministry of Justice (gJBO Registrationh). If no JBO is established, the registration shall be made at the place of residence of the JBO Representative.
2. The Company Law prohibits the Foreign Corporation from conducting commercial transactions gon a continuing basis in Japanh before completion of the JBO Registration.
3. Under the Company Law, the Foreign Corporation must have at least one JBO Representative residing in Japan.
4. The JBO Registration must be effected at the LAB within three (3) weeks of the date of appointment of the JBO Representative. The Commercial Registration Law (gRegistration Lawh) requires several documents to be appended to the application for the JBO Registration. However, in the practice of the LAB, the following documents will suffice for the relevant JBO Registration:
5. Any subsequent changes in the registered matters are subject to the requirements for amendments to the relevant registration.
B. Forex Law
1. Under the Forex Law, the Foreign Corporation falls under the category of gforeign investorh and the establishment of the JBO by a foreign investor constitutes an inward direct investment. When the JBO is established, the foreign investor must file an ex post facto report, unless otherwise a prior notification is required (See 2. infra), with the competent Ministers. This report must be filed through The Bank of Japan within fifteen (15) days of the date of establishment of the JBO.
2. Contrary to the above, however, if the JBO will be established to engage in activities relating to agriculture, forestry, fishery or mining, manufacturing of nuclear fuel, aircraft, weapons, munitions, etc., the nuclear power industry, and the space development industry, etc., the foreign investor must submit a prior notification to such competent Ministers. In the said notification, the foreign investor must provide information including, inter alia, the proposed business activities of the JBO, and the business plans such as facilities, sales and financial plans.
3. Following submission of the notification, there is a thirty day gwaiting periodh during which the Japanese government conducts investigations on the basis of the notification. This waiting period can be shortened to less than thirty days or extended to a maximum of four months from the acceptance date of the notification if the government considers it necessary to make a special investigation under gpeacetime controlsh (i.e. including, investments that may damage the safety of Japan, threaten existing industries or the economy of Japan, or investments that are in an area where there is a lack of reciprocity between Japan and the home country). If the government concludes that the notification be modified, then it issues a recommendation which must be replied to within ten days. If the foreign investor fails to respond or refuses such recommendation, the government may issue the order to modify or suspend the transactions covered by such notification.
4. Expansion in the business activities specified in the above-mentioned report or notification, which also constitutes an ginward direct investmenth, should be reported or notified in advance to the competent Ministers.
5. With regard to the inward remittance by the headquarters to the JBO, no license or notification requirements are imposed, insofar as the said remittance is made for the current expenses for the JBO, as in the case of the JLO discussed above. As to other remittances from the headquarters to the JBO, which constitute gcapital transactionsh under the Forex Law, there may be a case where either prior notification or other clearance from the government of Japan will be required.
A. Company Law
1. There are four types of corporations capable of being established under the Japanese law. They are namely: (1) a joint stock corporation (Kabushiki Kaisha); (2) an incorporated general partnership (Gomei Kaisha), members of which bear unlimited liability; (3) an incorporated limited partnership (Goshi Kaisha), which consists of members with limited liability and members with unlimited liability; and a limited liability company (Goudo Kaisha), members of which bear limited liability.
The corporations enumerated in (2), (3) and (4), supra, are not widely used in Japan. Therefore hereinbelow the legal framework shall be directed only to a joint stock company (Kabushiki Kaisha) (gKKh).
2. Before we discuss the procedural requirements for the incorporation of a KK, we will describe briefly the salient features thereof.
3. Procedures for incorporation of a KK under the Company Law are rather complicated and time-consuming. Incorporation of a KK can be effected, as a matter of law, either by promoter(s) and non-promoter share subscriber(s) or by promoter(s) alone. The former is called gBoshu-setsuritsuh, and the latter gHokki-setsuritsuh. We will hereinbelow discus the steps to be taken under the Company Law for incorporation of a KK by way of Boshu-setsuritsu. Additionally, we will discuss briefly the matters relating to Hokki-setsuritsu, as we go along, in comparison with the corresponding matters in Boshu-setsuritsu.
B. Forex Law
1. Acquisition of shares of stock in a KK by a gforeign investorh constitutes an inward direct investment, which requires the filing by the foreign investor of an ex post facto report with the competent government authority under the Forex Law, unless otherwise a prior notification is required. The term gforeign investorh includes, inter alia, individuals who are non-resident of Japan and corporations incorporated outside the jurisdiction of Japan.
2. With respect to the filing of an ex post facto report and a prior notification for acquisition by a foreign investor of shares of stock in a KK, please refer to the discussion in II.B. 1. and 3., supra, regarding the establishment of the JBO which is also applied to the share acquisition by a foreign investor in a KK.
|BEFORE ME, ___________________, Notary Public of ___________________, duly commissioned and qualified, personally appeared ___________________, who being duly sworn, declares and says:
|1)||That he is the Director of ___________________ (hereinafter the "Company"), duly authorized by the Company to prepare this Declaration and to have it authenticated by a Notary Public;
|2)||That the Company is a corporation organized under the laws of ___________________ on ___________________, and existing with its head office located at ___________________ ;
|3)||That ___________________, a Japanese national residing at ___________________, Tokyo, Japan, is the duly appointed representative of the Company in Japan;
|4)||That the objects and purposes of the Company are to engage in the following businesses:
c)To do any and all businesses related or incidental to any of the foregoing businesses.
|5)||That the name of the Directors of the Company are ___________________;
|6)||That the total number of shares authorized to be issued by the Company is ___________________, each having a par value of ___________________;
|7)||That the total number of shares issued by the Company is ___________________, and the amount of capital of the Company is ___________________;
|8)||That through the procedures required by law, the branch office of the Company will be established at ______________________________________, Tokyo, Japan, as of ___________________, 2007;
|9)||That the fiscal year of the branch office of the Company in Japan will commence on January 1st of each year and continue through December 31st of the same year; and
|10)||That the representative of the Company in Japan is duly authorized to represent the Company in Japan and to effect the necessary registration of the branch office of the Company in Japan either by himself or through an attorney or attorneys.
ARTICLES OF INCORPORATION
Prepared on ________________________________
Articles of Incorporation
CHAPTER I. GENERAL PROVISIONS
The Company shall be called "___________________ Kabushiki Kaisha," which shall be expressed in English as "___________________"
The objects of the Company shall be to engage in the following businesses:
e. To undertake and engage in any and all business and activities related or incidental to the foregoing.
(Location of Head Office)
The Company shall have its head office in ___________________-ku, Tokyo.
(Method of Public Notice)
Public notices of the Company shall be given in the Official Gazette (Kampo).
CHAPTER II. SHARES
(Total Number of Shares Possible to be Issued)
The total number of shares possible to be issued by the Company shall be ___________________ shares.
The Company shall issue share certificates pertaining to the shares.
(Restriction on Transfer of Shares)
Any transfer of the shares of the Company shall require the approval of the Board of Directors.
CHAPTER III. GENERAL MEETINGS OF SHAREHOLDERS
(Convocation of General Meeting of Shareholders)
Ordinary general meetings of shareholders shall be convened each year within three (3) months from the day following the last day of each business year. Extraordinary general meetings of shareholders shall be convened by a resolution of the Board of Directors, from time to time whenever necessary.
(Record Date of Ordinary General Meetings of Shareholders)
The record date for voting rights at ordinary general meetings of shareholders of the Company shall be December 31st of each year.
(Person to Convene Meetings and Chairman Thereof)
Except as otherwise provided by law, general meetings of shareholders shall be convened by the President in accordance with a resolution of the Board of Directors, and the President shall act as the chairman at such general meetings of shareholders. If the President is unable to act as the chairman at any general meeting of shareholders, another of the directors shall take his place in the order previously determined by the Board of Directors.
(Notice of Convocation)
A notice of convocation of a general meeting of shareholders shall be dispatched to each shareholder one (1) week prior to the date of the meeting, setting forth therein the agenda of the meeting in Japanese and English.
(Method of Resolution)
Except as otherwise provided by law or by these Articles of Incorporation, resolutions of a general meeting of shareholders shall be adopted by a majority of the votes cast at a meeting at which shareholders holding a majority of the issued voting shares are present in person or by proxy.
A shareholder may exercise his vote by proxy, who need not be a shareholder of the Company; provided, however, that such proxy shall present to the Company a document evidencing his power as proxy for each general meeting of shareholders.
(Minutes of Meetings)
The substance of the proceedings of a general meeting of shareholders and the results thereof and other matters provided by law shall be recorded in the minutes of the meeting. The minutes shall be kept at the head office of the Company after the chairman of the meeting and the directors present at the meeting have affixed their signatures or seals. English translation of the minutes shall be prepared.
CHAPTER IV. DIRECTORS, STATUTORY AUDITORS,
REPRESENTATIVE DIRECTORS AND BOARD OF DIRECTORS
(Establishment of Organs)
The Company shall have, in addition to the general meeting of shareholders and the directors, the following:
1.@board of directors
(Scope of Authority of Statutory Auditors)
The scope of authority of the statutory auditors of the Company shall be limited to accounting matters.
(Number of Directors and Statutory Auditors)
The Company shall have three (3) or more directors and one (1) or more statutory auditors.
(Election of Directors and Statutory Auditors)
(1) Directors and statutory auditors shall be elected at a general meeting of shareholders.
(2) No cumulative voting shall be used for the election of directors.
(Term of Office)
(1) The term of office of directors shall be for the period until the closing of the ordinary general meeting of shareholders held pertaining to the business year last ending within two (2) years subsequent to their election.
(2) The term of office of a director elected as the replacement or due to an increase in the number of directors shall be conterminous with the remaining term of office of other directors in office.
(3) The term of office of statutory auditors shall be for the period until the closing of the ordinary general meeting of shareholders held pertaining to the business year last ending within four (4) years subsequent to their election.
(4) The term of office of a statutory auditor elected as the replacement shall be for the remaining term of office of his predecessor.
(Representative Directors and Directors with Specific Titles)
(1) The Company shall, by a resolution of the Board of Directors, elect representative director(s). The President shall be elected, by a resolution of the Board of Directors, from among the representative directors.
(2) The Company may, by a resolution of the Board of Directors, appoint several number of Chairman, Vice Chairman, Vice President, Senior Managing Directors (Senmu torishimariyaku) and Managing Directors (Jomu torishimariyaku).
(Powers of the Board of Directors)
(1) The Board of Directors shall, by resolutions, decide all important matters pertaining to the management of the Company, in addition to those matters as prescribed by law or by these Articles of Incorporation.
(2) Directors shall make a report on the status of execution of business to the Board of Directors at least once in three (3) months.
(Convocation of Meetings of the Board of Directors)
Except as otherwise provided by law, meetings of the Board of Directors shall be convened by the President or another of the directors in the order previously determined by the Board of Directors.
(Notice of Convocation of Meetings of the Board of Directors)
A notice of convocation of a meeting of the Board of Directors shall be dispatched to each director one (1) week prior to the date of the meeting, setting forth therein the agenda of the meeting. Provided, however, that with the unanimous written consent of all directors, a meeting of the Board of Directors may be held by dispensing with the procedures required for the convocation thereof or by shortening of the notice period thereof.
(Chairman of Meetings of the Board of Directors)
The President shall act as the chairman at a meeting of the Board of Directors. If the President is unable to act as the chairman at any meeting of the Board of Directors, another of the directors shall take his place in the order previously determined by the Board of Directors.
(Method of Resolution)
Except as otherwise required by these Articles of Incorporation, resolutions of the Board of Directors shall be adopted by a majority of the votes of the directors present at a meeting of the Board of Directors at which a majority of the directors in office are present.
(Minutes of Meetings)
The substance of the proceedings of the meetings of the Board of Directors and the results thereof and other matters provided by law shall be recorded in the minutes of the meeting. The minutes shall be kept at the head office of the Company after the directors present have affixed their signatures or seals. English translation of the minutes shall be prepared.
(Remuneration and Retirement Allowance)
Remunerations and retirement allowances for directors and statutory auditors shall respectively be determined by resolutions of general meetings of shareholders.
CHAPTER V. ACCOUNTS
The business year of the Company shall be for the period from January 1 of each year through December 31 of the same year.
(Record Date for Distribution of Surplus)
(1) The record date for payment of term-end dividends shall be December 31st of each year.
(2) The Company may, in addition to the preceding paragraph, distribute surpluses by fixing record dates.
(Period of Exclusion of Right to Demand Payment of Dividends)
(1) The Company shall be released from the obligation to pay dividends (in the event the assets to be distributed are cash), if the dividends are not received after the lapse of three (3) years from the date of tender for payment thereof.
(2) No interest shall accrue on undistributed dividends referred to in the preceding paragraph.