“Is it illegal (Engaging in Activities Other Than Those Permitted) to establish a company while holding my current work visa (e.g., Engineer/Specialist in Humanities/International Services)?”
Regarding this doubt that foreign nationals aiming to start a business in Japan inevitably face, information online only offers the superficial stance that “you cannot manage a business on a work visa,” failing to discuss the realistic boundaries in immigration law practice. Under the Japanese legal system, as long as the acts are strictly limited to “business preparation,” they are not immediately considered illegal activities. However, there is a harsh reality: crossing that line by even a millimeter makes the visa subject to immediate revocation.
1. The “Absolute Paradox” of the Business Manager Visa
There is an unavoidable paradox in immigration law practice. To apply for a change of status to a Business Manager visa, there is an absolute rule: “The company must already be established, the office lease signed, and the business ready to operate at any moment (the framework of the business must be complete)” prior to the application.
Therefore, undertaking company incorporation and office leasing while holding your current work visa is structurally inevitable, and Immigration recognizes this as a “lawful preparatory act for changing the status of residence.”
2. The Millimeter “Red Line” Between Legal and Illegal
Immigration will penalize you for “Engaging in Activities Other Than Those Permitted” the exact moment you step beyond preparation and into “business operation (sales).” You must identify this red line accurately.
- Safe (Lawful Preparatory Acts): Registering the company incorporation at the Legal Affairs Bureau (assuming the role of Representative Director), signing an office lease, remitting capital and opening a business bank account, and drafting a business plan.
- Out (Illegal Activities): Signing business contracts with clients and “generating sales/revenue,” purchasing goods and starting sales activities, “receiving executive compensation (salary)” from your newly established company, or hiring employees and giving them operational instructions.
In short, you must understand the reality: “Until the Business Manager visa is officially approved, you must not earn a single yen, nor can you start substantive business operations.”
3. The Risk of “Company Rules,” Not Just Immigration Law
Even if it is lawful under the Immigration Control Act, there is another hurdle to clear: your current employer’s “Employment Regulations (rules banning side jobs).” When you register a company, your name is listed as the Representative Director on the corporate registry at the Legal Affairs Bureau, which is accessible to anyone. This creates a risk of your current employer discovering your business venture.
This is precisely why, to avoid disputes, the most strategic and secure transition route is to finalize your intention to resign early and fully utilize your final 1 to 2 months of “paid leave” (when you are practically detached from company duties) to complete your setup all at once.
*Note: Depending on the business model, determining “what constitutes preparation and what constitutes the start of operations” can be extremely complex. Before crossing a fatal line based on your own judgment, ensure you receive an objective situation analysis from an expert.