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Investing in Japan: Choosing Between a Share Deal, Asset Deal, Joint Venture or New Company

2026/10/08

Investing in Japan: Choosing Between a Share Deal, Asset Deal, Joint Venture or New Company

Miyake & Partners | Japanese Law Explained | October 2026

Many overseas companies want to enter the Japanese market by buying a business, partnering with a Japanese company or setting up their own. The structure you choose decides which liabilities you take on, whether employees move with the business, how you are taxed and which government filings you need. Some of those filings must be made before closing, and the rules are changing again in 2027. Checking these points early avoids delays and costly surprises.

What are the main ways to enter Japan?

Share purchase. You buy the shares of a Japanese company. The company keeps its contracts, licences and employees, but you also take on all of its past liabilities, so protection comes from warranties and indemnities in the share purchase agreement.
Asset purchase. You buy only the assets and liabilities you choose. This keeps old risks with the seller, but contracts, permits and employees must be moved one by one, often with third-party consent.
Joint venture. You invest with a Japanese partner, usually through a jointly owned company. This gives you local relationships and shared risk, at the cost of sole control.
New company (greenfield). You set up your own company, typically a kabushiki kaisha (KK) or godo kaisha (GK). You have full control from day one, but it is the slowest route to revenue and licences must be obtained in the new company’s name.

Do I need government clearance to invest?

Under the Foreign Exchange and Foreign Trade Act (FEFTA), many investments need, at most, a report after the investment. However, if the Japanese company operates in a designated sector, such as businesses related to national security or critical infrastructure, the investor must file a prior notification before acquiring any shares in an unlisted company, or 1% or more of a listed company. Filings are made through the Bank of Japan to the Ministry of Finance and the ministry responsible for the target’s business.

After a prior notification is accepted, the investor must wait 30 days before investing. The period is often shortened, but it can be extended to up to five months if closer review is needed, and the authorities can recommend or order changes to, or suspension of, the investment. Investors that meet certain conditions, such as not joining the board and not accessing non-public technology information, may be exempt from prior notification. The exemption is narrower in core sectors and is not available to foreign governments, entities they control (other than accredited sovereign wealth funds) or investors previously sanctioned under FEFTA.

Two practical points are often missed. First, “foreign investor” is judged by residence and control, not nationality: a Japanese national living abroad, or a Japanese company majority-owned by foreign investors, can be a foreign investor. Second, actions other than buying shares, such as agreeing to the appointment of the investor as a director, can also require prior notification.

Recent changes

FEFTA amendment Act: promulgated on 5 June 2026. It addresses indirect investment, investment under the influence of high-risk foreign persons and risks arising in non-designated sectors.
Implementing Cabinet Order and rules: promulgated on 16 September 2026, in force from 4 January 2027 and fully applicable from 3 February 2027.
Japan Fair Trade Commission (JFTC): public consultation on a draft revision of the Merger Guidelines opened on 17 July 2026.

Is a merger control filing required?

For a share acquisition, a prior filing with the JFTC is required where the buyer’s group has domestic sales of more than JPY 20 billion, the target and its subsidiaries have domestic sales of more than JPY 5 billion, and the buyer’s voting rights will exceed 20% or 50%. Different thresholds apply to mergers, company splits and business transfers. The deal cannot close until 30 days after the filing is accepted, although the JFTC can shorten this period, so integration planning and information sharing should be handled carefully until then.

What happens to employees?

In a share purchase, the employer does not change, so employees stay on their existing terms. In an asset purchase, employees do not transfer automatically: under the Civil Code, each employee’s individual consent is needed. A company split follows a separate statutory procedure for transferring employment contracts, with consultation and notice requirements. The Ministry of Health, Labour and Welfare has issued guidelines on both situations.

How does tax differ between structures?

In an asset purchase, the buyer generally takes the assets at their market value, which can increase future depreciation. Where conditions are met, the excess of the price over the net assets acquired is treated as tax goodwill and deducted over 60 months. In a share purchase, the company keeps its existing tax values. Specialist tax advice should be taken for every structure.

Six checks before you sign

Check	Why it matters
FEFTA classification	If the target operates in a designated sector, prior notification and a waiting period apply before closing.
JFTC thresholds	A required merger filing means the deal cannot close until the 30-day waiting period ends.
Licences and permits	In an asset purchase most permits do not transfer automatically, and a new company must apply in its own name.
Change-of-control clauses	Key customers, suppliers or landlords may be able to refuse consent or terminate contracts.
Employees	In an asset purchase each employee must consent to the transfer, so plan consents before completion.
Land and registration	Unregistered or wrongly registered land and undisclosed security interests are common red flags.

After closing

File any required FEFTA post-investment report within 45 days.
Register changes of directors and other corporate details, and complete tax and social insurance registrations.
Record transfers of intellectual property and notify counterparties where contracts require it.
Track any commitments made in the FEFTA or JFTC review, and check deals closing in 2027 against the amended FEFTA rules.

How we can help

Our Cross-Border Team advises overseas investors in English at every stage of entering Japan. We can compare structures for your goals, conduct legal due diligence, prepare FEFTA and JFTC filings, draft and negotiate share purchase, asset purchase and joint venture agreements, manage employee transfers and set up new companies. If you are considering an investment in Japan, please contact us before you sign a term sheet.

Cross-Border Team: cross-border@miyake.gr.jp
Yasuchika Fukuda, Partner: y-fukuda@miyake.gr.jp

Official sources

NOTICES

THIS ARTICLE IS PROVIDED FOR GENERAL INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL ADVICE.
THIS ARTICLE IS BASED ON THE LAWS AND REGULATIONS IN EFFECT AT THE DATE OF PUBLICATION, WHICH MAY CHANGE AS A RESULT OF FUTURE AMENDMENTS.

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