Location of the head office: Where should it be located?

The Location of the Head Office

Under the Companies Act in Japan, the location of the head office must be stipulated in the Articles of Incorporation.
Practically, a smallest administrative district of the address would be stated in the general provision, and the initial location of the head office’s address would be stated in a supplementary provision(←Latter provision usually removed at the next amendment of the Articles of Incorporation).

Example: 
General provision: “Article 3 The head office of the Company shall be located in Chuo-ku, Tokyo.”
Supplementary provision: “Article 33. The head office of the Company at the time of incorporation shall be located in Room No. 123 ABC building, 1-1-1 ABC, Chuo-ku Tokyo.”

As for the registration procedures, there is no specific regulations of where the head office is to be located. Meaning, it is both acceptable to register the place where the office actually does exist or does not exist (a so called “virtual office”). However, there are several situations where the location of the head office must be well considered, such as in the following:

Matters to be considered when deciding on the location of the head office

Virtual Offices

Many of my clients from overseas are inclined to search for a virtual office, especially when they operate their Japanese company via the internet and there is no necessity of renting the business office. Also, it is true that many non-Japanese residents have difficulty renting offices in Japan.
However, there are several disadvantages when non-Japanese residents are signing a virtual office lease agreement.

Note: For more detail about (1) and (2) below , please consult with an expert administrative scrivener, and about (3) below with the bank you are considering opening an account with.

(1) Disadvantages for applications for permits and licenses:
For example, if you want to sell used brand-name goods bought in Japan via internet, you may need to apply to get an “antique dealer permit”. In such a case, “having an ‘actual’ business office” is a prerequisite for the permit.
(This is for the police to investigate the business office instantly in case those used goods are stolen items). Additionally, to obtain the permit, you must rent a “private room” office instead of a co-working office.

＊Regardless of above, if you have an actual business office, in addition to your virtual head office (in case, for example, you want to use your home as business office but do not want to register the home address for security reasons), then it is available to use the virtual office address as the registered head office.

(2) Disadvantages to visa application:
If you are planning to obtain a business management visa, “securing/existence of an actual business office” is an essential requirement for said application. Hence, a shared office without an independent room or co-working space office is not available to be registered.
As well as in this case, a home office is not acceptable since the office must be a private room with a clear separation between the residential and business space.

One of the solutions to (1) and (2) above is to rent a private room in a “rental office”. A “Rental office” is where people can have a small private office room that is available for immediate occupancy with the generally less expensive costs.

＊When you are applying for a business management visa, please consult with an administrative scrivener about the details of the lease agreement you are about to conclude, such as whether the contract can be signed in the name of a corporation, or whether the purpose of the leasing is clearly stated as “for business use”.

(3) Disadvantages to opening a bank account
If the head office is a virtual office, the screening process for opening a bank account tends to be more stringent. This is of course due to anti-money laundering measures.
However, there were some companies that could open their accounts with their head office being a virtual office. So it is difficult to clearly define the actual cause of the rejection since banks have not clarified their screening criteria in this regard.
Therefore, if you must set up your office as a virtual office, we recommend that you contact the bank where you plan to open your account and ask for instructions beforehand.

(4) Disadvantages for the reputation of the company
Sometime it is quite easily known that your head office is a virtual office by seeing the address of the corporate registry. It is important to be aware that it may cause unnecessary distrust among clients.

Apartment

If you intend to register your rented apartment as the head office, it is highly recommended to check the lease agreement in advance.
If you register the head office in spite of a clause such as “use for office purposes is not permitted,” you will be in breach of the contract, and in the worst case, you may be ordered to vacate the premises.

* For your information: If you are allowed to use your residential apartment as the head office, but do not want to register your home address for security reasons, you may omit the name of the apartment and room number from the registration. However, in this case, please be aware not to have your mail from the court or tax office go unaddressed.

Same corporate name with the same head office address

If a company with the same corporate name has already registered in the location where the head office is to be established, the company cannot be incorporated in the same location.
Please refer to this page: https://mklegalbizleaf-js.com/corporate-name/

Conclusion

As mentioned above, when deciding on the location of the head office, you may have to pay close attention to matters other than the registration procedures. In particular, if you are planning to apply for a visa or a permit, please make sure you are aware of the requirements pertaining to such application, and be careful not to sign a lease agreement before you consult with administrative scrivener.

MK@ 03/24/2022