New Rule for Authentication of Articles of Incorporation
The rule for authentication of articles of incorporation has been amended. Starting from November 30, 2018, companies are required to declare “beneficial owners” by submitting the application. This reform aims to identify the beneficial owners of companies and to prevent the misuse of companies by gang organizations or terrorists.
The purpose of this reform is to identify a person having a controlling influence on the company through the shareholding ratio and to prevent and deter money laundering and international terrorist funding by criminal groups. In case the beneficial owner in the application is suspected of being a member of gangster organizations or other criminal groups, the notary will require a more specific explanation. If there is no submission of the application or any suspect of illegality in the application, the articles of incorporation shall not be authenticated by the notary. This new rule is applied to the following three types of corporations: a stock corporation (Kabushiki-Kaisha), a general incorporated association (Ippan-Shadanhojin), and a general incorporated foundation (Ippan-Zaidanhojin).
3. Point to notice
Persons who are incapable or have no intention of substantially controlling the business or management of companies should be excluded from “beneficial owners.”
Therefore, in cases where an independent expert is appointed to become a proxy of a foreign resident and requested to undertake the following, he/she should not be treated as a beneficial owner because he/she is incapable or has no intention of substantially controlling the company.
To become an incorporator subscribing for all shares issued at incorporation, become a director at incorporation, transfer all issued shares to a foreign resident immediately after incorporation, and change the status of a director to the foreign resident
In this News, we mentioned the “New Rule for Authentication of Articles of Incorporation.”
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Japan National Notaries Association “About New Rule for Authentication of Articles of Incorporation” (Japanese)