Guide to Check Verification a Company in Japan

Japan, as the third-largest economy globally, provides a stable and lucrative environment for businesses. Its robust economy, modern infrastructure, and reliable tax system have made it a top destination for global investors. With 49% of businesses considering Japan as an attractive test market and 40.5% favoring it for business expansion, it is no surprise that many entrepreneurs and corporations looks to register a company in Japan. However, when expanding a business in Japan or engaging in partnerships, conducting thorough due diligence and verifying the legitimacy of a company is crucial. This blog outlines the process and challenges of verifying a company in Japan.

Why Verify a Company in Japan?

Business verification helps minimize risks by ensuring that the company is legally registered, compliant with local regulations, and operates transparently. Verifying a company in Japan involves accessing government databases, reviewing corporate documentation, and conducting due diligence to protect your business from fraud and legal issues.

How to Verify if a Company is Registered in Japan

Verifying a company in Japan involves gathering and analyzing business information through various official registries and agencies. Unlike many countries that have a single-parent registry for businesses, Japan's verification process is distributed across multiple government agencies, each serving a specific role.

Key Government Agencies for Business Verification in Japan

1. Legal Affairs Bureau (Hōmukyoku) The Legal Affairs Bureau operates under the Ministry of Justice and is responsible for registering companies, including corporations, limited liability companies (LLCs), and foreign entities. When verifying a company in Japan, the bureau's registry serves as a key resource for confirming a company’s legal status.

2. National Tax Agency (NTA) The National Tax Agency maintains a comprehensive public database of corporate numbers. This database allows individuals to verify a company’s tax identification and existence. The NTA is often regarded as the most reliable source for confirming the legitimacy of businesses operating in Japan.

3. Ministry of Economy, Trade and Industry (METI) METI oversees industry-specific regulations and is involved in issuing licenses and permits for various business activities. For industries requiring specific licensing, verifying compliance with METI’s standards is critical.

Step-by-Step Guide to Verify a Company in Japan

The verification process can be completed on the National Tax Agency’s website, which provides a search feature to check company registration details. Here’s a simple guide to verifying a company through the NTA:

1. Access the NTA Website: The National Tax Agency website is available in both Japanese and English, providing easy navigation for users.

2. Search Options: You have two primary search options:

   • Option 1: Search by Company Name, Address, or Other Conditions: This option allows you to search using the company’s name, address, or additional conditions such as company type or change history.
   • Option 2: Search by Corporate Number: Enter the 13-digit corporate number to directly retrieve information about the company.

3. View Results: After conducting your search, the following information will be displayed:

   • Physical Address
   • Registration Number
   • Date of Registration
   • Capital
   • Tax ID

Common Challenges in Verifying a Company in Japan

While the process of verifying a company may seem straightforward, there are several challenges that foreign investors and business partners might face.

1. No Single Parent Registry

Japan does not have a unified business registry. Instead, business information is scattered across multiple government agencies. This can create confusion and delays, as users may have to navigate between the Legal Affairs Bureau, National Tax Agency, and METI for different aspects of verification.

2. Corporate Number Confusion

The corporate number in Japan serves as a unique identifier for a business, encompassing both its registration and tax identification number. Many foreigners mistakenly believe the corporate number is solely for tax purposes, when in fact, it is essential for verifying a company’s legal status.

3. Understanding Company Types

Japan has various company structures that may be unfamiliar to foreign investors. Some common types include:

• Kabushiki Kaisha (KK): Similar to a joint-stock company, featuring shareholders and a board of directors.
• Gōdō Kaisha (GK): Comparable to a limited liability company (LLC), offering flexible management and limited liability for members.
• Yūgen Kaisha (YK): A type previously popular but now largely replaced by Gōdō Kaisha (GK).
• Gomei Kaisha: A general partnership structure where all partners have joint liability.

4. Language Barriers

The majority of business information, including corporate numbers and legal documents, is available only in Japanese. Translating these documents without compromising their legal meaning is a significant challenge for foreign investors, making it essential to engage with reliable translation services.

Verifying the Ultimate Beneficial Owner (UBO) in Japan

The Ultimate Beneficial Owner (UBO) refers to the individual who owns or controls more than 50% of a legal entity. In Japan, UBO information is not readily available through public registries. However, Japan has committed to establishing a beneficial ownership registry to enhance transparency, though this registry is not yet live. Verifying UBOs currently requires additional due diligence, such as conducting background checks on shareholders and directors.

Conducting Anti-Money Laundering (AML) Checks on Businesses in Japan

AML checks are vital to ensuring that businesses comply with Japan’s anti-money laundering regulations, such as the Act on Prevention of Transfer of Criminal Proceeds. Background checks are conducted on beneficial owners, directors, and shareholders to verify compliance with these regulations. The Financial Services Agency (FSA) and Japan Financial Intelligence Center (JAFIC) oversee AML compliance, ensuring businesses are not involved in illicit activities.

Conclusion

Verifying a company in Japan is a multi-step process that involves accessing information from various government agencies. While the process can be challenging due to the lack of a single-parent registry, corporate number misunderstandings, and language barriers, following the correct procedures can help ensure a thorough and reliable verification process. By understanding the legal structures, utilizing the resources available from agencies like the NTA and Legal Affairs Bureau, and conducting comprehensive due diligence, businesses can safely engage in partnerships and investments in Japan.

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