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Q_iconWhat are the responsibilities of investors and foreign head office to the creditors of its corporation in Japan (subsidiary company), its branch office in Japan (branch office), or its representative office?

A_iconFor a subsidiary company, liability is limited to the amount invested; however, as a general rule there is no limit on the liabilities of a branch office and a representative office.

★ Explanation ★

1. In the case of a subsidiary company

In the case of a subsidiary company, it is primarily liable to its creditors. While the parent company (foreign company) is also considered an investor, due to the provisions on limited liability of shareholders stipulated in Article 104 of the Companies Act, a shareholder’s liability is limited to the amount of investment made to its subsidiary company.

Article 104 (Shareholders’ Liabilities), Companies Act
“A shareholder’s liability is limited to the amount of the subscription price of the shares the shareholder holds.”

2. In the case of a branch office

In the case of a branch office, the foreign company the Japan office is part of is ultimately liable to the branch office’s creditors. Liability to the creditors is not limited, and there are no legal provisions that limit the liability of shareholders.

3. In the case of a representative office

In the case of a representative office, liability to the creditors is not limited, and there are no legal provisions that limit the liability of shareholders.