Under Article 349 of the Companies Act, a representative director has authority to do anything in the course of the company's business, in or out of court. Internal limits on that authority, such as a parent company's approval matrix, do not bind third parties who were unaware of them. In a company with a board, the board chooses the representative director from among the directors. A company can have more than one.
The representative director is usually the shacho, the president, but the two are not the same thing: shacho is a company title, and representative director is the legal role. The law protects outsiders here too. If a company lets a director use a title such as president that suggests authority, it can be bound by what that director does even without registration as representative.
Until March 2015, at least one representative director of a Japanese company had to live in Japan. The Ministry of Justice dropped that requirement, though a branch of a foreign company still needs a representative resident in Japan. The representative director's name and address appear in the commercial register, and since October 2024 they can apply to show only the city or ward.
What it means for a foreign employer
- Decide who can sign. Making the country manager representative director gives them the power to bind the company. Many groups keep a regional executive as co-representative or use internal approval rules, knowing these do not bind outsiders.
- Non-resident is legal but not always practical. Banks, tax filings and day-to-day contracts are easier with a representative in Japan.
- The role is a strong draw for senior candidates. Being representative director of a Japanese entity carries weight with clients and in the candidate's own network.
- Removing one is a board act. Taking away the representative title does not end the person's directorship or employment. Each needs its own step.
Sources
- Companies Act, Articles 349, 354, 362 and 817.
- Ministry of Justice notice of 16 March 2015 on registration where no representative director resides in Japan.
- Commercial Registration Rules, as amended in force 1 October 2024 (partial non-disclosure of representative directors' addresses).