Rely on Kojima Law Offices to succeed in Japan / Assistance with On-Going Operations
For a number of reasons, foreign-owned subsidiaries can often find themselves in hot water because they have violated some aspect of Japanese law. These subsidiaries sometimes mistakenly believe that they can conduct business in Japan in the same manner as the parent company does back home. Or some issues appear too trivial to seek a lawyer’s help with. In other cases, seemingly unrelated regulations may apply to the company’s business activities in quite unexpected ways.
As with most things in life as well as in the law, prevention is better than the cure. That’s why identifying the legal risks up front and taking any needed precautions is the best way to avoid the unnecessary time, cost, and effort that would be required to deal with the problem later. Below are some of the services that we offers to address typical issues that Japanese subsidiaries commonly face.
Immediately Following Incorporation/Acquisition:
Standard contract terms and conditions
The first instinct of many foreign-based companies is to have its Japanese subsidiary use HQ’s contract templates. But that’s not always the best approach. There may be terms or concepts that have no exact counterpart in Japanese contract law, which could lead to a disagreement about the precise meaning of a key provision. Another problem is that some contract templates contain terms or conditions that are unenforceable in Japan or that create potential risks under Japanese law. To ensure that our clients’ contracts are airtight, we prepares a Japanese version of the standard terms and conditions that complies with Japanese law and minimizes the chances of misinterpretation.
Managing Intellectual Property Rights
A company’s intellectual property, including its patents, trademarks, know-how and trade secrets, are critically important for branding and can generate significant profits. We assists clients with all of their intellectual property needs, including trademark applications, trademark infringement, trade secret theft by employees, and licensing. We helps companies properly maintain and manage the their intellectual property by preparing internal rules and protocols, as well as master license agreements and ancillary agreements.
Foreign investors need to carefully navigate Japan’s pro-labor legal regime. Japanese labor and employment regulations provide robust protections for employees in Japan. In fact, freedom of contract does not necessarily apply in Japan as far as employment agreements are concerned.
A company risks both financial and reputational damage for failing to comply with Japan’s strict labor laws. When hiring employees in Japan, the employer needs to pay particular attention to what can seem like minor details, including whether the employer should be the foreign headquarters or the Japanese subsidiary, the employee’s official title, and even the precise method that the employer uses to determine the employee’s salary.
At the heart of the employment relationship is the employment contract, which a foreign-based employer must ensure is in line with Japanese regulations and practices. We assists companies to prepare legally prudent employment agreements and directorship agreements in Japanese, in English or, when appropriate, in both languages. We also helps companies draft other important employment-related documents such as their rules of employment and labor-management agreements. Critically, we handle labor disputes on a regular basis, especially those between Japanese subsidiaries of foreign companies and their Japanese employees. We also cater to expats who require a work visa.
Companies in certain lines of business or that market and sell certain products in Japan need to obtain regulatory approval for their activities. We advises on those requirements and assists clients in obtaining the required governmental approval or making any necessary filings.
Business Expansion Phase:
Compliance with ongoing legal requirements
Despite the availability of alternatives, the vast majority of companies in Japan opt to incorporate as a kabushiki kaisha, which is roughly equivalent to a US-style limited liability corporation. Under Japanese law, kabushiki kaisha companies are required to comply with a bevy of legal requirements. These requirements include holding an annual shareholder meeting to approve the company’s financial documents, publishing a financial statement in the official governmental gazette once a year, and registering the appointment of directors. We monitors the deadlines for these tasks to ensure that our clients are in full compliance with all legal requirements.
Properly overseeing business’s contracts is a key part of minimizing a company’s risks. This is even more true in Japan, where linguistic issues can make contract issues more complicated. Many Japanese companies still prefer entering into agreements in Japanese, which can put foreign-based companies at somewhat of a disadvantage. To help level the playing field, we provides clients with English summaries of Japanese-language contracts (or, upon request, full translations) and advises on the potential risks from a Japanese law perspective. We also assists clients to draft counter-proposals in Japanese to address any specific concerns. Some clients essentially use our firm as their in-house counsel. This arrangement can be a great advantage because our close working relationship allows us to fully understand the client’s business and quickly respond to the client’s contract-related questions and needs.
A company has several options to raise money to expand its business. These options include equity financing by raising capital and borrowing money from banks or its parent company. We advises on the most appropriate financing options and handles any required documentation. We draft and review loan agreements, share purchase agreements, security agreements, and the like. We also assist with the process of increasing a company’s capital, including taking care of all required governmental registrations.
Labor and Employment
Labor issues in Japan represent a minefield of risk for the unwary. A company must regularly update its rules of employment to account for amendments to the relevant regulations, ensure that it documents in painstaking detail the performance shortcomings of any problematic employees, and minimize the possibility of sexual harassment claims, as well as the risk of so-called “power harassment”. In order to avoid costly and time-consuming labor disputes and maintain the company’s reputation, it is vitally important to address these issues as early and as thoroughly as possible. If, despite its best efforts, the company finds itself involved in a labor dispute, we assists clients to achieve a resolution, whether through a fair settlement or, if necessary, in litigation before the court.