Q8: I'm concerned about the legal risks involved in deciding whether to establish a Japanese corporation, branch, or representative office. Can you tell me about the legal risks associated with each?

Japanese Certified Public Accountant ・Tax Accountant Hiroya Aihara
Ringo Tax Corporation

A: For a Japanese corporation, the liability is limited to the amount of investment, so the risk from the parent company's perspective can be considered limited. On the other hand, the liability for a Japanese branch and representative office is unlimited, which might seem to pose a greater risk from the parent company's perspective.

For a Japanese Corporation

・The Japanese corporation bears primary responsibility towards creditors.
・The parent company, as the investor, has liability limited to the amount of its investment.

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For a Japanese Branch

・The Japanese branch is part of the foreign corporation, which bears full responsibility towards creditors, meaning there is no limit to the liability from the parent company's perspective.

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For a Representative Office

・The representative office, also part of the foreign corporation, bears unlimited liability.

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Thus, there are differences in the scope of liability between a Japanese corporation and branches/representative offices, necessitating appropriate risk management.

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