How do investors prove their initial investment in a startup company?

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One of the requirements to establish a company in Japan is to prove that the requisite money for the initial investment is available.  However, since this proof is required before the company is formed, the yet-to-be-established company will not have a bank account yet.  Therefore, the initial investment must be deposited into the bank account of one of the founding members. 

For a foreign investor, this rule can cause difficulties, as the bank account submitted as proof of the initial investment must be a Japanese bank account.  Therefore, foreign investors must deposit a sum of money equal to, or larger than their investment into a Japanese bank account.  Usually, this bank account will be the account of a Japanese partner or founding member.

Foreign investors should be aware that Japanese banks will often take a service fee from overseas money transfers and, without proper planning, this fee may reduce the amount of the transfer to lower than the required initial investment.

If you have any questions about starting a business in Japan, please contact our office for a legal consultation.