Can foreign buyers acquire companies or businesses in Japan? Legal and practical Q&A

Can foreigners buy a company or business in Japan?

Foreign individuals and overseas corporations can generally buy shares in, or acquire the business of, Japanese companies. A Japanese residential address is not required; with an appropriate structure and local professionals, SME M&A deals are typically completed without legal obstacles.

Japanese company law and civil law do not, as a rule, restrict share or business transfers based on the nationality of the seller or buyer. Where all or a material part of a business is transferred, the seller usually needs shareholder approval regardless of whether the buyer is foreign (Companies Act Article 467).

In practice, the friction points for foreign buyers tend to be operational rather than outright legal bans: opening bank accounts, immigration status, director registration, and licence holders of regulated businesses. These are commonly addressed by setting up a Japanese subsidiary, appointing a Japan-resident co-representative, and routing procedures through licensed professionals. Investments into certain security-sensitive sectors and parts of the infrastructure and finance space may require prior filings under the Foreign Exchange and Foreign Trade Act Article 27, so early case-by-case checks are essential.

Is there a difference between a foreign individual buyer and an overseas corporate buyer?

Legally, both foreign individuals and overseas corporations can acquire shares or business assets in Japan. In practice, deals often proceed more smoothly when the buyer uses a company vehicle, such as an overseas parent or a Japanese subsidiary.

For sellers, banks, and regulators, dealing with a corporate entity usually makes risk assessment and procedures more straightforward. Individual buyers are permitted, but they may face more questions around:

• Opening Japanese bank accounts or securing local bank financing
• Holding industry licences (for example in accommodation or construction), where a Japanese corporation is often required or preferred as licence holder
• Future exit planning, where shares in a corporate vehicle provide more structuring flexibility

For smaller online or single-location retail businesses, an individual structure can still be workable. For buyers from the US, EU, Singapore, Hong Kong, and Australia, using a Japanese special-purpose company is often closer to familiar acquisition practice and tends to align better with tax and governance planning.

Which sectors are generally straightforward for foreign buyers to acquire?

Most standard commercial sectors are accessible to foreign buyers without special foreign ownership restrictions. Manufacturing, typical B2B services, retail, IT and software development, and trading companies are all common SME M&A targets for overseas buyers.

The Foreign Exchange and Foreign Trade Act Article 27 and Article 27-2 focus primarily on defence-related businesses, parts of critical infrastructure, and sensitive technologies. Many SME targets are either outside these categories or can qualify for exemptions if certain conditions are met.

Restaurants, small accommodation facilities, e‑commerce businesses, and system integrators often require business registrations or licences, but these can usually be transferred or re-obtained by aligning licence holders, officers, and premises with the regulatory criteria. For a broader view of how these deals run in practice, see our guide on the full M&A process for buying a Japanese SME as a foreigner.

Which industries involve more regulation or complications for foreign or foreign‑owned buyers?

More heavily regulated areas include finance and insurance, telecommunications, airlines and shipping, energy, weapons, and core transport infrastructure such as railways and airports, alongside parts of real estate and accommodation. Several legal regimes can overlap: financial regulation, national security, and local planning or tourism rules.

Even in these sectors, foreign ownership is not necessarily prohibited. The key point is that additional reviews, approvals, or notifications may apply. Investments in national security–relevant fields may trigger pre-transaction filings and screening under FEFTA Article 27 and Article 28.

In practice, advisors usually map the target’s revenue mix and licences, identify which statutes may apply, and then seek informal feedback from the competent ministries or local authorities. Accommodation and tourism assets are a frequent focus for overseas capital, and where buyers address hotel/inn licences, local ordinances, and zoning early, workable solutions are often available.

What is the difference between buying shares and buying only the business (assets)?

Buying shares means taking over the company itself; buying a business (an asset deal) means acquiring selected business assets and contracts. For foreign buyers, this affects how risks are ring-fenced and how licences and employees are handled.

In a share transfer, the company’s rights and obligations remain in place. This continuity simplifies operations but means historical liabilities and contingent risks stay in the entity, so due diligence and contractual protections (representations, warranties, and indemnities) take on greater importance. In an asset deal, the buyer cherry-picks assets, contracts, and employees, often avoiding unwanted liabilities, but counterparties usually must consent to new contracts. Where a company sells all or a material part of its business, shareholder approval is required on the seller’s side (Companies Act Article 467).

Choosing between the two is a structuring decision based on the target’s financials, contracts, licences, and tax position. For a more detailed comparison of structures and their tax implications, see our guide on tax and deal structuring when buying a Japanese SME.

Can a foreign owner stay abroad, or must they live in Japan?

Shareholders are not required to live in Japan. Overseas individuals and foreign corporations can own 100% of a Japanese company’s shares without becoming residents. The practical question is how day‑to‑day management in Japan will be carried out.

Banks, tax and social security authorities, and regulators expect someone in Japan to handle daily correspondence and compliance. Many cross‑border deals therefore appoint a Japan‑resident representative director or senior manager. When a foreign company conducts continuous business in Japan, it may need to register a branch office and appoint a local representative; non-compliance can lead to orders such as branch closure (Companies Act Article 827).

Foreign owners who plan to work in or manage the business on the ground need an appropriate visa; working in Japan without a qualifying status is not allowed. One common pattern is foreign ownership combined with a Japanese management team, with governance tailored case by case.

Does buying a business in Japan automatically give me a visa?

No. Acquiring a business or company does not automatically grant immigration status. To live in Japan and be involved in management, a foreign national must apply separately for an appropriate status of residence, such as “Business Manager,” and pass screening by the Immigration Services Agency (Immigration Control and Refugee Recognition Act Article 2).

In practice, immigration authorities review the office setup, investment size, staffing plan, and business plan as a whole. Even where the buyer acquires an existing business, the authorities will look at whether the venture appears sustainable and genuinely operated, and whether it is more than a nominal acquisition. Smaller-scale or marginally profitable businesses can make visa approval and renewals more challenging.

We outline how business acquisitions interact with immigration options, and where hurdles tend to arise, in our guide on obtaining a status of residence by buying a business in Japan.

Can foreign buyers use Japanese bank loans to finance an acquisition?

Foreign individuals and overseas companies may be able to obtain acquisition financing from Japanese banks, but credit standards are usually tighter than for Japan-resident individuals or established domestic companies. Lenders often expect a higher equity contribution from foreign-backed buyers.

Japanese banks typically assess the target’s cash flows, domestic collateral, guarantors, and the buyer group’s track record and financial strength. Where a buyer’s track record is entirely overseas, it may help to establish a Japanese subsidiary and build some operating history, partner with a local co-investor, or secure a creditworthy guarantor.

There are public finance schemes in Japan to support succession financing for SMEs, including through Japan Finance Corporation, but these are generally designed for Japan-based successors (Act on Facilitation of Succession of Management of Small and Medium Sized Enterprises Article 14). For a sense of typical equity ranges foreign buyers should plan for, see our guide on how much capital is needed to buy a Japanese SME.

What are common issues when foreign buyers acquire regulated businesses (inns, hotels, factories, etc.)?

Foreign individuals and overseas corporations can typically own regulated businesses such as inns, hotels, manufacturers, restaurants, and construction firms. The focus is on meeting licence conditions, appointing qualified managers, and ensuring premises and equipment comply with technical standards.

For hotels and inns, this can involve transferring or re-obtaining operating permits under the Inns and Hotels Act and relevant local ordinances. For manufacturing, factory location rules and environmental and safety compliance may be key. Construction often turns on construction business licences and the presence of dedicated qualified engineers. These requirements sit in statutes, cabinet orders, ministerial ordinances, and local rules, so targeted confirmation with competent authorities is essential for each deal.

Japanese SMEs tend to keep approvals, plans, and inspection records for many years, which allows foreign buyers to map licence and compliance status carefully during due diligence. Sector-specific points for tourism and manufacturing acquisitions are covered in our guides on buying a ryokan in Kyoto, acquiring hotels in Hokkaido, and acquiring small manufacturing companies in Japan.

What should foreign buyers focus on in due diligence when acquiring a Japanese SME?

The core financial, tax, and legal due diligence scope is broadly similar for foreign and domestic buyers. For cross‑border deals, it is also important to check whether licences remain valid under foreign ownership, how key customers, suppliers, and banks may react to a foreign shareholder, and whether any managers or employees have immigration or labour status issues.

Japanese companies are generally diligent in keeping accounting records, contracts, and filings submitted to authorities, which helps clarify these questions from documents rather than assumptions. Where there is uncertainty or execution risk, it can be practical to phase the transaction—for example, through an initial minority stake with options—so that both sides can test the relationship and performance.

We set out a structured approach to due diligence for Japanese SME acquisitions, including prioritisation of issues and common findings, in our comprehensive guide to due diligence for SME M&A in Japan.

How are foreign buyers taxed when acquiring a Japanese company, and what structures are typical?

Key Japanese taxes—corporate income tax, consumption tax, and registration and licence tax—apply similarly regardless of the buyer’s nationality. However, the tax outcome differs significantly depending on which entity within the buyer’s group acquires the target, the tax residence of the parties, and whether the transaction is structured as a share deal or a business (asset) deal.

These choices affect the seller’s Japanese tax burden and after-tax proceeds, as well as the buyer’s future tax position on dividends, interest, and exit. As in the US, EU, Singapore, Hong Kong, and Australia, sellers in Japan focus heavily on net proceeds, so tax-efficient structuring often feeds directly into price and terms.

Our introductory guide on tax and structuring when buying a Japanese SME outlines the main options and trade-offs. Specific rates, treaty relief, and anti-avoidance rules depend on the buyer’s jurisdiction and situation, so deal teams should assume that local and international tax advice in both Japan and the buyer’s home country will be needed.

How should foreign buyers practically start the process, and whom should they speak to first?

A practical starting point is to clarify three points: (1) target business size and sector, (2) whether the buyer or key managers will live in Japan and what that means for visas, and (3) approximate equity capital available and any financing levers. With this, buyers can narrow down feasible structures and target profiles.

The next step is to engage a Japan-based M&A advisor and local legal and tax counsel to translate these goals into deal structures, identify legal and regulatory constraints, and design a realistic timetable. In the SME succession market, Japanese sellers are often flexible if they can secure a credible long-term successor, and government offices are generally constructive when approached with clear, concrete plans.

For a high-level overview of the entire journey, see our complete guide to buying a Japanese SME for overseas buyers (2025 edition) and the updated 2026 edition. Buyers who already have a target profile and budget can benefit from speaking with an M&A advisor early to test feasibility against current market conditions.