Japan has a vibrant non-profit sector, with "Specified Non-profit Corporations" (Tokutei Hieiri Katsudō Hōjin - 特定非営利活動法人), commonly referred to as NPO Corporations or NPO Hōjin (NPO法人), being a primary legal structure for organizations pursuing public interest activities. Establishing an NPO Corporation involves a distinct two-stage process: first, obtaining authentication from a competent government authority, and second, completing incorporation registration with the Legal Affairs Bureau. Understanding these key steps and legal considerations is essential for any group aiming to operate as a formally recognized NPO in Japan.

What is a Specified Non-profit Corporation (NPO Hōjin)?

NPO Corporations are governed by the Act on Promotion of Specified Non-profit Activities (Tokutei Hieiri Katsudō Sokushin Hō - 特定非営利活動促進法), often simply called the NPO Act. This legislation was enacted to provide a simpler and more accessible framework for non-profit organizations to gain corporate status compared to traditional general incorporated associations or foundations.

Key Characteristics of an NPO Corporation:

1. Purpose: Must primarily engage in one or more of the 20 types of "specified non-profit activities" listed in the NPO Act. These activities span a wide range, including:
   • Health, medical care, or welfare
   • Social education
   • Community development (machizukuri - まちづくり)
   • Culture, arts, or sports promotion
   • Environmental conservation
   • Disaster relief
   • International cooperation
   • Protection of human rights or promotion of peace
   • Activities for sound development of children and youth
   • Administration of organizations engaged in the above activities.
2. Non-Distribution of Profits: Profits, if any, cannot be distributed to members or officers. They must be used to further the NPO's specified activities.
3. Open Membership: Generally, NPO Corporations cannot unreasonably restrict qualifications for membership.
4. Minimum Number of Members (Shain - 社員): An NPO Corporation must have at least 10 members. These "members" are akin to voting members in some Western NPOs, forming the highest decision-making body (the General Meeting of Members), and are distinct from employees or general supporters/donors.
5. Specific Governance Structure: Must have a minimum of three directors (riji - 理事) and one auditor (kanji - 監事).
6. Religious or Political Neutrality: Cannot conduct religious activities as its main purpose, nor can its main purpose be to promote, support, or oppose any political candidate, political party, or specific political ideology. It also cannot be primarily aimed at recommending, supporting, or opposing candidates for public office.

The Two-Stage Establishment Process

Unlike business corporations that come into existence solely upon registration, NPO Corporations follow a two-stage process:

Stage 1: Authentication by the Competent Authority (Shokatsu-chō - 所轄庁)

Before an NPO Corporation can be legally registered, its establishment and its Articles of Incorporation (Teikan - 定款) must be "authenticated" (ninshō - 認証) by a competent government authority.

1. Identifying the Competent Authority:
   • If the NPO Corporation's office(s) are located within a single prefecture, the competent authority is usually the governor of that prefecture.
   • If its offices are within a single designated city, it may be the mayor of that city.
   • If its offices span multiple prefectures, the competent authority is the Cabinet Office.
     The rules regarding which specific office handles applications can vary, so confirming with the relevant local government is crucial.
2. Application for Authentication (Ninshō Shinsei - 認証申請):
   The founding group must prepare and submit an application package to the competent authority. This typically includes:
   • Application form for authentication.
   • Articles of Incorporation (Teikan).
   • List of proposed officers (directors and auditors), their letters of acceptance of office, and documents verifying their identity and addresses (e.g., certificates of residence).
   • Written oaths from officers confirming they are not disqualified under the NPO Act.
   • A list of at least 10 members, including their names and addresses.
   • Minutes of the inaugural general meeting where the establishment, AoI, and officers were approved.
   • A statement outlining the NPO's objectives and reasons for seeking authentication.
   • Business plans and budgets for the first two operational years.
   • Confirmation that the NPO meets the requirements of the NPO Act (e.g., primary focus on specified non-profit activities, non-distribution of profits).
3. Public Inspection and Review:
   Upon receipt of a complete application, the competent authority makes certain application documents (like the AoI, list of officers, business plans) available for public inspection for a prescribed period (typically one month, though previously longer). The authority then reviews the application to ensure compliance with all NPO Act requirements. They do not judge the merits or necessity of the NPO's proposed activities, only its compliance with legal criteria.
4. Issuance of Certificate of Authentication:
   If the competent authority finds that the NPO Corporation meets all legal requirements, it will grant authentication and issue a Certificate of Authentication (Ninshōsho - 認証書). If deficiencies are found, the application may be rejected or the applicant may be asked to make corrections. The standard processing time for authentication can be up to three months from the filing of a complete application (excluding the public inspection period).

Stage 2: Incorporation Registration (Setsuritsu Tōki - 設立登記) at the Legal Affairs Bureau

The NPO Corporation legally comes into existence only upon completion of its incorporation registration at the Legal Affairs Bureau (Hōmukyoku) that has jurisdiction over its principal office location.

1. Timing: The application for incorporation registration must be filed within two weeks from the date the Certificate of Authentication was received from the competent authority.
2. Key Information to be Registered:
   The registration will include:
   • The corporate name, which must include the phrase "特定非営利活動法人" (Tokutei Hieiri Katsudō Hōjin).
   • The address of the principal office (shitaru jimusho - 主たる事務所) and any secondary offices (jūtaru jimusho - 従たる事務所).
   • The NPO's business objectives as stated in the authenticated Articles of Incorporation.
   • Provisions regarding dissolution (if any are specified in the AoI).
   • The full names and residential addresses of all directors and auditors.
   • If specific directors are designated with representative authority (daihyōken o yūsuru riji - 代表権を有する理事), their names are registered. If the AoI stipulates that all directors have representative authority, or if no specific representative directors are designated from among multiple directors (meaning each director can individually represent the NPO, unless limited by the AoI or a subsequent resolution), this fact or the means of designation of representative directors is noted.
   • The method of asset management, if specified in the Articles of Incorporation.
   • The term of office for officers if it is shorter than the standard term (two years for directors, two years for auditors, though can be set differently in AoI up to certain limits).
   • The method of public notice (kōkoku hōhō - 公告方法).
   • The date of authentication by the competent authority.
3. Required Documentation for Incorporation Registration:
   • Application form for incorporation registration of an NPO Corporation.
   • The Articles of Incorporation (a copy certified by the competent authority that authenticated it).
   • The Certificate of Authentication issued by the competent authority.
   • Letters of acceptance of office from all initial directors and auditors (these may have already been submitted to the competent authority but are re-affirmed or re-submitted for registration).
   • Minutes of the meeting that selected the representative director(s), if not all directors automatically have representative authority or if selection is made after authentication.
   • Documents to verify the identity and addresses of the representative director(s) (e.g., certificate of seal impression if they register a corporate seal, or certificate of residence).
   • Registration of the NPO Corporation's official seal, if one is to be used for legal acts.
4. Registration License Tax: Generally, NPO Corporations are exempt from paying registration license tax for their incorporation registration.

Governance and Ongoing Operational Requirements

Once established and registered, NPO Corporations must adhere to specific governance and operational rules:

• Officers: A minimum of three directors and one auditor. Directors manage the NPO's affairs, while auditors oversee the execution of duties by directors and the NPO's financial status. Directors with representative authority legally represent the NPO.
• General Meeting of Members (Shain Sōkai - 社員総会): This is the highest decision-making body, responsible for approving important matters such as budgets, financial reports, business plans, amendments to the Articles of Incorporation, and election of officers.
• Reporting and Disclosure: NPO Corporations have significant reporting obligations to their competent authority. They must submit an annual activity report, financial statements (balance sheet, statement of activities), a list of current officers, and a list of members (with 10 or more members) each business year. These documents are made available for public inspection by the competent authority and usually at the NPO's office.
• Amendments to Articles of Incorporation: Any changes to the Articles of Incorporation (e.g., changing objectives, office location, provisions regarding officers) require a resolution at a General Meeting of Members and then re-authentication by the competent authority before the corresponding change can be registered with the Legal Affairs Bureau.
• Registration of Changes: Any alteration to matters already registered with the Legal Affairs Bureau (e.g., a change in officers, relocation of the principal office, amendments to the AoI that affect registered items) must be registered within two weeks (or, if requiring AoI re-authentication, within two weeks of that re-authentication).

"Certified NPO Corporation" (Nintei NPO Hōjin) Status

NPO Corporations that meet even stricter public benefit criteria and operational standards can apply to the national tax authorities (National Tax Agency or prefectural governor depending on the competent authority) for "certified" status (nintei - 認定). A "Certified NPO Corporation" enjoys preferential tax treatment, most notably allowing donors to receive tax deductions for their contributions. This certification is a separate, rigorous process beyond the initial establishment and registration, and involves demonstrating a track record of public support and sound governance. There is also a provisional "Temporarily Certified NPO Corporation" status.

Considerations for Foreign Involvement

• Participation: Foreign nationals can be founding members, ongoing members, directors, or auditors of a Japanese NPO Corporation, subject to the same requirements as Japanese nationals (e.g., providing identity verification).
• Establishing a Local NPO: Foreign NPOs or individuals wishing to conduct non-profit activities in Japan may find establishing a Japanese NPO Corporation to be an effective way to create a local legal entity with a clear operational mandate and public accountability.
• Regulatory Oversight: It's crucial to understand the dual regulatory environment: the competent authority (prefectural governor, etc.) oversees operational compliance, reporting, and authentication, while the Legal Affairs Bureau handles the corporate registry.

Conclusion

The establishment of a Specified Non-profit Corporation (NPO Hōjin) in Japan is a structured process designed to ensure transparency and accountability for organizations dedicated to public benefit activities. It begins with meticulous preparation and an application for authentication from a competent government authority, followed by incorporation registration at the Legal Affairs Bureau, which legally brings the NPO Corporation into existence. Ongoing compliance with reporting obligations to the competent authority and timely registration of any changes to registered corporate details are vital for maintaining the NPO's legal standing and its ability to effectively pursue its non-profit mission in Japan. While the process involves multiple steps, it provides a recognized and credible framework for non-profit endeavors.