【Case Study】How to prevent non-permission of extension of a business manager visa
Mr. A, an American, runs a trading company X Co., Ltd. in Japan with a business manager visa and a trading company in his home country, the United States. X Co., Ltd. posted sales of 30 million yen and a loss of 1.2 million yen in the second term. Mr. A was away from Japan for a total of about 6 months last year, as he was going back and forth between Japan and the United States to transfer his duties and entrust the management of his trading company in the United States to his successor.
As the visa was close to the expiration, Mr. A thought about applying for extension of his business manager visa. He became worried about whether he could extend his visa as the second term had been ended in the red and he had been away from Japan for many days.
In this article, we will look at how to prevent non-permission of extension of a business manager visa and the requirements for extension of business manager visa with examples.
1. How to prevent non-permission of extension of a business manager visa
Some foreigners think that extension of a visa can be easily done by themselves, but in case of a business manager visa, the financial status of the company will be examined in addition to the status of residence. We sometimes receive consultation regarding cases where extension of a business manager visa was rejected because of unexpected difficulties.
If you understanding the requirements for extension of a business manager visa, you can reduce the risk of rejection of extension of a business manager visa.
Therefore, we would like to explain what kind of preparations must be done, along with some examples of extension of a business manager visa.
2. “Business continuity” is emphasized in the examination on application for the extension of a business manager visa
Business manager visas are granted to foreigners who will carry out activities of business operation or management in Japan, so in the examination concerning extension of a visa, the business continuation is checked. It is because if the business will not continue, the activities to operate and manage the business will also not be able to continue.
Business continuation is judged based on the financial results. In business activities, there are various factors which may cause a huge loss. So, in the examination pertaining to the application for extension of a business manager visa, judgement is made based on comprehensive consideration of the settlement status (flow) of a single year, as well as the loan status (stock) etc.
Specifically, it will be handled as follows in accordance with the settlement status of the last 2 terms.
3. In case of surplus at the end of the most recent term
Surplus is the amount of assets minus the amount of liabilities minus the amount of capital. Since capital is invested in a company to carry out business, having surplus means that the company is making a profit.
If there is surplus on the balance sheet at the end of the most recent term, the extension of a business manager visa will be permitted in principle because it will be found that there is no problem with business continuation.
However, even in case of surplus, if the sales in the latest term are extremely low, the immigration office will suspect that the foreigner is not really carrying out management activities. Therefore, it is better to submit a written explanation as to why the sales were so low.
4. In case of a loss at the end of the most recent term
(1) In case of no insolvency at the end of the most recent term
Deficit means a state where the amount of assets minus the amount of liabilities is less than the amount of capital, which means that the company is losing money by doing business.
Insolvency means the state where debts exceed assets. Since the company has spent all capital and borrowed money, survival of the business is generally in crisis in such situation.
If a loss was recorded at the end of the most recent term but it’s not insolvency, the background of the loss, the prospect of improvement, and the future business plan should be submitted to prove that the business will continue in the future.
(2) Insolvency at the end of the most recent term, but not at the end of the previous term
In case of insolvency, the survival of the business is in jeopardy, so it is difficult to confirm the future continuation of the business. Nonetheless, if a company was not insolvent at the end of the previous fiscal year (i.e. if the insolvency has not continued for more than 1 year), and if you can reasonably explain the continuation of your business along with a written explanation of the background of the insolvency and a business plan to improve the insolvency situation within 1 year, you may have a chance to receive permission for extension of your business manager visa. However, in such case, you also need to submit a written evaluation concerning the prospect of improving the insolvency situation prepared by a third party with official qualifications such as a Small and Medium Enterprise Management Consultant and CPA.
(3) In case of insolvency for 2 consecutive terms
If a company stays in the state of insolvency for more than one year, that is, if it has been insolvent for 2 consecutive terms, such company is considered to be in a difficult financial situation to continue business and is not expected to improve in future. Accordingly, in principle, business continuation will be denied.
If you fall into insolvency for 2 consecutive terms, you should look for ways to increase capital or receive supports from other companies.
5. Other points to note when extending a business manager visa
(1) When the contents of business change
The business content indicated in the business plan attached to Application for Certificate of Eligibility or Application for Change of Status of Residence may be significantly changed later on. There are various causes for such change: there were not much needs for the business as expected in the beginning, the negotiations with potential business partners didn’t go well, etc.
If you have changed the original plan of business contents, you should submit a written explanation of the current business content, the necessity to change, and the business plan for the current business when you extend your business manager visa.
(2) When the office is relocated
After obtaining a business manager visa, you still need to meet the office requirements.
If you relocate your office, you need to first register the relocation of the head office and notify the relevant immigration bureau of the relocation within 14 days.
In addition, when extending your business manager visa, you should submit a copy of the register issued after the registration of the relocation of the head office, as well as the lease contract and a photo of the office as materials to demonstrate the fulfillment of office requirements.
(3) If you have be away from Japan for a long time
When foreigners with a business manager visa run companies in countries other than Japan or are expanding their business on a global scale, they inevitably have more opportunities to go overseas for business.
There is no specific requirement concerning number of days (i.e. how many days you have to be in Japan) to extend your business manager visa, but if you stay in Japan only for a short period of time, the risk of getting rejection for extension of your visa will increase. This is because a business manager visa is a visa given to do business in Japan, and if you leave Japan a lot, the immigration office will suspect that you are not doing business in Japan.
Therefore, if you have been away from Japan for a long period of time, you must give a rational reason for why you had to leave Japan for such a long time, and describe the future schedule of your stay in Japan, and so on when you apply for the extension of your business manager visa.
Since we are in an new era with technologies by which we can continue business while staying anywhere in the world as long as there is internet access, you can increase the likelihood of permission for extension of your business manager visa by specifying your work situation, such as having video conference with the employees while you are away from Japan for a long period of time.
6. How to handle the case of Mr. A
Let’s get back to Mr. A’s case.
X Co., Ltd., whose representative is Mr. A, posted a loss of 1.2 million yen in the second term, but did not cause a deficit, so there was no problem with business continuation.
However, since he was away from Japan for a long time, there was a risk that extension of his business manager visa would be rejected.
So, we listened carefully to his stories about why he had to be away from Japan for so many days in total. Then, we submitted a written explanation to the relevant immigration office. In the written explanation, we demonstrated how often and how long he left Japan and clarified that Mr. A had to transfer his business of his company in the United States to his successor.
Mr. A’s business manager visa was successfully extended, and Mr. A still runs a trading company in Japan as he completed the succession of his business in the United States.
7. Summary of how to prevent non-permission of extension of a business manager visa
In this article, we explained how to prevent non-permission of extension of a business manager visa in association with the requirements for business manager visa permission.
Business continuity is important in the examination on extension of business manager visa, but even if your company incur a loss, it does not necessarily mean that you cannot extend your visa. It is possible to extend your business manager visa if you can give rational explanation regarding the causes of loss and the prospects for improvement.
Obtaining a business manager visa is more expensive and time consuming than other visas. If you have any concerns, please consult an administrative scrivener who is experienced in applying for business manager visas, in order to prevent disapproval of extension of your visa.
We will continue to provide full support to foreigners working in Japan.