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.
When establishing a company in Japan, the founder will be required to register an official seal for the company. Stamps or seals are commonly used in Japanese business as an alternative to signatures to authorize documents. Officially registering the seal will legally bind that specific design to the company and any time that seal is used it will be presumed to be an official recognition by the company.
In order to officially register a company in Japan, the founder of the company must pay a registration fee at the Legal Affairs Bureau. This fee is calculated based upon the initial capital of the corporation. Therefore, a corporation with an initial capital of one hundred million yen will require a larger registration fee than a company with an initial capital of ten thousand yen.