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Q_iconWhy does the payment of capital during incorporation have to be coursed through an individual’s bank account?

A_dark_iconThis is so that the Legal Affairs Bureau can verify if the money would really become the company’s capital, or if there are other alternative assets.

★ Explanation ★

During the incorporation of a stock company, an incorporator must, without delay, pay in the entire sum of monies relating to the incorporator’s contribution (Companies Act, Article 34, paragraph (1)). The contribution in money indicated above must be paid through deposit in a bank (Companies Act, paragraph (2)).

Companies Act

(Performance of Contributions)

Article 34 (Some parts omitted)

(2) The contribution in money pursuant to the provisions of the preceding paragraph must be paid at the Bank, Etc. (meaning a Bank (meaning a bank as defined in Article 2, paragraph (1) of the Bank Act (Act No. 59 of 1981); the same applies in Article 703, item

(i)), a Trust Company (meaning a trust company as defined in Article 2, paragraph (2) of the Trust Business Act (Act No. 154 of 2004); the same applies hereinafter) and other entities prescribed by Ministry of Justice Order as entities equivalent to the same; the same applies hereinafter) designed for payment by the incorporator.

Source: Japanese Law Translation Database System
http://www.japaneselawtranslation.go.jp/law/detail/?id=3206&vm=04&re=2&new=1

performance-of-capital-contributionThe deposit account where the capital contribution(s) will be placed into is the personal bank account of the incorporator. If the incorporator is a company, the bank account will be that of the company.

If there is more than one incorporator, they can either choose to delegate one incorporator whose account will be used, or individually pay their own capital contributions to their individual bank accounts.

If an incorporator does not have a bank account with a Japanese financial institution, they may perform their contribution through the account of a director (or representative director). However, as this entails that one incorporator would become a director or a representative director upon incorporation, a power of attorney (authorization letter) that authorizes the [representative] director at incorporation to receive capital should be an attachment to the application for company registration.

The Ministry of Justice Min-sho, No. 41

March 17, 2017

Article 34 (Some parts omitted)

The account holder of the deposit passbook, in the case where a copy of the deposit passbook of the payment handling institution is attached as a part of a document evidencing the completion of a contribution in money as prescribed in Article 31, paragraph (1) of the Companies Act (Notice)

In the application for the registration of incorporation of stock company, in the case of hokki-setsuritsu (“incorporation without outside offering”), a document certifying the amount paid to the payment handling institution which is prepared by the representative director at incorporation or the representative executive officer at incorporation may be accepted as a document evidencing the completion of a contribution in money as prescribed in Article 34, paragraph (1) of the Companies Act (Act No. 86 of 2005) (Article 47, paragraph 2 (5) of the Commercial Registration Act (Act No. 125 of 1963)) if such document and either a copy of a deposit passbook of the institution, or a bill of transaction or other document prepared by the institution are booked into one volume (Part 2, I 2 (3) (v) (ii) of the notice by Director-General of the Civil Affairs Bureau of Ministry of Justice dated as of March 31, 2006, “Handling of the commercial registration after execution of the Companies Act” (The Ministry of Justice Min-sho, No. 782)). The scope of the account holder of the said deposit passbook shall be handled as follows. Please inform and direct this to each registrar for proper registration process.

Description

1. The scope of the person who is permitted as the account holder of the deposit passbook

A director at incorporation (including a person who is a representative director at incorporation; the same shall apply hereinafter), as well as an incorporator, may be permitted as the account holder.

In the case where a copy of a deposit passbook is attached as a document evidencing the completion of a contribution in money and the account holder of the deposit passbook is a director at incorporation, a document clarifying that the incorporator has delegated the right to receive the payment to the said director at incorporation must be attached additionally.

2. Special provisions in the case where all of the incorporators and directors at incorporation do not have any domicile in Japan

In the case where the fact that all of the incorporators and directors at incorporation do not have any domicile in Japan is apparent from the descriptions of attachments of a written application for the registration, the account holder do not have to be an incorporator or a representative director at incorporation.

In the case where a copy of a deposit passbook is attached as a document evidencing the completion of a contribution in money and the account holder of the deposit passbook is not an incorporator nor a director at incorporation is an account holder, a document clarifying that the incorporator has delegated the right to receive the payment to the said account holder must be attached additionally.

3. Delegation of the right to receipt the payment from the incorporator

In the case of 1 and 2 mentioned above, the right to receive the payment from the incorporator does not have to be delegated by all of the incorporators or a majority of them. The delegation from at least one of the incorporators is sufficient.

Source: The Ministry of Justice
http://www.moj.go.jp/content/001231093.pdf