Deemed Dissolution

Deemed dissolution is a system where registrars register (with advance notice) the dissolutions ex officio of the Kabushiki-Kaisha (and Ippan-Shadan-Houjin ‘一般社団法人’ and Ippan-Zaidan-Houji ‘一般財団法人’ ) whose registration has not been renewed for a certain period of time. After three years since the registration of deemed dissolution, the company is no longer allowed to continue its business as it was before dissolution.

Conditions for registration of deemed dissolution

The company that meet following condition have high risk of being dissolved ex officio.
1) A Kabushiki-Kaisha which has not submitted any registration for more than 12 years (5 years in the case of Ippan-Shadan-Houjin and Ippan-Zaidan-Houji)
2) The company has not taken any of the following actions within two months of the public notice by the Minister of Justice and the notice from the Legal Affairs Bureau:

(a) Application of registration e.g., changes in officers, etc.
(b) Notification that the business has not been discontinued

Reasons for the system

The purpose of the Commercial Registration Act is “to maintain the credibility of trade names, companies, etc. by establishing a registration system so as to notify the public of the matters to be registered pursuant to the provisions of the Commercial Code, the Companies Act or any other Act, as well as to contribute to the safe and smooth conduct of transactions. (Article 1)”.

Therefore, leaving dormant companies unattended may cause the corporate registration system to lose credibility and the system itself to collapse. Dormant companies also have the risk of being used as a means of committing crimes, such as the sale of a business through fraud.
i.e., Since the commercial register is not closed, the buyer may mistakenly believe that the corporation in question is still in existence and believe those fraudsters who are trying to sell the companies. As a result, there is a risk that the Representative Director named in the registration may got into the troubles.

The reason why the registration of deemed dissolution is set at “12 years” or “5 years” after the last registration is because the maximum term of office for Directors is 10 years in the case of a Kabushiki-Kaisha, and 10 years in the case of a Ippan-Shadan-Houjin and Ippan-Zaidan-Houji, so an application for registration must have be filed at least in that cycle.
Therefore, a deemed dissolution is not applicable to a Godo-Kaisha or a Tokurei-Yugen-Kaisha which there is no term of office for Officers.

What to do if you receive a notice of deemed dissolution from the registry office

A notice advising of deemed dissolution is sent out around the middle of October each year. In this case, you shall apply for registration of a change of officers within two months of the date on the notice, or fill out the “Notification Form” attached to the notification letter and mail or bring it to the Legal Affairs Bureau.
(A letter of attorney is required if you request a proxy to file the notification.)

The notification letter is written only in Japanese, and the notification must be submitted in Japanese. Therefore, if you receive a notice like the one below from the Legal Affairs Bureau, it is advised to find a specialist or an acquaintance who can read and write Japanese to assist you. Please do not leave it as it is unless you would not want to continue your business.

Continuation of a company after deemed dissolution

If the deemed dissolution is registered after the two-month notice and registration period has elapsed, the company can be continued by a special resolution of the shareholders’ meeting, members’ meeting, or council meeting within three years thereafter. If the resolution to continue the company is passed, the registration must be applied for within two weeks from the next date of the relevant system.

Notification No. XXXXX
Date: ,2022

To: Address of the Head Office
Trade Name
Representative Director

ZIP Code:　　　
Address of Legal Affairs Bureau
XXX Legal Affairs Bureau Corporate Registry Department
XXX Branch

Notification

　As of (yyyy/mm/dd) hereof, twelve (12) years or five (5) years have passed since your company was last registered. We hereby notify you that on said day, a public notice (please refer to a summary below) was issued by the Minister of Justice pursuant to Article 472 of the Companies Act or Article 149 or 203.
　If you would like to notify that your business has not yet been closed, it can be made using the bottom format of this document.

Particular

　Summary of Public Notice
To those Kabushiki-Kaisha which have not been registered for 12 years and Ippan-Shadan-Houjin or Ippan-zaidan-houjin that have not been registered for 5 years since last registration, if the business has not yet been abolished, a notification to that effect shall be submitted to the Legal Affairs Bureau with jurisdiction over the head office or principal.
If such notification is not made or any registration is not made within two months from the date of this public notice, such companies shall be deemed to have been dissolved at the expiration of the said period.

Date:

Head office*
Trade name*
Qualifications of Representative*
Address of Representative*
Name of Representative*
Address of Proxy (when notified by proxy)
Name of Proxy (when notified by proxy)
Contact telephone number* (where you can be reached during the daytime)

Fields marked with (*) must be all filled in.

To XXX Legal Affairs Bureau
Corporate Registry Department XXX Branch

Note 1: If the above contents of the notification do not match the items recorded in the registry, it will not be treated as a legitimate notification.
Note 2: The notification form shall be mailed or brought to the Legal Affairs Bureau so that it arrives by (yyyy/mm/dd). If the notification is made by a proxy, please attach a letter of attorney.
Note 3: Notification shall be made in writing.
Note 4: Please note that even if a notification was submitted in the previous fiscal year, unless you apply for the necessary registration or submit the Note 4: Please note that even if a notification was submitted in the previous fiscal year, unless you apply for the necessary registration or submit the notification again, you will be deemed to have been dissolved and the registrar will register the dissolution.
Note 5: If notification or registration is made, the registrar will file the court as the fine case, which may result in a fine being imposed by the court. (Articles 915 and 976 of the Companies Act, Article 3 of the Act on General Incorporated Associations and General Incorporated Foundations) Article 03, Article 342)

Notice No.

MK@ 08/18/2022