In an effort to tighten its oversight of global tech giants, Japan’s Ministry of Justice and Ministry of Internal Affairs and Communications reportedly asked local units of Google, Meta, Twitter, and other tech corporations to register their overseas headquarters by the end of March or to provide explanations for why they could not by mid-April.
The Companies Act (Act No. 86 of July 26, 2005, as amended) requires foreign enterprises that operate continuously in Japan to register their overseas headquarters and states that foreign companies may not carry out transactions continuously in Japan before completing such registration. (Companies Act art. 818, para. 1.) Many big tech companies, however, have registered only their Japanese units. The act provides a penalty for violating the registration requirement, but the penalty is light: the violator is punishable by a fine up to 1 million yen (about US$7,900). (Art. 976, item 1.) In addition, after registering, the foreign company must disclose its balance sheet. (Art. 819.)
While Meta maintains that it is not in continuous business in Japan, one expert has stated that it is unreasonable for the big tech companies to make such a claim because they have so many Japanese users.Act No. 30 of 2020, which amended the Telecommunications Business Act (Act No. 86 of 1984), bolstered the Justice Ministry’s position by strengthening supervision over foreign telecommunications businesses. Before the amendment took effect on April 1, 2021, the Ministry of Internal Affairs and Communications declared that foreign telecommunications companies that provide telecommunications services from abroad are “persons that intend to operate a telecommunications business” under the act, while article 9, paragraph 1 of the act obligates such persons to register with the minister for internal affairs and communications.