Can You Manage Multiple Companies (2) on a Business Manager Visa? Legal Practices from Establishment to “Main Business Determination”

Among foreign entrepreneurs who have successfully launched a business in Japan, there are many serial entrepreneurs who think, “My business is profitable, so I want to establish a second company in a different industry,” or “I want to acquire another company through M&A and become the president of both.”

To state the conclusion first: It is completely legal under Japanese law for a foreigner holding a Business Manager Visa to manage multiple corporations simultaneously.

However, during the screening by the Immigration Services Agency (Immigration), the basis for your visa is always strictly tied to your “primary activity (the one main company).” When managing multiple companies, failing to properly set and explain this “main company” can lead to the tragedy of a visa renewal rejection even if the overall business performance is good.

This article thoroughly explains the “criteria for determining the primary activity” you must know when managing multiple companies, the “trap of splitting executive compensation” that is easy to fall into during renewal, and recovery practices when your main company goes into the red.

1. How Does Immigration Determine Which Company is the “Main Company (Primary Activity)”?

In principle, a Business Manager Visa is evaluated based on “one main corporation (business) per visa.” If you become the representative director of two companies, Immigration strictly determines “which is this foreigner’s main activity” based on the following three objective criteria.

Criterion 1: Amount of Executive Compensation (Which is the Foundation of Your Livelihood?)

The amount of compensation is considered the most important factor. If you receive executive compensation of “300,000 yen per month from Company A and 50,000 yen per month from Company B,” Immigration will judge that “Company A is supporting the foundation of your livelihood, making Company A the primary activity.”

Criterion 2: Allocation of Business Effort (Time/Days)

How much time you devote to each of the two companies is also crucial. In your business plan or letter of reason, you must clearly explain the disparity in working hours (effort)—such as “managing at Company A’s office 4 days a week, and managing Company B 1 day a week”—to clarify the primary/secondary relationship.

Criterion 3: Business Scale and Number of Employees

By comprehensively comparing the “amount of capital,” “annual sales volume,” and “number of full-time employees hired,” the one with the larger actual business scale is more easily treated as the main company.

2. The “Splitting Executive Compensation” Rejection Trap You Must Avoid

The most fatal trap that foreigners managing multiple companies fall into during renewal screenings is the “splitting of executive compensation.”

For example, suppose the president needs 300,000 yen per month for living expenses. If they set up their compensation to receive “150,000 yen per month from Company A” and “150,000 yen per month from Company B,” combining them for a total of 300,000 yen, Immigration will make the following negative judgment:

“Neither company can pay more than 150,000 yen per month independently. In other words, both companies lack the business scale and stability to support a single manager, thus failing to meet the requirements for a Business Manager Visa.”

In this way, splitting compensation evenly dramatically increases the risk of both failing, leading to a rejection. The correct financial strategy is to create a situation where one company alone can fully meet the visa renewal requirements (independent livelihood requirement), such as “paying 250,000 to 300,000+ yen per month from the main Company A, while taking no compensation (or just a few tens of thousands of yen) from the sub Company B, and receiving profits via dividends.”

3. [Renewal Trap] What to Do When the Main Company is in the Red, but the Sub Company is in the Black

As management continues, a reversal phenomenon often occurs: “Company A, which is the basis (sponsor) of the visa application, runs a massive deficit, while Company B, established later, generates a massive profit.”

If you reach your renewal period without taking countermeasures and apply stating, “My main activity is Company A,” there is an extremely high danger of your visa renewal being rejected due to Company A’s deficit (lack of business continuity). No matter how much profit Company B makes, Immigration is evaluating it as “Company A’s visa.”

The Breakthrough: Recovery Practice via “Change of Primary Activity (Affiliated Organization)”

In such cases, before applying for a renewal, you must take proper legal procedures to convince Immigration of a “shift (change) in your primary activity.”

• Submit a Notification Concerning the Affiliated Organization: Submit a notification to Immigration in advance stating that “the primary activity has been changed from Company A to Company B.”
• Logical Explanation in the Business Plan: At the time of renewal, logically explain using a business plan and financial statements that “Company A’s business has shrunk (or gone dormant), and currently over 80% of management effort is poured into the successful Company B. Executive compensation is also primarily received from Company B.”

By doing this, the company serving as the standard for screening switches from the “deficit-running Company A” to the “profitable Company B,” allowing you to safely win renewal approval.

4. Summary: Checklist for Entrepreneurs Managing Multiple Companies

While managing multiple companies may be an excellent business strategy, from the perspective of the Immigration Control Act (visa screening), it is a double-edged sword where “the screening becomes complicated and risks increase.”

• Clarifying the Primary/Secondary Relationship: If becoming the president of 2 or more companies, clearly establish which is main and which is sub through “executive compensation amount” and “working hours.”
• Prohibiting the Splitting of Executive Compensation: Consolidate compensation in the main company to ensure a financial balance where one company alone can support the manager’s livelihood.
• Shifting When Performance Reverses: If the main company slumps, file a “Change of Primary Activity” before renewal and pivot the screening focus to the successful sub-company.

Applying for and renewing a Business Manager Visa across multiple companies is akin to solving a highly advanced financial and legal puzzle, especially since corporate fiscal years often differ. Before establishing a new company or determining executive compensation amounts, be sure to consult an Administrative Scrivener well-versed in both corporate taxation and visa practices to build a flawless strategy.