In order to attract foreign businesses to Japan, the Japanese government has enacted laws specifically designed to provide an incentive for parties who wish to expand their business into Japan. One such law is the Act for Promotion of Japan as an Asian Business Center, which was put into effect in November of 2012.
Splitting a company can be a valuable strategic tactic for corporations that want to change the focus of their business or split into two more specialized companies. There are two types of company splits in Japan: absorption type splits and incorporation type splits.
When an employee leaves the service of a company, he or she is required by law to keep trade secrets confidential. Revealing trade secrets, whether for compensation or for free, is illegal and the basis for a lawsuit under Japan’s unfair competition laws. Companies are subject to the same liability for questioning their own employees about the trade secrets of the employee’s former companies.
Companies and employees are free to set the governing law for employment contracts however they wish. This is particularly helpful for a foreign company that wishes to draft employment contracts that will be enforced according to the laws of its home country. However, in general, employees in Japan may still take advantage of Japan’s protective employment laws, such as the Labor Standards Law, even if their employment contract is governed by a foreign country’s laws.