Wednesday, June 8, 2005

Japan considers restrictions on offshore incorporation

by Brian Turner

The European Business Community and the American Chamber of Commerce in Japan are consulting with Japan’s Ministry of Justice to stop implementation of proposed changes in Japan’s commercial code that would make companies that do a majority of their business in Japan but are incorporated elsewhere illegal.

The new regulations have already been passed by the cabinet and the lower house of parliament and the upper house is now considering them.

If the changes are implemented, most US and Europeans that do business in Japan, a number of global legal firms, and companies in many other sectors that are considered “quasi-foreign” would be required to re-incorporate in Japan if they wish to continue to do business there. According to the ECB, such re-incorporation would cost a company from 10 to several million euros to accomplish.

Many of these companies would likely pull out of Japan rather than spend that amount of money. If the regulations are changed, the home nations of the businesses affected could make a complaint with the World Trade Organization.

 

 

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