REcent stories in the media have been hinting that the Japanese government will be liberalizing the requirements of the Investor visa (needed by foreign nationals to live in Japan to operate a new company they have incorporated) and that amendments to the present system will take effect from as early as April of this year.
Before describing what sort of changes are in store it might be useful to briefly describe the Investor visa and provide an overview of the procedures and difficulties with the current application process. The Investor visa as mentioned above is intended for foreign nationals who will be operating a new business in Japan. Under the current system, the process for a foreign national to setup a new business in Japan can be roughly summarized as follows:
- Enter Japan with a short-term (tourist) visa
- Find office space
- Incorporate a company
- Apply for an Investor visa (Certificate of Eligibility)
- Depart Japan
- After a Certificate of Eligibility is issued, apply for a landing visa at a Japanese consular office in another country
- Re-enter Japan with the Investor visa and have a Residents Card issued
- Begin business under Investor visa
- Apply and register to have Japanese business partner resign as legal representative of the company
While the above is grossly simplified, there are three procedural stumbling blocks which can act to deter foreign nationals considering starting up a new business in Japan.
First is the need for a Japan resident business partner. Before being able to apply for an Investor visa, it is necessary to incorporate a company. In order to incorporate a company in Japan, the Companies Act requires that at a minimum one resident of Japan is registered as legal representative. However, for a foreign resident to be considered a resident of Japan, they must be permitted to stay in Japan for more than three months. Since short-term (tourist) visas do not in principle exceed 90 days, it becomes necessary to have a Japan resident business partner for incorporation.
Second, in almost all cases an applicant will need to leave Japan at least once during the process. If a Certificate of Eligibility for an Investor visa is issued during the valid short-term stay period (maximum 90 days), it is theoretically possible to convert from a short-term stay visa to Investor status without having to leave Japan, however because in practice it typically takes 2 to 3 months for an Investor visa application to be evaluated, in most cases having the COE issued within the 90 day limit is not possible and the applicant has no choice but to leave Japan once of course adding to travel costs.
Third is the fact that in principle Immigration takes the view that there is only one proprietor /founder per company and therefore only one Investor visa is issued for a company. Accordingly, once an Investor visa is issued and the foreign national has acquired resident status, it will be necessary to register the foreign national as sole legal company representative and the resignation of the Japanese business partner as legal representative.
With the changes expected to commence from April 2015, the process will be amended as follows to address some of the above issues.
- Enter Japan on a short-term (tourist) visa
- Find office space
- Preparation to incorporate a company
- Apply for an Investor visa (Certificate of Eligibility)
- After a Certificate of Eligibility is issued, apply for change of status
- Apply for a Residents Card
- Incorporate company
- Begin business under Investor visa
- Extend period of stay
Procedurally, the revised flow offers several practical changes to the process as follows.
First and foremost is that under the new system, an Investor visa can be approved during the pre-incorporation stage. Since a Certificate of Eligibility will likely be issued during the short-term stay period of the applicant, it is believed that an application for change of status will still be required.
The second significant change is that a 4 month Investor visa may be issued at the pre-incorporation stage. This means that since the applicant will then be able to stay in Japan for longer than 3 months, he can have Residents Card issued and thus be considered a resident of Japan. As such, it will become possible for the foreign national to incorporate a company by himself without the need of a Japan resident business partner.
Once the company is officially incorporated, the applicant will then be able to apply for an extension to his period of stay.
As of the writing of this article, the changes described above have still not been finalized, nor have they been publicly announced fully so further amendments are of course possible. The visa specialists at Shinonome Group are monitoring these amendments to provide clients with the most up to date information.