Effect of Transitioning from Representative Director to Director on Residency and Permanent Residence#

When foreign nationals engaged in corporate management in Japan obtain the “Business Manager” (Keiei/Kanri) status of residence, they typically assume the role of “Representative Director” (Daihyo Torishimariyaku). However, due to corporate restructuring, business succession, or the dissolution of a joint representation system, a situation may arise where the individual steps down to become a non-representative “Director” (regular Director or Hira-Torishimariyaku).

Crucial questions arise in this scenario: “Can the Business Manager visa be maintained after losing representative rights?” and “What negative impact will this have on future applications for Permanent Residency?” This article provides an objective and detailed explanation of these impacts based on the Immigration Control and Refugee Recognition Act and practical operational standards.

1. Requirements for Corporate Officers under the “Business Manager” Visa#

First and foremost, holding the title of “Representative Director” is not an absolute statutory requirement for the “Business Manager” status of residence. The activities defined for this status involve “engaging in the operation or management of international trade or other business.”

Therefore, legally speaking, even a Director without representative rights can maintain this status of residence, provided they are substantively engaged in the management or administration of the corporation.

Proving Substantial Management Activities#

However, the burden of proof in immigration examinations differs significantly between a Representative Director and a regular Director. For a Representative Director, the possession of management rights is self-evident through the Commercial Registration Certificate (Tokibo Tohon).

In contrast, for a regular Director, immigration authorities may suspect that the role is merely nominal (“name-only director”). consequently, when applying for an extension of the period of stay, the following points must be concretely proven:

1. Clarification of Duties: Evidence of decision-making authority and supervision of subordinates in a specific department (e.g., Head of Sales, CFO, CTO).
2. Participation in Management: Records of attendance at Board of Directors meetings, statements made in minutes, and involvement in management decisions.
3. Full-time Status: The applicant must be engaged full-time in the business, not serving in a part-time or advisory capacity without executive power.

2. Remuneration and Maintenance of Status#

It is common for executive compensation to decrease when stepping down to a regular Director role. However, the amount of remuneration is a critical factor in maintaining the “Business Manager” visa.

While the Immigration Act does not stipulate a specific minimum annual income, the practical standard requires “remuneration equal to or greater than that received by a Japanese national engaged in comparable work.” If one claims a managerial position, receiving a salary equivalent to or higher than that of general employees is necessary to maintain consistency.

If the remuneration is set extremely low (e.g., 150,000 to 200,000 JPY per month), doubts will arise regarding whether the applicant can maintain a livelihood solely from the business and whether there is any substance to their managerial role. This significantly increases the risk of denial during the next visa renewal. It is strongly recommended to secure sufficient remuneration to support an independent livelihood (generally an annual income of 3 million JPY or more, with additions for dependents).

3. Impact on Permanent Residency Applications#

Transitioning from Representative Director to regular Director requires careful consideration regarding Permanent Residence (PR) applications, particularly concerning the “Independent Livelihood Requirement” and the “Stability of Residency.”

Direct Impact on Annual Income Requirements#

Annual income is one of the most important indicators for PR applications. Generally, income over the past few years (usually the last 1 to 5 years, depending on the applicant’s category) is scrutinized. If executive compensation drops significantly due to the change in position, the applicant may fall below the income standards required for PR, even if they successfully renew their current visa.

For instance, if there is a downward trend in income, immigration authorities may question the “stability of livelihood.” A decrease in income immediately preceding the application is typically viewed negatively.

Changes in Organization and Category Fluctuations#

Stepping down as Representative Director while remaining in the same company is not considered a “job change” (employer change), but the change in status within the organization is a material fact.

If the applicant is considering applying for Permanent Residence using the Highly Skilled Professional (HSP) point system, a reduction in annual income due to the position change could result in a loss of points, potentially causing them to fall below the required threshold. Furthermore, if the resignation from the representative role was due to deteriorating company performance, the continuity and stability of the business itself will be questioned, which consequently affects the applicant’s eligibility for permanent residence.

4. Procedural Points and Countermeasures#

When a Representative Director becomes a regular Director, this does not trigger the “Notification of Change in Relationship with Contracting Organization” (which must be filed within 14 days). However, at the time of the next application for extension of period of stay, it is necessary to submit a detailed explanation of the background of the change and current duties, along with the updated Commercial Registration Certificate.

Essential Documents for Renewal Applications#

To prove that the applicant is still eligible for the Business Manager visa, the following documents are crucial:

• Minutes of the General Meeting of Shareholders: Records of the resolution regarding the change of officers.
• Minutes of the Board of Directors: Records determining the specific duties and remuneration of the director.
• Organizational Chart: A visual representation of the applicant’s position in the new structure.
• Statement of Reasons: A document logically explaining why the applicant stepped down as representative and how they will continue to be involved in management in their new capacity.

Conclusion#

Resigning as Representative Director to become a regular Director does not immediately imply the loss of a status of residence. However, it shifts the situation to one where the “substance of management” and the “adequacy of remuneration” are examined more strictly. Particularly for those aiming for Permanent Residency, a decrease in annual income or instability in position can be negative factors. Therefore, meticulous attention must be paid to the setting of remuneration and the design of administrative authority. It is essential not to view this merely as a change in title, but to objectively re-evaluate whether the requirements under the Immigration Control Act continue to be met.