What happens to the status of residence when accepting a foreigner as a director?

When an existing Japanese company welcomes a foreign national as a director or other officer, or as a branch manager or general manager, the company will consider obtaining a “Management and Administration” visa.
The key to obtaining a business administration visa for a foreign national is whether or not he/she is substantially participating in the management or administration of the business. If the job description is the same as that of a regular employee with only a title, a general work visa must be obtained. This article explains whether a business management visa or a work visa is required when a foreign national is a director of a company.

Director’s status of residence is “Business Administration

When a Japanese company hires a foreigner as an employee, it often requires the foreigner to obtain a “Technical/Humanities/International Business” visa, which is a general work visa, but when accepting a foreigner as a director, a “Business Administration” visa is required. The “Management/Administration” status of residence is required when a foreigner engages in activities to manage a trade or other business in Japan or to manage such a business. Generally, this status is required when a foreigner establishes a company in Japan (starts a business), but it is also required when a foreigner participates in the management of a company that has already been established or engages in the management of a business.

Requirements for obtaining a business administration visa for executives

When a foreigner seeks to obtain a business management visa to start a business in Japan, the size of the company to be established and other factors are considered important. On the other hand, if the foreigner is to assume the position of director or other officer of a company that has already been established, the Whether or not it is necessary to have the foreigner serve as a director or other officer of the company is also a key point in the examination.

For investments of 5 million yen or more

When a foreigner invests 5 million yen or more in a company and assumes the position of director or other officer of that company, it is the same as if the foreigner had established the company and is managing it. Therefore, the size of the company and the location of its offices are considered important in the screening process.

If you do not make an investment of 5 million yen or more

Cases in which a foreigner does not make an investment of 5 million yen or more in a company are those in which the foreigner is invited to work for a company already established in Japan as a “president for hire” or the like. In this case, the foreigner must have experience in business management or administration, and the amount of remuneration must be equal to or greater than the amount of remuneration received by a Japanese national who assumes the position of director, etc. In addition, the foreigner must meet the requirements of the size of the company, etc. In addition to the size of the company and other requirements, the examination will also focus on whether it is necessary to appoint the foreigner as a director or other officer of the company.　In addition to the size of the company, the necessity of appointing the foreign national as a director or other officer is also an important factor in the screening process.

Points to keep in mind when assuming the position of director of an existing company and obtaining a business administration visa

When a foreigner assumes the position of director, etc. of an existing company, a status of residence of business administration or management is required. However, it is not a given that a foreigner will be qualified for the status of residence of business administration if he or she assumes the position of director or officer. Management/Administration is a status of residence where the foreigner “substantially participates” in the management or administration of the business. Specifically,

The applicant must be involved in the management of the company. Please note that if you are only given the title of director, etc., but do not exercise such authority, you will not be able to obtain a status of residence for business or management. In addition, the following points should also be considered.

Whether the responsibilities are clear or not

In larger companies, each director often has his or her own jurisdiction, such as the human resources or finance departments. In this case, the area of responsibility is clearly stated. On the other hand, in a small company, there may be only a few directors, and the divisions they are in charge of may not be clear, but even in such a case, it is necessary to clearly indicate their duties so that they are not regarded as directors in name only. Even if the company is small, if it does not have as many as 10 or more employees, it may be judged that there is little need to appoint a foreigner as a new director. In this case, the need to have the foreigner act as a director must be specifically stated.

Whether the amount of work assigned is appropriate

The key point is whether or not they are performing their duties as directors or other officers on a daily basis. If you are only given the title of “director,” but most of your time is spent doing the same work as other employees, or if you do not come to work, you cannot be said to be working as a director or other officer, and therefore cannot obtain a status of residence for business administration. In the case of small and medium-sized companies, it is quite common for directors and other officers to be involved in the same work as other employees. If a foreigner works in this way, even after assuming the position of director, he or she may not be eligible for a general In such cases, it may be necessary for the foreigner to apply for a work visa under the general status of “Engineer/Humanities/International Services”. Since only one of the two visas, “Management/Administration” or “Technical/Humanities/International Services,” can be obtained, if you are not sure which is appropriate for you, please consult with an expert administrative scrivener.

Steps to Obtaining a Business Management Visa

When an existing company brings in a foreign national as a director or other officer, there are two possible patterns

• In cases where a person who is already working in Japan under the status of residence of “Engineer/Humanities/International Services” etc. is appointed as a director or other officer (recruitment of personnel residing in Japan).
• When a foreigner residing overseas is allowed to enter Japan and become a director or other officer (recruitment of personnel residing overseas)

In the former case, an application for permission to change status of residence from “Engineer/Humanities/International Services” to “Management/Administration” is required. In the latter case, a new status of residence of “Management/Administration” will be acquired.

Application for permission for change of status of residence (employment of personnel residing in Japan)

When appointing a foreign employee as a director or other officer of the company, the company’s management team should hold discussions with the employee to determine the nature of his/her duties. The key point is not only to ask the foreigner to become a director, but also to clearly define his/her responsibilities and have the foreigner participate substantially in the management or administration of the business. Once you have reached an agreement with the foreigner, you will apply for registration of a change of officers to appoint a director after passing a resolution to appoint a director at a general shareholders’ meeting. After that, we will apply for permission to change the status of residence to “management/administration. Basically, the application for change of status of residence is done by the applicant, but because of the large number of required documents and the strict examination process, the applicant should receive support from an administrative scrivener, who is an expert in the field.

New application for “Management/Administration” status (employment of personnel residing overseas)

In the case of inviting a foreign national residing overseas to become a director or other officer of the company, the company’s management team will first hold discussions with the individual to determine the nature of his/her duties. Once discussions with the foreigner have been concluded, the company will apply for registration of a change of officers to appoint a director after a resolution to appoint a director is passed at a general shareholders meeting. The company will then apply for a new status of residence of “management/administration. The company may perform this procedure on behalf of the individual, but because of the large number of documents required and the rigorous screening process, it is best to request a professional administrative scrivener to perform this procedure.

Please consult with an administrative scrivener to obtain a business management visa.

When a Japanese company accepts a foreign national as a director or other officer, it is necessary to change to a business administration visa or apply for a new visa. The key to obtaining a business administration visa is whether the foreign national is substantially participating in the management or administration of the business. If the majority of the duties of a director are the same as those of a regular employee, the employee may be considered to remain on a working visa.

In many cases, it is difficult to determine whether a business administration visa or a work visa should be obtained. If you are unsure, please consult with an expert administrative scrivener.

At Gyoseishoshi Lawyer Corporation TOUCH, we will listen to each customer’s situation in a free consultation, propose the most appropriate status of residence, and support the customer in obtaining it.