Regarding Status of Residence that will be granted to foreign entrepreneurs
In the previous post ‘Easy Introduction to “Startup Visa” – Part 2’, I explained the differences between “METI’s Startup Visa” established by the Ministry of Economy, Trade and Industry of Japan, and “NSSZ Startup Visa” which is based on the system of National Strategic Special Zones. In this post, we will learn about the Status of Residence that Immigration Services Agency (ISA) grants to foreign entrepreneurs who utilize “Startup Visa” for preparation of the businesses.
(1) Status of Residence for the startup preparation differs depending on “Startup Visa” programs.
Regardless of which “Startup Visa” program foreign entrepreneurs utilize, ultimately, they will need to obtain the Status of Residence “Business Manager” and dedicate themselves to business activities in the long term.
However, depending on which “Startup Visa” program is utilized, the Status of Residence granted during the initial startup preparation stage will be different.
If foreign entrepreneurs begin their startup preparations using “METI’s Startup Visa”, they will be granted the Status of Residence called “Specified Activities (Tokutei-Katsudo)” (Notification No. 44) for a period of one year.
If they start their startup preparations using “NSSZ Startup Visa,” they will be granted the Status of Residence “Business Manager” from the initial stage, but its validity is only six months. This short-term “Business Manager” status can be regarded as a sort of temporary Business Manager’s status.
(2) Things to Do in the Entrepreneurial Preparation Stage
In any case, foreign entrepreneurs who have obtained a temporary residency status must fulfill the following two requirements within the permitted period, which are prerequisites under the Status of Residence “Business Manager”.
(a) Establishing a proper office (a physically independent and separated space for conducting business, with a proper long term rent contract)
(b) Employ at least two full-time employees, or making an investment of over 5 million Yen
Failure to meet these requirements will result in the inability to obtain the “Business Manager” residency status and the foreign entrepreneur cannot continue to stay in Japan, even if his/her business itself is successfully launched and running smoothly.
Now, let’s take a closer look at the contents of the Status of Residence “Business Manager” that foreign entrepreneurs ultimately obtain.
(3) How many executives are needed in your company?
In the first place, this status of residence is designed to be more friendly to executives and managers of large companies. Unfortunately, large companies and small companies are not treated equally.
Generally speaking, this status is assumed to apply to chief officers such as presidents, vice presidents, directors, and auditors of large companies. Having multiple officers engaged in ‘management’ in one company typically indicates a large company.
Administrators within the category of “Business Manager” are required to have actual operational experience for certain years, meaning being a professional capable of running an organization. Typically, it applies to factory managers, branch managers, or department heads in large companies who supervise many subordinates.
If you are planning to start a business with a friend, you will be questioned by ISA whether a newly established, still small-scale company really needs two chief officers? If your friend is applying as ‘administrator’, ISA will ask whether the friend has the above-mentioned experience? Furthermore, ISA may doubt whether there is enough administrative work to be taken care by one full person?
When making actual applications for residence status permits, it’s important to carefully consider these points in advance.
(4) The smaller and newer the company is, the higher the hurdles will be.
Furthermore, when a company wishes to employ new foreign nationals under the Status of Residence such as “Engineer/Specialist in Humanities/International Services (Gijinkoku)*”, practical difficulty to obtain the permits from ISA increases as the company size decreases. Smaller companies must submit more documents to prove their stability and future prospects as the evidence of secure and stable employment.
*This Status of Residence is for white-collar employees with knowledge equivalent to a university graduate in fields such as technology, law, economics, etc. I will explain further in another post. Or for more detailed information, please contact our office.
Therefore, when a foreign entrepreneur wishes to hire fellow nationals in his/her newly established, still small-scale company, he/she needs to prepare a lot of detailed explanatory documents.
If you have started your business utilizing the “Startup Visa” program, the local government of your place will continue to support you beyond preparation period. So, you are recommended to consult the local government for the case like this.
◎ The series of Easy Introduction to “Startup Visa” (total 3 parts) is now completed. We hope these small lectures were a little bit of your help on this subject. If you have any questions after reading them, please do not hesitate to send us an inquiry. Every small question is welcome!
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