This article is written by a Japanese local.
“Is it illegal (engaging in activities outside the scope of permitted status) to establish a company domestically and become the Representative Director while holding my current work visa (Engineer/Specialist in Humanities/International Services, etc.)?”
For foreign business professionals aiming to start a business domestically, this question is unavoidable. However, many information sources merely state the principle that “you cannot manage a business on a work visa” and fail to present the realistic boundaries set by the Immigration Services Agency.
Under Japan’s legal system, if your actions remain strictly as “preparations to start a business,” you will not be immediately accused of engaging in activities outside your visa scope. However, if you cross that line even by a millimeter, you face the severe reality of immediate visa revocation and forced repatriation. This article thoroughly explains the legal preparation processes required to safely complete the transition to a Japan Business Manager Visa.
1. The “Absolute Paradox” in the Business Manager Visa Screening
There is an unavoidable legal paradox in the practical procedures of the Immigration Control Act. It is the absolute rule that to have your application for a change of status to a Business Manager Visa accepted, “you must prove in advance that the company has already been legally established, a business office has been contracted, various infrastructures are in place, and you are ready to start the business at any time (the vessel is complete).”
The structure dictates that you create the company first and then apply for the visa, rather than getting the visa and then creating the company. Therefore, remitting capital and contracting an office while holding your current work visa is institutionally inevitable, and Immigration legally recognizes these actions as “valid preparatory acts for changing your status of residence.”
2. The Red Line Separating Legal Preparation from “Illegal Activities”
The moment Immigration cracks down on you for “activities outside your permitted scope (illegal labor)” and denies your visa is when you step out of the preparation framework and “commence actual business operations (sales activities).” You must accurately discern this boundary.
[SAFE: Legal Preparatory Acts]
The following actions are legally permitted even under your current work visa.
- Drafting Articles of Incorporation and Corporate Registration: Establishing a Joint-Stock Company (KK) or Limited Liability Company (GK) at the Legal Affairs Bureau and assuming the role of Representative Director.
- Securing an Office: Signing a lease contract for business use under the corporation’s name (or the individual promoter’s name).
- Preparing Capital and Opening a Corporate Account: Preparing investment funds (30 million JPY) and opening a bank account in the company’s name.
- Formulating a Business Plan and Applying for Licenses: Building a business model and applying to the relevant authorities for the various licenses and permits required for business operations.
- Creating Business Cards and a Website: Setting up infrastructure accompanying company establishment.
[OUT: Illegal Activities Outside Permitted Scope]
Performing the following acts before the “approval” of the Business Manager Visa is granted constitutes a fatal violation.
- Generating Revenue (Commencing Transactions): Signing contracts with customers and actually providing goods or services to generate “revenue (deposits).”
- Receiving Executive Compensation: Paying yourself “executive compensation (salary)” from your newly established company.
- Directing Employees: Hiring people and giving them specific business instructions to operate the business.
- Pre-Opening a Store: Bringing in customers and collecting money as a “test operation” at a restaurant, etc., before the visa is approved.
In other words, you must strictly comply with the rule: “Until the Business Manager Visa is approved, you must not earn a single yen in revenue, nor receive a single yen in salary from your company.”
3. Another Wall Beyond the Immigration Act: “Current Employment Regulations”
Even if it is legal as a “preparatory act” under the Immigration Control Act, as long as you are employed as a company worker, there is another compliance wall you must clear: your current employer’s “Employment Regulations (provisions banning side jobs).”
When you register your company establishment at the Legal Affairs Bureau, your name and address are recorded as the Representative Director on the corporate registry (Certificate of All Historical Matters), making it public information accessible to anyone. This creates a risk that your current company will discover your startup preparations, potentially escalating into labor disputes such as disciplinary dismissal or claims for damages.
4. A Safe Transition Timeline to Prevent Trouble
The most safe transition route to simultaneously eliminate the risk of illegal activities under the Immigration Control Act and the risk of violating employment regulations at your current job is as follows:
- Advance Coordination of Resignation: First, inform your current company of your intention to resign and finalize the resignation date.
- Utilizing Paid Leave: Use your final 1 to 2 months of “paid leave period” (a time when you are practically away from your current duties) to quickly complete corporate registration, office contracting, and opening a corporate bank account.
- Submitting the Change Application: Immediately after the company’s substance is finalized, around your resignation date, submit the “Application for Change of Status of Residence” to the Business Manager Visa to Immigration.
- Complying with Standby Period Rules: During the screening period (1 to 3 months), absolutely refrain from sales activities or recording revenue, and dedicate yourself strictly to “standby (continuing preparations).”
- Commencing Operations: Officially start your business on the very day you receive your new Residence Card (Business Manager).
5. Conclusion: Fatal Visa Revocation Risks from Self-Judgment
Depending on the business model (IT development, import/export, consulting, etc.), there are cases where the legal judgment of “what constitutes a preparatory act and what crosses the line into commencing operations (OUT)” is extremely complex. For example, there is a risk that test coding for system development or preliminary negotiations with overseas business partners may be deemed “substantial labor.”
Before crossing a fatal line based on self-judgment, design a meticulous timeline based on the standards of the Immigration Control Act and business law, and complete a smooth transition to a business owner while maintaining a perfectly legal status.