Establishing Your Japanese Subsidiary/Branch: Navigating the "Business Manager" (Keiei-Kanri) Visa Requirements

For foreign corporations looking to expand into the Japanese market by setting up a subsidiary or branch, or for entrepreneurs aiming to launch a new venture in Japan, securing the appropriate visa for key personnel is paramount. The "Business Manager" (経営・管理 - Keiei-Kanri) status of residence is specifically designed for individuals who will engage in the management or administration of such businesses. This visa, however, comes with a distinct set of requirements that demand careful planning and thorough documentation.

Understanding the "Business Manager" Status of Residence

The "Business Manager" status allows foreign nationals to engage in activities related to operating or managing a business in Japan. This can involve:

• Starting and subsequently managing a new business (e.g., a new company or a branch of a foreign corporation).
• Participating in the management of an already existing business in Japan.
• Managing a business in Japan on behalf of a foreign corporation or individual investor.
• Undertaking the administration of such businesses.

This typically encompasses roles such as company presidents, directors, auditors, branch managers, factory managers, and other individuals in significant managerial positions. It's important to note that if the core business activity itself requires a specific license (e.g., legal or accounting services where the manager is performing those licensed services rather than just managing the firm), this visa might not be the appropriate one, and a status like "Legal/Accounting Services" could be necessary if the management itself constitutes that licensed activity.

Core Requirements for the "Business Manager" Visa

Successfully obtaining or changing to a "Business Manager" status hinges on fulfilling several key criteria, primarily concerning the business entity itself and, in some cases, the applicant's background.

1. A Tangible Business Premise in Japan (Office Space)

A fundamental requirement is the existence of a dedicated, physical office space in Japan from which the business will operate. This cannot be a mere mailbox or a temporary arrangement.

• Commercial Space: Ideally, this should be a commercially leased or owned office. The lease agreement should clearly state that the premises are for business use and should typically be in the name of the business entity.
• Residential Property as Office: Using a portion of a residential property as an office is possible but subject to stringent conditions. These include:
  • Explicit permission from the landlord for business use (and, if applicable, for subletting to the company).
  • The resident (if different from the business manager) also consenting to the company's use of the space.
  • A clearly demarcated area exclusively for business operations, equipped with necessary business facilities.
  • Clear arrangements for the payment of utilities and shared expenses.
  • Appropriate business signage (e.g., a company nameplate).
• Unacceptable Spaces:
  • Virtual Offices: These are not recognized as legitimate business premises for this visa.
  • Short-Term Rentals/Coworking Spaces (with caveats): Month-to-month rental spaces or easily disposable setups like food stalls (without a fixed base for management) are generally deemed unsuitable unless there are compelling, specific reasons justifying their use for the stability of the business operations. Immigration authorities look for a degree of permanence and commitment.
• Incubation Offices: In some cases, temporary office spaces provided by recognized business incubators or support centers (like those offered by JETRO for foreign investment promotion) may be accepted during the initial startup phase, particularly for those on a preparatory "Business Manager" visa.

The underlying principle is that the business must have a stable, identifiable operational base in Japan.

2. Demonstrable Scale of Business

The business must meet a certain minimum scale. This can be demonstrated in one of the following ways:

• (a) Employment of Full-Time Staff: The business employs at least two full-time staff members who are residents of Japan. These staff members can be Japanese nationals or foreign nationals holding a status of residence that permits unrestricted employment (e.g., "Permanent Resident," "Spouse or Child of Japanese National," "Spouse or Child of Permanent Resident," or "Long-Term Resident"). Employees on temporary work visas tied to other specific employers would generally not count towards this requirement for another individual's Business Manager visa application.
• (b) Capital Investment or Total Contribution: The business has a paid-in capital or a total investment sum of at least 5 million JPY.
  • This 5 million JPY figure is a critical benchmark, especially for new businesses that may not immediately hire two full-time staff. Even if Japanese corporate law allows for company incorporation with less capital, for immigration purposes to demonstrate "scale" under this visa, this investment level is often a de facto requirement if not meeting the employment criterion.
  • The investment should be verifiably allocated towards essential business operations, such as securing office space, purchasing equipment, initial inventory, and covering initial operating costs.
  • If the funds are borrowed, immigration may scrutinize the source. However, if the applicant personally guarantees the loan, it may be considered part of their investment.
• (c) Equivalent Scale: In some instances, if the business doesn't strictly meet either of the above, it might still qualify if it's deemed to be of an "equivalent scale". For example:
  • A business with only one full-time employee but has invested an additional sum roughly equivalent to the cost of hiring a second employee (approximately 2.5 million JPY, making the total investment around that 5 million JPY mark when combined with other startup costs).
  • A sole proprietor (individual business owner) who has personally invested 5 million JPY or more into the business operations.

The immigration authorities will assess if the investment is genuinely and continuously committed to the business.

3. Requirements for Applicants in Purely Managerial Roles (Not Owner-Investors)

If the applicant is being hired or transferred to Japan to manage an existing business (rather than being the primary investor or founder), additional criteria apply:

• Managerial Experience: The applicant must have at least three years of experience in business management or administration. This experience can include time spent studying business management or administration at a graduate school level.
• Remuneration: The applicant's salary or remuneration from the Japanese entity must be equal to or greater than what a Japanese national would receive for performing comparable managerial duties.

4. Business Viability, Stability, and Continuity (事業の継続性)

A crucial aspect of the "Business Manager" visa is the expectation that the business will be a stable, ongoing concern. The immigration authorities will assess the long-term viability of the enterprise.

• Business Plan (事業計画書): For new businesses, a comprehensive and realistic business plan is essential. This plan should detail the nature of the business, market analysis, operational plans, financial projections (revenue, expenses, profitability), and funding sources.
• Financial Health:
  • For existing businesses, financial statements (balance sheets, profit/loss statements) are scrutinized.
  • While a single year of operating at a loss is not automatically disqualifying, persistent deficits or insolvency raise serious concerns about the business's sustainability.
  • If a company has been in a net loss position (欠損金がある) but is not yet insolvent (債務超過), a business improvement plan and future projections will be requested. Immigration may assess if the business can realistically become profitable.
  • If a company is insolvent, particularly for more than one year, the situation is more critical. A credible plan for recapitalization or a turnaround, possibly involving external investment or support, would need to be demonstrated.
  • Two consecutive fiscal years with no gross profit (売上総利益がない) – meaning sales revenue does not even cover the cost of goods sold – is generally viewed very negatively, suggesting the core business activity is not viable, and can lead to visa renewal difficulties unless there's a compelling turnaround plan with concrete backing.

5. Applicant's Substantive Involvement in Management

The applicant must be genuinely and substantially involved in the core management or administrative functions of the business. A nominal title without actual managerial duties and responsibilities will not suffice.

• For Founders/Investors: Immigration will look at the applicant's role in establishing the business, the source of their investment, and their ongoing decision-making authority.
• For Hired Managers: The scope of their authority, their specific managerial tasks, and their position within the organizational hierarchy are important.
• Multiple Foreign Managers: If a business seeks "Business Manager" visas for multiple foreign nationals, the scale of the business, its organizational complexity, sales volume, and number of employees must clearly justify the need for that many individuals in top managerial roles. Each manager's distinct responsibilities must be well-defined.

The Application Pathway: CoE and Change of Status

Typically, a foreign national outside Japan will first obtain a Certificate of Eligibility (CoE) for the "Business Manager" status, as detailed in our previous article. Once the CoE is issued, they apply for the actual visa at a Japanese embassy or consulate.

However, if an individual is already residing in Japan under a different valid status of residence (e.g., as an "Engineer" or "Student"), they can apply for a "Change of Status of Residence" (在留資格変更許可申請) to "Business Manager" directly with the immigration bureau in Japan. This is common for foreign professionals who decide to start their own company after gaining experience in Japan, or for students who, after graduation (and usually possessing a relevant prior degree or experience), establish a business. The scrutiny for a change of status application is comparable to that for a CoE.

A noteworthy provision exists for individuals overseas who intend to come to Japan to prepare for establishing a company. If it can be demonstrated that the company's establishment is highly probable (e.g., through detailed preparatory documents), a special 4-month "Business Manager" visa may be granted. This allows the individual to enter Japan, obtain a Residence Card, open bank accounts, secure an office, and undertake other necessary establishment activities before applying for a full-term "Business Manager" status.

Key Documentation for the "Business Manager" Visa

The documentary requirements are extensive, particularly for new businesses (Category 4). While specific lists are provided by immigration authorities and vary by the company's category (1-4, where Category 1 involves large, listed companies and Category 4 involves new or smaller, unlisted entities), common documents include:

Pertaining to the Applicant:

• Completed application form.
• Passport-style photograph.
• Copy of passport.
• Curriculum Vitae (CV), especially if applying based on managerial experience.

Pertaining to the Business Entity in Japan:

• Legal Establishment:
  • Certificate of Registered Matters of the company (登記事項証明書 - Toki Jiko Shomeisho).
  • For companies yet to be registered: Articles of Incorporation (定款 - Teikan) and other documents showing the intent to start the business.
• Business Operations & Office:
  • Business plan (事業計画書 - Jigyo Keikakusho), especially for new ventures, detailing business activities, financial projections, etc..
  • Lease agreement for the office space or proof of ownership. Photographs of the office (exterior with signage, interior workspace) are often required.
  • Company brochure or materials detailing business activities, organization structure, major clients, etc..
• Financial Scale & Stability:
  • Proof of capital investment (e.g., bank statements showing transfer of capital, shareholder register - 株主名簿).
  • Recent financial statements for existing businesses (balance sheet, profit and loss statement).
  • Tax-related documents:
    • For established companies: Summary of withholding tax payments (e.g., Kyuyo Shotoku no Gensenchoshuhyo tou no Hotei Chosho Gokeihyo).
    • For new companies: Notification of the establishment of a salary-paying office (Kyuyo Shiharai Jimusho tou no Kaisetsu Todokedesho no Utsushi).
• Employment (if applicable to meet scale requirement):
  • Employment contracts for the two or more full-time, Japan-resident staff.
  • Payroll records and residence documents (e.g., copies of their Residence Cards or resident records - Juminhyo) for these staff.
• Applicant's Role and Remuneration:
  • Documents clarifying the applicant's position (e.g., director), responsibilities, and remuneration. This might include board resolutions approving executive compensation, or the employment contract for a hired manager.

Important Considerations for Aspiring Business Managers

Several practical points and insights from common queries can help in planning:

• Starting a Business While on Another Visa: It's generally not permissible to actively run a business if your current status is, for example, "Engineer" or "Student." A timely change to "Business Manager" status is necessary once business operations commence or you take up a managerial role.
• Student Entrepreneurs: Students on a "Student" visa typically find it challenging to switch directly to "Business Manager" before graduating from their current course of study in Japan, unless they already hold a university degree from elsewhere and meet other criteria. Post-graduation, it becomes a more feasible option.
• Choice of Company Structure (K.K. vs. G.K./LLC): From an immigration perspective for the "Business Manager" visa, the choice between a Kabushiki Kaisha (K.K. - joint-stock company) and a Godo Kaisha (G.K. - limited liability company, similar to an LLC) is often less critical than meeting the core requirements like office space and scale. It's worth noting that the pass-through taxation benefits common with LLCs in the U.S. do not apply to Japanese G.K.s.
• Establishing from Overseas: Setting up a Japanese company while residing abroad presents logistical hurdles (e.g., opening bank accounts, securing leases without a Japanese address or residence status). Using a Japan-based representative or leveraging the preparatory 4-month "Business Manager" visa are potential solutions.
• "Business Manager" vs. "Intra-company Transferee": While both can involve managerial responsibilities, the "Intra-company Transferee" visa is for transfers within the same corporate group and requires at least one year of prior employment at the foreign entity. It doesn't have the same strict academic requirements as some other work visas. The "Business Manager" visa is broader, covering new business establishments by entrepreneurs and direct hires into managerial roles in Japanese entities, whether affiliated with a foreign company or purely domestic. Certain ancillary benefits, such as eligibility to sponsor domestic help under a "Specified Activities" visa, may specifically require the employer to hold "Business Manager" status.

Securing a "Business Manager" visa requires meticulous preparation, a clear demonstration of a viable business plan, a tangible operational base, and adherence to the specified scale requirements. Given the complexities, particularly for new enterprises or those unfamiliar with Japanese business and immigration norms, seeking professional legal and immigration advice is often a prudent investment.