Before you signBuying a Small Business in Japan: Legal Due Diligence for the Buyer

Your status of residence is a separate question from the deal

Buying a Japanese company does not by itself give you the right to run it from inside Japan. If you intend to manage the business yourself here, the relevant status of residence is usually Business Manager 経営・管理, and the criteria for it were tightened with effect from 16 October 2025: a total of JPY 30 million invested in the business, at least one full-time employee, a business plan checked by a qualified professional, a background requirement, and a Japanese-language requirement met by the applicant or by an employee. Transitional arrangements apply to people already holding the status.

Whether an acquisition satisfies these criteria depends on how the deal is structured, which is why the two are worth looking at together rather than one after the other. I do not file immigration applications — that work is done by immigration lawyers and gyoseishoshi, and I am happy to work alongside the one you instruct.

Foreign exchange law may require a filing before or after closing

Under the Foreign Exchange and Foreign Trade Act, an acquisition of shares in an unlisted Japanese company by a foreign investor is treated as an inward direct investment. Depending on what the target does, this means either a prior notification before closing, with a waiting period, or a report after closing.

Two points are easy to get wrong. First, whether you are a foreign investor turns on residence rather than nationality, so a foreign national who is a resident of Japan is generally outside the definition while a Japanese national living abroad may be inside it. Second, where a prior notification is required, it has to be made before the acquisition, which affects the closing timetable rather than merely adding paperwork afterwards.

Some licences do not travel with the deal

A licence held by the company usually stays with the company in a share transfer, and usually does not transfer in a business transfer. Either way, a change of representative director or of shareholder can require notification, and some regimes impose requirements on the people running the business. If the licence is what makes the business worth buying, it belongs at the top of the due diligence list, not the bottom.

Everything that matters is in Japanese

The commercial register, the articles of incorporation, the shareholder register, the employment rules, the customer contracts and the purchase agreement are all in Japanese, and the Japanese version is what governs. Working from a summary translation of a few pages is a common way for a buyer to miss the clause that matters. I read the Japanese originals and explain what they do in English.

Four years inside a company's legal department

I spent four years in the legal department of Rakuten, Inc. before practising as an attorney. Corporate work, M&A, startups and disputes are what I handle now.

The view from after the closing

The question is not only whether a clause is unusual, but whether it will get in your way once you are the one running the business. That is the angle I read the documents from.

Ranked, not listed

A report that lists forty findings of equal weight is not a decision-making tool. You get the handful that could change the price or the decision, and what to do about each.

English with you, Japanese with them

You get the advice in English. The documents, the questions to the seller and the agreement are handled in Japanese, and I go through each one with you. Other work is described on the startup legal and business disputes pages.